Introduction • Acquisition • Part of inorganic growth strategy • Completed this acquisition through its wholly-owned subsidiary AV Metals Inc • Novelis will operate as a subsidiary of Hindalco.
Hindalco • Hindalco established in 1958 • Operation Started in 1962 • Revenue and market capitalization • Division in Product • Our vision is to be a premium metals major, global in size and reach .... The acquisition of Novelis is a step in this direction‘ -Kumar Mangalam Birla, Chairman, Hindalco Industries
Novelis • Novelis is the world leader in aluminium rolling, producing nearly 20 percent of the worlds flat-rolled aluminium products. • Created in 2005 as a spin-off from aluminium producer Alcan Inc. • Industry leading assets and technology. • Has a net Worth of $322 million and has debt of $2.33 billion. • The company is No.1 rolled products producer in Europe, South America and Asia, and No 2 in North America.
Funding Of The Deal • Deal was agreed at approx $6 Billion. • Deal would be financed through a Recourse debt of $2.8 billion. • $2.4 billion will be raised on the balance sheet of Novelis. • Hindalco would contribute $450 million from its cash reserves. • SL Iron Ore Mining ,another A V Birla group company, will chip in with $300 million from its reserves. • The group has tied up with ABN Amro Bank, Bank of America and UBS for the Asian leg of the transaction, while the non- recourse debt raised on Novelis books will be funded through ABN Amro and UBS.
The Rationale Behind Acquisition • Establish a global integrated aluminium producer with low-cost alumina and aluminium production facilities combined with high - end aluminium rolled product capabilities. • Make Hindalco the biggest rolled aluminium products maker and 5th largest integrated aluminium manufacturer in the world. • Strong presence inFinancial Management-I business aluminums recycling • Increasing scale of operation, entry into high—end downstream market • General Motors Corp. and Coca-Cola Co. • Global presence • Novelis Fusion
Post acquisition • Hindalco has undertaken aggressive plans to increase its capacities • Post the acquisition of Novelis effective 15 May 2007; Hindalco is now a global player with a strong presence in five continents and with a product portfolio which is a natural hedge against the volatility of aluminium prices. Novelis has reported a net profit of USD 28 million (under US GAAP) for the period 16 May 2007 to 31 March 2008. • The total revenue for the year at Rs. 60,013 crore and PBIT at Rs. 4,835 crore were up by 211 per cent and 22 per cent respectively over last year. • Aluminium business revenue was Rs. 47,054 crore and PBIT was Rs. 3,214 crore, while the copper revenue was Rs.12, 340 crore with a PBIT of Rs. 931 crore. • Intigraton Process