Financial Analysis of
Hindalco Industries Limited
(Including Acquisition of Novelis Inc.)
Group – 8, Section – B
Ajeet Singh (PGP13067)
Ankit joshi (PGP13070)
Gurpreet Singh (PGP13089)
Nikhil Kejriwal (PGP13099)
Sahil Dhingra (PGP13112)
Samarjyoti Das (PGP13113)
Rakesh Sukumar (PGP13134)
Turnover of USD 14 billion, employs nearly 19500
Chairman – Kumar Mangalam Birla, himself a
Chartered Accountant by qualification.
To be a premium metals major, global in size and reach, excelling in everything we do, and
creating value for its stakeholders
The strategic acquisition of Novelis, Inc. was done keeping in view the overall vision of the
To relentlessly pursue the creation of superior shareholder value, by exceeding customer
expectation profitably, unleashing employee potential, while being a responsible corporate citizen,
adhering to our values.
Integrity - Honesty in every action.
Commitment - On the foundation of integrity, doing whatever it takes to deliver, as promise
Passion - Missionary zeal arising out of an emotional engagement with work.
Seamlessness - Thinking and working together across functional silos, hierarchy levels,
businesses and geographies.
Speed - Responding to stakeholders with a sense of urgency
• Novelis is a globally positioned organization,
operating in 11 countries with approximately 12,500
• In 2005, the company reported net sales of US $8.4
billion and net profit of US $90 million.
• In 2006 (till Q3) reported net sales of US $7.4
billion and net loss of US $170 million
• Market leader in aluminium rolled products
Made Hindalco the largest Aluminium Rolling Company in
the world – 19% share in downstream rolled aluminium
Strategic acquisition started in Jan 2007.
Rolling sheets for most car manufacturers and bottle cans
Acquisition was an all-cash transaction
Novelis shareholders received $44.3 per outstanding share
of common stock
Novelis - $6 bn enterprise value, US $2.4 bn debt
All debt was transferred to Hindalco
The transaction done through wholly owned subsidiary of
Hindalco, AV Metals Inc.
Gross profit Margin = (Revenue-COGS) /Revenue
= Gross Profit / Revenue
Operating Profit Margin = Operating Income / Sales Revenue
= EBIT / Sales revenue
Pre-tax Margin = Income before tax / Sales Revenue
Net profit Margin = Net income / Sales Revenue
Return on assets
Return on equity
ROA = Net Income
How profitable a
company’s assets are in
Return on Net
Return on Net
Return on assets increased in 2010 but then remained nearly constant.
Return on Equity continuously decreased throughout the period.
Increase in Gross Profit Margin and Operating Profit Margin
COGS doubled from 2.45 in FY 2007 to 5.1 with
acquisition of Novelis.
Days of inventory on hand has come down drastically
from 148.98 to 92.48, which is a healthy sign for the
Also, the inventory levels were high in 2007-08 due to
the effect of the acquisition
Current Ratio = Current Assets
Quick/ Acid test Ratio= Current Assets – Inventory
2006 2007 2008 2009 2010
D/E ratio = Total debt
Financial Leverage = Average total assets
Average total equity
D/A ratio = Total debt/Total asset