MIRA
INFORM REPORT
|
Report Date : |
08.08.2007 |
IDENTIFICATION DETAILS
|
Name : |
HINDALCO
INDUSTRIES LIMITED |
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|
|
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Registered
Office : |
Foil and Packaging
Business, Kalwa Works, thane Belapur Road, Near Vitawa Village, Kalwa,
Thane-400605, Maharashtra |
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Country : |
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Financials : |
31.03.2007 |
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Date of
Incorporation : |
15.12.1958 |
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Com. Reg. No.: |
11-11238 |
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CIN No.: [Company Identification No.] |
L27020MH1958PLCO11238 |
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TAN No.: [Tax Deduction
& Collection Account No.] |
MUMI05707C/MUMH00493D |
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PAN No.: [Permanent
Account No.] |
AAACH1201R |
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Legal Form : |
Public Limited Liability
Company. The company’s
shares are listed on the Stock Exchanges |
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Line of
Business : |
Manufacturing and
selling of aluminium metal, rolled products, extruded products, conductor
redraw rods, Aluminium foil, hot and
cold rolled flat steel products and
Generation of electricity. |
RATING & COMMENTS
|
MIRA’s Rating
: |
Aa |
RATING |
STATUS |
PROPOSED
CREDIT LINE |
|
|
71-85 |
Aa |
Possesses adequate working capital. No caution needed
for credit transaction. It has above average (strong) capability for payment
of interest and principal sums |
Large |
|
Maximum Credit
Limit : |
USD 490000000 |
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|
Status : |
Good |
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Payment
Behaviour : |
Regular |
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Litigation : |
Clear |
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Comments : |
Subject is a part
of Aditya Birla Group, a well-established and reputed company having fine
track. Available information indicates high financial responsibility of the
company. Trade relations are reported
as fair. Payments are always correct and as per commitments. The company can
be considered good for any normal business dealings at usual trade terms and
conditions. |
LOCATIONS
|
Registered
Office : |
Foil and Packaging Business, Kalwa Works, thane
Belapur Road, Near Vitawa Village, Kalwa, Thane-400605, Maharashtra, India |
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Tel. No.: |
91-22-25347151 |
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Head Office : |
Century Bhavan, 3rd
Floor, |
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Tel. No.: |
91-22-2430 8491 /
92 / 93/66626666 |
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Fax No.: |
91-22-2422 7586 /
2436 2516 |
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E-Mail : |
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Website : |
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Principal
office & Works: |
District
Sonbhadra, P. O. Renukoot – 231 217, Mirzapur, |
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Tel. No.: |
91-5446-252077-9 |
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Fax No.: |
91-5446-252107 /
252427 |
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E-Mail : |
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Birla Copper
Division: |
P. O. Dahej,
Lakhigam, Dist. Bharuch - 392130, |
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Tel. No.: |
91-2641-256004-06/251009 |
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Fax No.: |
91-2641-251002-3 |
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E-Mail : |
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Renusagar Power Division:
|
P. O. Renukoot,
District Sonebhadra - 231217, |
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Tel. No.: |
91-5446-272501-5 |
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Fax No.: |
91-5446-272382 |
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Foil & Wheels Division:
|
Village Khutli,
Khanvel, Silvassa – 396 230, |
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Tel. No.: |
91-260-2677021-4 |
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Fax No.: |
91-260-2677025 |
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Export Office: |
9/1, |
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Tel. No.: |
91-33-22480949 /
22200464 |
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Fax No.: |
91-33-22200214 |
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Email: |
DIRECTORS
|
Name : |
Mr. Kumar
Mangalam Birla |
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Designation : |
Chairman |
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|
Name : |
Mr. D.
Bhattacharya |
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Designation : |
Managing Director |
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Name : |
Mr. T. K. Sethi |
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Designation : |
Director |
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Name : |
Mr. C. M. Maniar |
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Designation : |
Director |
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Name : |
Mr. E. B. Desai |
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Designation : |
Director |
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Name : |
Mr. S. S. Kothari |
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Designation : |
Director |
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Name : |
Mr. K. N.
Bhandari |
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Designation : |
Director |
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Name : |
Mr. M. M. Bhagat |
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Designation : |
Director |
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Name : |
Mr. A. K.
Agarwala |
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Designation : |
Whole Time
Director |
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|
Name : |
Mrs. Rajashree
Birla |
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Designation : |
Director |
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Name : |
Mr. N. J. Jhaveri
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Designation : |
Director |
KEY EXECUTIVES
|
Name : |
Mr. S Talukdar |
|
Designation : |
President (Chief Financial Officer ) |
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|
Name : |
Mr. Anil Malik |
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Designation : |
Company Secretary, Joint President (Company Matters, Taxation &
Treasury) |
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|
Name : |
Mr. R. K.
Kasliwal |
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Designation : |
Executive President (Finance & Commerce), Advisor |
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Name : |
Mr. S. K. Tiwari |
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Designation : |
Chief Officer (Manufacturing) |
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Name : |
Ms. N. Chainani |
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Designation : |
Executive President (Corporate Affairs and Development) |
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Name : |
Mr. S. K. Maudgal |
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Designation : |
Executive President (Marketing) & Chief Executive Officer ( Foil
& Wheel) |
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|
Name : |
Mr. R. P. Shah |
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Designation : |
Joint President (Alumina Plant) |
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|
Name : |
Mr. Ajey
Srivastava |
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Designation : |
Joint President (Operation & Planning) |
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Name : |
Mr. P.K. Panda |
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Designation : |
Joint President (H. R.) |
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Name : |
Mr. Ramesh Kumar |
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Designation : |
Senior Vice-president (Marketing-Extrusions) |
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|
Name : |
Mr. A. K.
Karmakar |
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Designation : |
Senior Vice-President (Boiler & Co-generation) |
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Name : |
Mr. R. P. Tiwari |
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Designation : |
Senior Vice-President (Projects) |
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Name : |
Mr. S. N. Sharma |
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Designation : |
Senior Vice –President (Finance & Accounts) |
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Name : |
Mr. S. C. Tandon |
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Designation : |
Senior Vice-President (Port Room Operation) |
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Name : |
Mr. K. K. Patodia |
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Designation : |
Senior Vice- President (Raw Material) |
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Name : |
Mr. O. P. Sharma |
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Designation : |
Vice-President (Alumina Mech. Maintenance) |
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|
Name : |
Mr. R. Haridas
Menon |
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Designation : |
Vice-President (Marketing – Primary Metal) |
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Name : |
Mr. I. C. Rao |
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Designation : |
Vice President (Marketing – Rolled Products) |
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|
Name : |
Mr. Sanjeev Goel |
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Designation : |
Vice President (Information Technology) |
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|
Name : |
Mr. N. K. Zalani |
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Designation : |
Vice President ( Industrial
Engineer) |
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ALUMINIUM
BUSINESS : |
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|
Name : |
Mr. S. K. Maudgal |
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Designation : |
Executive President (Marketing) & Chief Executive Officer ( Foil
& Wheel) |
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|
Name : |
Mr. Shankar Ray |
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Designation : |
Joint President (Chemical and International Trade) |
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|
Name : |
Mr. S M Bhatia |
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Designation : |
President (Foil and Wheel) |
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|
Name : |
Mr. S Majumdar |
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Designation : |
Head Operations – Demerged Indal Units |
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Name : |
Mr. Amit Basu |
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Designation : |
Joint President (HR) – Demerged Indal Units |
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RENUKOOT
UNIT : |
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|
Name : |
Mr. Ratan K Shah |
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Designation : |
Chief Officer – Operations |
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Name : |
Mr. R P Shah |
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Designation : |
Chief Manufacturing Officer |
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|
Name : |
Mr. Rahul Mahnot |
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Designation : |
Joint Executive President (F and C) |
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Name : |
Mr. Ajey Srivastava |
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Designation : |
Joint President (Fabrication) |
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|
Name : |
Mr. J Bhowmik |
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Designation : |
Joint President (Renusagar Power) |
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ADITYA
ALUMINIUM : |
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|
Name : |
Mr. S N Bontha |
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Designation : |
Chief Executive Officer |
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UTKAL
ALUMINA : |
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|
Name : |
Mr. Debasis |
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Designation : |
Joint President (Project) |
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COPPER
BUSINESS : |
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|
Name : |
Mr. P Balakrishnan |
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Designation : |
Executive President |
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Name : |
Mr. P S Ghose |
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Designation : |
Joint Executive President (Projects) |
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Name : |
Mr. J P Paliwal |
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Designation : |
Joint Executive President (Commercial) |
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Name : |
Mr. B M Sharma |
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Designation : |
Joint Executive President (Marketing) |
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|
Name : |
Mr. Sanjay Loyalka |
|
Designation : |
Chief Executive Officer, Aditya Birla Minerals Limited (Copper Mines |
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CORPORATE :
|
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|
Name : |
Mr. Kim Freeman |
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Designation : |
COO (Mining) |
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|
Name : |
Mr. Pratik Roy |
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Designation : |
Chief People Officer |
MAJOR SHAREHOLDERS
Code
|
Category of Shareholders
|
No. of shares
|
Percentage of
Holding |
|
(A) |
Shareholding of promoter and promoter
group |
|
|
|
1 |
Indian |
|
|
|
(a) |
Individuals /
Hindu undivided Family |
1291496 |
0.11 |
|
(b) |
Bodies Corporate |
367744845 |
29.97 |
|
(c) |
Trust |
16316130 |
1.33 |
|
|
Total (A) |
385352471 |
31.40 |
|
|
|
|
|
|
(B) |
Public Shareholding |
|
|
|
1 |
Institutions |
|
|
|
(a) |
Mutual funds / UTI |
28030740 |
2.28 |
|
(b) |
Financial Institutions / Banks |
8921636 |
0.73 |
|
(c) |
Central government / State Government(s) |
287480 |
0.02 |
|
(d) |
Insurance Companies |
130850193 |
10.66 |
|
(e) |
Foreign Institutional Investors |
165601100 |
13.49 |
|
|
Sub-Total (B) (1) |
333691149 |
27.19 |
|
|
|
|
|
|
2 |
Non-institutions |
|
|
|
(a) |
Bodies Corporate |
117734588 |
9.59 |
|
(b) |
Individuals |
|
|
|
|
I. Individual
shareholders holding nominal share capital up to Rs. 0.100 million |
162406175 |
13.23 |
|
|
II. Individual
shareholders holding nominal share capital in excess of Rs. 0.100 million |
22833386 |
1.86 |
|
(c) |
Non-resident
individuals |
19832881 |
1.62 |
|
|
I. Foreign bodies
corporate |
32726923 |
2.67 |
|
(d) |
Shares in transit |
1505676 |
0.12 |
|
|
Sub-Total (B) (2) |
357039629 |
29.10 |
|
|
|
|
|
|
|
Total Public Shareholding (B) = (B) (1) +
(B) (2) |
690730778 |
56.29 |
|
|
|
|
|
|
(C) |
Shares held by custodians and against
which depository receipts have been issued |
15104693 |
12.31 |
|
|
|
|
|
|
|
GRAND TOTAL (A) + (B) + (C) |
1227130192 |
100.00 |
BUSINESS DETAILS
|
Line of
Business : |
Manufacturing and
selling of aluminium metal, rolled products, extruded products, and conductor
redraw rods, Aluminium foil, hot and cold rolled flat steel products and
Generation of electricity. |
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Products: |
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Exports to : |
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Imports from : |
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PRODUCTION STATUS
Class of goods |
|
Installed Capacity
|
Actual Production
|
|
|
|
Tonnes |
Tonnes |
|
Aluminium Metal |
|
455000 |
429140 |
|
Rolled Products |
|
200000 |
190581 |
|
Extruded Products
|
|
27700 |
32328 |
|
Conductor Redraw
Rods |
|
64400 |
67730 |
|
Aluminium Foil |
|
11000 |
26184 |
|
Aluminium Wheel |
|
300000 Pcs. |
194079 Pcs. |
|
Hydrate &
Alumina |
|
1160000 |
1203383 |
|
Electricity |
|
909.20 MW |
7252 MU |
|
Electricity
(Co-generation) |
|
205.40 MW |
1234 MU |
|
Continuous Cast
Copper Rods (CCR) |
|
97200 |
88687 |
|
Copper Cathodes |
|
500000 |
124012 |
|
Phosphoric Acid |
|
180000 |
-- |
|
Sulphuric Acid |
|
1670000 |
314581 |
|
DAP &
Complexes |
|
400000 |
218199 |
|
Gold |
|
7.5 |
6.715 |
|
Silver |
|
75 |
35.076 |
GENERAL INFORMATION
|
No. of
Employees : |
12000 |
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|
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|
Bankers : |
Ř
UCO
Bank, Mumbai Ř
State
Bank of Ř
Allahabad
Bank, Mumbai Ř
American
Express Bank Limited, Mumbai Ř
Bank
of Ř
Citibank
N. A., Mumbai Ř
Standard
Chartered Grindlays Bank Plc, 19,
Tel. No. 91-33-22220103 Ř
ABN
Amro Bank N.V., Mumbai Ř
Union
Bank of Ř
IDBI
Bank Limited, Mumbai Ř
Hongkong
and Shanghai Banking Corporation Limited |
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|
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Facilities : |
Unsecured Loans
(Rs. in millions)
|
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|
|
|
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Banking Relations : |
Good |
|
|
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|
Auditors : |
˛ Singhi & Company Chartered Accountants Kolkata, Cost Auditors
˛ R Nanabhoy & Company Cost Accountants Mumbai, |
|
|
|
|
Memberships: |
Confederation of
Indian Industry |
|
|
|
|
Collaborator: |
Kaiser
Engineering Corporation, |
|
|
|
|
Joint
Ventures: |
|
|
|
|
|
Associates : |
Ř
Grasim
Industries Limited Ř
Indian
Rayon & Industries Limited Ř
Mangalore
Refinery & Petrochemicals Limited Ř
Birla
Power Supply Company Limited Ř
Birla
Project Development Company Limited Ř
Bihar
Caustic & Chemicals Limited Ř
Birla
Sun-Life Joint Ventures Ř
Birla
Global Finance Ř
Bina
Power Supply Company Limited Ř
Rosa
Power Supply Company Limited Ř
HGI
Industries Limited Ř
Eastern
Spinning Mills Limited Ř
Shree
Digvijay Cement Limited Ř
Kerala
Spinners Limited Ř
Essel
Mining Ř
Tanfac
Industries Limited Ř
Birla
AT & T Communications Limited Ř
Birla
Global Finance Limited Ř
Birla
Maroochydore Pty Limited Ř
Birla
Minerals Resources Pty Limited Ř
Birla
Capital International AMC Limited Ř
Birla
Management Corporation Limited Ř
Birla
Telecom Limited Ř
Rajashree
Polyfil Ř
Thai Ř
Indo
Thai Synthetics, Ř
Century
Textiles, Ř
Thai
Acrylic Ř
Thai Ř
Thai Ř
Thai Ř
Thai Ř
Thai
Organic Chemicals, Ř
Indo
Phil Textile Mills, Ř
P T
Indo Ř
P T
Elegant Textile Ř
PT
Indo Ř
Pan
Century Edible Oils, Ř
Pan
Century Rubber Products, Ř
Pan
Century Ř
Ř
AV
Cell Inc., Ř
Learning
Byte International, Ř
Grasim
- Ř
LNG
Ennore Project Ř
Lucknow
Finance Company Limited Subsidiaries: Ř
Minerals
& Minerals Limited Ř
Renukeshwar
Investments & Finance Limited Ř
Renuka
Investments & Finance Limited Ř
Indian
Aluminium Company Limited Ř
Indal
Exports Limited Ř
Annapurna
Foils Limited Ř
|
CAPITAL STRUCTURE
Authorised Capital :
|
No. of Shares |
Type |
Value |
Amount |
|
1450000000 |
Equity Shares |
Rs. 1.00 each |
Rs. 1450.000 millions |
|
500000 |
14% Free of
Company’s tax but subject to deduction of taxes at source at the prescribed
rates, Redeemable Cumulative Preference shares |
Rs. 100.00 each |
Rs. 50.000 millions |
|
|
Total |
|
Rs. 1500.000 millions |
Issued, Subscribed Capital :
|
No. of Shares |
Type |
Value |
Amount |
|
1159329501 |
Equity Shares |
Rs. 1.00 each |
Rs. 1159.330 millions |
|
|
Total |
|
Rs. 1159.330 millions |
Paid-up
Capital :
|
No. of Shares |
Type |
Value |
Amount |
|
927808470 |
Equity Shares |
Rs. 1.00 each |
Rs. 927.810 millions |
|
231521031 |
Equity Shares |
Rs. 1.00 each |
Rs. 57.880 millions |
|
Less: |
Face value of Shares Forfeited |
|
Rs. 0.060
million |
|
Add: |
Forfeited Shares Account (Amount paid –up) |
|
Rs. 0.030 millions |
|
Less : |
Calls in Arrears |
|
-- |
|
|
TOTAL
|
|
Rs. 985.660 millions |
FINANCIAL DATA
[all figures are
in Rupees Millions]
ABRIDGED BALANCE
SHEET
|
SOURCES
OF FUNDS |
31.03.2007 |
31.03.2006 |
31.03.2005 |
|
|
SHAREHOLDERS
FUNDS |
|
|
|
|
|
1] Share Capital |
1043.250 |
985.660 |
927.770 |
|
|
2] Reserves &
Surplus |
123137.120 |
95076.860 |
75738.010 |
|
NETWORTH
|
124180.370 |
96062.520 |
76665.780 |
|
|
|
|
|
|
|
|
LOAN FUNDS |
|
|
|
|
|
1] Secured Loans |
64102.030 |
28480.470 |
29523.380 |
|
|
2] Unsecured
Loans |
9583.980 |
20553.910 |
8476.590 |
|
TOTAL
BORROWING
|
73686.010 |
49034.38 |
37999.970 |
|
|
|
|
|
|
|
|
DEFERRED TAX
LIABILITIES |
11258.010 |
12333.590 |
11296.980 |
|
|
|
|
|
|
|
TOTAL
|
209124.390 |
157430.490 |
125962.730 |
|
|
|
|
|
|
|
APPLICATION OF FUNDS
|
|
|
|
|
|
|
|
|
|
|
FIXED ASSETS [Net Block]
|
70067.090 |
67828.000 |
56035.290 |
|
Capital work-in-progress
|
14764.250 |
8329.170 |
13229.810 |
|
|
|
|
|
|
|
INVESTMENT
|
86753.170 |
39713.110 |
37021.450 |
|
|
|
|
|
|
|
CURRENT ASSETS, LOANS & ADVANCES
|
|
|
|
|
|
|
Inventories
|
43153.140
|
40950.880
|
23745.180
|
|
|
Sundry Debtors
|
15045.020
|
12484.010
|
7873.670
|
|
|
Cash & Bank Balances
|
6654.960
|
9172.850
|
4009.690
|
|
|
Other Current Assets
|
1188.080
|
2447.340
|
422.220
|
|
|
Loans & Advances
|
11742.200
|
7972.410
|
8713.490
|
Total Current Assets
|
77783.400
|
73027.490
|
44764.250
|
|
Less: CURRENT LIABILITIES & PROVISIONS
|
|
|
|
|
|
|
Current Liabilities
|
27433.790
|
21995.620
|
16782.950
|
|
|
Provisions
|
12841.410
|
9531.660
|
8398.980
|
Total Current Liabilities
|
40275.200
|
31527.280
|
25181.930
|
|
Net
Current Assets
|
37508.200
|
41500.210
|
19582.320
|
|
|
|
|
|
|
|
MISCELLANEOUS EXPENSES
|
31.680 |
60.000 |
93.860 |
|
|
|
|
|
|
|
TOTAL
|
209124.390 |
157430.490 |
125962.730 |
|
PROFIT & LOSS
ACCOUNT
|
PARTICULARS |
31.03.2007 |
31.03.2006 |
31.03.2005 |
|
Sales Turnover
|
183129.880 |
113964.760 |
97932.960 |
|
Other Income
|
3700.690 |
2439.110 |
0.000 |
|
Total Income
|
186830.570 |
116403.870 |
97932.960 |
|
|
|
|
|
|
|
Profit/ (Loss) Before Tax
|
35046.250 |
21026.750 |
19041.830 |
|
Provision for Taxation
|
9403.000 |
4471.250 |
5748.260 |
|
Profit/ (Loss) After Tax
|
25643.250 |
16555.500 |
13293.570 |
|
|
|
|
|
|
|
Export Value
|
NA |
NA |
26051.710 |
|
|
|
|
|
|
|
Import Value
|
NA |
NA |
38469.350 |
|
|
|
|
|
|
|
Expenditures:
|
|
|
|
|
|
|
(Increase) / Decrease in Stocks
|
(4425.170)
|
(10338.400) |
|
|
|
Raw Materials Consumed
|
110553.140
|
65829.480 |
|
|
|
Goods Purchased
|
230.190
|
204.190 |
|
|
|
Payments to and Provision for Employees
|
5195.810
|
4627.620 |
|
|
|
Other Operating Expenses
|
31426.050
|
27591.240 |
78800.100 |
|
|
Interest and Finance Charges
|
2423.880
|
2251.680 |
|
|
|
Depreciation
|
5528.020
|
5166.770 |
|
|
|
Impairment
|
852.40
|
44.540 |
|
|
|
Extraordinary Item
|
0.000
|
(30.220) |
|
Total Expenditure
|
151784.320 |
95346.900 |
78800.100 |
|
KEY RATIOS
|
PARTICULARS |
31.03.2007 |
31.03.2006 |
31.03.2005 |
|
Debt Equity Ratio |
0.56 |
0.50 |
0.44 |
|
Long Term Debt Equity Ratio |
0.43 |
0.48 |
0.42 |
|
Current Ratio |
1.21 |
1.40 |
1.24 |
|
TURNOVER RATIOS |
|
|
|
|
Fixed Assets |
1.82 |
1.27 |
1.33 |
|
Inventory |
4.69 |
3.77 |
5.77 |
|
Debtors |
14.31 |
11.99 |
15.27 |
|
Interest Cover Ratio |
15.46 |
10.35 |
12.20 |
|
Operating Profit Margin (%) |
21.82 |
23.34 |
24.65 |
|
Profit Before Interest and Tax Margin (%) |
19.02 |
19.10 |
20.15 |
|
Cash Profit Margin (%) |
15.82 |
17.80 |
17.41 |
|
Adjusted Net Profit Margin (%) |
13.02 |
13.57 |
12.91 |
|
Return on Capital Employed (%) |
21.86 |
17.96 |
19.87 |
|
Return on Net Worth (%) |
23.29 |
19.17 |
18.31 |
STOCK PRICES
|
Face Value |
Rs. 100.00 |
|
High |
Rs. 163.60 |
|
Low |
Rs. 157.55 |
LOCAL AGENCY FURTHER INFORMATION
History:
The company was
incorporated on 15.12.1958 at Mumbai in
The critical factor
for the company’s cost advantage is its strategic control over key inputs,
which include: Access to good quality and low cost bauxite reserves. Captive
power generation to meet most of company’s power needs, Alumina and smelting
facilities Downstream production plants that span several products Strategic
joint venture companies to ensure uninterrupted supply of other key inputs
–caustic soda and aluminium fluoride.
To continue to
deliver superior value to its shareholders in the future and as part of its
growth strategy, the company had embarked on a brownfield expansion in
Renukoot. It has enhanced the copper smelter capacity by 100000 TPA and the
albumin refining capacity by 210000 TPA. A matching increase in the captive
power generating capacity is also on the anvil. The project is being
implemented at a cost of Rs. 18000 billion. Its first phase was completed, when
the 9th pot line with an installed capacity of 33000 TPA was
commissioned in September 2001. The 10th Pot line and 11th
Potline marks the milestone of the company's brownfield expansion. In 2002-03 the capacity of Albumin, Metal
Production was enhanced by 35000 tones and 220000 tones respectively. By
enhancing, the smelter capacity is now pegged at 310000 TPA, Albumin at 660000
TPA. The total power generation is now increased to 699 MW. The expanded capacities
of the Smelter, Albumin Refinery and Power plant will be fully operational in
current financial year.
The project
Rocket-2k was implemented successfully, aimed at improving through increase in
thru-put, better efficiencies and productivity as well as reduced cost and the
annualized savings is estimated at around Rs.400-500 millions over a two year
periods.
Further, the
company is evaluating an integrated information technology solution. Its major
objective is: to integrate operations, ensure real time date reliability,
speedier decision, enhanced supply chain management and customer relationship.
This initiative will result in significant gains to the company.
The company will be
able to further consolidate its leadership in the domestic market and also
cater to a far greater extent to customers in the global market.
The project
Rocket-2K was implemented successfully, aimed at improving profitability
through increase in throughout better efficiencies and productivity as well as
reduced cost and the annualized savings is estimated at around Rs.400-500
millions over a two-year period.
The company is
recently entered the Rs.2500.000 millions branded foils market under the
“Hindalco Wrap” brand name. The company wants to address a category in the FMCG
sector. Launched in 54 cities across the
country, Hindalco Wrap is currently available at most retail outlets in a
unique dispenser pack at Rs.42 for a nine-metre roll. The company also plans to
enter the aluminium-based kitchen utility products market in a big way.
Aluminium Business:
The Aluminium business demonstrated a stellar performance with:
Ř
Highest ever Alumina and Primary Aluminium production with over
100% capacity utilization at all operating units.
Ř
Highest ever turnover and business profit
Ř
Highest ever EBITDA margins at 47.0%
Operational Review:
Ř
Products Net Sales (Rs. Mn) Sales Volumes (MT) FY06 FY05 FY06 FY05
Ř
Hydrate and Alumina (Standard 8,007 5,696 388,646
322,828Metallurgical & Specials)
Ř
Aluminium Ingots/Billets 14,480 14,375 146,785 158,518
Ř
Redraw Rods 7,045 5,908 67,895 62,841
Ř
Rolled Products 18,603 16,380 151,568 144,158
Ř
Extruded Products 4,102 3,379 32,181 28,453
Ř
Aluminium Foil 4,847 4,543 26,003 26,004
Ř
Aluminium Wheels (Pcs) 374 198 199,403 111,045
Alumina:
Alumina refinery utilization attained 104% of rated capacity and production
stood at 1,203,383
Primary Metal:
Primary metal output from the Company's Smelters increased to 429,140 MT, up 5%
over that of previous year. There has been an increased flow of primary metal
into value added products leading to lower merchant sales volumes for the product
category. Realizations, however, improved by 8.8% reflecting the strong trend
in global aluminium prices.
Redraw Rods:
Redraw rods production grew by 9% from 62,392 MT to 67,730 MT, while sales
tonnage rose by 8.0% to 67,895 MT as compared to 62,841 in the previous fiscal.
Further, average realizations stepped up to Rs.103,768/MT, reflecting a growth
of 10.4%, which is the highest growth amongst all the metal products. This is
primarily a result of significant growth in the power transmission sector, a
major end-user segment for the category.
Value Added Products (VAP):
The share of VAP (i.e. flat rolled products, extrusions and foils) in tonnage
terms extended from 47.3% to 49.4% while revenue share stood at 56.1% vis-a-vis
54.5% during the preceding fiscal. Value Added Products remain a key focus area
for the Company to enhance profitability, de-risk product portfolio, and grow
the market for aluminium products in the country. A slew of initiatives to
further bolster this segment have been taken.
The Company had already put in place a Key Account Management practice, which
started yielding results during the year under review. There are plans to
implement CRM practices to enhance customer satisfaction.
A number of application areas like Plates for Bus Ducts and Bus Bars, Fin Stock
for Auto Radiators, Roll Bond coils for Roll Bond Panel etc. have been
identified where imports can be substituted by locally manufactured products of
comparable quality.
To widen its distribution network, the Company has added 10 new dealers and
Stockists.
Their product development team is working on several projects to develop and
commercialize new products. These application areas include high value added
products like components of Heating Ventilation and Air conditioning system
used in the automotive sector, viz. Auto Fin - Bare, Alclad (Fin/Header/ Side
Plate) etc.
Additionally, significant potential areas include Truck bodies, Baby Coils,
Aluminium Composite Panel, High Security Registration Plate and other new
profiles.
Everlast roofing sheets, Freshwrapp foil packaging and Aura wheels from the
Company are among the leading brands today.
Flat Rolled Products:
Flat Rolled Products (FRP) output rose to 190,581 MT from 175,734 MT during the
previous year. Sales tonnage amplified from 144,158 MT to 151,568 MT, growing
by 5.1%. Realization increased by 8.0% to Rs.122, 734/MT while premium over
primary metal rose by Rs.1,143/MT to Rs.24,086/MT. This was achieved through a
richer product mix with higher contribution.
Extrusions:
Extruded products registered an impressive 13.2% growth from 28,551 MT in
2004-05 to 32,328 MT. Sales tonnage also surged from 28,453 MT to 32,181 MT
while realizations increased by 7.3 % to Rs.127,469/MT.
Foils:
Steps to optimize the foils business product mix and move away from lower
end products have been initiated. Consequently, production of foils was at a
level similar to that achieved during the last year, and sales tonnage also
remained flat. Realizations improved by 6.7% to Rs.186, 412/MT. The premium
realized over primary metal, advanced by 4% from Rs.84, 018/MT to Rs.87,
765/MT.
Wheels:
This segment witnessed a high growth of 80.9% with production increasing to
194,079 wheels vis-a-vis 107,279 wheels achieved during the previous fiscal.
Sales volumes expanded by 79.6% from 111,045 wheels to 199,403 wheels. The
Company was an early entrant in this segment to develop and expand the market.
These efforts have now come to fruition. The Indian alloy wheel market has
grown at a CAGR of 27% over the last three years. Interestingly, during the
year under review, the market registered a growth of 48% fueled by alloy wheels
being introduced in a number of new launches in the passenger vehicles segment.
Pricing, Cost & Profitability:
Aluminium prices on
the London Metal Exchange started at $1960/MT, moved down to $1675/MT and
touched a high of $2,634/MT before ending at $2,512/MT with the average for the
fiscal being $2,028/MT.
The Aluminium business faced significant cost pressures from high prices of key
raw materials such as fuel oil, coal, caustic soda and CP Coke. Freight costs
added to cost of all the raw materials including bauxite. However, the impact
of these factors was limited through cost reduction measures. Among these
are:
Enhancing Hirakud captive power capacity from 67.5 MW to 167.5MW to
substitute power from the state grid.
Setting up a 5,300 tpa captive Aluminium Fluoride plant at Dahej to convert
Fluosilicic acid, a by-product, into aluminium fluoride to be used in aluminium
smelters.
High utilization levels through de-bottlenecking and process optimization based
on in-house technical knowledge.
Bolstered by firm aluminium prices, average product realizations improved by
8.9%. Net Sales and Turnover increased by 15% to Rs.60,423 million and Earnings
before Interest & Taxes (EBIT) rose 33.4% to Rs.21,281 million. Business
profitability improved substantially as reflected in EBIT margins at 35.2% as compared
to 30.4% a year earlier.
Performance
The Company registered its best ever performance during the
year under review. Higher capacity utilization, increased realization, product mix
enrichment and improved operational efficiencies resulted in both revenues and
profits surpassing their previous levels. Alumina and Aluminium plants
continued to operate at utilization levels well above their rated capacities.
With the stabilization of the Hirakud brownfield expansion, metal production
rose by 3.2% to 442,686 MT. The production of Value Added Products i.e. rolled
and Extrusions increased due to acquisitions completed in FY06 as well as
higher utilization of available assets. Of the total sales volume, the share of
value added products was an impressive 55%.
Despite falling alumina prices in the international market, the Company was
able to maintain high realizations, largely because of its focus on Speciality
business as well as a prudent mix of forward contracts and spot sales.
The production of Copper cathodes went up by 38% to 290,529 MT in comparison to
previous year on the back of the expanded capacity commissioned last year.
Production of value added CC rods grew 23% to 109,029
The Chairman's letter to shareholders and the Management's Discussion
& Analysis, which form a part of this Annual Report, provide the strategic
direction and a more detailed analysis on the performance of individual
businesses and their outlook.
Rs. in Million
Financial Results for the year ended 31.03.2007 31.03.2006
Net Sales & Operating Revenue 183,130 113,965Profit before
Extraordinary Items and Tax 35,046 21,027Extraordinary Items - 30Profit before
Tax 35,046 21,057Provision for Current Tax 9841 3241Provision for Deferred Tax
(551) 1160 Provision for Fringe Benefits Tax 113 100Net Profit 25,643
16,556
Financing
An amount of Rs. 38900.000 millions was drawn at an average rate of 8.62% p.a. against
the 10 year Secured Rupee Term Loan facility syndicated in earlier years. The
Company met its entire obligation on payment of interest and repayment of
principal.
As part of the bidding process under Canadian Law for undertaking the
arrangement transaction for the acquisition of Novelis, the Company obtained
commitment letter from ABN AMRO, Bank of America and UBS of US$3.1 Billion with
recourse to the Company and secured by Hindalco's corporate guarantee for
paying the shareholders of Novelis. It also obtained back-stop facility of
approximately US$2.4 Billion from UBS and ABN AMRO for refinancing the existing
loans of the Novelis Balance Sheet with recourse limited to the cash flows and
assets of Novelis.
The Company was adjudged the successful bidder and all steps are being taken to
complete the legal and other formalities required to draw the committed
funds.
Prices:
Aluminium prices have risen significantly over the past year and reached
17-year highs of $2,634/MT in February 2006. This has been accompanied by
falling inventories and rising costs across the world. Reported primary
aluminium stocks have declined to a mere 5 weeks of consumption, while reported
total aluminium inventories stand at 8 weeks of consumption, close to the multi-year
lows. Importantly, aluminium smelters worldwide have been under tremendous cost
pressure from rising key input costs like alumina, power, carbon and oil. These
factors, along with rising global demand, are anticipated to support aluminium
prices above historical levels over the long term.
Domestic prices continue to be determined by international prices on the
London Metal Exchange and the movements of the Indian Rupee vis-a-vis US
Dollar. With the reduction in import duty on aluminium and its products, the
relationship is expected to become even stronger.
Business Outlook for
Hindalco:
The Company is at an inflection point on the growth curve with its strategic
initiatives and competitive strengths set to propel it forward from domestic leadership
to global scale operations based on
The Company's brownfield expansion projects are on track. * The expansion of
Muri Alumina Refinery from 110,000 TPA to 450,000 TPA is slated for mechanical
completion in the second half of fiscal 2006-07.
The Hirakud Smelter and Power expansions from 65,000 tpa to 146,000 tpa and
67.5 MW to 367.5 MW (100 MW already commissioned during the year),
respectively, are on course and expected to be commissioned partly in the last
quarter of FY07 and the balance by the end of FY08.
Plans to extend the refining capacity at
The Company's integrated aluminium project, Aditya Aluminium, encompassing
1-1.5 million TPA alumina refineries, 325,000 tpa aluminium smelter and 650 MW
captive power plant is on course. Clearances from the Ministry of Environment
& Forest are in place, while water scheme for the smelter and the power plant
have been approved. A joint venture agreement on bauxite mines has been signed
with Orissa Mining Corporation Limited. Requisite clearances for mining are
being obtained. The refinery project has received in principle approval.
Contracts for construction power at smelter and power plant site have been
awarded. Rehabilitation and Resettlement plan has been submitted to the Revenue
Divisional Commissioner and other authorities. The Rehabilitation Advisory
Committee meeting is expected to start in May 2006. The Company along with
Mahanadi Coalfields Ltd. and Neyvelli Lignite Corporation Ltd. has been
allotted the coal blocks - Talabira II & III for jointly developing and
mining coal for captive consumption, a significant development from the
perspective of securing key inputs. The Company has applied for a coal block
under the MoU signed earlier with the Government of Jharkhand. The project
which envisages a 325,000 TPA smelter and a 750 MW captive power plant will
proceed once the Company is allotted the coal block.
The Company has been allotted Mahan coal block in the Sidhi district of Madhya
Pradesh along with the Essar Group. This will be developed and mined through a
joint venture - Mahan Coal Company Limited. The Company is planning to set up a
325,000 TPA smelter and a 750MW captive power plant in the state.
A suitable financing plan for the projects is already in place. These projects
will significantly enhance the scale of the Company's operations and add to its
competitive strength by virtue of being one of the lowest-cost producers of
alumina and aluminium world-wide in a regime where cost curves are shifting
upwards.
Copper Business:
The Copper business faced one of the most trying years in its entire nine years
history. Despite the high prevailing copper prices and improved long term and
spot Tc/Rc as compared to the previous year, the business suffered on account
of difficult operating conditions.
Production:
The copper business suffered production disruptions on account of various problems,
both external and internal. The heavy rainfall in the state of
The 180,000 tpa Smelter I had been working at less than optimal levels due to
longer campaign runs and underwent a 25-day overdue bi-annual maintenance
shutdown in the months of November-December 2005. Besides, the lower than
anticipated utilization of the 70,000 tpa Smelter II due to refractory life
stabilization issues resulted in a shortfall in production.
The Company's new smelter (250,000 tpa Smelter III) was commissioned in July
2005. The commissioning of a new Copper Smelter is always associated with a
long-drawn ramp-up process, and the experience at Dahej was no exception. It
faced its share of teething problems and also took a 19-days shutdown due to a
minor metal leakage and resultant damage to nearby equipment.
These issues have, since, largely been sorted out. The Copper Smelter I am
running at optimal utilization level post its maintenance shutdown. Smelter II,
which had taken a shutdown in January 2006 for refractory change, has shown
improvement in its refractory life. Smelter III is slated to complete a 30-day
review shutdown in the month of May 2006, after which it is expected to ramp up
gradually to full capacity. Following these developments, the Copper business
should attain its targeted production and conversion cost levels.
Profitability:
The sharp rise in LME copper prices, led to higher revenues for the company
despite flat volumes.
However, since
copper prices are in the nature of a pass through for a Custom Smelter like
theirs, the runaway increase in LME copper prices did not have any significant
impact on profitability.
The Company benefited from the prevailing high Tc/Rc margins. Regardless, other
macro factors impacted the business adversely. The fall in import duty on
copper from 15% to 10% in February 2005 impaired domestic metal realizations
for the year. Though overall prices remained high, the premium for value added
CC Copper Rods reduced as compared to base copper prices.
As already discussed, the business experienced difficult operating conditions,
so EBIT from the business declined from Rs.2538 Million to Rs.193 Million for
the year, despite accrual of significant one-time benefits under the Target
plus Scheme.
Copper Industry Outlook:
During CY05 global copper consumption is estimated to have grown at less than
one percent. A key feature has been de-stocking by consumers across the
consumption chain in view of high and volatile copper prices. Copper demand is
expected to recover during CY06 as consumers in
Importantly,
Overall, refined copper demand is slated to rise at a modest pace of around 5%
in CY06, with
Copper Prices & Tc/Rc Outlook:
Low copper inventories combined with a series of output disruptions through
natural calamities, industrial actions and operating difficulties have driven
the sharp rally in copper prices which had run up to $5,528/MT by the end of
the year under review. Tc/Rc for copper concentrate supplies witnessed an
extremely volatile year with spot terms rising to as high as 54c/lb before
ending the year at 24c/lb. The benchmark Japanese contract terms increased from
18-20c/lb to 22-23c/lb.
With substantial smelting capacity projected to come online in 2006 and 2007,
the concentrate market is anticipated to become tight and exert downward
pressure on Tc/Rc rates. Meanwhile, low refined copper stocks and growing
demand is expected to keep copper prices extremely sensitive to any supply side
developments.
Domestic Industry Outlook:
The domestic demand for copper is expected to rise by 7-8% fuelled by growth in
key end-use segments, viz consumer electronics, industrial machinery and
equipments. The buoyant construction sector is likely to add to wiring and air
conditioning requirements.
Lowering of import duties in the Union Budget is expected to reduce the threat
of imports under FTA substituting domestic supply. In addition, the domestic
copper industry enjoys significant market presence in other Asian countries in
Middle East, East & South East Asia and
STRATEGIC INITIATIVES:
Enhancing Value Added Products
Capability:
To enhance its focus on Value added products, the Company has acquired certain
assets of Pennar Aluminium Company Limited (PALCO) from Asset Reconstruction
Company (
Landmark move to Strengthen Copper
Mining Portfolio:
To meet Hindalco's copper
concentrate requirement on a self financing basis, the Company's subsidiary
Aditya Birla Minerals Ltd. (ABML), formerly Birla Mineral Resources Pty Ltd.,
has come out with an Initial Public Offering (IPO) to issue 154 million equity
shares. It represents 49% of the post issue share capital of the Company. The
shares will be listed for trading on the Australian Stock Exchange (ASX).
Hindalco will continue to hold 159mn or 51% of the voting rights. This elevates
the Company to the rank of the first Indian business group to list in
Cost Reduction Initiatives:
With the commissioning of the 100MW power unit at Hirakud, Orissa in April,
2005 and the output from the unit being stabilized to full capacity in June
2005, there has been a substantial cost saving in the first 10 months of
operation.
Growth plans underway in
Aluminium:
The Company is aggressively
pursuing various brownfield and
Brownfield Expansions:
The Company's brownfield expansion projects are on track. The expansion of Muri
Alumina Refinery from 110 ktpa to 450 ktpa is slated for completion in the
second half of the fiscal 2006-07. The Hirakud Smelter and Power expansions
from 65ktpa to 146ktpa and 67.5MW to 367.5MW (100MW already commissioned during
the year), respectively, are on course and expected to be commissioned partly
in the last quarter of FY07 and the balance by the end of FY08. The plans to
extend the refining capacity at
Utkal Alumina, the 1-1.5 million TPA alumina refining project in a JV with
Alcan Inc., along with the integrated Aditya Alumina and Aluminium project is progressing
as scheduled. In Aditya Aluminium, the Company is setting up a 325,000 tpa
smelter and a 650MW power plant. To take it forward, the Company has been
allotted the Mahan coal block in the Sidhi district of Madhya Pradesh in a
joint venture with the Essar Group.
OTHER SIGNIFICANT DEVELOPMENTS:
Stock Split:
To encourage active
retail investor participation and enhance liquidity, the Company has
sub-divided its equity shares of Rs.10 each into 10 equity shares with a face
value of Re.1 per share. The split was approved by the shareholders at their
Extra-Ordinary General Meeting held on
Rights Issue:
As part of the arrangement to finance its expansion plans, the Company has made
an offer of equity shares on 1:4 rights basis to raise Rs.22266 million. This
was the largest rights issue ever in the domestic capital markets.
The full amount will be mobilized in three phases viz 25% in phase I have
already been mobilized, the next tranche of 25% is to be called within 9-12
months and the balance within 18-24 months. The allotment of shares was
completed on
Business:
The company is
engaged in manufacturing and selling of aluminium metal, rolled products,
extruded products, conductor redraw rods, aluminium foil, hot and cold rolled
flat steel products and generation of electricity.
The company is one
of the promoter members of Birla Management Corporation Limited (BMCL), a
company limited by guarantee which has been formed to provide a common pool of
facilities and resources to its members, with a view to optimize the benefits
of specialization and minimize cost for each member. The company has participated in the common
pool and has shared the expenses incurred by BMCL and accounted these under
appropriate heads.
The Company has delivered a commendable performance amidst significant
challenges. Though a rise in LME prices benefited, both aluminium and copper
businesses suffered on account of a steep cut in import tariff, appreciation in
the value of Indian Rupee against the US Dollar, high energy and caustic
prices. Being a custom copper smelter, the company gained little from the steep
rise in LME price. The business bore the brunt of a heavy reduction in export
incentives and a 10% cut in import tariff effected through the two budgets. The
dramatic recovery in the Treatment Charges and Refining Charges (Tc/Rc) did not
have any significant positive impact on profitability as most of the long term
contracts for FY05 were negotiated towards the end of CY2004.
The company's foil
and an aluminium alloy wheel plant at Silvassa, which has helped the company to
optimize capacity, and enhance the share of value-added semi-fabricated
products.
Awards & recognition
Subject was
adjudged the worldwide Runner-up for the "Millennium Business Award for
Environmental Achievement" under the auspices of the United Nations
Environment Programme.
Subject has been
categorized as a Star Trading House by the Government of India. It is also the recipient of EEPCs Award for
Export Excellence for exports during 1998-99 as well as a Special Award from
CAPEXIL exports during 1999-2000.
The prestigious
International Aluminium Institute has selected the company's Alumina Refinery
as "Joint Best Running Refinery for 1999".
The company's mines
also bagged several awards instituted for exemplary work accomplished in
Reclamation & Rehabilitation, Afforestation, Top Soil Management and Water
Quality Management.
The company is a
Government Recognized Trading House and has received several awards from Export
Promotion Councils as well as the Government of India.
The company had
been recognized through the Ministry of Power, Government of India, conferring
upon its Aluminium division the National Award for Energy Conservation.
The company's
aluminium division also bagged the "Yogayata Praman Patra" - for its
safety record from the National Safety Council of India.
The Aluminium
division of the company was honoured by FICCI-SEDF with the "Social
Responsiveness Award". In addition it was the proud recipient of FICCI
award 2001-02 for excellent work in Family Welfare.
It is in trade
terms with:
Ř
Air
Control & Chemical Engineering Company Limited
Ř
Alba
Security Systems Private Limited
Ř
Brassomatic
Private Limited
Ř
BVM
Compresor Spares Syndicate
Ř
Grip
Engineers Private Limited
Ř
Webb India
Private Limited
The company has
been accredited with ISO 14000 and ISO 9002 certification.
Fixed Assets
Ř
Tangible
Assets
Ř
Mining
Rights
Ř
Land
& Site Development
Ř
Buildings
Ř
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Press Releases
Hindalco to acquire Alcan stake in Utkal Alumina
Aditya
Birla Group's flagship company, Hindalco Industries Limited,
The conclusion of the transaction marks the complete exit of Alcan from the Utkal project. Alcan will have no surviving rights or obligations, as Hindalco becomes the 100 per cent owner of the Utkal project.
Hindalco and Alcan will continue to have a cordial business association given that Alcan has ongoing contracts with Novelis. It is also the technology provider to the Utkal alumina project and some other alumina projects of Hindalco.
Novelis now a Hindalco subsidiary
- Acquisition
process completed
Hindalco,
the Aditya Birla Group's flagship company announced today the completion of its
acquisition of Novelis. The transaction makes Hindalco the world's largest
aluminium rolling company and one of the biggest producers of primary aluminium
in Asia, as well as being
On 10
February 2007, Hindalco entered into an agreement with Novelis to acquire the
company in an all-cash transaction which values Novelis at approximately US$
6.0 billion, including debt. Under the terms of the agreement, Novelis
shareholders will receive US$ 44.93 in cash for each outstanding common share.
Novelis shareholders approved the transaction by an overwhelming majority (99.8
per cent) in a special meeting on 10 May 2007.
"We
look upon the aluminium business as a core business that has enormous growth
potential in revenues and earning. Our vision is to be a premium metals major,
global in size and reach with a passion for excellence. The acquisition of
Novelis is a step in this direction", said Mr. Kumar Mangalam Birla,
Chairman, Hindalco.
"The
combination of Hindalco and Novelis establishes an integrated producer with
low-cost alumina and aluminium facilities combined with high-end rolling
capabilities and a global footprint. The complementary assets and expertise of
the team provides a strong platform for growth and success", added Mr.
Birla.
Welcoming the men and women of Novelis into Hindalco and the
Aditya Birla Group, Mr. D. Bhattacharya, managing director of Hindalco and
director of Aditya Birla Management Corporation said, "Novelis makes a
perfect fit for Hindalco. There are enormous geographical market and product
synergies. Novelis is the global leader in the value-added high-end aluminium
rolled products and aluminium can recycling. Hindalco is consistently
increasing its share of value-added products, which today stand at nearly 60
per cent. The Novelis acquisition gives it an instant leg-up with its
technologically sophisticated rolled aluminium products capability, apart from
a scale and a global footprint".
"We
are very pleased to complete this transaction with Hindalco," said
Novelis' chief operating officer, Ms. Martha Brooks. "The arrangement has
created significant value for Novelis shareholders while at the same time
providing new opportunities for the future of the combined company. With the
support of Hindalco and the Aditya Birla Group, we will be able to accelerate
the Novelis business strategy, leveraging our world-class assets for the
production of premium aluminium products."
Novelis'
stock has ceased trading on the New York Stock Exchange. De-listing on the New
York Stock Exchange and the Toronto Stock Exchange is expected to occur shortly
- Record annual
revenues at Rs.183130.000 millions
- EBIDTA at
Rs.43851.000 millions soars by 54 per cent
- Net profit at
Rs.25643.000 millions up by 55 per cent
- Q4 revenues
reflect 30 per cent YoY growth; net profit rises by 15 per cent
|
(In
Rs. Millions) |
Quarter |
Quarter |
Change |
Year ended |
Year ended |
Change |
|
Net sales and operating revenue |
47489.000 |
36574.000 |
30 |
183130.000 |
113965.000 |
61 |
|
Other income |
1233.000 |
743.000 |
66 |
3701.000 |
2439.000 |
52 |
|
EBDITA |
11732.000 |
10041.000 |
17 |
43851.000 |
28520.000 |
54 |
|
Profit before tax |
9579.000 |
7974.000 |
20 |
35046.000 |
21057.000 |
66 |
|
Net profit |
7213.000 |
6263.000 |
15 |
25643.000 |
16555.000 |
55 |
|
EPS (basic and diluted) (Rs) |
72.000 |
64.000 |
13 |
255.000 |
168.000 |
52 |
Hindalco
Industries Ltd, the flagship company of the Aditya Birla Group has reported a sterling
performance for the quarter ending 31 March 2007. Net sales at Rs.47489.000
millions are up by 30 per cent over Q4 of FY06 (Rs.36574.000 millions). Profit
before tax rose by 20 per cent and profit after tax increased by 15 per cent
vis-ŕ-vis Q4 of FY06.
Driven
by strong aluminium prices on the LME and an improved product mix on account of
higher sales volume of value added products, aluminium business revenues
extended from Rs.17263.000 millions to Rs.20424.000 millions, an increase of 18
per cent. Despite strong inflationary pressures, profit before interest and tax
mounted from Rs. 7131.000 millions to Rs.7902.000 millions, up 10.8 per cent.
Copper
business revenues stepped up from Rs.19317.000 millions to Rs.
27112.000millions, a rise of 40 per cent. Profit before interest and tax at
Rs.1365.000 millions witnessed a growth of 13.6 per cent over the corresponding
quarter of the previous year.
FY 2007 performance
The FY 2007 results have been extremely impressive. Higher capacity
utilization, increased realization and strengthening of operational
efficiencies resulted in both revenues and profits surpassing their previous
levels. Consolidated revenues at Rs.183130.000 millions reflected a growth of
61 per cent. The EBIDTA crossed the USD 1 billion mark for the first time ever
at Rs.43851.000 millions. Net profits grew sharply by 55 per cent to
Rs.25643.000 millions.
Aluminium
business revenues stretched from Rs.60423.000 millions to Rs.73444.000 millions
an increase of 21.5 per cent. Despite strong inflationary pressures, profit
before interest and tax rose from Rs.21281.000 millions to Rs.29292.000
millions up 37.6 per cent.
Copper
business revenues doubled to Rs.109776.000 millions from Rs.53542.000 millions.
Profit before interest and tax surged to Rs.5171.000 millions vis-a-vis
Rs.193.000 millions in FY 06.
Dividend
The Company has paid an interim dividend of 170 per cent for FY 07. Together
with the corporate dividend tax of Rs.249.000 millions, the total payout on
this score was Rs.2022.000 millions. The board at its meeting held on date, has
decided not to recommend any further dividend and to treat the interim dividend
as the final dividend.
A major strategic initiative
The company has entered into a definitive agreement with Novelis Inc. on 10
February 2007 for acquiring all outstanding common shares at the rate of USD
44.93 per share in cash for a total consideration of approximately USD 3.5
billion.
For
this purpose the company has secured firm commitments of USD 3.1 billion bridge
loan of 18 months against the corporate guarantee of the company and the
balance of USD 450 million will be financed by the company by way of infusing
equity / preferred stock / other securities in its wholly owned subsidiaries.
The acquisition will be effected through one or more of its wholly owned
subsidiaries.
The
acquisition marks a synergistic extension to the company's upstream business by
way of expanding the company's business activities to multiple downstream
businesses, by optimisation of the operating assets of Novelis located in
different geographical markets catering to a larger consumer base.
The
acquisition is subject to various customary approvals including shareholders
and Canadian court approval.
Operational review
Aluminium
Both alumina and aluminium continued to operate at high utilisation levels,
above their rated capacities. With the stabilisation of the prebaked smelter
potline at Hirakud, metal production has risen by 7 per cent to 114,334 mt. The
production of value-added products i.e. rolled and extrusions ascended due to
better performance from the rolling plants and the extrusion press set up in FY
06.
|
(In Rs. millions) |
Units |
Q4 FY07 |
Q4 FY06 |
Change |
FY07 |
FY06 |
Change |
|
Primary metal |
MT |
1143340.000 |
1068250.000 |
7.0 |
4426850.000 |
4291400.000 |
3.2 |
|
Wire rods |
MT |
169480.000 |
167380.000 |
1.3 |
689980.000 |
677300.000 |
1.9 |
|
Rolled products |
MT |
483220.000 |
455360.000 |
6.1 |
2110880.000 |
1905810.000 |
11.5 |
|
Extruded products |
MT |
95250.000 |
90440.000 |
5.3 |
382820.000 |
323280.000 |
18.4 |
|
Foils |
MT |
61440.000 |
63150.000 |
-2.7 |
256990.000 |
261840.000 |
-1.9 |
|
Wheels |
Nos. |
451930.000 |
585690.000 |
-22.8 |
1966210.000 |
1940790.000 |
1.3 |
|
Power |
MU |
20740.000 |
19630.000 |
5.7 |
83150.000 |
78450.000 |
6.0 |
|
Alumina |
MT |
2964110.000 |
2990060.000 |
-0.9 |
11986580.000 |
12033830.000 |
-0.4 |
Of the
total sales volume, the share of value added products was 52 per cent. Despite lower
alumina price in the international market, the company has been able to
maintain a good realization, largely because of its focus on Speciality
business as well as a prudent mix of forward contracts and spot sales.
Copper
The production
of copper cathodes went up by 22 per cent to 81,460 t in comparison to Q4 of
the previous year. Production of value-added product CC rods grew 27 per cent
to 30,076 t. Sulphuric acid output was up by 8 per cent to 240,860 t. In view
of the overall economics, copper II operations remained suspended in the fourth
quarter of FY 2007 with copper concentrate in international markets becoming
more expensive due to a shortage. The company expects this situation to be
transient.
|
(In Rs. millions) |
Units |
Q4 FY07 |
Q4 FY06 |
Change |
FY07 |
FY06 |
Change |
|
Copper cathodes |
MT |
814600.000 |
667480.000 |
22.0 |
2904250.000 |
2102270.000 |
38.1 |
|
CC rods |
MT |
300760.000 |
237250.000 |
26.8 |
1090330.000 |
886870.000 |
22.9 |
|
DAP/NPK |
MT |
537940.000 |
558500.000 |
-3.7 |
2193330.000 |
2181990.000 |
0.5 |
|
Sulphuric acid |
MT |
2408600.000 |
2231460.000 |
7.9 |
8925970.000 |
6394140.000 |
39.6 |
|
Gold |
KG |
29610.000 |
19510.000 |
51.8 |
103340.000 |
67110.000 |
54.0 |
|
Silver |
KG |
178270.000 |
98790.000 |
80.5 |
484620.000 |
350790.000 |
38.2 |
Expansion
projects
Muri
The brownfield expansion of the alumina refinery from 110 ktpa to 450 ktpa is
expected to be commissioned in the third quarter of the next fiscal.
Hirakud
The commissioning of phase I of the expanded smelting capacity from 65 ktpa to
100 ktpa has been completed with all 150 pots energised. Phase II of the
project which will raise smelting capacity to 143 ktpa, is on track. The
conversion of pot line 3 commenced in November 2006 in a phased manner. The
first lot of 64 pots have been completed, ahead of schedule. The second 100 mw
power plant was commissioned in December 2006 in line with the schedule and the
third 100 mw plant is slated to go on stream by December 2007.
The allotment of the lease for bauxite mines for expanding the alumina refinery
capacity at
Utkal
Work on the 1,500 ktpa alumina project is in progress. The pile foundation for
the precipitation area is progressing well and will be completed by May 2007.
The layout of the non-plant buildings has been finalised. The detailed
engineering for mines has started and is expected to be over by March 2009. The
second phase of rehabilitation and resettlement process is on track.
Aditya
Alumina
This
Mahan
This project envisages setting up of a 325 ktpa smelter and 750 mw captive
power plant supported by captive coal mine. The coal block was allotted in
April 2006 in a JV with Essar. The production of coal is likely to start from
April 2009. The Government of Madhya Pradesh has sanctioned an allocation of
1213 hectares of land and accorded a SEZ status. Its commissioning is expected
by November 2012.
Lathehar
For this project entailing the setting up a 325 ktpa aluminium smelter with 750
mw captive power plant, supported by five million tpa captive coal mine in
Jharkhand, the allotment of coal block has reached its final stages. Land
acquisition is in progress. An application has also been filed for
environmental clearance, water, construction power and other necessary
infrastructure.
Industry outlook
Aluminium
Global aluminium consumption is estimated to have grown by 7.2 per cent during
CY06. The key contributor to this growth has been the Asian region powered
mainly by
Rapidly
increasing semi-fabrication capacity in
Copper
The smelter production recorded a strong growth in CY2006, despite the tight
concentrates market and low Tc/Rcs. Expansions to underlying capacity continued
to lift output, and high concentrate stocks enabled smelters to cover the
shortfall in new mine production. Yet another output surge in CY2008 is
expected as new capacity is to go on stream. This will be the peak year for
production growth. However, despite a strong growth in capacity, with mine
output continuing to fall short of smelter requirement, actual output will be
constrained by concentrate availability.
Refined
output increased by an estimated 6.4 per cent last year as there was underlying
growth in capacity, particularly in
Company
outlook
The
company has been continuously improving its performance. It is leveraging its
fundamental strengths to deliver shareholder value and this is an ongoing priority.
LME will drive the performance of aluminium business whereas it is a pass
through for copper business. Going forward the biggest challenge would be to
maintain high levels of performance once the aluminium price at the LME starts
moving down.
CMT REPORT (Corruption, Money Laundering & Terrorism]
The Public Notice information has been collected from various sources
including but not limited to: The Courts,
1] INFORMATION ON
DESIGNATED PARTY
No records exist designating subject or any of its beneficial owners,
controlling shareholders or senior officers as terrorist or terrorist
organization or whom notice had been received that all financial transactions
involving their assets have been blocked or convicted, found guilty or against
whom a judgement or order had been entered in a proceedings for violating
money-laundering, anti-corruption or bribery or international economic or
anti-terrorism sanction laws or whose assets were seized, blocked, frozen or
ordered forfeited for violation of money laundering or international
anti-terrorism laws.
2] Court Declaration :
No records exist to suggest that subject is
or was the subject of any formal or informal allegations, prosecutions or other
official proceeding for making any prohibited payments or other improper
payments to government officials for engaging in prohibited transactions or
with designated parties.
3] Asset Declaration :
No records exist to suggest that the property or assets of the subject
are derived from criminal conduct or a prohibited transaction.
4] Record on Financial
Crime :
Charges or conviction
registered against subject: None
5] Records on Violation of
Anti-Corruption Laws :
Charges or
investigation registered against subject: None
6] Records on Int’l
Anti-Money Laundering Laws/Standards :
Charges or
investigation registered against subject: None
7] Criminal Records
No
available information exist that suggest that subject or any of its principals have
been formally charged or convicted by a competent governmental authority for
any financial crime or under any formal investigation by a competent government
authority for any violation of anti-corruption laws or international anti-money
laundering laws or standard.
8] Affiliation with
Government :
No record
exists to suggest that any director or indirect owners, controlling
shareholders, director, officer or employee of the company is a government
official or a family member or close business associate of a Government
official.
9] Compensation Package :
Our market
survey revealed that the amount of compensation sought by the subject is fair
and reasonable and comparable to compensation paid to others for similar
services.
10] Press Report :
No press reports / filings exists on
the subject.
CORPORATE GOVERNANCE
MIRA INFORM as part of its Due Diligence do provide comments on
Corporate Governance to identify management and governance. These factors often
have been predictive and in some cases have created vulnerabilities to credit
deterioration.
Our Governance Assessment focuses principally on the interactions
between a company’s management, its Board of Directors, Shareholders and other
financial stakeholders.
CONTRAVENTION
Subject is not known to have contravened any existing local laws,
regulations or policies that prohibit, restrict or otherwise affect the terms
and conditions that could be included in the agreement with the subject.
FOREIGN EXCHANGE RATES
|
Currency |
Unit
|
Indian Rupees |
|
US Dollar |
1 |
Rs.40.58 |
|
|
1 |
Rs.81.85 |
|
Euro |
1 |
Rs.55.70 |
SCORE & RATING EXPLANATIONS
|
SCORE FACTORS |
RANGE |
POINTS |
|
HISTORY |
1~10 |
8 |
|
PAID-UP CAPITAL |
1~10 |
9 |
|
OPERATING SCALE |
1~10 |
8 |
|
FINANCIAL CONDITION |
|
|
|
--BUSINESS SCALE |
1~10 |
8 |
|
--PROFITABILIRY |
1~10 |
8 |
|
--LIQUIDITY |
1~10 |
8 |
|
--LEVERAGE |
1~10 |
8 |
|
--RESERVES |
1~10 |
8 |
|
--CREDIT LINES |
1~10 |
8 |
|
--MARGINS |
-5~5 |
- |
|
DEMERIT POINTS |
|
|
|
--BANK CHARGES |
YES/NO |
YES |
|
--LITIGATION |
YES/NO |
NO |
|
--OTHER ADVERSE INFORMATION |
YES/NO |
NO |
|
MERIT POINTS |
|
|
|
--SOLE DISTRIBUTORSHIP |
YES/NO |
NO |
|
--EXPORT ACTIVITIES |
YES/NO |
YES |
|
--AFFILIATION |
YES/NO |
YES |
|
--LISTED |
YES/NO |
YES |
|
--OTHER MERIT FACTORS |
YES/NO |
YES |
|
TOTAL |
|
73 |
This score serves as a reference to assess SC’s credit risk
and to set the amount of credit to be extended. It is calculated from a composite
of weighted scores obtained from each of the major sections of this report. The
assessed factors and their relative weights (as indicated through %) are as
follows:
Financial
condition (40%) Ownership
background (20%) Payment
record (10%)
Credit history
(10%) Market trend
(10%) Operational
size (10%)
RATING EXPLANATIONS
|
RATING |
STATUS |
PROPOSED CREDIT LINE |
|
|
>86 |
Aaa |
Possesses an extremely sound financial base with the strongest capability
for timely payment of interest and principal sums |
Unlimited |
|
71-85 |
Aa |
Possesses adequate working capital. No caution needed for credit
transaction. It has above average (strong) capability for payment of interest
and principal sums |
Large |
|
56-70 |
A |
Financial & operational base are regarded healthy. General
unfavourable factors will not cause fatal effect. Satisfactory capability for
payment of interest and principal sums |
Fairly Large |
|
41-55 |
Ba |
Overall operation is considered normal. Capable to meet normal
commitments. |
Satisfactory |
|
26-40 |
B |
Unfavourable & favourable factors carry similar weight in credit
consideration. Capability to overcome financial difficulties seems comparatively
below average/normal. |
Small |
|
11-25 |
Ca |
Adverse factors are apparent. Repayment of interest and principal sums
in default or expected to be in default upon maturity |
Limited with
full security |
|
<10 |
C |
Absolute credit risk exists. Caution needed to be exercised |
Credit not
recommended |
|
NR |
In view of the lack of information, we have no basis upon which to
recommend credit dealings |
No Rating |
|