MIRA INFORM REPORT

Report Date :

09.06.2007

IDENTIFICATION DETAILS

Name :	HINDALCO INDUSTRIES LIMITED
Registered Office :	Foil and Packaging Business, Kalwa Works, thane Belapur Road, Near Vitawa Village, Kalwa, Thane-400605, Maharashtra, India
Country :	India
Financials :	31.03.2006
Date of Incorporation :	15.12.1958
Com. Reg. No.:	11-11238
CIN No.: [Company Identification No.]	L27020MH1958PLCO11238
TAN No.: [Tax Deduction & Collection Account No.]	MUMI05707C/MUMH00493D
PAN No.: [Permanent Account No.]	AAACH1201R
Legal Form :	Public Limited Liability Company. The company’s shares are listed on the Stock Exchanges
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 375000000
Status :	Good
Payment Behaviour :	Regular
Litigation :	Clear
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
Tel. No.:	91-22-25347151
Head Office :	Century Bhavan, 3^rd Floor, Dr. Annie Besant Road, Worli, Mumbai – 400 025, Maharashtra, INDIA
Tel. No.:	91-22-2430 8491 / 92 / 93/66626666
Fax No.:	91-22-2422 7586 / 2436 2516
E-Mail :	hindalco.rkt@rmjsprintrpg.ems.vsnl.net.in ajjhala@hindalco.com pragnyaram@adityabirla.com rkasliwal@adityabirla.com ajjhala@adityabirla.com careers@adityabirla.com sangram@adityabirla.com
Website :	http://www.adityabirla.com/hindalco http://www.hindalco.com
Principal office & Works:	District Sonbhadra, P. O. Renukoot – 231 217, Mirzapur, Uttar Pradesh, INDIA
Tel. No.:	91-5446-252077-9
Fax No.:	91-5446-252107 / 252427
E-Mail :	hindalco.rkt@adityabirla.com
Birla Copper Division:	P. O. Dahej, Lakhigam, Dist. Bharuch - 392130, Gujarat
Tel. No.:	91-2641-256004-06/251009
Fax No.:	91-2641-251002-3
E-Mail :	birlacopper@adityabirla.com
Renusagar Power Division:	P. O. Renusagar, District Sonbhadra, Uttar Pradesh, INDIA
Tel. No.:	91-5446-272501-5
Fax No.:	91-5446-272382
Foil & Wheels Division:	Village Khutli, Khanvel, Silvassa – 396 230, Union Territory of Dadara & Nagar Haveli, INDIA
Tel. No.:	91-260-2677021-4
Fax No.:	91-260-2677025
Export Office:	9/1, R. N. Mukherjee Road, Kolkata - 700 001, West Bengal
Tel. No.:	91-33-22480949 / 22200464
Fax No.:	91-33-22200214
Email:	hindalco@cal2.vsnl.net.in

DIRECTORS

Name :	Mr. Kumar Mangalam Birla
Designation :	Chairman
Name :	Mr. D. Bhattacharya
Designation :	Managing Director
Name :	Mr. T. K. Sethi
Designation :	Director
Name :	Mr. C. M. Maniar
Designation :	Director
Name :	Mr. E. B. Desai
Designation :	Director
Name :	Mr. S. S. Kothari
Designation :	Director
Name :	Mr. K. N. Bhandari
Designation :	Director
Name :	Mr. M. M. Bhagat
Designation :	Director
Name :	Mr. A. K. Agarwala
Designation :	Whole Time Director
Name :	Mrs. Rajashree Birla
Designation :	Director
Name :	Mr. N J Jhaveri
Designation :	Director

KEY EXECUTIVES

Name :	Mr. S Talukdar
Designation :	President (Chief Financial Officer )
Name :	Mr. Anil Malik
Designation :	Company Secretary, Joint President (Company Matters, Taxation & Treasury)
Name :	Mr. R. K. Kasliwal
Designation :	Executive President (Finance & Commerce), Advisor
Name :	Mr. S. K. Tiwari
Designation :	Chief Officer (Manufacturing)
Name :	Ms. N. Chainani
Designation :	Executive President (Corporate Affairs and Development)
Name :	Mr. S. K. Maudgal
Designation :	Executive President (Marketing) & Chief Executive Officer ( Foil & Wheel)
Name :	Mr. R. P. Shah
Designation :	Joint President (Alumina Plant)
Name :	Mr. Ajey Srivastava
Designation :	Joint President (Operation & Planning)
Name :	Mr. P.K. Panda
Designation :	Joint President (H. R.)
Name :	Mr. Ramesh Kumar
Designation :	Senior Vice-president (Marketing-Extrusions)
Name :	Mr. A. K. Karmakar
Designation :	Senior Vice-President (Boiler & Co-generation)
Name :	Mr. R. P. Tiwari
Designation :	Senior Vice-President (Projects)
Name :	Mr. S. N. Sharma
Designation :	Senior Vice –President (Finance & Accounts)
Name :	Mr. S. C. Tandon
Designation :	Senior Vice-President (Port Room Operation)
Name :	Mr. K. K. Patodia
Designation :	Senior Vice- President (Raw Material)
Name :	Mr. O. P. Sharma
Designation :	Vice-President (Alumina Mech. Maintenance)
Name :	Mr. R. Haridas Menon
Designation :	Vice-President (Marketing – Primary Metal)
Name :	Mr. I. C. Rao
Designation :	Vice President (Marketing – Rolled Products)
Name :	Mr. Sanjeev Goel
Designation :	Vice President (Information Technology)
Name :	Mr. N. K. Zalani
Designation :	Vice President ( Industrial Engineer)
ALUMINIUM BUSINESS :
Name :	Mr. S. K. Maudgal
Designation :	Executive President (Marketing) & Chief Executive Officer ( Foil & Wheel)
Name :	Mr. Shankar Ray
Designation :	Joint President (Chemical and International Trade)
Name :	Mr. S M Bhatia
Designation :	President (Foil and Wheel)
Name :	Mr. S Majumdar
Designation :	Head Operations – Demerged Indal Units
Name :	Mr. Amit Basu
Designation :	Joint President (HR) – Demerged Indal Units
RENUKOOT UNIT :
Name :	Mr. Ratan K Shah
Designation :	Chief Officer – Operations
Name :	Mr. R P Shah
Designation :	Chief Manufacturing Officer
Name :	Mr. Rahul Mahnot
Designation :	Joint Executive President (F and C)
Name :	Mr. Ajey Srivastava
Designation :	Joint President (Fabrication)
Name :	Mr. J Bhowmik
Designation :	Joint President (Renusagar Power)
ADITYA ALUMINIUM :
Name :	Mr. S N Bontha
Designation :	Chief Executive Officer
UTKAL ALUMINA :
Name :	Mr. Debasis Roy
Designation :	Joint President (Project)
COPPER BUSINESS :
Name :	Mr. P Balakrishnan
Designation :	Executive President
Name :	Mr. P S Ghose
Designation :	Joint Executive President (Projects)
Name :	Mr. J P Paliwal
Designation :	Joint Executive President (Commercial)
Name :	Mr. B M Sharma
Designation :	Joint Executive President (Marketing)
Name :	Mr. Sanjay Loyalka
Designation :	Chief Executive Officer, Aditya Birla Minerals Limited (Copper Mines Australia)
CORPORATE :
Name :	Mr. Kim Freeman
Designation :	COO (Mining)
Name :	Mr. Pratik Roy
Designation :	Chief People Officer

MAJOR SHAREHOLDERS

Category	No. of shares	% of shareholding
Indian Promoters	311450599	26.22
Mutual Funds and UTI	70736446	6.08
Banks, Financial Institutions and Insurance Companies	125478483	10.48
FIIs	233138310	20.88
Corporates	57134335	4.70
Individuals	152133769	12.80
NRIs/OCBs	40533321	4.06
GDRs	168663738	14.78
Total	1159269001	100.00

BUSINESS DETAILS

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.
Exports to :	Bangladesh, North America, Europe, Africa, Asia, Korea, Nepal, ingapore, Taiwan and UAE.
Imports from :	Australia, Belgium, France, Japan, Netherlands, Singapore, Spain, UK and USA.

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

Bankers :

Ø UCO Bank, Mumbai

Ø State Bank of India, Mumbai

Ø Allahabad Bank, Mumbai

Ø American Express Bank Limited, Mumbai

Ø Bank of America, Mumbai

Ø Citibank N. A., Mumbai

Ø Standard Chartered Grindlays Bank Plc, 19, N. S. Road, Kolkata, West Bengal

Tel. No. 91-33-22220103

Ø ABN Amro Bank N.V., Mumbai

Ø Union Bank of India, Mumbai

Ø IDBI Bank Limited, Mumbai

Ø HongKong & Shanghai Banking Corporation Limited

Facilities :

Secured Loans (Rs. in millions)
	31.032006
A. Secured Redeemable Non-Convertible Debentures : 150 11.22% NCD of Rs. 10.000 Millions each redeemable on 12th January, 2008 (Put/call option on 12th January, 2006) (Option exercised) 200 9.75% NCD of Rs. 10.000 Millions each redeemable on 2nd July, 2008 (Put/ call option on 2nd July, 2006) 50 9.00% NCD of Rs. 10.000 Millions each redeemable on 17th September, 2008 (Put/call option on 17th September, 2006) 60 7.95% NCD of Rs. 10.000 Millions each redeemable on 15th July, 2009 (Put/ call option on 15th July, 2007) 25 6.95% NCD of Rs. 10.000 Millions each redeemable on 23rd August, 2007 (Put/call option on 23rd August, 2005) (Option exercised) 75 7.20% NCD of Rs. 10.000 Millions each redeemable on 23rd August, 2007 (Rs. 500.00 million) & 23rd August, 2009 (Rs. 250.00 million) (Put/call option on 23rd August, 2007 for Rs. 250.00 million only) 105 6.40% NCD of Rs. 10.000 Millions each redeemable on 29th November, 2009 (Put/call option on 29th November, 2007)	0.000 2000.000 500.000 600.000 0.000 750.000 1050.000
The above debentures are secured by mortgage of all immovable properties of the Renukoot plant, both present and future, save and except some of the Workers' Quarters, ranking pari passu with existing charge holders, and hypothecation of movable properties (excluding all current assets) of Renukoot plant, both present and future.
50 9.95% NCD of Rs. 10 million each redeemable on 14th June, 2006 486804 6.60% NCD of Rs. 0.001 million each redeemable on 20^th November, 2007 100 6.39% NCD of Rs. 10 million each redeemable on 15th September, 2009	500.000 486.800 1000.000
The 9.95% and 6.60% debentures have been secured jointly by mortgage of immovable properties of Belur plant, both present and future, ranking paripassu with existing charge holders and hypothecation of movable properties of the Belur plant, both present and future (save and except current assets). The 6.39% debentures are secured / to be secured by mortgage of immovable properties of Hirakud Smelter and power plant, both present and future ranking pari-passu with existing charge holders and hypothecation of movable properties of Hirakud smelter and power plant, (save and except current assets) both present and future.
3000 12.75% NCD of Rs. 0.500 million each redeemable in five equal installments of Rs. 265 million each on 4th December, 2002 (Redeemed), 4th December, 2003 (Redeemed), 4th December, 2004 (Redeemed), 4th December, 2005 (Redeemed) and 4th December, 2006 and Rs. 35 million on 12th December, 2002 (Redeemed), 12th December, 2003 (Redeemed), 12th December, 2004 (Redeemed), 12th December, 2005 (Redeemed) and 12th December, 2006 4000 8.70% NCD of Rs. 0.500 million each redeemable on 23rd April, 2007 2000 8.10% NCD of Rs. 0.500 million each redeemable on 19th July, 2009 (Put/call option on 19th July, 2007) 1000 6.20% NCD of Rs. 0.500 million each redeemable on 8th January, 2008 1000 5.95% NCD of Rs. 0.500 million each redeemable on 14th January, 2008 2500 6.50% NCD of Rs. 1 million each redeemable on 6th September, 2009	300.000 2000.000 1000.000 500.000 500.000 2500.000
These debentures are secured by mortgage of immovable properties of the Dahej plant, both present and future, ranking pari-passu with existing charge holders and hypothecation of the movable properties of Dahej plant, both present and future (save and except current assets). Additionally, the 12.75% debentures are also secured by a second charge on the current assets of that plant, ranking subordinate to the charge created / to be created in favour of those Bankers who have extended secured Working Capital facilities.
B. Term Loans from Government of Uttar Pradesh under Subsidised Housing Scheme for Industrial Workers : Secured by hypothecation of Workers' Quarters (repayable within one year Rs. 0.19 million)	0.540
C. Loans from Scheduled Banks - Cash Credit and Export Credit Accounts : Rs. 1,175.98 million is secured by hypothecation of stocks of Raw Materials, Consumable Stores, Spares, Work-in-Progress and Finished Products of Renukoot plant, Rs. 515.71 million secured by hypothecation of stocks of Raw Materials, Consumable Stores, Spares, Work-in-Progress and Finished Products of all other aluminium plants (except Renusgar Power plant) and Rs. 19.59 million secured by hypothecation of stocks of Raw Materials, Consumable Stores, Spares, Work-in-Progress and Finished Products of Copper Business, both present and future, secured by way of joint equitable mortgage of the immovable assets, on second charge basis, of Copper Business, ranking pari-passu with other Lenders/Institutions.	1711.280
D. Rupee Term Loans from Scheduled Banks : The loan of Rs 9,950 million is secured/ to be secured by first charge on all immovable properties of the Company both present and future ranking pari-passu and hypothecation on all the assets both present and future of the Company ranking pari-passu with other charge holders and Rs 45 million secured by first charge on all immovable properties of the copper division both present and future ranking pari-passu and hypothecation on all the assets of copper division both present and future, (repayable within one year Rs. 45 million)	9995.000
E. Rupee Term Loans from Financial Institutions : Rupee Term loans from Financial Institutions are secured by joint equitable mortgage/hypothecation of all properties (save & except book debts) of the Copper Business of the Company, both present & future, ranking paripassu inter-se, subject to prior charges created in favour of the Company's Bankers on specified movable assets for securing the borrowings for the working capital facilities and Hirakud Power assets (repayable within one year Rs. 0.34 million)	1.340
F. Foreign Currency Term Loans from Banks : USD 12.5 million loan is secured by first charge on the movable properties, both present and future, located at the Taloja and Kalwa plants. The JPY loan equivalent to USD 50 million is secured by first charge on the immovable properties of the Dahej plant ranking pari-passu with the other charge holders and hypothecation of movable properties both present and future of the Dahej plant ranking pari-passu. (repayable within one year US $ 12.50 million)	2885.370
G. Foreign Currency Term Loans from Financial Institutions : Deffered payment Guarantee of the Bank is secured by first charge on all immovable properties of the Copper Business, both present and future, ranking pari-passu with other charge holders, (repayable within one year US $ 2.24 million)	200.140
Total	28480.470

Unsecured Loans

(Rs. in millions)

Particulars	31.032006
Employees' and other Deposits Rupee Loans from Banks Foreign Currency Loans from Banks Foreign Currency Loans from Financial Institutions Buyers' Credit Sales Tax Deferral	261.490 150.000 6016.760 0.000 13908.840 216.820
Total	20553.910

Banking Relations :	Good
Auditors :	² Singhi & Company Chartered Accountants Kolkata, West Bengal Cost Auditors ² R Nanabhoy & Company Cost Accountants Mumbai, Maharashtra, India
Associates :	Ø Grasim Industries Limited Ø Indian Rayon & Industries Limited Ø Mangalore Refinery & Petrochemicals Limited Ø Birla Power Supply Company Limited Ø Birla Project Development Company Limited Ø Bihar Caustic & Chemicals Limited Ø Birla Sun-Life Joint Ventures Ø Birla Global Finance Ø Bina Power Supply Company Limited Ø Rosa Power Supply Company Limited Ø HGI Industries Limited Ø Eastern Spinning Mills Limited Ø Shree Digvijay Cement Limited Ø Kerala Spinners Limited Ø Essel Mining Ø Tanfac Industries Limited Ø Birla AT & T Communications Limited Ø Birla Global Finance Limited Ø Birla Maroochydore Pty Limited Ø Birla Minerals Resources Pty Limited Ø Birla Capital International AMC Limited Ø Birla Management Corporation Limited Ø Birla Telecom Limited Ø Rajashree Polyfil Ø Thai Rayon, Thailand Ø Indo Thai Synthetics, Thailand Ø Century Textiles, Thailand Ø Thai Acrylic Fibre, Thailand Ø Thai Carbon Black, Thailand Ø Thai Polyphosphates, Thailand Ø Thai Epoxy, Thailand Ø Thai Peroxide, Thailand Ø Thai Organic Chemicals, Thailand Ø Indo Phil Textile Mills, Philippines Ø P T Indo Bharat Rayon, Indonesia Ø P T Elegant Textile Industry, Indonesia Ø PT Indo Liberty Textiles, Indonesia Ø Pan Century Edible Oils, Malaysia Ø Pan Century Rubber Products, Malaysia Ø Pan Century Oleochemicals, Malaysia Ø Alexandria Carbon Black, Egypt Ø AV Cell Inc., Canada Ø Learning Byte International, USA Ø Grasim - Dubai, UAE Ø LNG Ennore Project Ø Lucknow Finance Company Limited Subsidiaries: Ø Minerals & Minerals Limited Ø Renukeshwar Investments & Finance Limited Ø Renuka Investments & Finance Limited Ø Indian Aluminium Company Limited Ø Indal Exports Limited Ø Annapurna Foils Limited Ø Dahej Harbour and Infrastructure Limited

CAPITAL STRUCTURE

Authorised Capital :

No. of Shares	Type	Value	Amount
1450000000	Equity Shares	Rs. 1/- 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/-each	Rs. 50.000 millions
	Total		Rs. 1500.000 millions

Issued, Subscribed Capital :

No. of Shares	Type	Value	Amount
1159329501	Equity Shares	Rs. 1/-each	Rs. 1159.330 millions
	Total		Rs. 1159.330 millions

Paid-up Capital :

No. of Shares	Type	Value	Amount
927808470	Equity Shares	Rs. 1/-each	Rs. 927.810 millions
231521031	Equity Shares	Rs. 1/-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		31.03.2006	31.03.2005	31.03.2004
SHAREHOLDERS FUNDS
1] Share Capital		985.660	927.770	924.770
2] Reserves & Surplus		95076.860	75738.010	67654.230
NETWORTH		96062.520	76665.780	68579.000
LOAN FUNDS
1] Secured Loans		28480.470	29523.380	17259.350
2] Unsecured Loans		20553.910	8476.590	8386.550
TOTAL BORROWING		49034.38	37999.970	25645.900
DEFERRED TAX LIABILITIES		12333.590	11296.980	9951.350
TOTAL		157430.490	125962.730	104176.250
APPLICATION OF FUNDS
FIXED ASSETS [Net Block]		67828.000	56035.290	47402.150
Capital work-in-progress		8329.170	13229.810	4676.660
INVESTMENT		39713.110	37021.450	33772.050
CURRENT ASSETS, LOANS & ADVANCES
	Inventories	40950.880	23745.180	11913.430
	Sundry Debtors	12484.010	7873.670	5611.130
	Cash & Bank Balances	9172.850	4009.690	2313.780
	Other Current Assets	2447.340	422.220	0.000
	Loans & Advances	7972.410	8713.490	9245.010
Total Current Assets		73027.490	44764.250	29083.350
Less : CURRENT LIABILITIES & PROVISIONS
	Current Liabilities	21995.620	16782.950	8966.110
	Provisions	9531.660	8398.980	1791.850
Total Current Liabilities		31527.280	25181.930	10757.960
Net Current Assets		41500.210	19582.320	18325.390
MISCELLANEOUS EXPENSES		60.000	93.860	0.000
TOTAL		157430.490	125962.730	104176.250

PROFIT & LOSS ACCOUNT

PARTICULARS	31.03.2006	31.03.2005	31.03.2004
Sales Turnover [including other income]	116403.870	97932.960	65529.630
Profit/(Loss) Before Tax	21056.970	19041.830	12456.690
Provision for Taxation	4501.470	5748.260	4067.400
Profit/(Loss) After Tax	16555.500	13293.570	8389.290
Export Value	36432.660	26051.710	12950.970
Import Value	53698.950	38469.350	24177.960
Total Expenditure	95377.120	78800.100	53072.940

SUMMARISED RESULTS

Particulars	31.03.2007 (Full year)
Sales Turnover	183130.000
Other Income	3701.000
Total Income	186831.000
Total Expenditure	142980.000
Operating Profit	43851.000
Interest	2424.000
Gross Profit	4142.7.000
Depreciation	6381.000
Tax	9954.000
Reported PAT	25643.000
Dividend (%)	1700.000

KEY RATIOS

PARTICULARS	31.03.2006	31.03.2005	31.03.2004
Debt Equity Ratio	0.50	0.44	0.38
Long Term Debt Equity Ratio	0.48	0.42	0.28
Current Ratio	1.40	1.24	1.12
TURNOVER RATIOS
Fixed Assets	1.27	1.33	1.07
Inventory	3.77	5.77	5.98
Debtors	11.99	15.27	11.70
Interest Cover Ratio	10.35	12.20	8.71
Operating Profit Margin (%)	23.34	24.65	26.28
Profit Before Interest and Tax Margin (%)	19.10	20.15	21.44
Cash Profit Margin (%)	17.80	17.41	17.62
Adjusted Net Profit Margin (%)	13.57	12.91	12.78
Return on Capital Employed (%)	17.96	19.87	15.63
Return on Net Worth (%)	19.17	18.31	12.86

STOCK PRICES

Face Value	Rs. 100.00/-
High	Rs. 168.95
Low	Rs. 166.25

LOCAL AGENCY FURTHER INFORMATION

History:

The company was incorporated on 15.12.1958 at Mumbai in Maharashtra having Company Registration Number 11238.

Indal’s strength in alumina and downstream products would ideally dovetail with Hindalco’s strong presence in metal. It is also among the world’s lowest cost aluminium producers. Company has recently acquired from Alcan Aluminium around 38.84 millions shares of Indian Aluminium Company.

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 9^th pot line with an installed capacity of 33000 TPA was commissioned in September 2001. The 10^th Pot line and 11^th 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.

OVERVIEW: 

Their Company has recorded yet another year of impressive performance with highest-ever top and bottom lines. Net Sales and Operating Revenues reached Rs.113965 million and net profit was Rs.16556 million.

The Aluminium business delivered outstanding results with all-encompassing growth. Business revenues grew on the back of higher prices on the LME, expanded volumes from better asset utilization and optimal load distribution, coupled with an increased share of value added products. Cost pressures on account of input price escalation were contained in some measure through cost reduction programmes initiated earlier.  

The copper business faced the toughest year ever in its nine year history, despite TC/RC (Treatment Charges/Refining Charges) recording an improvement. Production shortfalls arising from operational issues along with huge backwardation prevailing in the market gave rise to challenging operating conditions. On the positive side, the Company's export performance yielded significant benefits through Target Plus scheme initiated by the Government for encouraging exports. 

The basic and diluted Earnings per Share (EPS) increased by 25% from Rs.13.5 per share to Rs.16.8 per share. 

The Company has made significant progress in the implementation of its growth strategy. Brownfield projects are on track and site work on Greenfield Projects has gained momentum with the emphasis being on securing rights to mineral resources and land. 

STRATEGIC INITIATIVES: 

Enhancing Value Added Products Capability:

To enhance focus on Value Added Products (VAP), the Company has acquired a 30,000 tpa Aluminium Rolling Mill and a 14,400 tpa Conductor Rod plant at Mouda near Nagpur, belonging to Pennar Aluminium Company Limited. These assets were purchased from the Asset Reconstruction Company (India) Limited under the Securitization and Reconstruction of Financial Assets and Enforcement of Security, Act, 2002. The move will enhance the flat rolled products capacity to 200,000 tpa taking the effective VAP capacity to more than 60% of the operating primary metal capacity. From 10 March 2006, the rolling plant is operating as one of the Company's units. 

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 raised A$299 million through issue of 154 million equity shares priced at A$1.95 per share. While this represents 49% of the post issue share capital of the Company, Hindalco continues to hold 159mn shares or 51% of the share capital following the offer and has entered into a voluntary escrow arrangement in respect of its shares. The proceeds from the offer will be used primarily to repay debt and provide financial resources to pursue growth opportunities. ABML has a number of attractive options to grow the core mining business, with development and exploration potential near the existing operations. It may also screen selective acquisition opportunities. The shares commenced trading on the Australian Stock Exchange (ASX) from 12th May, 2006 at a significant premium to the issue price.

Major Cost Reduction Initiatives:

With the commissioning of the 100MW captive power unit at Hirakud, Orissa in April, 2005 and the output from the unit having been stabilized to full capacity in June 2005, there has been a very significant cost saving as grid power dependence has been eliminated by generating power from captive coal. 

BUSINESS PERFORMANCE REVIEW: 

As stated earlier, the Company has recorded its best ever performance during the fiscal 2005-06. A snapshot is provided below: 

Aluminium Copper Unallocable Total Rs. Mn Share Rs. Mn Share Rs. Mn

Net Sales & Operating 60,423 53.0% 53,542 47.0% - 113,965Revenue EBIT 21,281 91.3% 193 0.8% 1,834 23,308EBIT Margins (%) 35.2% - 0.4% - - 20.4%Capital Employed 65,792 41.8% 50,738 32.2% 40,840 157,370ROCE (%) 32.3% 0.4% - 14.8% 

Aluminium Business:

The Aluminium business demonstrated a stellar performance with:

Ø Highest ever Alumina and Primary Aluminium production with over 100% capacity utilization at all operating units. 

Ø Highest ever turnover and business profit 

Ø Highest ever EBITDA margins at 47.0% 

Operational Review: 

Ø Products Net Sales (Rs. Mn) Sales Volumes (MT) FY06 FY05 FY06 FY05

Ø Hydrate and Alumina (Standard 8,007 5,696 388,646 322,828Metallurgical & Specials)

Ø Aluminium Ingots/Billets 14,480 14,375 146,785 158,518

Ø Redraw Rods 7,045 5,908 67,895 62,841 

Ø Rolled Products 18,603 16,380 151,568 144,158 

Ø Extruded Products 4,102 3,379 32,181 28,453

Ø Aluminium Foil 4,847 4,543 26,003 26,004 

Ø 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 MT. Third party sales volumes expanded by 20.4% while realisations rose 16.8% resulting in Rs. 8,007 million in revenues, 40.6% higher than the previous year. 

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 (ie 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 commercialise 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. 

Aluminium Outlook:

Global Industry Outlook:

Global Primary Aluminium demand is estimated to have grown by 5.3% to 32 million tones in CY05. The key contributor to this growth has been the Asian region accounting for 77% of total consumption, 2/3rds of which emanated out of the Chinese growth story. Going forward, the demand is expected to stay strong.

Demand in the Western world is expected to be modest during CY06.

China is expected to remain the driver of aluminium demand world over. Rapidly increasing semi-fabricated products capacity is adding to primary metal demand. From end-use perspective, the Chinese manufacturing sector is growing at a robust pace, driven by continued investments in industries. In the transportation sector, the automobiles segment is witnessing strong growth, with domestic consumer demand increasing at a healthy pace. There is substantial growth forecast for infrastructure development like rail network extension and container production. Although the construction sector is believed to be slowing down, the absolute demand continues to be strong. Chinese aluminium consumption is anticipated to intensify by over 12% during CY06.

Primary Aluminium consumption in the rest of Asia is growing at a robust pace on the back of strong activity in end-use markets. Automobiles output combined with the industrial machinery, and white goods are exhibiting strong growth trends. Demand is expected to continue upward at a healthy pace of 14% in CY06 as activity in these markets is expected to remain strong.

Domestic Industry Outlook:

Domestic aluminium consumption has been witnessing strong growth spurred by investments and industrial growth. The outlook for future demand remains upbeat as economic activity in key aluminium consuming sectors continue to be fast paced.

The electrical sector demand growing at 23% during FY06 will provide a major push. Aluminium consumption will get a further boost from the mega power projects as well as the initiatives announced by the Government in the budget for rural electrification. There is substantial investment needed in the sector to meet the country's current and projected future power requirement which bodes well for aluminium demand.  

Aluminium consumption in transportation segment expanded at an even higher rate of 32%. Rapidly increasing household income has provided a significant lift to the passenger vehicles segment growing at around 20% in the last couple of years. Reduction in excise duty on small cars in the Union Budget 2006-07 is likely to further enhance growth. Improvement in road infrastructure and increasing economic activity bodes well for commercial vehicles demand. The strong growth of the Indian automobile industry is backed by a vibrant auto component sector which is emerging as a hub for global manufacturing. Exports of auto components from India have clocked a growth rate of 33% in the last 3 years, owing to a huge increase in sourcing of auto components from India by several developed countries. Experts project US $25 billion of value-realization from India's auto components exports by 2015. This has significant potential for domestic aluminium consumption.

The Building and Construction sector has been witnessing an unprecedented growth all over the country. The broad based economic growth has resulted in rapid urbanization and development of smaller towns. This along with strong business sentiment is boosting demand for commercial properties. Experts forecast a shortfall of 19 million houses every year, which can lead to a substantial demand creation for aluminium products.

Growing consumer demand has led to swift growth in Consumer durables and packaging sectors. These possess significant potential for future aluminium consumption.

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 India's significant mineral potential. The large deposits of coal and high quality bauxite possess enormous potential for low cost aluminium production. To exploit these competitive advantages, the Company is pursuing an aggressive growth strategy through various brownfield and greenfield opportunities in Aluminium. Brownfield Expansions: 

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 Belgaum from 350,000 tpa to 650,000 are awaiting government approvals relating to bauxite mines.

Greenfield Projects: 

Greenfield projects have also made significant progress. Utkal Alumina, the 1-1.5 million tpa alumina refining project in a JV with Alcan Inc., is progressing well, with completion of 66% of land acquisition and transfer of ownership for the balance 34% in progress. Phase I of the government approved rehabilitation and resettlement package has been completed with 100 houses built and possession handed to the displaced families. Basic infrastructure work on roads, bridges and accommodation is advancing well with the approach road from the nearest town getting completed. Detailed engineering contract for the project has been awarded and the project is slated to go on-stream as per plan. 

The Company's integrated aluminium project, Aditya Aluminium, encompassing 1-1.5 million tpa alumina refinery, 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 Gujarat during the first week of July resulted in flooding of the plant as well as the neighboring areas. Road transportation was cut off resulting in serious dislocations in the movement of essential inputs and personnel not getting access to the site.

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 is 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.

Operational Review:

In spite of lower production, sales tonnage improved marginally from 214,376 MT to 215,392 MT during the year. Revenues rose 25% from Rs.42712 million to Rs.53542 million, largely on account of the high copper prices on the LME.

The Company faced stiff competition from imports, leading to a drop in the domestic market share at 33% vis-a-vis 41% during last year. A number of steps have been initiated to regain their market share, including allowing pricing options to customers, and intensifying focus on quality, dispatch and service.

Sulphuric Acid production declined marginally by 3.4% to 639,414 MT. The Company sold 10% extra Sulphuric acid as compared to last year after meeting captive consumption needs.

DAP & NPK fertilizer production was lower by 24% from 286,264 MT to 218,199 MT. Sales tonnage was lower by 28.2% from 302,436 MT to 217,176 MT which resulted in a lower market share of 6.4% as compared to 10% a year earlier. However, the Company has already worked out a strategic plan to strengthen its 'Birla Balwan' brand to recoup lost market share.

The Copper Concentrate supply was with higher precious metals content. Gold production was higher by 30% at 6,715 Kgs while Silver output declined 4% from 36,595 Kgs to 35,076 Kgs. Sales volumes for Gold rose to 6,740 Kg from 5,300 Kg while realisations improved by 11% to Rs.6,700/gm. Silver realizations moved parallely, rising from Rs.101/gm to Rs.112/gm.

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 North America and European regions return to markets after having run down their inventories.

Importantly, Asia would continue to be the strongest growth driver for Copper demand. Chinese industrial Hindalco's Birla Balwan, the branded fertilizer commands a strong market position in India's agricultural sector growth continues to remain robust adding to the demand for copper wires and cables, which account for more than 60% of the country's copper demand. The Japanese market is displaying healthy signs of recovery as demand for consumer electronics (televisions, cameras, mobile phones etc,) is picking up. Construction activity is also adding to wiring and air conditioning requirement. East & South East Asian demand is expected to shore up on the back of increased production of automobiles, air conditioners and consumer electronics.

Overall, refined copper demand is slated to rise at a modest pace of around 5% in CY06, with Asia being thefastest growing region

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 China. 

Business Outlook for Hindalco: 

The Company is poised for a strong growth in the copper business as production from its smelters normalizes. The focus continues to be on the three pronged strategy adopted earlier, i.e.,

Sweating assets to increase productivity and lower costs.

Capitalizing on the strength of Aditya Birla Minerals Limited (ABML) to obtain uninterrupted supplies of concentrate from own copper mining assets to meet a part of their requirement.

Strengthening the mining portfolio through development, acquisitions and other innovative arrangements like price sharing contracts to secure concentrate supplies.

The Company expects to derive significant value from the Copper business as it comes out of operational difficulties and delivers strong performance based on its intrinsic core strengths. 

Net Sales & Operating Revenues:

Net Sales and Operating Revenues for the year 2005-06 increased by 19.7% YoY on the back of higher Aluminium volume, increased VAP tonnage and buoyant prices for both the metals on LME. The increase in revenue has not been proportional to the rise in metal prices due to appreciation in domestic currency and lower import duties.

The Company accounted for Rs.861.25 million and Rs.1038.08 million being benefit under Target Plus Scheme accrued in relation to exports made during previous year and current year.

Other Income:

Other Income at Rs.2439 Million was lower by 9.7% from Rs.2700 million during FY05 largely due to higher non-recurring interest income on income tax refund during the previous year. However, recurring income was higher due to increased post tax yield on treasury investments as compared to previous year.  

Profit: 

Net Profit increased 24.5% to Rs.16556 million. Cash Profit increased from Rs.17,927 million to Rs.21,767 million. 

Sources of Cash:

Cash from operations:

Strong margins backed by higher realizations for Aluminium along with enhanced share of VAP added to operating profitability significantly. This resulted in the cash profit rising by 21.4% as compared to the last year. Rising Copper prices resulted in greater working capital requirement for inventories causing cash flow from operations to be significantly lower as compared to last year.

Non-operating income:

Cash from non-operating income also decreased to Rs.1523 million as compared to Rs.2061 million a year earlier. The decline is in line with the 9.7% decrease in Other Income.

Net debt inflows: 

The Company has contracted further ten year loans totaling to Rs.15000 million for its expansion projects announced in the last fiscal. With this, the total loans tied up by the company amounted to Rs.64500 million, out of which, the company drew down Rs.5000 million in the financial year under consideration. The debt inflows for the year, net of repayments, were Rs.10869 million. 

Investment in Subsidiaries:

Aggregate investments, including Loans & Advances to Subsidiaries, amounted to Rs.1634 million. The company infused Rs.924 million by way equity into its subsidiaries. These include Rs.538 million invested in ABML and Rs.394 million in Utkal Alumina International Limited. The Company terminated the joint venture agreement with Tanfac Industries Limited. for Aluminium Fluoride in view of the captive capacity at Dahej. Major loans advanced during the year include Rs.455 million to ABML and Rs.130 million to Bihar Caustic & Chemical Limited. 

CONCLUSION: 

The Company has recorded a strong performance despite the challenging conditions in Copper business posed by the falling tariffs as well as production related issues. The success of its cost optimization initiatives at its power plant in Hirakud as well as higher price realizations is evident from the higher operating margins that the Company has achieved. 

Going forward, the Company will deliver impressively from both of its businesses. The higher volumes from the brownfield expansions and acquired downstream assets in aluminium coupled with expectations of better price realizations will help maintain the strong performance of the aluminium business. Increased production from the copper smelters, along with resultant efficiencies as well as benefits from higher Tc/Rc during the year, should translate to significant improvement in profitability and capital output.  

The Company has also made good progress on the strategic growth projects that will propel it into the league of global majors. Efforts towards obtaining relevant approvals for the expansions are moving at a fast pace. There have been significant developments during the year towards meeting the funding objectives for the same. The strong balance sheet, prudent financial practices as well as expectations of improved operations give the confidence that the Company will be able to economically finance its strong growth plans. On the whole the Company is poised to deliver superior value to its stakeholders on a continuing basis. 

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 (India) Limited (ARCIL) on 'as is where is and as is what is' basis. The assets include a 30,000 tpa Aluminium Rolling Mill and a 14,400 ktpa Conductor Rod complex at Nagpur. The Directors are pleased to inform you that production in Rolling Mill has commenced and its performance is in line with expectations.

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 Australia, with the largest pure copper stock on ASX. The total issue size is A $ 299 million, based on a price of A$ 1.95 per share. The issue opened on April 27, 2006 and is scheduled to close on May 10, 2006.

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 greenfield growth opportunities in Aluminium.  

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 Belgaum are on hold, awaiting government approvals relating to bauxite mines.

Greenfield Projects:

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 6th August, 2005 and is effective from 6th September, 2005. 

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 has 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 February 15, 2006. Trading of the new partly paid shares commenced on the stock exchanges (BSE and NSE) on February 22, 2006. (BSE Code: 890120, NSE Code: HINDALC0 Market Type: E1)

OPERATIONAL PERFORMANCE:

The company has reported a stellar performance for the year under review. The aluminium business continued to post an impressive performance. Strong demand, firm prices and an enriched product mix have led to higher realizations. The aluminium and alumina capacity utilization levels remained high throughout the year. The captive power plant commissioned at Hirakud, pared power costs to less than half. Volumes growth from high utilization levels, operational efficiencies and strong aluminium prices bolstered profitability. 

The copper division faced the toughest year ever in its nine year history, despite TC/RC (Treatment Charges/Refining Charges) margins recording an improvement. Maintenance shutdowns, refractory stabilization issues and a minor accident at the plant impaired the Dahej smelter's performance. This resulted in a production shortfall which in turn coupled with high backwardation prevailing throughout the year affected profitability adversely.

The Chairman's letter to shareholders and the Management's Discussion & Analysis, which forms 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 31.03.2006 31.03.2005

Net Sales and Operating Revenues 113,965 95,231Profit before Extraordinary Items and Tax 21,02719,133 Extraordinary Items 30 (91)Profit Before Tax 21,057 19,042 Provision for Current Tax 3,241 5,705Provision for Deferred Tax 1,160 759Provision for Fringe Benefits Tax 100 -Provision for Deferred Tax for earlier years - (716) written back Net Profit 16,556 13,294 Appropriations :Transfer to Debenture Redemption Reserve 751 960 Proposed Dividend 2,168 1,856 Tax on Proposed Dividend 304 264Transfer to General Reserve 14,395 10,614.

FINANCING: 

In March, 2005 the Company had tied up a syndicated 10 year Secured Rupee Term Loan facility with domestic banks for an amount of Rs.49500 Million at a spread of 65 basis points over the 5 year sovereign paper. On 27.01.2006 yet another Secured Rupee Term Loan agreement was entered into with a consortium of domestic banks for Rs.15000 Million borrowing at similar terms and pricing. These loans have been tied up to finance expansion plans.  

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.

It was yet another landmark year for the Company as aggregate revenues and net profits reached a new high of Rs.95233 million and Rs.13,294 million respectively. The results reflect an impressive growth, even if adjusted for the impact of the business units, demerged from Indal, their subsidiary, during the year. 

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. 

Generic Names of the Principal Products / Services of Company are as under:

Item Code No. (ITC Code)	Product Description
7601	Aluminium Ingots
7606	Aluminium Rolled Products
7605	Aluminium Redraw Rods
740311	Copper Cathodes
740710	Continuous Cast Copper Rods

The company's foil and an aluminium alloy wheel plant at Silvassa, which has helped the company to optimise capacity, and enhance the share of value-added semi-fabricated products.

Awards & recognition

Subject was adjudged the worldwide Runner-up for the "Millenium Business Award for Environmental Achievement" under the auspices of the United Nations Environment Programme.

Subject has been categorised 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:

Ø Air Control & Chemical Engineering Company Limited

Ø Alba Security Systems Private Limited

Ø Brassomatic Private Limited

Ø BVM Compresor Spares Syndicate

Ø Grip Engineers Private Limited

Ø Webb India Private Limited

It has technical and financial collaboration with Kaiser Engineering Corporation, USA.

The company has joint venture with Bihar Caustic and Tanfac Industries Limited.

The company has been accredited with ISO 14000 and ISO 9002 certification.

The company’s fixed assets of important value include Mining Rights, Land & Site Development, Buildings (Factory & Non-Factory), Plant, Machinery & Equipment, Aerial Ropeways, Construction & Mobile Equipments, Vehicles & Aircraft, Railways Sidings, Furniture, Fixtures, Air-conditioners, Office Equipments, Computers, Fire Fighting Equipments, Live Stock and Roads & Drainage.

Memberships:

Confederation of Indian Industry

PRESS RELEASE

1 November 2006

Hindalco in a joint venture with Almex USA Inc.

Hindalco today entered into a joint venture partnership with Almex USA Inc., for the manufacture of high strength aluminium alloys for applications in the aerospace, sporting goods and surface transport industries.

The joint venture is to be named Hindalco-Almex Aerospace Limited. Hindalco has 70 per cent equity participation, with Almex holding the balance 30 per cent in the JV.

Says Mr. Kumar Mangalam Birla, "In line with their growth aspirations, we are aggressively ramping up their portfolio of value-added products. Getting into high-strength alloys is a part of their strategic growth initiative. Today, 60 per cent of their products are value-added and we expect to scale this up, going forward".

Avers Mr. Debu Bhattacharya, Managing Director, Hindalco, "This is a great opportunity for Hindalco at a time when the aviation industry is slated to be on an upswing. Its foray in this segment catapults Hindalco into a different league, joining as it does an exclusive band of global players in this high technology sector."

A high proportion of the new company's output will be marketed overseas. India currently has small demand for high strength aluminium alloys but over time this demand is likely to grow as well, as India's aerospace sector takes off.

The joint venture envisages a capital outlay of Rs.1550 millions at a production level of 46,000 tones. This volume is likely to be reached in phases over three to four years. Production is expected to commence in the first quarter of 2008.

The joint venture's registered office will be in Maharashtra. The location of the manufacturing facility is under finalization.

Almex is a renowned technology supplier and equipment manufacturing company based in Los Angeles, California. Hindalco is India's leading non ferrous metals company, with a turnover of over Rs.113965 millions and net income of Rs.16556 millions in the financial year 2005-06.

BHEL bags Rs.800 millions order from Hindalco, Their Bureau

New Delhi, September 5

BHARAT Heavy Electricals Limited (BHEL), the premier power equipment major, has bagged a contract from Hindalco Industries Limited for the manufacture and supply of an environment-friendly cogeneration plant. The 41-MW plant is to be set up by BHEL for meeting the captive power and steam requirements of Hindalco.

Valued at nearly Rs.800 millions, Hindalco has placed this repeat order on BHEL to enhance the capacity of its captive cogeneration power plant at Renukoot in Sonebhadra district of Uttar Pradesh. The project is to be commissioned by BHEL within a tight schedule of 20 months.

According to a BHEL press release here, the company had supplied and commissioned generating equipment for the existing 37-MW cogeneration power plant at the same complex. The plant has been in commercial operation for the last five years.

14 April 2005

Prime Minister, Dr. Manmohan Singh, inaugurates Eternal Gandhi multimedia museum at Gandhi Smriti Indian Prime Minister Dr. Manmohan Singh today inaugurated the innovative Eternal Gandhi multimedia Exhibition at Gandhi Smriti on Tees January Marg, New Delhi.

The exhibition sprawling over 8000 sq. ft., has been put up by the Aditya Birla Group as a tribute to the humanitarian values that the Mahatma epitomized, and to help percolate these to the young across the nation.

Addressing the distinguished gathering among who were Mr. Jaipal Reddy, Minister of Culture, Information & Broadcasting; Mrs. Shiela Dixit, Chief Minister of Delhi; Mrs. Rajashree Birla and Dr. Kumar Mangalam Birla, the Prime Minister appreciated this initiative to take the message of the Mahatma in such a novel manner. He believed that an exhibition of this kind would stoke an even greater interest in the Father of the Nation, not only in India but globally.

The exhibition opens under the aegis of the Gandhi Smriti and Darshan Samiti, of which the Prime Minister is the Chairman.

Dr. Savita Singh, Director, Gandhi Smriti and Darshan Samiti, remarked, "The idea to do something for propagating Gandhian thoughts and values, and the teachings of the Mahatma, is not new for Gandhi Smriti and Darshan Samiti. They have been deliberating amongst themselves and from time-to-time several steps have been taken and several thoughts have been pondered over. This eternal journey towards project Shashwat Gandhi has been one such historical moment when an idea came in the form of Smt. Rajashreeji Birla and her team from the Aditya Birla Group - to contribute to the never-ending journey of the Mahatma. Its culmination is this Eternal Gandhi multimedia exposition."

Mrs Rajashree Birla, Director, Aditya Birla Group, who has spearheaded this initiative, says that the exhibition, the brainchild of Dr. Kumar Mangalam Birla, was conceived to "pay homage to the Father of the Nation at one level. At another level, for quite some time, all of us in the Birla family, who have been deeply influenced by the humane values that Gandhiji and Shri G D Birla espoused, felt a compelling need to present these in a contemporary fashion to the youth and the children of today. To give them a sense of history, to help them realize at what cost they won their freedom, to give them a feel of their leaders, of their nation in its making - they believe is worthwhile. Most importantly, to take the message of shanty - peace, of satya - truth, of ahimsa - nonviolence, ekta - the universality of mankind, in today's day and age".

"To rediscover these truths that the Mahatma lived by, they thought they should take them as voyagers on an energizing and revealing journey that could touch them in a sublimal way - and embed his life's message in their psyche. This has been their endeavour. To do so, they have created a technological marvel, admirably conceptualized and executed by Mr. Ranjit Makkuni, a renowned computer and multimedia expert," remarked Mrs Birla.

The entire walk through the exhibition serves as a stimulus, even a resurgence into Gandhism and is undeniably a serendipitous experience. It can be a guiding light for this generation and for all generations to come, given its potential to ignite the minds of the young and spark in them an unquenchable thirst for truth, for values, for compassion, avers Mrs. Birla.

Mr. Ranjit Makkuni, the Project Director, informed that the Eternal Gandhi Multimedia Exhibition is one of the world's first digital multimedia exhibitions made possible through the commitment of the Aditya Birla Group and the government to propogate Gandhism.

"The project presents a language of physical interface actions derived from classical symbols of the spinning wheel, turning of the prayer wheels, touching symbolic pillars, the act of hands touching sacred objects, collaboratively constructed quilts, sacred chanting in the collective group, the satsanga and the touching and rotating of prayer beads. These tradition-based interactions inspire a rich panorama of tactile interfaces that allow people to access the multimedia imagery and multidimensional mind of Gandhiji," said Mr. Makunni.

The technology developed does not 'merely scan' Gandhian images. It extrapolates Gandhian ideals to newer domains of information technology and product design, and at higher levels, the creation of meaning in a globalised world. For example, the Gandhian commitment to hand-based production and its symbiotic relationship with nature is interpreted in the context of modern culture-conscious design, commented Mr. Makkuni.

The contributions of the spectrum of artists, spanning wide geographic boundaries and disciplines, illustrate the universal resonance in Gandhian messages. Computer scientists, modern designers, mosaic makers, craftsmen, artists and wood carvers offer their work as a dedicated prayer, in remembrance of the Gandhian vision; a collective Likita Japa, the endless remembrance of the Divine through repetition of the written mantra. Each object in the exhibition, whether a pixel of light, a bit-map on the screen, an animation, a circuit or a handcrafted object, is a living prayer. Here lies the reaffirmation of the Gandhian view, a commitment to the dignity of hands, the healing of divides, the leveraging of village creativity and cultural diversity in the face of homogenization, concluded Mrs. Birla.

The exhibition is now open to the public who can visit between 10.00 am. and 5.00 pm. on all days barring Monday.

Aditya Birla Group to set up a world-class aluminium project in Orissa

Hindalco Industries Limited, the Aditya Birla Group's flagship company, today entered into a Memorandum of Understanding (MoU) with the government of Orissa to set up a world-class aluminium complex in Orissa.

This integrated aluminium project will comprise an alumina refinery of one million metric tonnes per annum, an aluminium smelter plant of 2,60,000 tones per annum, a captive power plant of 650 MW and bauxite mines of three million tonnes annual capacity, at a project cost of about Rs.11,0000 millions.

Dr. Kumar Mangalam Birla, Chairman of the Aditya Birla Group and the Honorable Chief Minister of Orissa, Shri Naveen Patnaik, were present at the signing ceremony in Bhubaneswar. Dr. Birla said that this MoU with the government of Orissa marks a key milestone, creating a very strong global growth platform for the company's aluminium business. This project also positions Orissa on the world map in the metals sector.

He expressed his deep appreciation to the entire Orissa government apparatus, which, under the visionary leadership of the Honourable Chief Minister, Shri Patnaik, helped facilitate the project.

Hindalco poised for greater growth in revenues and earnings

Addressing shareholders at Hindalco's 46th AGM, Dr. Kumar Mangalam Birla said the long- term fundamentals of both aluminium and copper are strong and promise exciting growth prospects going forward.

Briefing them on the company's performance in 2004-05, he characterized it as an eventful year for the non-ferrous metals industry, and for Hindalco as well. Hindalco has posted a splendid performance recording the highest ever net profit of Rs.13290 millions and an excellent turnover of Rs.9,5230 millions.

Dr. Birla stated that for this fiscal too, Hindalco's topline and bottomline growth would move upwards.

Hindalco has declared a dividend of Rs.20 per share. The payout on this account — Rs.2120 millions, which is 16 per cent of net profit inclusive of the corporate dividend tax.

On the major developments in Hindalco, Dr. Birla stated that the copper smelter capacity at Dahej has been doubled from 250,000 tpa to 500,000 tpa. "Commissioning trials are well ahead of schedule. Commercial production will roll on soon. Once stabilised, this expansion will catapult Hindalco to the position of the world's largest single location custom copper smelter and amongst the top ten copper producers of the world. More importantly, it brings Hindalco closer to its goal of being among the top 15 per cent of the globally cost-efficient copper producers."

Spelling out Hindalco's plans for moving forward, Dr. Birla stated that the company would aggressively pursue both the organic and inorganic routes. Elaborating, he said:

The project to raise alumina capacity at Hindalco's Muri plant from 110,000 tpa to 450,000 tpa is likely to be commissioned by the third quarter of FY 2006.

The proposal for capacity enhancement at Belgaum from 350,000 tpa to 650,000 tpa is under evaluation.

Significantly raising high value special alumina capacity from its existing level of 91,000 tpa is on the cards.

The Hirakud smelter metal capacity is being enhanced from 65,000 tpa to 146,000 tpa, while power generation capacity will increase from 67.5 MW to 317.5 MW in a phased manner.

On the Utkal alumina project, Dr. Birla confirmed that mining leases for bauxite reserves of over 195 million tonnes are in place. The land for mining has been acquired. The site development work has begun. The project is expected to gain further momentum in the coming fiscal.

Moving over to the greenfield opportunities, he apprised shareholders on the MoUs entered into with the Orissa government to set up a world-class aluminium complex and the Jharkhand government for a greenfield aluminium smelter in the state. The projects are subject to receiving the necessary approvals, land and other infrastructural support from the respective governments, he averred. "Once commissioned, these projects will position Hindalco in the league of the top ten global players — marking a milestone in their goal of making Hindalco a global non-ferrous metals powerhouse," commented Dr. Birla.

Highlighting Hindalco's roadmap for forging ahead, Dr. Birla remarked that it is based on a multi-pronged strategy that rests on:

Raising its cost competitiveness through further efficiency improvements and optimal asset sweating.

Leveraging the Hindalco-Indal combine in the market place, riding on the complementary nature of their product capacities and offerings, brand equity and customer reach.

Exploring opportunities for value-added growth to take advantage of the exciting long term potential in the country.

Likewise on the growth strategy in copper, the thrust is:

Focus on attaining global cost competitiveness. Doubling the smelter capacity to 500,000 tpa would help Hindalco reach there.

On strengthening presence in exports while retaining its leadership in the domestic market. Capitalizing on its coastal advantages and captive jetty, the company intends entrenching further into the profitable markets of South East Asia and the Middle East. The huge demand-supply gap in the region, as well as improved availability of low cost metal from the expanded capacity, will be exploited optimally.

Acquiring new mines to secure concentrate supplies in a tight market situation besides tapping the copper value chain optimally.

The company is optimistic about its future.

29 July 2005

Hindalco delivers stellar Q1 FY06 performance

Turnover	Rs.2,2080 millions	^7.1%
PBDIT	Rs.6380 millions	^24.5%
Net profit	Rs.3250 millions	^37.9%
EPS (for the quarter)	Rs.35

Hindalco, the metals major and a flagship company of the Aditya Birla Group, has posted a stellar performance for the first quarter ended on 30 June 2005. The company's net profit surged to Rs.3249 millions from Rs.2356 millions recording a 38 per cent jump. Revenues, at Rs.22078 millions, have moved up 7 per cent YOY from Rs.2,0616 millions. EBITDA margins improved significantly at 28.9 per cent vis-à-vis 24.9 per cent achieved in the same period during the previous fiscal.

The aluminium business accounted for Rs. 13406 millions of the total operating revenues, marking a 15.5 per cent rise over the corresponding quarter. Higher volumes, enriched product mix and better realizations helped by buoyancy in the LME prices were the key growth enablers.

The copper business clocked revenues of Rs. 8677 millions vis-à-vis Rs.9033 millions reflecting a decline of 3.9 per cent, due to lower production volume in the quarter on account of planned and preventive shutdowns.

The business, however, achieved better operating efficiencies and added 200 basis points to the EBITDA margins that increased to 9.4 per cent from 7.2 per cent in the first quarter of the last year. This was accomplished inspite of a tariff cut, reduction in export incentives and increased input and energy costs.

Expansion programmes

Expansions in aluminium

The company commissioned the 100 mw power unit at Hirakud, Orissa in April 2005. Subsequently, the output from the unit stabilised to full capacity in June 2005.

Brownfield expansion in copper

In July 2005, the company's brownfield expansion, intended to raise its copper smelter capacity from 250,000 tpa to 500,000 tpa, was commissioned. When fully ramped up, it will position Birla Copper as the world's largest single location custom smelter.

Operational review

Aluminium

Aluminium production rose considerably, driven by de-bottlenecking of the expanded capacities at Renukoot and synergies from integrated Hindalco-Indal operations.

Alumina output grew by 15,032 mt and moved up to 300,055 mt. High value special alumina output increased 19.2 per cent from 26,982 mt to 32,168 mt.

Metal production jumped by 10.4 per cent reaching 106,081 mt from 96,095 mt.

Wire rods output increased by 3.8 per cent from 16,008 mt to 16,614 mt in Q1 this year.

Rolled products turnout of 47,110 mt shows an impressive increase of 11.7 per cent over the 42,181 mt in the same period during previous year.

Extrusions production was higher by 7 per cent at 7,627 mt vis-à-vis 7,130 mt.

Foils rollout at 6,084 mt declined by 6.7 per cent from 6,523 mt.

Alloy wheels turnout soared 62.6 per cent from 19,123 wheels to 31,087 wheels.

Power generated at the company's captive power plants surged 18.8 per cent YOY from 1,277 mu to 1,742 mu, aided by the recently commissioned 100 mw power unit at Hirakud, Orissa.

Copper

Copper production suffered during the quarter due to

Planned maintenance shutdown of copper smelter for eight days.

An 18 day shutdown of the copper smelter II for refractory relining.

Copper cathodes production stood at 42,714 mt vis-à-vis 48,218 mt in the same quarter of the last year.

The output of continuous cast copper rods was almost flat at 20,331 mt as compared to 21,200 mt.

Sulphuric acid production at 115,852 mt against 149,081 mt moved in line with the smelter output.

The production of DAP and complexes stood at 65,838 mt as compared to 67,844 mt in Q1 FY05.

The output of gold registered a small increase of 2.2 per cent from 1,201 kg last year to 1,228 kg in the first

quarter of the current fiscal.

Similarly, production of silver was slightly up from 8,024 kg to 8,031 kg in the current quarter.

The performance of the refractory in the converter of the second smelter needs improvement, which will be taken up in the second quarter.

The heavy rainfall in the state of Gujarat during the first week of July adversely impacted the copper plant.

The plant and the neighbouring areas were completely flooded and road transportation was cut off resulting in serious dislocation in the movement of essential inputs and personnel. The plant continued operation in a limited manner. These may affect performance in the second quarter.

Outlook

The company believes that both aluminium and copper segments are poised for growth.

Aluminium

Globally, aluminium demand is slated to grow at a stable rate of 4-5 per cent this year. This would be fuelled by end-use specific demand across regions. The centre piece of this growth story is Asia, which is expected to grow at 8-9 per cent for the year. Helped by increased semis production, China will remain the biggest growth contributor, to be followed by the South East Asian markets, which are forecast to grow by over 5 per cent in 2005.

World production is expected to adequately match the demand; however, regional imbalances provide attractive opportunities. Aluminium supplies have continued to lag behind the demand in Asia. The recent withdrawal of tax incentives by the Chinese authorities on tolling of alumina is expected to reduce China's export surplus significantly. The demand-supply gap in the region is thus expected to widen to 4.3 million tones in 2005 and touch 5.7 million tones by 2009.

Reflecting the positive outlook for the sector, LME prices are forecast to remain stable and move within the $1,700 to $1,900 band, over the next 12 to 18 months.

In so far as it relates to India, the growth prospects seem bright. The economy is on an upswing; and the company expects end-use segments like housing, construction, transportation and electrical sectors to provide the push. Additionally, India is also emerging as a global hub for automobiles and auto components manufacturing.

All these portend well for the business. The company expects the domestic aluminium consumption to grow by 7 to 8 per cent in FY06.

Copper :

In copper, continued demand from China and supply bottlenecks have helped prices to remain strong. Metal shortage may hold high prices in the near term before supply catches up in the next 6 to 12 months.

Tc/Rcs recovered smartly after hitting a new low in the first half of 2004. However, spot Tc/Rcs have since retraced from their highs of around 50c/lb to more sustainable levels of 27c/lb on the back of slowing mine output growth coupled with increasing utilization of refineries. They expect the Tc/Rcs to sustain at reasonable levels of 20 to 30c/lb in the near to medium term reflecting the demand-supply situation in the concentrate market.

The outlook for the domestic copper market is optimistic, with growth pegged at 4 to 5 per cent annually in the next few years. Signals from segments such as winding wires, power cables and the transformer sector are very encouraging. On a cautious note, non-value added imports from Sri Lanka under FTA continue to pose a significant challenge for domestic copper producers.

With increasing volumes and better realizations in the aluminium business and an improved outlook for the copper business in the second half as benefits of the brownfield expansions set in, the future looks promising for Hindalco on the whole.

Fund management

During the third quarter of the current fiscal, Hindalco raised Rs.1124 millions for general corporate purposes. This was by way of external commercial borrowing at an annualized rate of 5.74 per cent entailing bullet repayment at the end of five years.

Outlook

The Company continues to believe in the strong long-term fundamentals for both aluminium and copper. These throw up exciting growth opportunities in future.

The aluminium sector continues to perform well, with worldwide consumption growth at 8.6 per cent in 2004. The Indian aluminium market has grown by over 10 per cent in the first nine months of the financial year and prospects in the electrical, building and transportation sectors look good, indicating a second double digit growth year in a row for aluminium.

The worldwide consumption of copper grew at around 6.9 per cent in 2004 on the back of economic growth in USA and strong Chinese demand. Domestic consumption increased by 10 per cent as demand continued to be buoyant from user segments such as winding wire, power cables and transformers industry. An increased export of down stream products supported higher deemed export sales. However, non-value added imports from Sri Lanka under FTA continue to adversely impact the domestic sales of the Indian producers.

The premium on cathode has hardened and sustained period of buoyant copper prices is being forecast.

With the existing mines producing more and the reopening of small mines encouraged by strong copper prices and many smelters going for their annual maintenance shut down during the first half of 2005, the TCRC outlook appears to be positive.

The Company remains confident of reaping a rich harvest from its three-pronged strategy of vertical integration, thrust on branding and continued emphasis on value added products.

28 July 2006

Hindalco's Q1 FY 2006-2007 results

Hindalco posts outstanding performance for the first quarter Net sales and operating revenues rise 94 per cent EBITDA for the quarter increases 58 per cent Net profit grows 59 per cent to Rs.6015 million

Financial highlights

(In Rs. millions)	Quarter ended 30 June 2006	Quarter ended 30 June 2005	Change (per cent)
Net sales and operating revenue	4,2737	2,2071	94
Other income	776	335	132
EBDITA	1,011	638	58
Depreciation	1341	1169	15
Interest and finance charges	634	461	38
Profit before tax	8135	475	71
Provision for taxes	212	958	121
Net profit	6015	3792	59
EPS (basic and diluted)	61	39	58

Subject, the flagship company of the Aditya Birla Group, has reported excellent performance for the 1st quarter of the fiscal 2006-07.

Net sales and operating revenues grew by 94 per cent to Rs.4,2737 million as compared to Rs.2,207.1 crore. Net profit rose to Rs.6015 million reflecting a 59 per cent jump over Rs.3792 million in the corresponding period of previous year.

That despite the negative impact of Rs.520 million resulting from the reduction of target plus benefits due to the amendment of the EXIM policy, retrospectively from 1 April 2005, the company has posted impressive profits, is indeed commendable.

Of the total revenues of Rs.42737 million, aluminium business contributed Rs.16542 million and Rs.7125 million of profits.

A sharp increase in fuel oil, coal, pitch and bauxite costs exerted considerable pressure on margins. On the positive side, the company benefited from a decline in caustic soda prices. To counter cost pressures, the company has undertaken a slew of efficiency improvement programmes which are likely to yield results in the coming future.

In the copper business, revenues more than tripled to Rs.26217 million driven by elevated copper prices. The profits grew to Rs.978 million vis-à-vis Rs.529 million a year earlier.

Copper gained on account of higher Tc/Rc and expanded volumes, though sustained high energy prices continue to be a constraint. The business also faced high working capital requirement on account of rising copper prices.

Operational review

Aluminium

Alumina and Aluminium plants operated at above 100 per cent capacities. Production of value added products (VAP) increased by 10 per cent with rolled products, extrusions and foils rising by 9 per cent, 13 per cent and 10 per cent respectively. Alloy wheels rollout jumped 48 per cent.

	Units	Q1 FY07	Q1 FY06	Change (per cent)
Alumina	MT	299,188	299,018	-
Primary metal	MT	107,263	105,744	1
Wire rods	MT	17,034	16,617	2
Rolled products	MT	52,109	47,740	9
Extruded products	MT	8,639	7,671	13
Foils	MT	7,303	6,646	10
Wheels	Nos.	46,106	31,087	48
Power	MT	2,058	1,929	7

Copper

Copper smelter I operated at more than 85 per cent utilization level. Copper smelter II has shown a markedly improved response to the new refractory running approximately 150 per cent longer than the average. Copper smelter III took its 30-days scheduled shutdown in May 2006, and has since been ramping up progressively. Copper smelter II is undergoing a 25-days shutdown for refractory change.

Production volumes increased across all product segments, with copper cathodes and CC rods output rising 51 per cent and 34 per cent on YoY basis. Sulphuric acid production grew by 67 per cent over the corresponding period last quarter. Precious metals registered improved volumes.

Particulars	Units	Q1 FY07	Q1 FY06	Change (per cent)
Copper cathodes	MT	64,670	42,894	51
Continuous cast copper rods	MT	27,305	20,317	34
Sulphuric acid	MT	211,657	126,840	67
DAP and complexes	MT	72,502	65,908	10
Gold	Kg	2,712	1,228	121
Silver	Kg	9,523	8,031	19

Expansion projects

Muri

The brownfield expansion from 110,000 tpa to 450,000 tpa at Muri Alumina Refinery in the state of Jharkhand is at an advanced stage. It is expected to commence commissioning by the fourth quarter of FY07.

Hirakud

Phase I of the brownfield expansion at Hirakud Smelter from 65,000 tpa to 100,000 tpa and augmenting the power capacity from 167.5 mw to 267.5 mw, is on schedule. The commissioning of 164 pre-bake pots is likely to begin by the end of December 2006.

Phase II of the expansion of smelting capacity from 100,000 tpa to 146,000 tpa and the power generation capacity from 267.5 mw to 367.5 mw is moving smoothly. The project is slated to be commissioned by the end of December 2007.

Belgaum

For the expansion of alumina refining capacity at Belgaum, Karnataka from 350,000 tpa to 650,000 tpa the leases for bauxite mining are yet to be allotted.

Utkal

The 1.5 million tpa greenfield alumina refinery project in Orissa is on track. Preliminary work such as piling in the precipitation area of the proposed plant has begun. Phase II of the rehabilitation and resettlement plan for building 90 houses has commenced. The mining plan has been submitted to Indian Bureau of Mines, Bhubaneswar for scrutiny.

Aditya Aluminium

The greenfield integrated 1.5 million tpa alumina refining and 325,000 tpa aluminium smelting project in Orissa is on course. The land acquisition and the R&R package will be finalised shortly. Applications for various Government, Central and State clearances are at different stages of approval.

Mahan

The company has signed an MoU with the government of Madhya Pradesh, for setting up a 325,000 tpa aluminium smelter and a 750 mw power plant. To source coal for the power plant, the company has signed the shareholders' agreement with Essar Power (M.P.) Limited for a 50:50 joint venture — Mahan Coal Company Limited.

Jharkhand

Pursuant to the MoU signed in 2005 between Hindalco and the government of Jharkhand for a 325,000 tpa aluminium smelter and a 750 mw power plant in the state, the state government has made recommendations to the Ministry of Coal for the allotment of a coal block. The company has identified the site for the project; contour mapping and land selection is in progress. The requisite data has been gathered for the environmental impact assessment. The company is in the process of filing applications for various infrastructure requirements.

Industry outlook

Aluminium

Global aluminium consumption has witnessed strong demand growth of 7 per cent in the April-June 2006 quarter. Going forward, the demand is forecast to grow at 6.2 per cent on an average in 2006.

The growth momentum in China continues, leading to a 21 per cent increase in aluminium consumption. There is also a significant demand from East European countries, South Asia and some parts of Africa, where aluminium demand grew at 7 per cent collectively. The commercial transportation sector has been the strongest driver of aluminium in North America while selected construction markets and beverage can production provided support to the European demand for the metal.

Domestic aluminium consumption increased by 12.7 per cent on the back of robust growth in electrical, transportation and construction sectors. The increased thrust on infrastructure creation in the country is expected to propel domestic aluminium consumption growth.

The stock-consumption ratio at 6.6 weeks as indicated by the reported primary aluminium stocks also hints at sustained demand growth. Inventories continued to decline steadily as consumers took advantage of the correction in prices since May 2006.

Alumina prices have fallen more than 30 per cent in the past 3-4 months as production from China continued to rise. This poses a risk for aluminium prices by lowering the operating costs for several standalone smelters. The relatively high cost of the incremental supply is expected to provide sufficient support to aluminium prices going forward.

Copper
Copper prices have been extremely volatile over the past 3 months, with daily volatility almost doubling in comparison to the same period a year ago. This is largely the result of growing concerns about the global macro economic outlook affecting demand in the wake of high crude prices and uncertainties about mine supply.

The situation is further exacerbated by the low inventories scenario and continued large-scale activities of financial investors in the copper market.

Increasing capacity utilisation at smelters and fresh capacities coming online has constrained the concentrate market. The availability of supply from mines is expected to be tight and is already affecting spot Tc/Rc which have moderated to 16-17c/lb levels. For the next 1-2 years, Tc/Rc is likely to be under pressure in view of the global concentrate supply scenario

Company outlook

Hindalco's aluminium business is consistently creating value for its stakeholders, while copper business is also now positioned to contribute to this value creation process. The company will continue to exceed performance benchmarks, given its strong fundamentals.

23 May 2006

Hindalco to set up world-class aluminium smelter The new smelter to contribute significantly in Hindalco's global growth ambitions Project to cost Rs. 7,7000 million Direct employment for 4,000 people and indirect employment for 12,000 people Hindalco committed to sustainable development and upliftment of underserved communities Project to contribute Rs.5000 millions revenues to the exchequer The state of Madhya Pradesh is an attractive investment destination with a proactive government.

Hindalco, the Aditya Birla Group's flagship company, today entered into an MoU with the Madhya Pradesh government for a greenfield aluminium smelter in Siddhi district. Mr. O.P. Rawat, Principal Secretary- commerce, industry and employment, signed the MoU on behalf of the government, while Mr. D. Bhattacharya, Managing Director — Hindalco, represented the Aditya Birla Group.

"The MoU with the government of Madhya Pradesh marks yet another milestone in their goal of making Hindalco a non-ferrous metals powerhouse. In aluminium, their Chairman, Mr. Kumar Mangalam Birla's vision is to be among the top 10 global players. This new greenfield aluminium project is a forward move in this regard", said Mr. D. Bhattacharya.

Dwelling on the linkages between the Aditya Birla Group and Madhya Pradesh, Mr. Bhattacharya commented, "They have always been committed to the growth and development of M.P. Their tryst with the state dates back to 1948, with the positioning of Grasim in Nagda, off Ujjain, beginning with their viscose staple fibre plant. Subsequently in 1972, they put up their rayon grade caustic soda unit also in Madhya Pradesh. When their Group forayed into cement in the 1980's, interestingly the late Mr. Aditya Birla chose Jawad in this state as its location".

Till now the Aditya Birla Group's investment in Madhya Pradesh at its VSF and cement plant are in excess of Rs.60000 millions. More than 5,500 people are employed at these plants and ancillarisation /outsourcing has added to 18,000 more jobs. The aluminium smelter in Siddhi, at an investment of Rs. 77000 millions, is expected to create 4000 to 5000 new jobs and generate another 12,000 jobs indirectly.

Attributing the Group's interest in Madhya Pradesh to the government's endeavors in making the state an attractive investment destination, Mr. Bhattacharya appreciated the tremendous support provided by the administration and the government. He profusely thanked the Honorable Chief Minister, the Finance Minister, the Principal Secretary and all others in the government for facilitating the entire process.

Outlining the contours of the project, Mr. R.K. Kasliwal, Advisor — Hindalco, said that this greenfield project entails putting up of a 325,000 tonne aluminium smelter, a 750 MW captive power plant and a jointly owned captive coal mine. Hindalco will source the alumina required for this smelter from Utkal Alumina, the company's greenfield project in Orissa, in a joint venture with Alcan, Canada. The new 3.25 lakh smelter in Madhya Pradesh will need around 0.640 million tones of alumina. Utkal Alumina is slated to produce 1.5 million tones of alumina.

The finances for this project have already been tied up through internal accruals and debt. Hindalco is an AAA rated corporation. The project is expected to go on stream in a 4-year time frame, after all the necessary approvals and infrastructure support are well in place.

"They feel extremely reassured, given the unequivocal commitment of the government of Madhya Pradesh toward the fruition of this project," stated Mr. Bhattacharya.

Hindalco has already filed applications for land and related infrastructure to get the project going.

Mr. Bhattacharya also dwelt on the Group's social vision. The Group's social projects are spearheaded by Mrs.Rajashree Birla through the Aditya Birla Centre for Community Initiatives and Rural Development. The Group works in 3,700 villages and reaches out to 5 million people annually. He said that in line with the Group's DNA of caring for the communities among which it operates and as a responsible corporate citizen, Hindalco will be actively engaged in the betterment of the underserved communities in proximity to its proposed smelter.

Currently, Hindalco is involved in the upliftment of the weaker sections of society in over 520 villages and the company touches the lives of over 1.5 million people. The company subscribes to the triple bottom line accountability and is a signatory to the United Nation's Global Compact.

Company’s Fixed Assets of important value includes :

Ø Tangible Assets

Ø Mining Rights

Ø Land & Site Development

Ø Buildings

Ø Plant & Machinery

Ø Vehicles & Aircraft

Ø Railway Sidings

Ø Furniture St Fittings

Ø Live Stock

Ø Road & Drainage

Ø Leased Plant & Machinery

Ø Intangible Assets

Ø Technological Licences

Ø Computer Software

CMT REPORT (Corruption, Money Laundering & Terrorism]

The Public Notice information has been collected from various sources including but not limited to: The Courts, India Prisons Service, Interpol, etc.

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.40.98
UK Pound	1	Rs.80.98
Euro	1	Rs.54.99

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

PRIVATE & CONFIDENTIAL : This information is provided to you at your request, you having employed MIPL for such purpose. You will use the information as aid only in determining the propriety of giving credit and generally as an aid to your business and for no other purpose. You will hold the information in strict confidence, and shall not reveal it or make it known to the subject persons, firms or corporations or to any other. MIPL does not warrant the correctness of the information as you hold it free of any liability whatsoever. You will be liable to and indemnify MIPL for any loss, damage or expense, occasioned by your breach or non observance of any one, or more of these conditions