summer project

2015 – 2016

Hindalco Industries Limited

Summer INTERNSHIP Project Financial Analysis

United Institute Of Management, Allahabad Page | 1

SUMMER INTERNSHIP PROJECT REPORT ON ANALYSIS OF FINANCIAL HEALTH

OF

By Priyanka Chauhan MBA (Finance)

Under the guidance ofFaculty Guide Company Guide Mr. Gaurav Sonkar Mr. Vimal Raheja Sr. Finance Manager Hindalco Ind. Ltd.


PREFACE

A Summer Training Project is the integral requirement of our Academic Session and curriculum.

A project works requires a lot of hard works, labors, initiatives, practices and proper guidance

and direction. So it is quite necessary to take assistance from different quarters and departments.

During the training period a student learns the practical approach of their theoretical knowledge.

Actually a Project is the summarized from of seven activities.

They are-

PLANNING

RESOURCE ALLOCATION

ORGANIZATION

JOINT EFFORTS

EFFICIENCY

COMMUNICATION

TRANSPARENCIES

The project emphasizes on the financing mix of the company. I have tried my best to

make good report. However, no one can claim perfection in it’s entirely. So, I apologize

for the discrepancy, if any, crept in.


DECLARATION

I hereby declare that the project study title “ANALYSIS OF FINANCIAL HEALTH OF

HINDALCO LTD.” is my original work carried out during the period from 15th June to 22th July

2016 under the guidance of Prof. Gaurav Sonkar and Mr. Vimal Raheja, Corporate Mentor

(Senior Manager Accounts) at Hindalco Ind. Ltd., Renukoot.

I also declare that this project has not been submitted nor shall it be submitted in future to any

other University or Institution for the award of any other degree or diploma.

Date of project submission: Priyanka Chauhan

22-July-2016 Sem-3rd

Roll No: 1501170054

Place:

Renukoot

Faculty Mentor’s Comments:


ACKNOWLEDGEMENT

I take this opportunity to thank the people who have helped me immensely in the successful

completion of my project on ANALYSIS OF FINANCIAL HEALTH OF HINDALCO LTD.

Firstly, I thank Mr. Ajay Joshi (Vice President) for giving me the opportunity to do my project at

Hindalco Industries Limited, Renukoot.

I also thank my project guide Mr. Vimal Raheja (Senior Manager Accounts) for his guidance,

encouragement, time and effort by sharing the knowledge and information and constant support

all throughout the project duration.

I would also like to thank Prof. Gaurav Sonkar , my faculty guide for his valuable guidance and

support toward the successful completion of my project.

Lastly, I would like to thank the entire team of Finance & control at Hindalco Ind. Ltd.,

Renukoot and my family members who have constantly motivated me throughout my life.

I’m grateful to all the people and staff of the organization who directly or indirectly contributed

to the successful completion of the project and working at HIL was a delight and a valuable

learning experience for me and I am glad to have completed my project successfully.

Thank you.

With best regards & wishes,

Priyanka Chauhan

MBA (Finance)


CONTENT

Objective of study

Literature review

Introduction

Company Profile

Industry Profile

SWOT analysis

Financial Analysis

Research Study:

Research objective and scope of the study

Research Methodology

Sample Design

Sources of data collection

Tools and techniques for analysis of data

Limitations

Fund Management at Hindalco Ind. Ltd.

Data Analysis & Interpretation

Findings and Conclusion

Recommendations

Conclusion

Bibliography

Annexure:

Statement of Profit & Loss A/C

Balance Sheet



Chapter 1

OBJECTIVE OF THE STUDY

The basic purpose of carrying this study is to gain understanding about the ways in which

company manages its funds and employs it in various operational activities. Apart from these

there are some other related objectives which are also taken care of, like familiarizing oneself

with the processes adopted by the company for its daily operations.

Therefore, the main purpose of this study can be broadly categorized into the following –

To understand the process of fund management at Hindalco Industries Limited.

Also to understand the different ways in which company’s fund are managed and put to

various applications and operations and to suggest any better alternative



Ch

apt

er 2

Literature Review

The purpose of this literature review is to describe financial analysis concept, to outline existing

financial performance measurement concepts and to identify value drivers that have been

identified, analyzed, and tested. It helps to measure the profitability of the business. It helps

management to know about the earning capacity of the business concern.

I choose this topic analysis of financial analysis of hindalco ltd because as I check the previous

project of hindalco ltd. There is no research is done which is related to analysis of financial

health of hindalco ltd.

It measures company’s ability to meet its short term obligations with its most liquid assets with

the help of quick ratio. The higher quick ratio shows the better position of the company.

Financial analysis is the key to success of a firm’s profitability. This thesis has been

substantiated in numerous empirical studies. Since the positive impact of financial analysis on

firm profitability has been substantiated in various empirical studies, several researchers have

recently investigated potential drivers of Financial Analysis performance that potentially boost

firm performance. Based on data available in the public sectors, a large quantity of drivers,

including operational cash flow, firm size and sales growth, have been identified and tested.


INTRODUCTION OF THE TOPIC

My internship project was done at Hindalco Ind. Ltd., the metal flagship company of the Aditya

Birla group, an industry leader in aluminum and copper located at Renukoot, Uttar Pradesh with

its operation spread all over the world.

During my internship, I had studied in detail the ANALYSIS OF FINANCIAL HEALTH OF

HINDALCO LTD, which is a mixture of both capital structure of the company and working

capital management.

FINANCIAL ANALYSIS consists of study done to find out the various requirements of funds,

arrangement of funds, receipt of fund and utilization of funds. During this study standard

operating activities performed by the banks such as credit limit etc. is also analyzed.



Chapter 3

HISTORY OF THE COMPANY

Hindalco Industries: The Hindalco story dates back to the young Indian democracy of the 1950s. Ready

to take a giant leap, India was geared to make it big, especially in terms of

innovation and industrialization.

Hindalco embarked on its journey in 1958. Its first real contribution to the vision of

an industrial India occurred four years later, when the visionary late Mr. GD Birla

set up India's first integrated aluminum facility at Renukoot, in the eastern fringe of

Uttar Pradesh, India. It was backed by a captive thermal power plant at Renusagar

in 1967. Hindalco attained its leadership position in the aluminum industry under

the dynamic leadership of the late Mr. Aditya Vikram Birla — a formidable force

in the Indian industry.

And it was through the vision and guidance of Mr. Kumar Mangalam Birla, the

Group Chairman that the business segments of aluminum and copper are

consolidated to make Hindalco the non-ferrous metals powerhouse it is today. This

was achieved in part by expansion through mergers and acquisitions with

companies such as Indal and Birla Copper. Hindalco also secured copper reserves

and amplified its operating base by acquiring Australian copper mines.


Over the years, Hindalco has grown into a major vertically integrated aluminum

company in the country and among the largest primary producers of aluminum in

Asia. Its copper smelter is today one of the world's largest custom smelter at a

single location.

In 2007, the landmark acquisition of Novelis Inc., the world's largest aluminum

rolling company, placed Hindalco's footprint across the globe, securing it a rank

amongst the top five global aluminum majors.

HINDALCO INDUSTRIES LIMITED RENUKOOT; SONEBHADRA; U.P. COMPANY PROFILE

Hindalco Industries Ltd. is the Flagship Company of Aditya Birla Group. The Aditya Birla

Group is India’s second largest business house with a turnover of Rs. 280 billion, and Assets are

valued at over Rs. 265 billion. The group has nearly 72000 employees in 18 countries. Hindalco

Industries Limited was incorporated in 1958 and commercial production commenced in 1962.

The Company was set up in technical collaboration with Kaiser Aluminum & Chemicals

Corporation, USA. Hindalco is today one of India’s premium corporate, contributing

significantly to economic growth, generating employment and setting high standards in respect

of fulfilling of obligations to all stakeholders. The Company prizes its ‘Human Capital’, and

employees have been reciprocating by turning in a sterling performance for the Company,

year after year. Hindalco has an enviable record of harmonious Industrial Relations, with not a

single man day lost since the past 30 years on account of industrial strife. Company’s principal

products comprise of Aluminum Ingots, Aluminum Billets, Aluminum Wire Rods, Sheet

Products, Extrusions, Aluminum Foils and Aluminum Alloy Wheels. The Company’s by

products include Gallium Metal, Vanadium Sludge and Aluminum Dross.United Institute Of Management, Allahabad Page | 14

Hindalco Industries Limited, one of the major producer of Aluminum metal audits semis in the

country as well as a premier flagship company of A.V. Birla grouping the biggest industrial

enterprise of Uttar Pradesh. It is a public limited company in the private sector having about

39000 shareholders. It is the largest integrated Aluminum plant in India with all its production

facilities viz. Alumina, Aluminum & Fabrication located at Renukoot near Rihand Dam in

Sonebhadra (Uttar Pradesh). Hindalco’s power division is situated at Renusagar about 35 km

from Renukoot. In September 1959, an industrial license was granted by the Government for

setting up an integrated Aluminum plant at Renukoot, with an initial installed capacity of 20000

MT. The construction work was completed with 18 months, a record for a major job of this kind.

The dream of the great visionary Syt. G.D. Birla to locate an Aluminum plant nea r

R ihand pow er hous e ca me t rue .


VISION: “To be a premium metals major, global in size and reach, excelling in everything

we do and creating values for its stakeholders.”

MISSION: “To relentlessly pursue the creation of superior shareholder value by exceeding

customer expectation profitably, unleashing employee potential and being a responsible

corporate citizen adhering to our values”

VALUES:

Integrity:

– honesty in every action.


Commitment

– doing whatever it takes to deliver, as promised.

Passion:

– missionary zeal arising out of an emotional engagement with work.


Seamlessness:

– thinking and working together across functional sales, hierarchy levels, business and geographies.

Speed:

– responding to stakeholders with a sense of urgency


THE MARKET LEADER

Hindalco Industries Limited, metals flagship company of the Aditya Birla Group, is the industry

leader in aluminum and copper. With a consolidated turnover of US$17 billion, Hindalco is the

world’s largest aluminum rolling company and one of Asia’s biggest producers of primary

aluminum. Its state-of-art copper facility comprises a world-class copper smelter and a fertilizer

plant along with a captive jetty. The copper smelter is one of the world’s largest custom smelters

at a single location.

In India, the company’s aluminum units across the country encompass the gamut of operations

from bauxite mining, alumina refining, coal mining, captive power plants and aluminum

smelting to downstream rolling, extrusions and foils. Today, Hindalco ranks among the global

aluminum majors as an integrated producer and a footprint in 13 countries outside India.

The Birla Copper unit produces copper cathodes and continuous cast copper rods, along with

other by-products, including gold, silver, and DAP fertilizers. It is also India’s largest private

producer of gold.

Hindalco has been accorded Star Trading House status in India. Its aluminum is accepted for

delivery under the High Grade Aluminum Contract on the London Metal Exchange (LME),

while its copper quality is also registered on the LME with Grade A accreditation.


ALUMINIUM OVERVIEW:

One of the largest integrated primary producer of aluminum in Asia. With a Pan-Indian presence

that encompasses the entire gamut of operations, from bauxite mining, alumina refining,

aluminum smelting to downstream rolling, extrusions and recycling, Hindalco enjoys a

leadership position in aluminum and downstream value-added products in India.

Our Indian aluminum operations are integrated and consist of bauxite mining, alumina refining,

smelting and converting primary metal into value-added products. We have dedicated sources for

critical raw materials such as bauxite, power and coal. We also have committed supply sources

for auxiliary chemicals.

Our finished products include alumina, primary aluminum in the form of ingots, billets and wire

rods, value-added products such as rolled products, extrusions and foils. Metallurgical alumina is

used for our own captive needs. Chemical alumina and hydrates are used in range of industries

including water treatment, fillers in cables and plastics, refractories and ceramics, glass among

others.


Our facilities are in regions close to raw material sources, low cost and available labour and

demand markets. This helps in reducing costs and improving profit margins. The technology

upgrade has resulted in higher utilization rates at our plants and improved efficiency.

We believe implementation of superior technology not only reduces costs but also provides

superior and customized products, thus, improving our sales.

Hindalco’s integrated complex at Renukoot, in Uttar Pradesh, India, houses an alumina refinery,

an aluminum smelter and facilities for the production of semi-fabricated products. Power is

sourced from our Renusagar power plant, located about 45km from Renukoot. Our facilities also

include an aluminum smelter and an aluminums FRP facility (for rolled products, extrusions

products and wire rods) at Hirakud (Odisha) with a captive power plant and coal mine, and

alumina refinery at Muri (Jharkhand). Our Chemical grade alumina plant is located at Belagavi

(Karnataka), and rolling mills at Belur (West Bengal), Taloja near Mumbai and Mouda near

Nagpur (Maharashtra). Foil rolling facilities are situated at Mouda near Nagpur (Maharashtra)

and Kollur (Telangana) and our extrusion plant at Alupuram (Kerala).

Hindalco's new age smelters at Aditya (Odisha) and Mahan (Madhya Pradesh), operating on

state-of-the-art AP36 technology, have not only resulted in expansion of our capacities but also

improved cost-efficiency of our operations. These smelters have their own captive power plants

and source alumina from Utkal, our 100% subsidiary.

Utkal Alumina (Odisha) is a world class refinery with one of the lowest cost structure in the

world. The bauxite for Utkal is sourced from Baphlimali mines by a 18 kilometer long conveyor,

one of its kind in the world.


All our units are ISO 9001, 14001 and OHSAS 18001 certified. Furthermore, many of our units

have adopted the Integrated Management System (IMS) certification, reflecting a combined

business excellence model. Apart from being a dominant player in the domestic market,

Hindalco's products are well-accepted in the international markets.

Our strength in aluminum products differentiates us from our competition. A significant portion

of Hindalco’s sales come from value-added products. This is in line with our ‘market-grower’

philosophy. Hindalco has introduced numerous new products in the Indian market, including

branded roofing sheets, branded kitchen foils and input material for bicycles and railway

wagons. Hindalco’s Aluminum Gallery is a platform for its small customers to showcase their

products to their consumers.

Some of our popular brands like Eternia Windows, Maxloader and Hindalco Extrusions under

the extrusions segment, ever last roofing under the flat rolled products segment, Freshwrapp and

Super wrap under the aluminum foil products segment, as well as Birla Copper and Birla Bal

wan under the copper mainstream products and co-products segment have garnered strong

customer acceptance.

Aluminum Smelting


Hindalco Aluminum Smelting operations are located at Renukoot in Uttar Pradesh, Aditya

Aluminum in Odisha, Mahan Aluminum in Madhya Pradesh and Hirakud in Odisha. All these

facilities combined produce around 1.3 Million tons of primary aluminum in a year.

Aditya Aluminum

Mahan Aluminum

Hirakud

Renukoot

Aditya Aluminum:

Aditya Aluminum is a smelter-power plant complex at Lapanga in Sambalpur district of Orissa

with 360,000 tones smelter supported by a 6 x 150 MW coal based captive power. Like Mahan

this also employs AP 36 technology supplied by Aluminum Pechiney.

Alumina is primarily sourced from Utkal Alumina, a 100% subsidiary of Hindalco.


Mahan Aluminum:

Mahan smelter project comprises 360 KTPA Aluminum Smelter, along with 900 MW captive

power plant. Located in Bargawan, Madhya Pradesh, this state of the art facility has already

started production and is ramping up as per the schedule.

This smelter uses globally proven AP 36 technology with enhanced power efficiency and

improved manpower productivity. The CPP set up by BHEL, constitutes six units of 150 MW

each, with one of them acting as a stand by unit.

The alumina for the smelter is sourced from Utkal Alumina, our subsidiary, which is one of the

most efficient alumina refineries globally.


Hirakud Aluminum:

The Hirakud smelter and power complex is in Odisha, about 320km by road from the capital city

of Bhubaneswar. The Hirakud smelter, set up by Indal in 1959, was the country’s second

aluminum smelter operating on grid power sourced from the hydro power station of

Renukoot:


Hindalco’s Renukoot plant was commissioned in 1962 with one pot line and a smelter of

20,000tpa capacity. Over the years the plant has increased its capacity through various

brownfield expansions and asset-sweating measures.

Today Hindalco, at Renukoot, operates across the aluminum value chain from bauxite mining,

alumina refining, aluminum smelting to downstream rolling and extrusions. The integrated

facility houses an alumina refinery and smelter along with facilities for production of semi-

fabricated products namely conductor redraw rods, sheet and extrusions.

In 1967 Hindalco established a captive power plant at Renusagar, the first captive power plant

(CPP) for aluminum industry in India. This along with a co-generation power unit ensures

continuous supply of power for the smelter and other operations.

Renukoot has earned the Integrated Management System (IMS) certification combining quality,

environment and occupational health and safety into one business excellence model. The unit has

been a recipient of several national and international awards in quality, environment

management, energy conservation, CSR, among others.

The sprawling 1056-acre Renukoot complex located near the Rihand Dam, 160 km from the city

of Varanasi, includes beautifully landscaped gardens, a residential colony cum mini township, a

full-fledged hospital for employees and the community around along with schools, clubhouses,

banks, sports facilities, cultural facilities, supermarkets and the Renukeshwar Mahadev Temple.

As a responsible corporate citizen Hindalco Renukoot’s Community Development Cell plays a

leading and exemplary role in social projects on health care, women’s empowerment, education

and sustainable livelihood schemes. Hindalco Renukoot's CSR cell has taken up various

innovative rural development projects in 385 neighboring villages in the states of Uttar Pradesh,


Jharkhand and Chhattisgarh. These social projects are carried out under the aegis of the Aditya

Birla center for Community Initiatives and Rural Development spearheaded by Mrs. Rajashree

Birla.

the Hirakud Dam. After facing severe power scarcity, Hirakud captive coal-based power plant

came up in 1993. It was the first in India to adopt clean coal combustion technology that uses a

circulating fluidized bed, which is considered environmentally friendly. The metal from this

facility is processed to produce FRP.

Aluminum Products:Hindalco’s aluminum rolled products is a prime source for all major brands and are used in a

multitude of industrial segments.

Building sheets

Closure stock

Fin stock

Hot rolled plates

Pattern sheets

Cable wrap stock

Cold rolled coils

Flooring sheets / tread plates

Lamp cap stock

PCB entry sheets / coils


Circles

Cold rolled sheets

Foil stock

Litho stock

Spiral fin stock

Copper overview:

Hindalco’s Copper division operates one of the largest single location custom copper smelters in

the world. The Custom Smelter complex at Dahej in state of Gujarat in the west coast of India

houses copper smelters, refineries, rod plants, captive power plant, a jetty and other utilities.

Hindalco produces copper cathodes, continuous cast copper rods in various sizes and also

precious metals like Gold and Silver. The co-product Sulphuric acid is also utilized to produce


Phosphoric acid and fertilizers like di-ammonium phosphate (DAP). Hindalco is the only

manufacturer in India for 19.6mm diameter copper rod used for railway electrification.

Branded, Birla Copper and Birla Copper II, Hindalco’s copper cathodes are known for high

purity and consistent quality. Birla Copper is an ISO 9001, 14001 and OSHAS 18001 certified

company, registered on the London Metal Exchange as Grade-A copper brand and certified as a

Star Trading House having NABL accredited labs for chemical, mechanical and electrical

testing.

Copper smelting:

Figure 1: DAHEJ

Birla Copper, Hindalco's copper unit, is located at Dahej in the Bharuch district of Gujarat. This

is one of the largest single-location copper smelters in the world with integrated port facilities.

Dahej Harbor and Infrastructure Limited (DHIL) is strategically located to cater to the logistics

and transportation needs of its customers.


The copper unit at Dahej comprises copper smelters, backed by a captive power plant, oxygen

plants, by-products plants, utilities and a captive jetty. There is also a precious metals recovery

plant at Dahej, which produces gold, silver and selenium.

Environment Analysis

Global Environment: The extraordinary financial crisis in the US has spread to Europe and

Japan and is likely to see most developed economies suffering a prolonged period of recession

that could extend beyond 2009 and according to some even beyond 2010. The financial crisis in

the US started in the latter half of 2007, with the so-called sub-prime housing mortgage crisis. As

is by now well established, the crisis had its real roots in hugely excessive leveraging by

investment and commercial banks, underpricing of risk and lack of necessary regulatory

oversight. The busting of some of the big financial institutions has created an atmosphere of lack

of confidence. This in turn has near completely clogged the flow of credit in the system. The

banker’s adage that ‘it’s not the speed that kills, it’s the sudden stop’ fits the present precarious

situation quite well. The impasse seen in the credit flow has had a direct impact on investment

and consumption and has taken a massive toll of the real economy. The morphing of the ‘Wall

Street crisis’ in to a historical ‘Main Street crisis’ has led to the majority of OECD economies

sliding into deep recession. And it is not yet clear as to when the bottom of this recessionary

slide will be reached. This causes a further loss of confidence. The enormity of the situation can

be sensed by looking at some numbers. The IMF has re-estimated that the losses for financial

institutions on account of US-based mortgage loans (the so called sub-prime loans) and securities

may raise up to US$ 2.2 trillion (last estimate in October 2008 was US $ 1.4 trillion). The total

funds made available by the US government and the Federal Reserve so far under the various


rescue programs have already amounted to a whopping US$ 7.5 trillion or more. In addition, the

loss of market capitalization can be gauged from the sharp fall in stock market prices both in

mature and emerging economies. The loss of wealth this represents is bound to adversely impact

global demand for a prolonged period. This year in the Forbes list of billionaires the total wealth

registered was 2.4 trillion U.S. dollars, down from 4.4 trillion last years, reducing more than 45

per cent and marking the worst reading since Forbes began compiling the list.

Aluminum Industry in India

Aluminum Industry in India is one of the leading industries in the Indian economy. The main

operations of the of the India aluminum industry is mining of ores, refining of the ore, casting,

alloying, sheet, and rolling into foils. At present, Hindalco and Nalco are one of the most

economical in the production of aluminum in the world. Aluminum industry, which is highly

capital intensive and scale sensitive, depends on two major variable cost components viz.

alumina and power. Bauxite from which alumina is obtained, being a bulk commodity, has

forced companies to be concentrated near bauxite deposits.

With over 7% growth per annum, one of the highest in the world, the Indian aluminum market is

booming. Even better, sectors that extensively use aluminum are themselves booming, ensuring

that this sector stays firmly on the growth path for times to come. Fortunately for India, it is

perched atop the 5th largest Bauxite reserves in the world with one of the world's lowest per

capita consumption rates that is set to explode. Together, these factors spell one clear outcome:


that if you're a player in the global aluminum sector, India is where the action and the future of

your business lie.

The India aluminum Metal Industries sector in the previous decade experienced substantial

success among the other industries. The India aluminum industry is developing fast and the

advancement in its technologies is boosting the growth even faster. The utilization of both

international and domestic resources was significant in the rapid development of the India

aluminum industry. This rapid development has made the India aluminum industry prominent

among the investors. The India aluminum industry has a bright future as it can become one of the

largest players in the global aluminum market as in India the consumption is fairly low, the

industry may use the surplus production to cater the international need for aluminum which is

used all over the world for several applications such as aircraft manufacturing, automobile

manufacturing, utensils, etc.

The Indian aluminum sector is characterized by large integrated players like Hindalco and

National Aluminum Company (Nalco). The other producers of primary aluminum include Indian

Aluminum (Indal), now merged with Hindalco, Bharat Aluminum (Balco) and Madras

Aluminum (Malco) the erstwhile PSUs, which have been acquired by Sterlite Industries.

Consequently, there are only three main primary metal producers in the sector.

Some Key points regarding this sector:

The per capita consumption of aluminum in India continues to remain abysmally low at

under 1 kg as against nearly 25 to 30 kgs in the US and Europe, 15 kgs in Japan, 10 kgs

in Taiwan and 3 kgs in China. The key consumer industries in India are power,

transportation, consumer durables, packaging and construction. Of this, power is the

biggest consumer (about 44% of total) followed by infrastructure (17%) and

transportation (about 10% to 12%). However, internationally, the pattern of consumption


is in favor of transportation, primarily due to large-scale aluminum consumption by the

aviation space.

In order to protect the domestic industry, the government has imposed up to 30%

safeguard duty on import of aluminum products from China. Imports of aluminum flat

sheets used by sectors like auto and construction are imposed a duty of 12% to 14% while

import of aluminum foils, mainly used by the packaging industry attracts around 25% to

30% duty. This duty is imposed for a period of two years starting March 2009.

Aluminum: Through the lens of Michael Porter

Backed by abundant and good quality bauxite reserves and cheap labor costs, Indian aluminum

producers have emerged among the lowest cost aluminum producer in the world. India is home

to the sixth largest bauxite deposit in the world which makes its world’s 5th largest aluminum

producer. Aluminum industry in India registered a phenomenal growth during the past few

years on the back of robust growth in the economy. However, the current ongoing global crisis

seems to have created some medium term hiccups. We have analyzed the domestic aluminum

industry through Michael Porter’s five forces model so as to understand the competitiveness of

the sector.

Barriers to entry: We believe that the barriers to entry are medium. Following are the

factors that vindicate our view.


Economies of scale: As far as the sector forces go, scale of operation does matter.

Benefits of economies of scale are derived in the form of lower costs and better

bargaining power while sourcing raw materials. It may be noted that the minimum

economic size of a fully integrated Greenfield smelter is around 250,000 tonnes. The

aluminum companies, which are integrated, have their own mines for key raw materials

such as bauxite and coal and this protects them from the potential threat for new entrants

to a significant extent. They also have their own power plants as it is a major cost driver.

Capital intensive: Aluminum industry is a highly capital intensive business. It is

estimated that a capital investment of around US$ 1.2 bn is required to setup an

economically viable Greenfield project.

Higher gestation period: The gestation period for an economically viable green

field plant is over 4 years while for a Brownfield project, (modernization / capacity

addition) the gestation period is relatively lower between 1.5 years to 2 years.

Government policies: The government has a favorable policy towards aluminum

manufacturers. In fact, to protect the domestic industry, recently, the government has

imposed duty on value added products like foils and rolled products from the Chinese

markets. However, similar to other sectors, there are certain discrepancies involved in

allocation of mines and land acquisitions. Furthermore, regulatory clearances and other

issues are some of the major problems for the new entrants.

Bargaining power of suppliers: The bargaining power of suppliers is low for fully

integrated aluminum smelters (upstream) as they have their own mines for key raw material like


bauxite. Examples here could be Nalco and Hindalco. However, those who are non-integrated or

semi integrated, (downstream) have to depend upon the upstream producers for alumina or

primary metal. While the bargaining power is limited in case of power purchase as it is highly

regulated sector and government is the sole supplier most of the times, increasing usage of

captive power plants are helping the companies to rationalize their costs to certain extent.

Bargaining Power of Customers: Being a commodity, customers enjoy relatively high

bargaining power as prices are determined on demand and supply.

Competition: Competition is primarily on quality and price, as being a commodity,

differentiation is difficult. However, the recent spate of consolidation has reduced the

competitive pressure in the industry. Further, increasing value addition to aluminum products has

helped some companies protect themselves from the high volatility witnessed in the industry.

Threat of substitutes: On one side, the usage of aluminum is rising continuously in the

automobile and construction sector but steel still remains a main substitute because of its

relatively lower cost. On the other side, copper has been slowly substituting aluminum’s usage in

the power sector due to its higher conductivity. However, with properties like higher strength-to-

weight ratio, durability, higher corrosion-resistance and relatively lower cost, aluminum is able

to hold its own. Thus the usage of aluminum is likely to increase over a long term period.


Global Aluminum Industry

Global production of primary aluminum rose continuously from 32 million tones’ (MT) in 2005

to 38 MT in 2007, registering a CAGR of 9%. However, during 2008 the production remained

flattish at around 38 MT (2007 levels) on account of significant fall in demand in the second half

of the year due to the global credit crisis. This created a large amount of demand supply gap, thus

making the inventory levels at LME reach their multi year highs. China accounted for around

30% of the total global aluminum production. Asia, once again showed the largest annual

increase in consumption of primary aluminum, driven largely by increased industrial

consumption in China, which has emerged as the largest aluminum consuming nation,

accounting for 35% of global primary aluminum consumption in 2008. As far as the global

consumption goes, it declined by around 3%YoY to 37 MT in 2008.

The Indian aluminum industry registered a growth of around 9% in FY09. Strong growth in

industrial, infrastructure, automobile, transportation and power sectors during the first half of the

fiscal were the key drivers for the demand. However, realizations for the fiscal fell significantly

on account of fall in LME prices due to the global credit crisis, thus causing a dent in margins.

On the other hand, the steep depreciation of Indian rupee against the US dollar impacted the

industry positively. The total aluminum production in the country stood at around 1.35 m tones

in FY09.


Prospects

Overseas Demand Boosting Metal Prices - Demand in emerging markets like China

and India, coupled with drastically reduced inventories and lower output, have boosted US metal

prices. US Steel raised its prices three times between June and July 2009, while Alcoa boosted

aluminum prices by 6 percent since the first quarter, according to BusinessWeek.com. Industry

observers differ over whether prices will continue to rise, however. Some say US auto

production is too weak to sustain higher prices, while Chinese consumption may slow. Output

has furthermore stagnated despite higher prices, leaving metal makers still in search of profits.

Climate Bill Could Impact Steel Costs - A Congressional climate-change bill could add

$1 billion to production costs for US steel producers by 2030. The Waxman- Markey bill calls

for the reduction of carbon emissions by 17 percent by 2020 and more than 80 percent by 2050.

The domestic steel industry accounts for about 9 percent of heavy emissions in the US heavy

industry sector. Steel earnings could drop by 2 to 5 percent as a result of the legislation, and

could fall further unless an offset penalty is imposed on imported steel, according to a recent

Goldman Sachs report.

Steel Imports Drop - US steel imports in June 2009 dropped to their lowest levels since

1975, according to the American Iron and Steel Institute. Steel import permit applications

declined 23 percent compared to May, with Japan, India, South Korea, and China submitting the

largest finished steel applications. Despite the falling applications, some industry observers are

still concerned over unfairly traded imports: steel imports boast a 28 percent market share, while

domestic production has slowed to 49 percent of capability.

Globally, the demand for aluminum is projected to fall by around 7% in 2009 on account

of subdued conditions in the key user industries. However, China is projected to


maintain the consumption levels of 2008 mainly due to the fiscal stimulus package that is

likely to support its ailing economic growth. The revival in the demand for the metal is

expected to start from 2010 globally. As per Alcoa, world’s largest aluminum producer,

the demand for aluminum is projected to grow at around 6% CAGR till 2018 on account

of newer packaging applications and increased usage in automobiles, consumer durables,

construction and defense.

With key consuming industries forming part of the domestic core sector, the aluminum

industry is sensitive to fluctuations in performance of the economy. Power, infrastructure

and transportation account for almost 3/4th of domestic aluminum consumption. With

the government focusing towards bringing back GDP growth rates of above 8%, the key

consuming industries are likely to lead the way, which could positively impact aluminum

consumption. Domestic demand growth is likely to remain robust over a long term

period.


HINDALCO

Hindalco's businesses

Hindalco in India enjoys a leadership position in aluminum and copper. The company

aluminum unit across the country encompass the entire gamut of operations from bauxite

mining, aluminum smelting to downstream rolling, extrusions, foils and alloy wheels,

along with captive power plant and coal mines. The Birla copper cathodes, continuous

cast copper rods along with other by-products, including gold, silver and DAP fertilizers.

Brief History:

The Hindalco story unfolds with the establishment of the company in 1958, the

commissioning of the aluminum facility at Renukoot in 1962 and the Renusagar power

plant in 1967. Over the years, Hindalco has grown into the largest vertically integrated

aluminum company in the country and among into the largest primary producers of

aluminum in Asia. Its copper smelter is today the world’s largest custom smelter at a

single location. Hindalco’s journey has been challenging at times, but truly exhilarating


2007

In May 2007, Novelis became a Hindalco subsidiary with the completion of the

acquisition process. The transaction makes Hindalco the world’s largest aluminum

rolling company and one of the biggest producers of primary aluminum in Asia, as

well as being India’s leading copper producer.

Acquisition of Alcan’s 45 per cent equity stake in the Utkal Alumina project, thereby

making Hindalco the 100 per cent project owner

2006

Joint Venture with Almex USA for manufacture of high strength aluminum alloys for

applications in aerospace, sporting goods and surface transport industries.

Signed a MoU with the government of Madhya Pradesh for a Greenfield aluminum

smelter in the Siddhi district of the state

Hindalco completes largest Rights Issues in the history of Indian capital markets with

total size of Rs. 22,266 million.

Hindalco announces 10:1 stock split. Each shares with face value of Rs. 10 split into

10 shares of Re 1 each.

In May 2006, the company entered into a JV with Essar Power (M.P.) Ltd. to develop

and operate coal mines at Mahan, Madhya Pradesh. The JV will supply coal to the

proposed aluminum smelter and power complex in Madhya Pradesh.


In May 2006, company's copper mining subsidiary Aditya Birla Minerals Limited

(formerly Birla Mineral Resources Pty Ltd.) came out with an equity offering and

subsequent listing on the Australian Stock Exchange (ASX).

In March 2006, the company acquired an aluminum rolling mill and wire rods facility

situated at Mouda (Nagpur), from Asset Reconstruction Company (India) Ltd

(ARCIL), belonging to Pennar Aluminum Company Ltd.

2005

All businesses of Indal, except for the Kollur Foil Plant in Andhra Pradesh, merged

with Hindalco Industries Limited.

In September 2005, the company split its shares in ratio of 10:1 in order to enhance

liquidity and to encourage participation from retail investors.

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

cost of about Rs.11, 000 Crore.

MoUs signed with state governments of Orissa and Jharkhand for setting up

Greenfield alumina refining, smelting and power plants.

Commissioned Copper III expansion, taking total capacity to 500,000 tpa.

2004

Scheme of arrangement announced to merge Indal with Hindalco.

Copper smelter expansion to 250,000 tpa.

2003


Hindalco acquires Nifty Copper Mine through Aditya Birla Minerals Ltd. (ABML,

formerly Birla Minerals Resources Pty. Ltd.).

ABML acquires the Mount Gordon copper mines in November 2003.

Hindalco becomes majority stakeholder in Utkal Alumina, a joint venture with Alcan.

The amalgamation of Indo-Gulf's copper business with Hindalco becomes effective

from 12 February 2003.

Equity stake in Indal increased to 96.5 per cent through an Open Offer.

Divestment of 8.6 per cent holding in Indo Gulf Fertilizers Ltd. :: Brownfield

expansion of aluminum smelter at Renukoot to 345,000 tpa.

2002

Brownfield expansion at an outlay of Rs.1, 800 Crore — ninth pot line

commissioned.

Buyback of equity shares to generate shareholder value and to utilize surplus cash.

Major corporate restructuring to create a non-ferrous metals powerhouse:

The amalgamation of Indo Gulf Corporation Ltd.'s copper business, Birla Copper,

with Hindalco with effect from 1 April 2002.

Open offer to acquire additional equity to make Indal a wholly-owned subsidiary.

2001

Hindalco enters 'The Asia Top 25' list of the CFO Asia Annual Report Survey, the

only Indian company in 2001.

2000


Acquisition of controlling stake in Indian Aluminum Company, Limited (Indal) with

74.6 per cent equity holding.

1999

Aluminum alloy wheels’ production commenced at Silvassa.

Brownfield expansion of metal capacity at Renukoot to 242,000 tpa.

1998

Foil plant at Silvassa goes on stream.

Hindalco attains ISO 14001 EMS certification.

1995

Mr. Kumar Mangalam Birla takes over as Chairman of Indal Board.

1994

A huge expansion, modernization and diversification program takes off.

1991

Beginning of major expansion program.

1967 United Institute Of Management, Allahabad Page | 43

Commissioning of Renusagar Power Plant — a strategic and farsighted move.

1965

Downstream capacities commissioned (Rolling and Extrusion Mills at Renukoot).

1962

Commencement of production at Renukoot (Uttar Pradesh) with an initial capacity of

20,000 mtpa of aluminum metal and 40,000 mtpa of alumina.

1958

Incorporation of Hindalco Industries Limited.


Recent accolades

Hindalco won the prestigious “D.L. Shah National Award for Economics of-

Quality” given by Quality Council of India, presented by the President of India, H.E.

Dr. A.P.J. Abdul Kalam, on 9 February 2007.

National Energy Conservation Award-2006 was presented by the Ministry of Power,

Government of India.

Hindalco Hirakud Complex earned the Pollution Control Appreciation Award

presented by the Orissa State Pollution Control Board.

The IT department of Hindalco received prestigious IT certificates BS15000 (IT

services), ISO 9001 Software development) and BS7799 (Information security).

Hindalco's Renukoot IT function is the first in the Group as well as in India to be

recommended for all these certifications in an integrated manner.

The company's fabrication plant’s hot mill team won the prestigious Qualtech

Award for their project "Reduction of time in work role change time”.United Institute Of Management, Allahabad Page | 45

Hindalco Taloja became the second unit after Renukoot to achieve the Integrated

Management System Certificate, which combines ISO 9001, ISO 14001, OHSAS

18001 into one Business Excellence Model.

Hindalco, Renukoot has won the National Award for Excellence in Water

Management 2006 organized by CII.

Hindalco Hirakud Power Plant team bagged second prize at the state level CII

Orissa Award 2006 for Best Practices in Environment, Safety & Health.

Hindalco Hirakud Quality Circle 'Jagruti' bagged national level honors at the 20th

National Convention of Quality Circles, organized by the Quality Circle Forum of

India.

Hirakud Power Plant team received the State Safety Award 2006 for their act of

bravery in saving lives and preventing a disaster, by their proactive initiative to

arrest the chlorine leakage at the Railway Colony in Sambalpur.

Engineering Export Promotion Council (EEPC, Eastern Region) Award for Export

Excellence in recognition of highest performance in export of engineering goods

(Primary Metal, Rolled Products) for 2003-04.

"ICWAI National Award for Excellence in Cost Management-2005" presented by

the Institute of Cost and Works Accountants of India (ICWAI).

Renukoot Complex named the winner of the National Safety Award 2005 for the

second consecutive year. Also awarded the Greentech Safety Silver Award for its

outstanding safety performance during 2005-2006.

Hirakud Smelter received the State Safety Award for best performance in Safety,

Health & Environment Management-2004 as also the National Safety Award for

outstanding performance in industrial safety in achieving the longest accident free


period for the year — 2004 and Runners Up award for Lowest Accident Frequency

Rate — 2004 for the second consecutive year.

Hirakud also won the Shreshtha Surakhya Puraskar — 2004 and Prashansa Patra —

2005 from the National Safety Council of India, Mumbai, for developing and

implementing effective occupational safety and health management systems and

procedures.

Hirakud Smelter also received the second prize for excellence in energy conservation

in aluminum sector for 2005 from the Ministry of Power, GoI.

The Muri Alumina Plant won the Greentech Safety Gold Award 2004-2005 and

Silver Award 2005-2006, as also the Greentech Environment Silver Award 2004-

2005.

The Kalwa Foil Plant was the recipient of the Dhanukar Rotating Trophy 2005- ::

2006 presented by the Indian Association of Occupational Health, Mumbai.

The Belur Sheet Plant was named the winner of the National Award for Excellence

in Water Management 2005 (Water Efficient Unit) and for Excellence in Energy

Management 2005 (Energy Efficient Unit), presented by the CII — Sohrabji Godrej

Green Business Centre. Belur also won the Greentech Environment Excellence Gold

Award 2005.

The Alupuram Extrusions plant earned the Best Safety Performance Award

presented by the National Safety Council, Kerala Chapter, while Alupuram Smelter

was presented the Industrial Safety (Runners Up) Award for 2003-2005 for the

lowest average accident frequency.

Alupuram Extrusions earned the first prize in the Kerala state level Quality Circle

Competition organized by CII.


Alupuram Smelter ranked third in the Kerala state level Quality Circle ::

Competition organized by CII.

Bauxite and coal mines, in all regions (Jharkhand, Maharashtra, Chhattisgarh and

Orissa) have won a host of awards in safety, environment, pollution control and

overall performance during the Mines Safety Week and Mines, Environment & ::

Mineral Conservation Week programs organized by the Indian Bureau of Mines and

the Directorate of Mines Safety.

Mergers and Acquisitions

Hindalco Industries Ltd. and Novelis Inc. announce an agreement for Hindalco's

acquisition of Novelis for nearly US$ 6 billion

Aditya Birla Group's Hindalco Industries Limited, India's largest non-ferrous metals

company, and Novelis Inc. (NYSE: NVL) (TSX: NVL), the world's leading producer of

aluminum rolled products, announced that they have entered into a definitive agreement

for Hindalco to acquire Novelis in an all-cash transaction which values Novelis at

approximately US$6 billion, including approximately US $2.40 billion of debt. Under the

terms of the agreement, Novelis shareholders will receive US $44.93 in cash for each

outstanding common share.

Based in Mumbai, India, Hindalco is a leader in Asia's aluminum and copper industries,

and is the flagship company of the Aditya Birla Group, a $12 billion multinational

conglomerate, with a market capitalization in excess of $20 billion. Following the United Institute Of Management, Allahabad Page | 48

transaction Hindalco, with Novelis, will be the world's largest aluminum rolling

company, one of the biggest producers of primary aluminum in Asia, and India's leading

copper producer.

Mr. Kumar Mangalam Birla, Chairman of the Aditya Birla Group, said, "The acquisition

of Novelis is a landmark transaction for Hindalco and our Group. It is in line with our

long-term strategies of expanding our global presence across our various businesses and

is consistent with our vision of taking India to the world. The combination of Hindalco

and Novelis will establish a global integrated aluminum producer with low-cost alumina

and aluminum production facilities combined with high-end aluminum rolled product

capabilities. The complementary expertise of both these companies will create and

provide a strong platform for sustainable growth and ongoing success."

Acting Chief Executive Officer of Novelis, Mr. Ed Blech Schmidt, said, "After careful

consideration, the Board has unanimously agreed that this transaction with Hindalco

delivers outstanding value to Novelis shareholders. Hindalco is a strong, dynamic

company. The combination of Novelis' world-class rolling assets with Hindalco's

growing primary aluminum operations and its downstream fabricating assets in the

rapidly growing Asian market is an exciting prospect. Hindalco's parent, the Aditya Birla

Group, is one of the largest and most respected business groups in India, with growing

global activities and a long-term business view."

Novelis was the global leader in aluminum rolled products and aluminum can be

recycling, with a global market share of about 19 per cent. Hindalco has a 60 per cent


share in the currently small but potentially high-growth Indian market for rolled products.

Hindalco's position as one of the lowest cost producers of primary aluminum in the world

is leverage able into becoming a globally strong player. The Novelis acquisition gave

Hindalco immediate scale and a global footprint.

The transaction has been unanimously approved by the Boards of Directors of both

companies. The closing of the transaction is not conditional on Hindalco obtaining

financing.

The transaction will be completed by way of a plan of arrangement under applicable

Canadian law. It will require the approval of 66.66 per cent of the votes cast by

shareholders of Novelis Inc. at a special meeting to be called to consider the arrangement

followed by court approval. The closing of the transaction will also be subject to

customary conditions including regulatory approvals, and is expected to be completed

during the second quarter of 2007. Novelis is the global leader in aluminum rolled

products and aluminum can be recycling. The company operates in 11 countries, has

approximately 12,500 employees and reported $8.4 billion in 2005 revenue. Novelis has

the unrivaled capability to provide its customers with a regional supply of technologically

sophisticated rolled aluminum products throughout Asia, Europe, North America and

South America. Through its advanced production capabilities, the company supplies

aluminum sheet and foil to the automotive and transportation, beverage and food

packaging, construction and industrial, and printing markets.


ACHIVEMENTS

2016 – Mrs. Rajashree Birla honored with the Lifetime Achievement Award 2015-2016 by the

Ladies’ Wing of the Indian Merchants’ Chamber Mrs. Rajashree Birla honored with the Lifetime

Achievement Award 2015-2016 by the Ladies’ Wing of Indian Merchants’ Chamber

AV Cell and AV Nackawic (Pulp & Fiber business) have emerged among the top 25 employers.

Birla Carbon is credited for publishing ‘Asia’s Most Transparent Report’ and ‘Asia’s Best

Materiality Report’. Birla Carbon also received commendation certificates for ‘Asia’s Best

Supply Chain Reporting’, ‘Asia’s Best Community Reporting’ and ‘Asia’s Best Environment

Reporting’ at the Asia Sustainability Reporting Awards, organized by CSRWorks Events, an arm

of CSRWorks International.

2015 – Under the aegis of Egypt’s Prime Minister, The Federation of Egyptian Industries -

Environmental Compliance Office and Sustainable Development (ECO FEI), conferred the

‘Pioneer Businesses to Achieve Sustainable Development 2015 Award’ upon Birla Carbon’s

Alexandria Carbon Black.

For being an exemplar in energy efficiency, Birla Carbon’s Tiszaújváros plant in Hungary was

accorded the Werner von Siemens Efficiency award.


The Minister of Industry of Thailand honors Thai Carbon Black with the 'National QC

Promotion Award 2015' in recognition of its outstanding commitment to quality.

Birla Carbon’s Korean plant was hailed by the Korean Employment and Labor Minister, Mr. Lee

Ki-Kweon as 'The Distinguished Contributor of Industrial Accident Prevention Award.'

Idea Cellular wins Silver and Bronze for Idea’s ‘No Ullu Banaoing’ campaign at the Asian

Marketing Effectiveness Awards 2015 in Singapore.

Idea wins ‘Mobile Data Service Provider of the Year and Most Innovative Telecom Service

Provider of the Year’ award at Frost & Sullivan Asia Pacific ICT Awards 2015.

Birla Sun Life Asset Management Company wins ‘Best Fund House – Debt category’ and ‘Best

Intermediate Bond Fund' award for 'Birla Sun Life Dynamic Bond Fund’ at the Morningstar

Awards 2015. Morningstar is a leading global investment research and investment management

firm.

Birla Sun Life Insurance Company’s ‘Khud Ko Kar Buland’ marketing campaign wins the ‘Best

Screenplay’ award at the 5th Dadasaheb Phalke Film Festival 2015.

Aditya Birla Nuvo Limited consolidates its Branded Apparels Businesses under listed subsidiary

— Pantaloons Fashion & Retail Limited (PFRL). The Board of PFRL approves PFRL to be

renamed as ‘Aditya Birla Fashion & Retail Limited’ (“ABFRL”).

Mr. Kumar Mangalam Birla is bestowed with 'Global Leadership Award' of the US India

Business Council (USIBC), at the 39th Anniversary Leadership Summit at Washington DC.

Mr. Kumar Mangalam Birla is conferred with 'Hello Hall of Fame Award – Business Leader of

the Year' by the World Wide Media Group (WWM), a joint venture between the Times Group

and BBC Worldwide.

Aditya Birla Group – Indonesia (Fibre and Spinning Business) is named one of the 'Best

Employers in Indonesia, 2015' in the 8th edition of Aon Hewitt’s Best Employers study in Asia.


Mr. Himanshu Kapania, Managing Director, Idea Cellular, is named 'Outstanding CEO of the

Year' in Master Category at CEO India Awards 2015.

UltraTech’s Vikram Cement (Madhya Pradesh) wins the prestigious IMC Ramkrishna Bajaj

National Quality Performance Excellence Trophy.

Aditya Birla Nuvo’s Indian Rayon wins Golden Peacock Award for HR Excellence and Golden

Peacock Environmental Management Award; GreenTech Silver Award for Outstanding

Achievement for Best Strategy in HR and GreenTech Silver Award for Outstanding

Achievement in Safety.

Idea Cellular wins three awards at the Effies — 2 gold and a silver — Gold in the Services

category (Telecom) for 'No Ullu Banaoing', Gold For Best Ongoing Campaign – 'An Idea can

change your life' and Silver in the category – Integrated Advertising Campaign (for a 360

approach on the campaign across all media). It also won ET Telecom Award for the Best

Marketing Campaign of the year for “No Ullu Banaoing”.

Idea Cellular wins award in 'Analytics' category for the implementation of end-to-end Campaign

Management solution at Business Technology IT Awards.

Aditya Birla Financial Services wins CIO Impact Award 2015 from Frost & Sullivan USA and

Best in Class – Cloud Computing category for 2015; wins two Midas Awards 2014; Silver at

Emvies from the Advertising Club, India; three Bronze medals at Goafest Creative & Media

Abby Awards; two Bronze and one Silver at DMAi Award and Silver for its marketing campaign

at Effies.

Aditya Birla Money wins Best Performing National Financial Advisors award at the CNBC TV

18 Financial Advisor Award.

Birla Sun Life Insurance’s 'My Solutions' wins at the Celent Model Insurer Asia Awards in

Digital and Omni-channel category; Golden Peacock Award for Business Excellence.


Birla Sun Life Mutual Fund wins Morningstar Award 2015 for the ‘Best Fund House – Debt' and

'Best Intermediate Bond Fund'; the Asset Management – House of the Year at Money Today,

FPCIL Awards.

Mrs. Rajashree Birla conferred with the ‘Champion of Humanity’ award by the Hindustan

Chamber of Commerce

The Board of Directors of Grasim Industries Limited approves the proposed merger of Aditya

Birla Chemicals (India) Limited, an Aditya Birla Group company, with Grasim.

2014 – Mr. Phil Martens, President & CEO, Novelis, is named Automotive News Industry All-

Star (December 2014).

Idea Cellular wins ET Telecom award 2014 in Enterprise category for the second year in

succession for smart cab solution.

Birla Carbon (Brazil) is named 'Best Carbon Black Supplier Company', by virtue of which it was

awarded 'The Top Rubber 2014', title by Borracha Atual, a key trade magazine in the rubber

industry.

Novelis is honoured as the winner of the Minister of Environment Award at the 2014 Korea

Lifestyle of Health and Sustainability (LOHAS) Awards.

Novelis wins Edison Green Award Silver Trophy (April 2014); Aluminum Industry Leadership

Award at Platts Global Metals Awards (May 2014) and Clean Tech Innovation Award at Metro

Atlanta Chamber E3 Awards (May 2014).

The Board of Directors of UltraTech Cement, the largest cement company in India, approves the

acquisition of cement units of Jaiprakash Associates Limited in Madhya Pradesh in December.

The enterprise value of this acquisition was agreed at Rs. 5,400 crores.

Aditya Birla Chemicals (India) Limited (ABCIL) acquires the chlor-alkali division of Jayshree

Chemicals Limited in September.United Institute Of Management, Allahabad Page | 54

Birla Sun Life Asset Management, joint venture between Aditya Birla Group and Sun Life

Financial Inc., acquires Mutual Fund Assets of ING Investment in May.

Aditya Birla Money Mart wins Best Financial Advisor (Retail) award at CNBC TV18 Financial

Advisor Award 2013-14.

Novelis, a leading producer of rolled aluminum, is honored with Industry Leadership award -

Aluminum at Plats Global Metals Awards 2014. The award recognizes Novelis' decisive action

to transform its business, demonstrated leadership as a first-mover and willingness to take risks

by making fundamental changes in the way it operates.

Aditya Birla Group is ranked number 1 in the Nielsen Corporate Image Monitor 2013-14, for the

second year in a row, across the six pillars of corporate performance – products and services,

vision and leadership, workplace environment, financial performance, operating style and social

responsibility.

Mrs. Rajashree Birla accorded the CSR Leader award — a Jury award — at the CEO India

Awards 2014.

Dr. Santrupt Misra is awarded 'Global Leader of the Year' at the CEO India awards 2014.

The Fine Arts Society (FAS), Mumbai, confers the 'FAS Stree Ratna Award 2014' on Mrs.

Rajashree Birla.

Mrs. Rajashree Birla receives the 'Exceptional Leader – Social and Rural Development' award

from the ASSOCHAM Ladies League.

The American Chamber of Commerce in Thailand (AMCHAM) bestows the 'AMCHAM Award'

on the Aditya Birla Knowledge Centre, the first centre of its kind set up by the Group in South

East Asia to provide community service through vocational training.

The Corporate Social Responsibility (CSR) team at Grasim Industries Limited (Grasim), a global

leader in viscose staple fibre manufacturing, wins the first 'CSR Activist of the Year Award'


instituted by the Federation of Madhya Pradesh Chamber of Commerce & Industries for its work

in uplifting the marginalized.

Birla White (UltraTech), the largest cement company in India wins the 'Golden Peacock

Innovation Management Award 2013'.

Vikram Woollens, a unit of Grasim Industries Limited, is named the overall winner at the 'Amity

CSR Conclave 2013'.

Novelis is honored with 'Best Report' award in PR Daily's 2013 CSR Awards.

The CSR team at Indian Rayon, Veraval is awarded the 'Greentech CSR Award' for a sustainable

development project empowering 400 marginalized women through extensive training in

tailoring.

Novelis is awarded the 'Climate Leadership Award' by the US Environmental Protection Agency

for exemplary leadership in reducing carbon pollution and addressing climate change.

Aditya Birla Financial Services (ABFS), one of India’s reputed non-banking financial

companies, is given the 'Excellence Award' by the Institute of Internal Auditors India – Bombay

Chapter, for use of the most innovative processes in conducting branch internal audit.

Birla Sun Life Asset Management Company is recognized as the 'Most Admired AMC of the

Year' in the BFSI Category by Star of India Awards.

ABFS wins the 'Best Marketing Campaign Birla Sun Life Insurance' at the Effie’s, the Indian

chapter of Effie’s International, which recognizes marketing campaigns for their effectiveness in

the market.

ABFS wins four Gold Midas awards between Birla Sun Life Insurance, Birla Sun Life Mutual

Fund and Aditya Birla Money at the Midas Awards, New York, the only international platform

that recognizes excellence in financial advertising and marketing. The company's insurance

business bags the Grand Midas at the event.


more. Megastore is chosen as the winner under the 'Food & Grocery Retailer' category - 'Images

Most Admired Food & Grocery Retailer of the Year, Large Format' at the 7th edition of the Coca

Cola Golden Spoon Awards 2014.

2013 – Aditya Birla Chemicals (Thailand) Limited acquires 100 per cent equity stake in two

epoxy companies based in Germany, i.e., Chemicals & Technologies for Polymers (CTP GmbH)

and 50 per cent equity stake in Chemicals & Technologies for Polymers Advanced Materials

(CTP AM GmbH) in Germany through its 100 per cent owned German subsidiary Aditya Birla

Chemicals (Europe) GmbH.

UltraTech Cement acquires the Gujarat Cement Unit of Jaypee Cement Corporation.

Aditya Birla Chemicals (India) Limited acquires the chlor-alkali and phosphoric acid divisions of

Solaris Chemtech Industries through ABCIL for Rs.153 crores in May.

Madura Clothing wins the 2013 Golden Peacock Award for Corporate Social Responsibility

Mr. Kumar Mangalam Birla is chosen 'Business Leader of the Year' at the Economic Times

Awards for Corporate Excellence 2012-13, becoming, in the process, the first corporate leader to

win the award twice in 10 years. His previous win was in 2003.

UltraTech wins the Intel-AIM Corporate Responsibility Award — Governance and Society:

Asian CSR Awards 2013, for its work among the underprivileged and highest standards of

governance.

The chlor-alkali and phosphoric acid divisions of Solaris Chemtech Industries are acquired by

the Aditya Birla Group through ABCIL in May. The acquisition makes ABCIL the largest

producer of chlor-alkali in India.

Mr. Kumar Mangalam Birla, Aditya Birla Group Chairman, is conferred with the "Most

Inspiring Leader Award 2012" by NDTV.


The Government of India releases a commemorative postage stamp honoring the visionary Mr.

Aditya Vikram Birla as India's 'First Global Industrialist'. The special stamp is released by the

President of India, Mr. Pranav Mukherjee, at Rashtrapati Bhavan in New Delhi on 14th January.

Aditya Birla Group tops Nielsen's Corporate Image Monitor 2012-13 that measures the

reputation of 40 leading corporates in the country across sectors. The Group emerged 'Best in

Class' across the six pillars of corporate image comprising product and service quality, vision

and leadership, workplace management, financial performance, operating style and social

responsibility.

Mrs. Rajashree Birla is conferred with the Godfrey Phillips 'Social Lifetime Achievement

Award' in April.

Mrs. Rajashree Birla is conferred with the Giants International 'Lifetime Achievement Award' in

April.

Birla White cement, an UltraTech brand, completes 25 years of operations.

UltraTech's Birla White (Jodhpur) receives the IMC Ramakrishna Bajaj National Quality Award

– Performance Excellence Trophy 2012.

Aditya Birla Nuvo's Indo Gulf wins the Platinum Award for Excellence in Manufacturing

Processes in the Medium Business Sector at the Economic Times India Manufacturing

Excellence Awards (IMEA).

UltraTech Cement wins three awards at the Economic Times India Manufacturing Excellence

Awards (IMEA) — Vikram Cement Works (Khor) won the Gold award; Rawan Cement Works

(Raipur) bagged the Gold Certificate of Merit; and Awarpur Cement Works (Maharashtra)

received the Silver Certificate of Merit.

Hindalco Industries (Hindalco), the world’s largest aluminum rolling company, receives the

Golden Peacock National Quality Award for 2012.


ABFS receives the Bronze award at the International ECHO Awards 2012 in Las Vegas –

equivalent to the Oscars of Direct Marketing – and a Gold, Silver and Merit certificate at the

Midas Awards 2012, New York. The Midas Awards honors the world's best financial marketing

and advertising campaigns. The company also wins a Bronze at Effie 2012 for its effective

marketing campaign.

ABFS wins the Silver award at the Emvies 2012. The Emvies honor measurable and significant

contributions in the field of Indian media.

For the second year in a row, Idea wins the 'The Best Brand Campaign' award at the World

Communications Awards 2012 in London for its 'Population Control' (3G pe busy) campaign.

The same campaign wins Gold at APPIES 2012 in Singapore.

The mobile number portability campaign - No Idea, Get Idea - wins the award for 'Excellence in

Marketing' at the Economic Times Telecom Awards 2012.

Aditya Birla Minacs wins Bronze in the 'Most Customer Friendly Company of the Year' category

at the Best in Biz awards from among more than 400 companies from nearly every major

industry.

For the second time in a row, Aditya Birla Minacs' finance and accounting team wins the Asian

Leadership Award for 'Quality and Operations Excellence' for its innovative Q-Score Model.

The NDTV Profit Business Leadership Award jury rates Idea Cellular as the 'Best in Class'

telecom company.

'Asian Centre Awards 2012 – Awards for Corporate Governance, Sustainability & Leadership'

commends the Aditya Birla Group as the 'Company with Best CSR and Sustainability Practices'.

2012 – Aditya Birla Group [Company name] makes a financial investment of 27.5 per cent in

Living Media India Limited (India Today Group) through a private investment company in May.


Aditya Birla Group acquires Terrace Bay Pulp Mill in North Western Ontario in July 2012.

Terrace Bay is considered an anchor mill due to its location and its significant consumption of

residual chips produced by regional sawmills.

Aditya Birla Nuvo Limited (ABNL), largest manufacturer of linen fabric in India, acquires

Future Group's Pantaloons format, a part of Pantaloons Retail (India) Limited (PRIL). The

acquisition is in line with the Group's strategic intent to create the largest integrated branded

fashion player in the country.

Aditya Birla Group Chairman, Mr. Kumar Mangalam Birla conferred with Forbes India

Leadership Awards' flagship award – 'Entrepreneur of the Year' in October.

Aditya Birla Group Chairman, Mr. Kumar Mangalam Birla is honored with the 'NASSCOM

Global Business Leader Award, 2012' at the NASSCOM India-Global Leadership Forum held in

Mumbai.

The Asian Centre for Corporate Governance and Sustainability conferred the 'Transformational

Leader Award' on Aditya Birla Group Chairman, Mr. Kumar Mangalam Birla in recognition of

his extraordinary contribution towards setting up corporate governance standards in India, for

authoring the first ever SEBI-initiated Corporate Governance Report in India and for benchmark

able governance standards in the Aditya Birla Group companies.

Aditya Birla Group wins the Economic Times Corporate Citizen Award — 2011-12. The award

honors the contribution to public good through commitment to critical social causes that

influence the lives of thousands of needy Indians. The Group had won this coveted award for the

first time in 2002.

Aditya Birla Group is at the top of the league among 'most loved companies' at the 11th edition

of Business Today's Best Companies survey. The survey, conducted online by Indicus Analytics

from 6 September to 14 November, 2011, drew 6,176 responses from 323 cities. More than 80

per cent of the respondents were between 24 and 35 years of age.United Institute Of Management, Allahabad Page | 60

Novelis is conferred with the American Metal Market Environmental Responsibility and

Stewardship Award 2012; three European Aluminum Awards for Innovation at the world's

biggest Aluminum Trade Show; a Jury Prize for the Titanic Belfast aluminum facade panels; and

a Special Prize, Surface Treatment for its anti-graffiti aluminum surface – Clearly 105.

The Novelis Global Automotive team receives a Special Prize, rolling, for its three-piece tailored

welded blank for Mercedes SL.

The Aditya Birla Memorial Hospital is awarded the 'Performance/Excellence Trophy for its

Compassionate Quality Healthcare' by the Indian Merchant Chambers' Ramakrishna Bajaj

National Quality Awards Committee in Mumbai, India.

Birla White, a division of UltraTech Cement – the largest cement company in India, is conferred

with the ASSOCHAM CSR Excellence Award.

CNBC TV18, one of the top business TV Channels in India, chooses the deal between the Aditya

Birla Group and Columbian Chemicals as the 'Best deal in the M&A category'.

AWARDS AND RECOGNITION:

2015

Aditya Aluminum wins Kalinga Safety Award for Best Practices in Safety & CSR, presented at

the Odisha State Safety Conclave.

Utkal Alumina International Limited wins the Think Media Best CSR Case Study Award 2014

on the theme of “Access to Quality Health Care Services”.

Hirakud wins Greentech CSR Silver Award 2014 for its initiatives in Sustainable Livelihood in

and around the unit location.


Hirakud Smelter wins CII Easter Region Quality Award 2014-15 (Certificate of Appreciation) in

the large scale category.

Birla Copper Dahej wins Greentech CSR Silver Award 2014 for Education Upliftment in 85

surrounding Government schools.

2013

Renukoot Aluminum Complex wins Greentech HR Platinum Award, in the Best Strategy

category, the highest in this segment.

Renusagar Power Division wins the Safety Innovation Award-2013 in Power Plant category,

presented by the Institute of Engineers (India) for its outstanding innovative achievements in the

field of Occupational Health and Safety.

Renusagar Power Division Hospital wins the FICCI Healthcare Excellence Award 2013’.

Birla Copper, bagged the 3rd Annual Green Tech CSR Award in the silver category for the year

2013 for their “Education for All” Project. Hindalco Lohardaga.

CSR activities won recognition from the Indian Bureau of Mines during 21st Mines Environment

and Mineral Conservation Week held in March, 2014, at R& D Centre, SAIL-Ranchi.

2012

Renukoot Complex is conferred the Golden Peacock National Quality Award- 2012, in the

Mining & Metals sector, presented by the Institute of Directors, for its efforts towards “Quality”,

meeting international parameters.

Renusagar Power Division wins the Safety Innovation Award-2012, in the Power Sector

category, for outstanding achievement in safety management, presented by Institute of Directors.

Dahej Copper Complex wins the Greentech Gold Environment Award- 2012, for its outstanding

achievement in Environment Management.


Hirakud Power Plant wins CII Odisha Award- 2012 (2nd Runners Up), for Best Practices in

Environment, Safety and Health.

Taloja Rolling Plant wins the overall title for “Maharashtra Safety Awards-2011”, competition

organised by the National Safety Council - Maharashtra Chapter, in the Heavy Engineering

category for its commendable safety performance, Scheme-I, Lowest Average Accident

Frequency Rate.

2011

Hindalco bagged the prestigious CII – EXIM Bank Business Excellence Award 2011 for its

"strong commitment to excel on the journey towards business excellence".

Birla Copper, a division of Hindalco, won the IMC Ramakrishna Bajaj Quality Award

Commendation Certificate.

Hindalco Renusagar won the Greentech Safety Gold Award 2011 in power sector for outstanding

achievement in safety management by Greentech Foundation, New Delhi.

2010


Renukoot

NIPM Gold Award for Best HR Practices for the year 2010 by National Institute of Personal

Management (NIPM).

Greentech Gold Safety Award 2010 for Occupational Health and Safety Management in the

mining and metals sector by Greentech Foundation, New Delhi.

Greentech Environment Excellence Gold Award 2010 in the metals sector for its efforts towards

environment management by Greentech Foundation, New Delhi.

The Golden Peacock Award for Corporate Social Responsibility for the year 2010.

Greentech HR Excellence Silver Award for 2010 for excellence in training.

Best Exporter Award for 2010 by the Container Corporation of India for contributing to India's

economic progress through significant volume of exports.

National Energy Conservation Award (Second Prize) 2010, in the metals sector presented by the

Ministry of Energy, Government of India.

Silver Certificate of Indian Manufacturing Excellence Award — 2010 by Economic Times and

Frost & Sullivan.

Birla Copper Dahej

Greentech Environment Excellence Gold Award — 2010 in the mining and metals sector for its

efforts towards environment management by Greentech Foundation, New Delhi.

Greentech Silver Safety Award 2010 for Occupational Health and Safety Management in the

mining and metals sector by Greentech Foundation, New Delhi.

Renusagar


Greentech Gold Award 2010 in thermal power sector for outstanding achievement in

environment management by Greentech Foundation, New Delhi.

Commendation for Safety Innovation Award 2010 by the Institution of Engineers (India).

Special Commendation for the Golden Peacock Environment Management Award 2010 by the

Institute of Directors, New Delhi.

Hirakud

Hirakud Power Plant awarded third prize in the state-level CII Odisha Award for Best Practices

in Environment, Safety and Health 2010.

Hirakud Power awarded the Greentech Environment Excellence Gold Award 2010 in the thermal

power sector category.

Muri

National Award for Excellence in Water Management 2010 "Beyond the Fence" category, for

the indigenous work being done by the unit outside the fence as a corporate citizen and for

fulfilling its corporate responsibilities.

Quality Circle Awards


Gold Awards to four Hindalco Renukoot Quality Circle Teams — Kushal, Vaibhav, Pragati and

Nirantar — at the International Quality Circle Competition (IQCC 2010) held at Hyderabad.

Silver and Bronze Awards to Hindalco Hirakud Power Quality Circle Teams — Aryan and

Power — respectively at the International Convention on Quality Concept Circle (ICQCC 2010)

held at Hyderabad.

Quality Circle teams from Renukoot, Hirakud and Birla Copper Dahej units excelled at the

National QC Convention (NCQC 2010), winning Par Excellence, Excellence, Distinguished and

Runners-Up Awards.

2009

Hindalco Renusagar's power division bagged the Golden Peacock Environment Management

Award during the Global Convention on Climate Security. The convention was held at

Palampur, Himachal Pradesh from 12 to 14 June 2009. Dr. Madhav Mehra, President, World

Council for Corporate Governance honored Renusagar’s power division with the award in the

services category.

2008

Greentech Safety Gold Award 2008 for outstanding achievement in safety management in coal-

based power sector.

Hindalco Hirakud Systems ranked runners-up at the state-level IT Competition 2008 organized

by CII in association with the department of information technology, Government of Odisha.

Hirakud smelter was awarded the state-level safety award for Best Occupational Healthcare 2006

— presented in February 2008 at Bhubaneswar.


Talabira coal mines won a host of safety awards, namely, first in working face and maintenance

of Dozer and Pay loader and second in dust suppression at the Annual Coal Mines Safety

Fortnight 2008 organized by Directorate of Mines Safety, Bhubaneswar and Chaibasa region.

POWER PLANT:

Renusagar Power Plant. A 801.57 MW (10 generating units of various capacities) captive

power plant which is about 40 km from Renukoot, Sonebhadra district, Uttar Pradesh.

Hirakud Captive Power Plant. A 467.5 MW captive power plant located

at Hirakud, Sambalpur District Odisha. This plant supplies power to Hirakud smelter of

Hindalco Industries.[10]

Utkal Alumina Captive Power Plant. A 90 MW captive power plant located

at Doraguda, Rayagada District Odisha. This plant supplies power to Utkal Refinery of

Hindalco Industries.[10]

Aditya Captive Power Plant. A 900 MW captive power plant located at Lapanga, Sambalpur

District Odisha. This plant supplies power to Aditya smelter of Hindalco Industries.[10]

Mahan Hindalco industries ltd. a 900 MW captive power plant located and alumina smelter

in Bargawa 20 km from singrauli.

RENUSAGAR POWER PLANT:


Renusagar Power Plant is a coal based captive thermal power plant located

near Renukoot in Sonebhadra district in the Indian state of Uttar Pradesh. The power plant is

operated by the Hindalco Industries and gives power to the smelter (integrated plant), Renukoot

for production of aluminum.

HIRAKUD CAPTIVE POWER PLANT:

Hirakud Power Plant is a coal based captive thermal power plant located

near Hirakud in Sambalpur district in the Indian state of Odisha. The power plant is operated by

the Hindalco Industries. The plant supplies power to Hirakud smelter of Hindalco Industries. The

coal for the plant is sourced from Talabira captive coal mines.


Hindalco & Market in India

After functioning for over 3 decades in an era of the protective license raj, being exposed

to a market where competition exists at a global level would probably make most India

companies weak in the knees. But Hindalco Limited has lived through both environments

of protection and cutthroat competition and has emerged unscathed.

Low cost production, incremental capacity additions, continuous modernization and

efficient asset utilization have been the underpinnings of Hindalco's strategy. The

company is vertically integrated right from the mining of bauxite till the production of

value-added products like extruded products, rolled products, rods and foils.

Aluminum has remained the sole focus of the company. The management of the

company has been responsive to the changes in the environment and has taken steps

accordingly to ensure efficient running of its business. Envisaging a power-deficit

scenario, Hindalco installed a 100 percent captive power unit as early as 1967. The power

plant (612 MW) has been run at peak load factors, and has today, made Hindalco

completely self-sufficient in its power requirements. The net result is that its efficiency

norms are better than most of its peers.


This backward integration strategy of Hindalco has paid it rich dividends. The captive

sources for bauxite and power and proximity from coal mines to its power plant and

smelter give Hindalco an unmatched competitive advantage. In fact, it is rated amongst

the cheapest producers of aluminum in the world. Besides, being an integrated producer,

it has more flexibility in pricing as compared to its competitors in the local market who

convert from scrap or metal, especially in situations when prices are rising. The company

is seen, more often than not, as the leader in setting prices for the domestic industry.

The fortunes of aluminum companies in India are dependent on several key factors and

Hindalco is no exception to any of these. With a fall in import duties on aluminum,

Indian companies today, no longer enjoy the protection available to other sectors. Besides

domestic competition, Indian aluminum companies also have to compete with relatively

cheaper imports. This makes the profitability of these companies very vulnerable to

changes in the international prices of aluminum and the value of the Indian rupee. In

recent times, aluminum companies in India have had a mixed run. Though the prices of

aluminum declined (leading to a squeeze in margins), the value of the rupee also fell.

This made aluminum cheaper to export from India, and that much more expensive to

import. With its fundamentals in place, Hindalco has been able to face the challenges of

weak demand and prices, both in international and domestic markets.

In order to increase value addition, Hindalco has now added and modernized

downstream facilities (rolling, extrusion, foils). It is now focused on increasing its

downstream sales to improve margins and drive bottom-line growth. It is pricing its

products aggressively to penetrate the market. During the first quarter of the current

financial year, Hindalco's turnover growth of 14.5 percent was lead by an improvement in United Institute Of Management, Allahabad Page | 70

sales mix. The company sold more of higher value rolled products and foils. Thus while

metal production increased by 5.6 percent and average prices were up 3.5 percent, the

product mix changes lead to a further 4.7 percent improvement in turnover.

The recent run up in aluminum demand and prices have made analysts look up and take

notice. The stock has been a star performer at the bourses raking in impressive gains of

over 100 percent over just the past 6 months. But that is not the only reason. The market

has appreciated the recent shift in the perspective of the Birla Group, which was recently

spelt out by Chairman, Kumar Birla. It espouses a clear focus for each group company,

within its ambit of businesses, and efforts to unwind the investments made by the

companies in unrelated businesses. In line with its new credo, Hindalco shelved its

proposed Greenfield aluminum project and is instead considering a Brownfield

expansion. It also made a bid for Balco, an integrated aluminum company, for which the

government has announced a strategic sale of its stake. With the overhang of a fresh plant

now out of the way, industry observers are seeing Hindalco in a new light. The new focus

may also see Hindalco reduce in large investments (Rs 4.8 bn in financial year 99) in

group companies.


COMPETITORS

Domestic:Textiles Copper/Aluminum Cement Telecommunication

Reliance Vedant Group Ambuja Bharti Airtel

Raymond ESSAR Unitech Reliance

Mayur Sail Vodafone

TATA Nano BSNL

Interpretation: ALCOA Inc.

ALCAN Inc.

Russian Aluminum

NORSK HYDRO


SWOT ANALYSIS OF HINDALCO INDUSTRIES LIMITED

STRENGTHS: Strong brand recognition Internet sales

Growing international sales

Superior research and development department

Strong financial returns

Strong sense of culture in the working environment

Successful experience being competitive

Effective leadership

Cost leadership

WEAKNESS:

Complexity of operation

Lengthy processing chain

OPPORTUNITIES:

Growth of core sector industries

Rapid integration with global economy


Booming construction business in asia

Growing e-commerce’s business

Increasing urbanization

THREATS:

Entry of global players

Take over possibilities

Political threats

The impact of foreign currency fluctuation and interest rates

Loss of sales to substitutes


Hindalco brands:Hindalco’s brands are well-known for their reliability and superior quality. Hindalco’s brands have evolved into very successful products over the years and represent the technological excellence of the company.

Aluminum Extrusions Brands

Hindalco extrusions Maxloader Eternia

Aluminum FRP Brands Ever last

Aluminum Foil Brands Freshwrapp Super wrap

Copper Product Brands Birla Bal wan


MILESTONES:

2011 – the company successfully achieved financial closure of the Mahan Project with the

signing of Common Rupee Loan Agreement for 7875 crores.

2009 – QIP raised $600 million for projects, the largest straight QIP in India.

2008 – alumina expansion at Muri right issue- raised total of 4426 crs. for re-financing bridge

loan taken for Novelis acquisition. Hindalco Almex Aerospace Ltd. Facility became operational

and produced largest aluminum billet of 42” diameter.

2007 – successful acquisition of Novelis, making Hindalco the largest in aluminum rolling and

among the global top five metal majors, with a presence in 11 countries outside India.

Acquisition Alcan’s 45% equity stake in the Utkal Alumina project, thereby making Hindalco

the 100% project owner.

2006 – Hindalco announces 10:1 stock split. Each share with face value of Rs.10 per share split

into 10 shares of Rs.1 each.

Hindalco completes largest Rights Issue in the history of Indian capital market with total size of

Rs. 22266 million

Equity offering and subsequent listing of Aditya Birla Minerals Ltd. on Australian Stock

Exchange.

Signed an MoU with the Government of Madhya Pradesh for a green field aluminum smelter in

the Siddhi district of the state.

Joint venture with Almex USA for manufacture of high strength aluminum alloy for application

in aerospace, sporting goods and surface transport industries.

2005 – all business of Indal, except for the Kolar Foil Plant in Andhra Pradesh, merged with

Hindalco Industries Ltd.


MoUs signed with state government of Orissa and Jharkhand for setting up of greenfield alumina

refining, smelting and power plants.

2004 – copper smelter expansion to 250000 tpa.

2003 – Hindalco acquires Nifty Copper Mine in March through Aditya Birla Minerals Ltd.

(ABML, formerly Birla Minerals Resources Pvt. Ltd.)

ABML acquires the Mount Gordon copper mines in Nov.

Equity stake in Indal increased to 96.5% through an open offer.

Brownfield expansion of aluminum smelter at Renukoot to345000 tpa.

2002 – the amalgamation of Indo Gulf Corporation Ltd. (Indal) with 74.5% equity holding.

1999 – aluminum alloy wheels commenced at Silvassa.

Brownfield expansion of metal capacity of Renukoot to 242000 tpa.

1998 – Foil plant at Silvassa goes on stream, Hindalco attains ISO 14001 EMS certification.

1995 – Mr. Kumar Mangalam Birla takes over as Chairman of Indal Board.

1991 – beginning of major expansion program.

1967 – commissioning of Renusagar Power Plant.

1965 – downstream capacities commissioned (rolling and extrusion mills at Renukoot).

1962 – commencement of production at Renukoot, U.P. with an initial capacity of 20000 mtpa of

aluminum metal and 40000 mtpa of alumina.

1958 – incorporation of Hindalco Industries Ltd.


Products and services

Hindalco Industries has a number of products to offer in categories like alumina

chemicals, aluminum foil and packaging, primary aluminum, aluminum alloy wheels,

aluminum extrusions, copper products, aluminum rolled products and DAP/NPK

complexes.

In alumina chemicals section Hindalco Industries produces alumina and hydrates. In

primary aluminum section its main offerings are ingots, billets and wire rods. In

aluminum extrusions section major products are rods, channels, flats, round tubes,

squares, rectangular tubes, equal leg angles and square tubes.

In aluminum rolled products section main offerings of Hindalco Industries are building

sheets, foil stock, cable wrap stock, hot rolled plates, circles, lamp cap stock, closure

stock, litho stock, cold rolled coils, pattern sheets, cold rolled sheets, PCB entry sheets

and coils, fin stock, spiral fin stock and flooring sheets and tread plates. There are other

products in this section as well.

Aluminum

Hindalco was among the first few alloy wheels’ companies to have obtained the ISO/TS

16949 certification to meet the stringent standard of the automobile industry. In India,

Hindalco enjoys a leadership position in specialty alumina, primary aluminum and


downstream products. Apart from being a dominant player in the domestic market,

Hindalco's products are well accepted in international markets. Exports account for more

than 30 per cent of total sales.

Hindalco's major products include standard and specialty grade alumina and hydrates,

aluminum ingots, billets, wire rods, flat rolled products, extrusions, foil and alloy wheels

Copper

Birla Copper, a unit of Hindalco is located at Dahej in Gujarat. The unit has the unique

distinction of being the largest copper smelter in the world at a single location with

500,000 TPA capacity with multiple world class technologies. The facilities comprise

copper smelters, precious metals, fertilizers, sulfuric acid, captive power plants, utilities

and a captive jetty.

Hindalco's Birla Copper is a renowned producer of copper cathodes and continuous cast

copper rods since its inception, with ISO-9001:2000 (Quality Management systems),

ISO-14001:2004 (Environmental Management System) OHSAS- 18001:2007

(Occupational Health and Safety Management Systems) accreditations.

Mines

The two copper mines in Australia were acquired in 2003. Birla Nifty mine consists of

an open-pit mine, heap leach pads and a solvent extraction and electro winning (SXEW)

processing plant, which produces copper cathode. Birla Nifty's copper cathode capacity is


25,000 TPA. Open pit mining was completed in 2006. During FY2008, Nifty produced

5,112 tons of copper cathode.

A copper sulphide deposit is located at the lower levels of the Nifty open pit mine and an

underground mine and concentrator have been developed to mine and process ore from

this deposit. The Nifty Sulphide Operation, commenced ore production from stopping in

December 2005 and concentrate production in March 2006. During FY2008, Nifty

produced 53,397 tons of copper in concentrate.


PRODUCTS IN COMPANY’S PRODUCT LINE

o Alumina Chemicals

Alumina and Hydrates

Minerals.

o Primary Aluminum

Ingots

Wire rods

Billets.

o Aluminum Extrusions

o Aluminum Rolled products

o Aluminum Foil and Packaging

o Aluminum Alloy Wheels

o Copper products

Copper Cathodes

Continuous cast copper rods.

o DAP/NPK Complexes


COMPANIES OF HINDALCO

Novelis Inc:

Acquired by Hindalco in 2007, Novelis is the world leader in rolled aluminum products,

delivering unique solutions for the most demanding global applications, such as beverage cans,

automobiles, architecture and consumer electronics. Our unique material advantage, customer-

focused innovation and unparalleled commitment to sustainability define the Novelis brand.


Aditya Birla Minerals

Aditya Birla Minerals is an Australian mining company with a focus on copper production and

exploration. Based in Perth, West Australia, the company conducts its activities at the Birla Nifty

Copper Operation in the Great Sandy Desert, WA. Aditya Birla Minerals is part of the Aditya

Birla Group and is part owned by Hindalco.


Hindalco-Almex Aerospace:

Hindalco-Almex Aerospace Limited manufactures high-strength aluminum alloys for

applications in the aerospace, sporting goods and surface transport industries. A joint venture

between Hindalco and Almex Aerospace, Hindalco-Almex operates a first-of-its-kind facility in

India, which is exclusively devoted to high-performance aluminum alloys.


BOARD OF DIRECTORS:

S.No Name Designation1. Mr. Satish Pai Addl. Director & WTD2. Mr. Kumar Mangalam Birla Chairman3. Mr. Debnarayan Bhattacharya Managing Director4. Mr. Rajshree Birla Non-Executive Director5. Mr. Madhulkar Manilal Bhagat Non-Executive Director6. Mr. Kailash Nath Bhandari Non-Executive Director7. Mr. Askaran Agarwala Non-Executive Director8. Mr. Narendra Jamnadas Jhaveri Non-Executive Director9. Mr. Ram Charan Non-Executive Director10. Mr. Jagdish Khattar Non-Executive Director

Key Executives:

S.No. Auditor’s Name Designation1. Mr. Praveen Kumar Chief financial Officer2. Mr. Sachin Satpute Chief Managing Officer3. Mr. Dinesh Kumar Kohly Chief Operating Officer4. Mr. Vineet Kaul Chief People Officer5. Mr. Anil Malik Co. Secretary & Compl. Officer6. Mr. Dilip Kumar Group Executive President7. Mr. Satish Mohan Bhatia President8. Mr. Sanjay Sehgal President9. Mr. Bharat Bhusan Jha Senior President


COMPOSITION OF COMMITEES:

Name of Committee

Name of Committee members

Category (Chairperson/Executive/Non-Executive/Independent/Nominee)

1. Audit Committee

1. Mr. M.M Bhagat

2. Mr. K.N Bhandari

3. Mr. Y.P. Dandiwala

1. Chairman-Independent- Non Executive

2. Member-Independent- Non Executive

3. Member-Independent- Non Executive

2. Nomination & Remuneration Committee

1. Mr. M.M Bhagat

2. Mr. Kumar Mangalam Birla

3. Mr. K.N Bhandari

1. Chairman-Independent- Non Executive

2. Member- Non Executive3. Member-Independent

3. Risk Management Committee

1. Mr. A.K Agarwala

2. Mr. Satish Pai3. Mr. R.K

Kasliwal4. Mr. Anil

Mathew5. Mr. D.

Bhattacharya

1. Chairman-Non Executive2. Member-Executive3. Member4. Member5. Member-Executive

4. Stakeholders Relationship Committee

1. Mr. K.N Bhandari

2. Mr. M.M Bhagat

3. Mr. A.K Agarwala

1. Chairman-Independent-Non Executive

2. Member-Independent – Non Executive

3. Member- Non Executive



Cha

pter

4

FINANCIAL ANALYSIS

Financial Statement Analysis will help business owners and other interested people to

analyze the data in financial statements to provide them with better information about

such key factors for decision making and ultimate business survival.

Financial Statement Analysis is the collective name for the tools and techniques that are

intended to provide relevant information to the decision makers. The purpose of the FSA

is to assess the financial health and performance of the company. FSA consist of the

comparisons for the same company over the period of time and comparisons of different

companies either in the same industry or in different industries.

Financial Statement Analysis Purpose :

To use financial statements to evaluate an organization’s – Financial performance –

Financial position – Prediction of future performance

To have a means of comparative analysis across time in terms of: – Intracompany basis

(within the company itself) – Intercompany basis (between companies) – Industry

Averages (against that particular industry’s averages).

To apply analytical tools and techniques to financial statements to obtain useful

information to aid decision making.


Financial Statement Analysis Financial statement analysis involves analyzing the

information provided in the financial statements to: – Provide information about the

organization’s: • Past performance • Present condition • Future performance – Assess the

organization’s: • Earnings in terms of power, persistence, quality and growth • Solvency

Financial Statements…• 1. The Income Statement• 2. The Balance Sheet• 3. The

Statement of Retained Earnings• 4. The Statement of Changes in Financial Position

Changes in Working Capital Position Changes in Cash Position Changes in Overall

Financial Position

Effective Financial Statement Analysis• To perform an effective financial statement

analysis, you need to be aware of the organization’s: – business strategy – objectives –

annual report and other documents like articles about the organization in newspapers and

business reviews. These are called individual organizational factors.

Effective Financial Statement Analysis Requires that you. Understand the nature of the

industry in which the organization works. This is an industry factor. Understand that the

overall state of the economy may also have an impact on the performance of the

organization. → Financial statement analysis is more than just “crunching numbers”; it

involves obtaining a broader picture of the organization in order to evaluate appropriately

how that organization is performing


Standards of Comparison…• 1. Rule-of-thumb Indicators Financial analyst and

Bankers use rule-of thumb or benchmark financial ratios. • 2. Past performance of the

Company• 3. Industry Standards

Sources of Information.

1. Company Reports – Directors Report – Financial Statement – Schedules and notes to

the Financial Statements – Auditors Report

2. Stock Exchanges

3.Business Periodicals

4.Information Services • CRISIL • ICRA • CMIE

Tools of Financial Statement Analysis: The commonly used tools for financial

statement analysis are:

o Financial Ratio Analysis

o Comparative financial statements analysis: – Horizontal analysis/Trend analysis

– Vertical analysis/Common size analysis/ Component Percentages

Financial Ratio Analysis

o Financial ratio analysis involves calculating and analyzing ratios that use data

from one, two or more financial statements.

o Ratio analysis also expresses relationships between different financial

statements.


o Financial Ratios can be classified into 5 main categories: – Profitability Ratios –

Liquidity or Short-Term Solvency ratios – Asset Management or Activity Ratios

– Financial Structure or Capitalization Ratios – Market Test Ratios

Profitability Ratios3 elements of the profitability analysis:

o Analyzing on sales and trading margin – focus on gross profit

o Analyzing on the control of expenses – focus on net profit

o Assessing the return on assets and return on equity

Profitability Ratios

o Gross Profit % = Gross Profit * 100 Net Sales

o Net Profit % = Net Profit after tax * 100 Net Sales Or in some cases, firms use

the net profit before tax figure. Firms have no control over tax expense as they

would have over other expenses. ⇒ Net Profit % = Net Profit before tax *100 Net

Sales

o Return on Assets = Net Profit * 100 Average Total Assets

o Return on Equity = Net Profit *100 Average Total Equity

Liquidity or Short-Term Solvency Ratios Short-term funds

management• Working capital management is important as it signals the firm’s ability


to meet short term debt obligations. For example: Current ratio• The ideal benchmark for

the current ratio is $2:$1 where there are two dollars of current assets (CA) to cover $1 of

current liabilities (CL). The acceptable benchmark is $1: $1 but a ratio below $1CA:

$1CL represents liquidity riskiness as there is insufficient current assets to cover $1 of

current liabilities.

Liquidity or Short-Term Solvency ratios

o Working Capital = Current assets – Current Liabilities

o Current Ratio = Current Assets Current Liabilities

o Quick Ratio = Current Assets – Inventory – Prepayments Current Liabilities –

Bank Overdraft

Asset Management or Activity Ratios

o Efficiency of asset usage – How well assets are used to generate revenues

(income) will impact on the overall profitability of the business. For example:

Asset Turnover• This ratio represents the efficiency of asset usage to generate

sales revenue

Asset Management or Activity Ratios

o Asset Turnover = Net Sales Average Total Assets

o Inventory Turnover = Cost of Goods Sold Average Ending Inventory

o Average Collection Period = Average accounts Receivable Average daily net

credit sales* * Average daily net credit sales = net credit sales / 365United Institute Of Management, Allahabad Page | 92

Financial Structure or Capitalization Ratios Long term funds

management• Measures the riskiness of business in terms of debt gearing. For

example: Debt/Equity• This ratio measures the relationship between debt and equity. A

ratio of 1 indicates that debt and equity funding are equal (i.e. there is $1 of debt to $1 of

equity) whereas a ratio of 1.5 indicates that there is higher debt gearing in the business

(i.e. there is $1.5 of debt to $1 of equity). This higher debt gearing is usually interpreted

as bringing in more financial risk for the business particularly if the business has

profitability or cash flow problems.

Financial Structure or Capitalization Ratios

o Debt/Equity ratio = Debt / Equity• Debt/Total Assets ratio = Debt *100 Total

Assets• Equity ratio = Equity *100 Total Assets• Times Interest Earned =

Earnings before Interest and Tax Interest © Mary Low

Market Test Ratios

o Based on the share markets perception of the company. For example:

Price/Earnings ratio

o The higher the ratio, the higher the perceived quality of the earnings by the share

market.

Market Test Ratios

o Earnings per share = Net Profit after tax Number of issued ordinary shares


o Dividends per share = Dividends Number of issued ordinary shares

o Dividend payout ratio = Dividends per share *100 Earnings per share

o Price Earnings ratio = Market price per share Earnings per share

Horizontal analysis/Trend analysis

o Trend percentage• Line-by-line item analysis

o Items are expressed as a percentage of a base year

o This is a time series analysis• For example, a line item could look at increase in

sales turnover over a period of 5 years to identify what the growth in sales is over

this period.

Vertical analysis/Common size analysis/ Component Percentages

o All items are expressed as a percentage of a common base item within a financial

statement

o e.g. Financial Performance – sales are the base

o e.g. Financial Position – total assets are the base

o Important analysis for comparative purposes – Over time and – For different

sized enterprises

Limitations of Financial Statement Analysis

o We must be careful with financial statement analysis. – Strong financial

statement analysis does not necessarily mean that the organization has a strong


financial future. – Financial statement analysis might look good but there may be

other factors that can cause an organization to collapse.

Limitations of FSA…

o Financial Analysis is only a Means

o Ignores the Price Level Changes

o Financial Statements are essentially Interim Reports

o Accounting Concepts and Conventions

o Influence of Personal Judgments

o Disclose only Monetary Facts



Chapter

5

RESEARCH METHODOLOGY

Scope of The Study:

Research methodology is a way to systematically solve the research problem. It may be

understood as a science of studying how is done scientifically. In it we study various steps that

are generally adopted by a researcher in studying his research problem along with the logic

behind them.

Descriptive Research Meaning:

The descriptive research attempts to describe, explain and interpret conditions of the present i.e.

“what is”. The purpose of a descriptive research is to examine a phenomenon that is occurring at

a specific place(s) and time. A descriptive research is concerned with conditions, practices,

structures, differences, or relationships that exist, opinions held processes that are going on or

trends that are evident.


SAMPLING DESIGN:

Sampling Unit: Hindalco

Sampling Size: Last five years’ financial statements

Tools Used: MS-Excel has been used for calculation

Objective:

To understand the process of fund management at Hindalco Industries Limited.

Also to understand the different ways in which company’s fund are managed and put to

various applications and operations and to suggest any better alternative.

Data Collection:

Company staffs and information provided by them were the primary sources.

Company’s Annual Report and other web sources were the secondary sources.

COLLECTION OF DATA:

Data required for the project e.g. Balance Sheet, statement of Profit & Loss Account Etc. were

collected from the annual reports of Hindalco period of 2010-2011, 2011-2012, 2012-2013,

2013-2014, 2014-2015. Besides for Explanation of several issues, different articles, internet

data’s, books etc. were consulted data collected secondary data.


Secondary Sources:

Annual report of Hindalco, 2014-2015 and individual contra sheet of Aluminum and

copper for the 2014-2015.

Internet

Induction Guide

Tools & Techniques:

For the purpose of analyzing financial statement, large number of tools are available to choose

from. Following tools have been used for this purpose for analyzing the performance of

HINDALCO Ind. Ltd.

Ratio analysis

Cash flow statement analysis

Trend analysis

Statement of change in Working capital

Common size statement & Balance sheet

All the above tools have been used with the help of applications in MS Office package.

Analysis: For the comparative analysis ratios were used along with graphs, charts and necessary diagrams.

The current year i.e. 2015-2016 has not been taken into calculation because, at that time of

preparation of this report annual closing accounting of the company was going on.


Problems and limitations:

The company is situated so far from the Airport.

Causes of huge demand the company has to work 24 hours.

There is no facility of shipping because it is situated at hill.

The raw materials are available in other states coal, bauxite.

Time is definitely the main Constraint. Time was not sufficient enough to assess all

processes and policies of an organization of the stature of Hindalco industry ltd.

Inadequacy of data is another problem.

The analysis is limited to just five years of data study for financial analysis.

Limited interaction with the concerned heads to their busy schedule.

The findings of the study are based on the information retrieved by the selected unit.


Data Analysis:

For the comparative analysis ratios were used along with graphs, charts and necessary diagrams.

The current year i.e. 2015-2016 has not been taken into calculation because, at that time of

preparation of this report annual closing accounting of the company was going on.

Interpretation & Recommendation:

After completion of the entire analysis, interpretation & recommendation were made on the basis

of figures and diagrams, Statistical tools like Tables, Charts, Bar Graphs used for representation

of data.



Cha

pter

6

DATA ANALYSIS AND INTERPRETATION

Here, analysis has been carried out using Ratio Analysis. For this following ratios have been

applied with their description as under.

Apart from the above there are many other ratios some of which are also used in the analysis like cash ratio, dividend payout ratio, earning per share, net income, net working capital, etc.

I. Liquidity Ratio: analyzes the ability of the company to pay off both its short-term as

well as long-term liabilities as and when they become due. In other words, these ratios

show the cash level of a company and the ability to turn other assets into cash to pay off

liabilities and obligations. Ratios used here areUnited Institute Of Management, Allahabad Page | 103

Ratio Analysis

Liquidity Ratio Solvency Ratio Efficiency Ratio Profitability Ratio

Assets Turnover Ratio

Compound Annual Growth

Rate

Cha

pter

6

Year 2014-2015 2013-2014 2012-2013 2011-2012 2010-2011Current Assets 22929.20 21951.89 20150.03 16479.44 15929.20Current Liabilities 13092.72 12581.79 9736.76 10035.04 9126.27Current Ratio 1.7513 1.7447 2.0694 1.6422 1.7454

a) Current Ratio = (Current Assets/Current Liability)

b) Quick/Acid Test Ratio = Cash + Cash Equivalents + Short-term Investments + ReceivablesYEAR 2014-2015 2013-2014 2012-2013 2011-2012 2010-2011Quick Assets 14107.97 13037.31 12447.42 8736.58 8277.80Current Liab. 13092.72 12581.79 9736.76 10035.04 9126.27Quick Ratio 1.0775 1.0362 1.2784 0.8706 0.9070

Current Liabilities

Interpretation:

Quick Ratio: On the basis of analysis of financial statement the researcher found that the

quick ratio has improved over the time period ranging from 2010-2011 to 2014-2015 which


1 - J a n - 1 1 1 - J a n - 1 2 1 - J a n - 1 3 1 - J a n - 1 4 1 - J a n - 1 50

0.5

1

1.5

2

2.5

Quick RatioQuick Ratio Current Ratio

means that the company is investing into more liquid current assets therefore the liquidity is

more however excess liquidity can become a cause of falling profitability as in an effort to

maintain liquidity hindalco may lose upon huge good investment opportunities which can

contribute towards profitability.

Current ratio: on the basis of financial statement of hindalco the researcher found that when

observed over a period of time the current ratio has improved significantly over the year 2012-

2013nand then it becomes consistent at level of 1.7 in the following two years (2013-2014 and

2014-2015)

As observed in case of quick assets that the proportion is increasing therefore the

researcher concluded that the proportion of current assets is falling as compare to current

liabilities and of these limited current assets a significant proportion is going towards more liquid

assets which is a point of concern for hindalco.

II. Solvency Ratio: also called the leverage ratio, measures a company’s ability to sustain

operations indefinitely by comparing debt level with equity, assets and earnings. In other

words, it identifies going concern issues and a firm’s ability to pay its bills in the long run. In

simple words, it is used to measure the firm’s ability to meet its long-term debts. For this, debt-

equity ratio is used.

a) Debt-Equity Ratio = Total Liabilities/Total Equity


Year 2014-2015 2013-2014 2012-2013 2011-2012 2010-2011T. Liability 38745.38 37037.50 32646.17 23615.15 16836.24T. Equity 37255.26 36732.45 33972.39 32032.47 29700.10Ratio 1.0399 1.0083 0.9609 0.7372 0.5668

InterpretationOn the basis of financial analysis, the researcher found that over a period of time the contribution

of debt in the overall capital structure has increased significantly from the year 2010 to the year

2014.

It has though provided a financial leverage to the organization but has also increased the

burden of fixed percentage interest on hindalco which may be a cause of the following revenue.

III. Debtors Turnover Ratio: shows the number of times a business collects its average

accounts receivables per year. It helps in evaluating the ability of a company to efficiency issue

credits to its customers and collect funds from them in a timely manner.

Debtors Turnover Ratio = Net Credit Sales / Average Debtors

Year 2014-2015 2013-2014 2012-2013 2011-2012 2010-2011


2010-2011 2011-2012 2012-2013 2013-2014 2014-20150

0.2

0.4

0.6

0.8

1

1.2

Debt-Equity Ratio

Series 1

Sales 36438.59 29823.47 27797.16 28053.24 25255.01Debtors 1832.18 1283.65 1515.04 1427.45 1255.49Ratio 19.89 23.23 18.34 19.65 20.12

InterpretationThe researcher which analyzing the financial statements also used debtors’ turnover ratio in

order to evaluate the receivables management system of Hindalco ltd. It was found that there is

no infirmity in the debtors’ turnover ratio rather it is quite fluctuating in nature there is a

consistent up and down from the year 2014-2015 which is again not so good assign for the

company.

The ratios have been fluctuating over the last few years which represents an uneven collection

policy being adopted. This could be a result of changing credit policy of the company.

I. Return on Assets Ratio: is a profitability ratio that measures the net income

produced by total assets during a period by comparing net income to the average total


2010-2011 2011-2012 2012-2013 2013-2014 2014-20150

5

10

15

20

25

Debtors Turnover Ratio

Ratio

assets. In other words, it measures how efficiently a company can manage its assets to

produce profits during a period.

Return on Assets Ratio = Net Income / Average Total Assets

Year 2014-2015 2013-2014 2012-2013 2011-2012 2010-2011Net Income 1246.91 1685.38 2046.63 2736.95 2594.74Avg. T. Asset 74885.30 70194.25 61133.09 51096.98 41085.34Ratio 0.0166 0.0240 0.0334 0.0535 0.0631

InterpretationThe researcher also fixed to analyze the efficiency of Hindalco to manage its assets it was found

through though the return on assets ratio the return on assets ratio the return on assets is

continuously falling from the year 2010-2011 to the year 2014-2015 which is symbolic of

improper utilization of assets.

The proportion of income has decreased over the last five years this shows that the organization

is not using its assets efficiently which has resulted in this downward movement.


2010-2011 2011-2012 2012-2013 2013-2014 2014-20150

0.01

0.02

0.03

0.04

0.05

0.06

0.07

Return on Assets

Ratio

II. Return on Investment: is a performance measure used to evaluate the efficiency of

an investment or to compare the efficiency of a number of different investments. It

measures the return achieved from an investment relative to the investment’s cost.

Year 2014-2015 2013-2014 2012-2013 2011-2012 2010-2011PBIT 3462 2793 2483 3031 2815Capital Employed 62907.92 61188.16 56881.80 45612.58 36693.70ROI 0.0550 0.0456 0.0436 0.0664 0.0767

Return on Investment = PBIT / Capital Employed

Interpretation: The ratio was calculated by researcher in order to find how efficiently Hindalco ltd. Is utilizing

the investment that it has received from various sources. This ratio again shows a significant

downfall from the year 2010-2011 to the year 2012-2013. However, is the following two years

that is 2013-2014 and 2014-2015 there is some improvement in the return on investment ratio

however this improvement is not significant.


2010-2011 2011-2012 2012-2013 2013-2014 2014-20150

0.01

0.02

0.03

0.04

0.05

0.06

0.07

0.08

0.09

RIO

RIO

III. Net Working Capital: It is an important measurement because it shows the firm’s

short-term liquidity as well as management’s ability to use its assets efficiently.

Net Working Capital = Current Assets – Current Liabilities

Year 2014-2015 2013-2014 2012-2013 2011-2012 2010-2011Current Assets 22929.20 21951.89 20150.03 16479.44 15929.20Current Liability 13092.72 12581.79 9736.76 10035.04 9842.64Net Working Cap. 9836.48 9370.10 10413.27 6444.40 6086.56

Interpretation


2010-2011 2011-2012 2012-2013 2013-2014 2014-20150

2000

4000

6000

8000

10000

12000

Ratio

Ratio

Net working capital is calculated by researcher shows the same trend as the current ratio when

the amount of current assets has increased considerably in the year 2012-2013 the amount of net

working capital has also increased and when the amount of current assets became stable to a

certain mark then the amount of net working capital also seems to be established at a particular

level. This facet can also be see in the diagram mentioned above.

The company is showing an increasing trend towards net working capital during the last five

years with a slight downfall in the preceding year.

IV. Net Profit Ratio: is the overall measure of a firm’s ability to turn each rupee of sales

into profit. It indicates the efficiency with which a business is maintained.

Year 2014-2015 2013-2014 2012-2013 2011-2012 2010-2011Net Sales 34525 27851 26057 26597 23859Operating Profit 3417 2492 2204 3105 3155Net Profit 925 1413 1699 2237 2137NP ratio 0.0270 0.0507 0.0652 0.0841 0.0896


Interpretation:The net profit ratio was calculated by the researcher so that the reader can get an idea about the

profitability position of hindalco ltd.

It can be seen from the financial analysis of the financial statements for the period of five years

ranging from 2010-2011 to 2014-2015 that the net profit ratio is showing a clear-cut downward

trend which is symbolic of continuously falling net profit margin of the company.

TREND ANALYSISYear 2014-2015 2013-2014 2012-2013 2011-2012 2010-2011Total Income 35,407.24 28,975.35 27040.02 27,212.57 24,206.70Net Profit 925 1413 1699 2237 2137


2010-2011 2011-2012 2012-2013 2013-2014 2014-20150

0.01

0.02

0.03

0.04

0.05

0.06

0.07

0.08

0.09

0.1

NP Ratio

NP Ratio

InterpretationOn the basis of financial statement of hindalco the researcher found that total income can be seen

increasing over the year with continuous decline in the net profit. This may be due to high

operating cost and other expenses incurred by the firm.

EPS and DPS


2010-2011 2011-2012 2012-2013 2013-2014 2014-20150

5000

10000

15000

20000

25000

30000

35000

40000

Annual Trend

T. Income Net Profit

Year 2014-2015 2013-2014 2012-2013 2011-2012 2010-2011EPS 4.48 7.09 8.88 11.69 11.17DPS 1.00 1.00 1.40 1.55 1.50

InterpretationEPS has decreased over the last five years, but the dividend remained constant which shows the

company is using constant dividend policy and is retaining major part of the profit for financing

its everyday activities.


2010-2011 2011-2012 2012-2013 2013-2014 2014-20150

2

4

6

8

10

12

14

EPS DPS

Chapter

Findings


Chapter

Hindalco’s financial analysis reveals that the fund management process adopted is quite

good and efficient, still can be further improved by making some changes in the policies

relating to sources of raising fund for operations and its allocation in different day-to-day

activities.

Company is forecasting its funds or cash with the help of cash budgeting on monthly

basis.

Shareholders’ fund is still the major source of fund comprising of around 54% of the total

even though debt financing is extensively used and overall contribution has also

increased over the last few years.

Debtor Turnover Ratio is almost the same which represent that there are no major

changes made in average collection period and collection policy adopted by the company.

The company’s liquidity position has recovered, still needs to be increased as it is

approximately the same as current liabilities.


Suggestions


Chapter

8

Company is financing mainly through equity but the returns are good. So there is need of

reviewing the capital structure of the firm.

Company should check and reduce its operating expenses as compared to income to

increase its net profit.

For accelerating its cash collection company could adopt lock-box system.

The company could also reduce its operating cycle to converts inventory in cash in less

time.

In determining the optimum level of current asset, the firm is not accurate.


CONCLUSION


Chapter

9

There are two fundamental ways that the return on income can be improved. First it can be improved by

increasing the profit margin-by earning more profit per rupee of income sales. Second, it can be improved

by increasing the asset turnover. In turn the asset turnover can be increased in either of the two ways: (1)

by generating more sales volume with the same amount of investment or (2) by reducing the amount of

investment in assets required for a given level of sales volume


BIBLIOGRAPHY


Chapter 10

Books:

Payday L.M. “Financial Management” 7th edition; New Delhi; Vikas Publishing House

Pvt. Ltd; 1995.

Rustagi R.P. “fundamentals of Financial Management” 3rd edition; New Delhi; Galgotia

Publishing Company;2002.

Annual Reports:

Annual report of FY 2010-2011, 2011-2012, 2012-2013, 2013-2014, 2014-2015 of

Hindalco Industries Limited.

Internet Sources:

www.hindalco.com

www.wikipedia.com

www.sify.com


http://www.sify.com/

http://www.wikipedia.com/

http://www.hindalco.com/


Chapter 11

ANNEXURE

Detailed Financial Result for the period from 1st April-14 to 31st March-15

Description Amount(Rs. Millions)

Net Sales Net Sales / Income from Operations Other Operating RevenuesExpenditure Other Expenses Power & Fuel Cost of Material Consumed Employee Benefit Expenses Purchase of Stock in Trade Changes in inventories of finished goods, WIP and Stock-in-trade Depreciation and Amortization expenseProfit from Operations before Other Income, Interest and Exceptional Items Other IncomeProfit before Interest and Exceptional Items InterestProfit after Interest but before Exceptional Items Exceptional ItemProfit (+)/ Loss (-) from Ordinary Activities before Tax TaxNet Profit (+)/ Loss (-) from Ordinary Activities after Tax

3,45,250.303,40,944.10

4,306.20-3,19,455.40

-31,571.20-52,007.70

-2,10,562.90-15,894.80

-370.4-678.1

-8,370.3025,794.90

8,822.1034,617.00-16,370.9018,246.10-5,777.00

12,469.10-3,217.509,251.60


Balance Sheet

Particulars (in Rs. Crore) as on 31st Mar 2015

as on 31st Mar 2014

EQUITY and LIABILITIESShareholders’ Fund Share Capital Reserves and Surplus

Non-Current Liabilities Long-term Borrowings Deferred Tax Liabilities Other Long-term Liabilities Long-term Provisions

Current Liabilities Short-term borrowings Trade Payables Other Current Liabilities Short-term Provisions

ASSETSFixed Assets Tangible Assets Intangible Assets Capital Work-in-Progress Intangible Assets under Development Non-Current Investments Long-term Loans and Advances Other Current Assets

Current Assets Current Investments Inventories Trade Receivables Cash and Bank Balances Short-term Loans and Advances Other Current Assets

206.5237,048.7437,255.26

22,973.851748.28474.63455.90

25,652.66

5,675.533,651.652,678.131,087.41

13,092.7276,000.64

26035.8724.02

10743.610.02

14781.751454.73

31.4453071.44

6468.938821.231832.18984.18

3879.67943.01

22929.2076000.64

206.4836,525.9736,732.45

22,108.581,174.31

830.86341.96

24,455.71

4,258.374,383.752,901.911,037.76

12,581.7973,769.95

18024.9829.73

17277.130.10

15312.451161.15

12.5351818.06

6595.018914.581283.651163.173226.40769.08

21951.8973769.95


summer project

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