Hindalco's businesses Creating superior value

Hindalco is one of the leading producers of aluminium and copper. The aluminium units across the globe encompass the entire gamut of operations, from bauxite mining, alumina refining and aluminium smelting to downstream rolling, extrusions, foils, along with captive power plants and coal mines. The copper unit, Birla Copper, produces copper cathodes, continuous cast copper rods and other by-products, such as gold, silver and DAP fertilisers. Our units are ISO 9001:2000, ISO 14001:2004 and OHSAS 18001 certified. Several units have gone a step further with an integrated management system (IMS), combining ISO 9001, ISO 14001 and OHSAS 18001 into one business excellence model. We have been accorded the Star Trading House status in India. Hindalco's aluminium metal is accepted for delivery under the High Grade Aluminium Contract on the London Metal Exchange (LME). Our copper quality standards are also internationally recognised and registered on the LME with Grade A accreditation.

Aluminum
Hindalco's major products include standard and speciality grade aluminas and hydrates, aluminium ingots, billets, wire rods, flat rolled products, extrusions and foil. The integrated facility at Renukoot houses an alumina refinery and an aluminium smelter, along with facilities for the production of semi-fabricated products, namely, redraw rods, flat rolled products and extrusions. The plant is backed by a co-generation power unit and a 742 MW captive power plant at Renusagar to ensure the continuous supply of power for smelter and other operations. A strong presence across the value chain and synergies between operations has given us a dominant share in the value-added products market. As a step towards expanding the market for value-added products and services, we have launched

various brands in recent years Everlast roofing sheets, Freshwrapp kitchen foil and Freshpakk semi-rigid containers.

Copper
Birla Copper, Hindalcos copper unit, is located at Dahej in Gujarat, India. The unit has the unique distinction of being the largest single-location copper smelter in the world. The smelter uses state-of-the-art has a capacity of 500,000 tpa.

technology

and

Birla Copper also produces precious metals, fertilisers and sulphuric and phosphoric acid. The unit has captive power plants for continuous power generation and a captive jetty to facilitate logistics and transportation. Birla Copper upholds its longstanding reputation for quality copper cathodes and continuous cast copper rods by assuring its management processes meet the highest standards. It has acquired certifications such as ISO-9001:2000 (Quality Management Systems), ISO-14001:2004 (Environmental Management System) and OHSAS-18001:2007 (Occupational Health and Safety ManagementSystems).

Mines
Hindalco acquired two Australian copper mines, Nifty and Mt. Gordon, in 2003. The Birla Nifty copper mine consists of an underground mine, heap leach pads and a solvent extraction and electrowinning (SXEW) processing plant, which produces copper cathode. The Mt. Gordon copper operation consists of an underground mine and a copper concentrate plant. Until recently, the operation produced copper cathode through the ferric leach process. In 2004, a copper concentrator was commissioned to provide concentrate for use at Hindalco's operations in Dahej. During FY2009, Mt. Gordon produced 17,815 tonnes of copper in concentrate.

Both Nifty and Mt. Gordon have a long-term life of mine off-take agreement with Hindalco for supply of copper concentrate to the copper smelter at Dahej.

COMMON SIZE INCOME STATEMENT

PARTICULARS

Net sales Less: Total expenses Operating profit Add: Other income EBIT Less: Finance cost EBT Less: Tax PAT

AMOUNT(in crore) March -12 80821.37 77259.50 3541.87 783.07 4324.94

% OF NET SALE 100 95.5 4.3 0.9 5.3

AMOUNT(in crore) March -11

% OF NET SALE

SEGREGATION OF OTHER EXPENSES IN DETAIL

particulars Consumption of spares Repairs to building Repairs to machine Rates & taxes Rent Insurance Payments to auditors R&D Freight & forwarding expense Provision for doubtful loan Bad loans written off Pre operative expenditure written off Prior period items Donation Director fee & commission Change in fair value of derivatives Foreign currency transaction and translation Cost of own manufactured product used Tolling expense Misc. expense Less: transfer to capital w.i.p Amount (in crore) 2557.63 129.46 1555.05 101.24 162.84 155.50 43.76 220.71 2489.82 3.03 5.92 Amount (in crore) 2436.78 169.13 1262.76 91.25 157.35 155.70 38.76 187.92 2068.94 11.94 6.33 0.12 1.96 36.15 16.83 (57.37) 52.51

(1.60) 35.51 17.25 (668.77) 116.19

(91.86)

(42.82)

488.58 3373.85 10694.11 345.89 10348.22

303.63 2445.38 9343.32 194.34 9148.98

DU PONT ANALYSIS

PARTICULARS Return on equity Net profit/sales Sales/total assets Total assets/equity

MARCH -12 17.7 0.04 0.79 529.5

MARCH-11 12.8 0.03 0.85 443.2

RATIO ANALYSIS

ACTIVITY RATIOS Debtors Turnover Ratio Creditors Turnover Ratio

2011-12 3 DAYS 81 DAYS

2010-11

3 86 97.29 1.4 3.0 0.2

Stock Turnover Ratio Current Ratio

133 DAYS 1.5

Asset Turnover Ratio Debt Equity Ratio

2.7 0.4

PROFIT & LOSS RATIOS Gross Profit Margin Operating Expenses Ratio Operating Margin(EBIDTA) Interest Coverage

2011-12 32.7% 27.5% 6.6% 5.23

2010-11 33.0% 26.2% 8.1% 8.9

Z score Z score <1.10 1.10-2.60 >2.60 Indication Bankruptcy Gray area Non bankruptcy

Z score for the company is 3.92 which clearly indicates that there are no chances of bankruptcy as a z score greater than 2.60 indicates a non bankrupt company .