UNLOCKING STAKEHOLDER VALUE THROUGH RESTRUCTURING

By Mr. M.R. Prasanna General Counsel Aditya Birla Group, India

The views expressed herein are that of the author and not that of the organization he represents.

ADITYA BIRLA GROUP GLOBAL FOOTPRINTS

The Group operates in 25 countries
India, UK, Germany, Hungary, Brazil, Italy, France, Luxembourg, Switzerland, Australia, USA, Canada, Egypt, China, Thailand, Laos, Indonesia, Philippines, Dubai, Singapore, Myanmar, Bangladesh, Vietnam, Malaysia and Korea.

The first truly multinational Indian Group. A US $28 billion corporation, the Aditya Birla Group is in the league of Fortune
500.

Rock solid in fundamentals, the Aditya Birla Group nurtures a culture where success does not come in the way of the need to keep learning afresh, to keep experimenting.

THE ADITYA BIRLA GROUP GLOBAL FOOTPRINTS

$28bn $24bn

Over 50 years of excellence Operations across 20 countries and presence in 30 countries Anchored by about 100,000 strong workforce employed in 123 locations globally. 32,000 employed outside India, 20 nationalities
Market cap Revenues
FY07

Presence in diverse businesses spanning manufacturing and services industries

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RESULTED IN GLOBAL SIZED, GLOBALLY COMPETITIVE BUSINESSES Cement

11h largest in the world

Carbon Black
4th largest in the world

VSF
Largest manufacturer with 21% global share

Insulators
3rd largest in the world

Metals Mining
Among largest Indian merchant iron ore mining Company Global cost & regional market leadership Aluminum, Copper, Iron ore

ADITYA BIRLA GROUP

International Operations Aditya Birla Retail Ltd.

Joint Ventures

100% 51%

100%

100%

100%

51%

BUILDING BRANDS

BUILDING BRANDS

ADITYA BIRLA GROUP BUSINESS SEGMENTS

ALUMINIUM
Indias largest and globally one of the most cost efficient producers. Fully integrated from mines to metal to downstream products. Worlds largest aluminium rolled products manufacturer Largest custom smelter and refinery in India. Backward integrated into copper mining in Australia

COPPER

CEMENT

Leader in India and 11th largest globally

VSF & PULP

Commands a 21 per cent global market share; is the second largest producer of viscose filament yarn (VFY) in India with a 30 per cent domestic market share

TEXTILES

Global leader in Rayon. Major acrylic fibre producer. Wide range of fabrics produced in India and Thailand. Leader in branded apparel in India

CARBON BLACK

Amongst the top 4 in the world and one of the most cost efficient producers. Operating in India ,Thailand, China and Egypt One of the large and most efficient urea producers in India

FERTILIZERS

INSULATORS

Indias largest and worlds third largest producer

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ADITYA BIRLA GROUP BUSINESS SEGMENTS

CHEMICALS

Chemicals: caustic soda, aluminum fluoride, polyphosphates, epoxy resins, hydrogen peroxide, sulphites, epychlorohydrins etc.

MINING

Essel mining - Indias largest private sector iron and manganese ore mining company Commodity trading

TRADING

FINANCE & INSURANCE TELECOM

One of the largest private sector mutual Funds. A leading insurance company and insurance advisory services provider

A leading cellular operator in India

RETAIL SOFTWARE BPO

Multi format stores

IT solutions for insurance, banking and finance A leading offshore call center and transaction processing service provider
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GROUP HISTORY OF M & A AND RESTRUCTURING

Year 1998-99 Transaction Key features Approx Value (in mn)

Grasim acquires cement business of Internal Group restructuring Indian Rayon (Now Aditya Birla Nuvo Resulted in consolidation of cement business ) Grasim acquires Shree Digvijay Cement Company

1998-99

Target was a listed Company with significant debts

Rs. 66 Cr.

2000

ABNL acquired Madura Garment and Revolutionized Indias readymade apparel and retail market Retail

Rs. 60

2001

Acquisition of PSI Data Systems from Group Bull SA, France

2001 2002

Acquisition of Indal by Hindalco Divestment of Mangalore Refinery & Petrochemicals to ONGC Hindalco acquired copper business of Indo Gulf Grasim acquires L&T cement business

Acquired from Alcan, Canada Exiting from non- core business activity Created a metals powerhouse (Aluminum + Copper) New Indo Gulf Fertilizer Ltd formed Ultratech Open offer was made Start of consolidation phase in cement industry Substantial re-branding exercise undertaken

$ 225 $14

2002

2003

$ 700

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GROUP HISTORY OF M & A AND RESTRUCTURING Contd..

Year Transaction Key features Approx Value (in mn)

2003 2004

Transworks acquired by ABNL Hindalco acquired Nifty and Mount Gordon copper

Entry by group in BPO business First Mines acquisition in Australia (a new territory for the
Group)

$ 110

First Indian mines company to be listed in Australian Stock

exchange

2004 2006

Various Transaction for Idea Cellular

Idea acquires 5 circles of Escotel - 2004 16.5% Idea stake from Cingular - 2005 48% Idea stake from Tata 2006 Merger of Birla Global Finance Ltd and Indo Gulf Fertilizer
Ltd with ABNL

$ 300 $ 150 $ 980 Created $ 2b ABNL

2005

Consolidation in Aditya Birla Nuvo Ltd (ABNL)

2006

Acquisition of Minacs (Canada) by Transworks/ ABNL

Group became 3rd largest India Based BPO and Globally

among top 15 players

$ 125

2007

Hindalco acquires 100% of Novelis

Novelis was a Canada Based Listed Company Globally largest aluminum rolling products Company

$ 6,100

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M & A AND RESTRUCTURING in 2008

Year Transaction Key features Approx Value (in mn) Rs. 680

2008

Idea Cellular Ltd. acquires Spice Communications Ltd.

Pan India presence and entry in to high growth markets Offset loss of 1st mover advantage in Punjab and
Karnataka

2008

Aditya Birla Nuvo Ltd, acquires 56% stake in Apollo Sindhoori Capital Investments Ltd. Acquires Trinethra Superretail Limited from India Value Funds. Creates Aditya Birla Retail Ltd

Strengthen the position in retail financial market as

distributor of value added financial products

Rs. 2 bn

2008

As part of overall portfolio strategy and long-term growth

plans.

2008

Entry into fast growing Indian retail market with multi

format presence across the board

Rs. 200

2008

Divested Vikram Ispat to Welspun Power and Steel Ltd Divested Palm oil business to IOI Corporation Berhad

Exiting from non core business like sponge iron Exiting on a high As no scope for horizontally leveraging group's business
synergies

$ 230

2008

$175

2008

Divested Shree Digvijay Cement Co. Ltd. to Cimpor, Portugal

Rationalize the portfolio and optimum utilizations of plants

$100
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FLAGSHIP COMPANIES

HINDALCOS COMPANY STRUCTURE

Indian Subsidiaries
Hindalco Almex Aerospace Limited (70%)

Indian Aluminium Company, Ltd. (currently awaiting court order to merge with Hindalco)

Utkal Alumina Internation al Ltd. (100%)

Bihar Caustic & Chemical s Ltd. (54.65%)

Dahej Harbour & Infrastruct ure Ltd. (100%)

Tubed East Coast Coal Bauxite Limite Mining d Company (60%) Pvt. Ltd (74%)

Australian Subsidiaries

Aditya Birla Minerals Ltd. (51%)

Birla (Nifty) Pty. Ltd. (100%)

Birla Resources Pty. Ltd. (100%)

Birla Mt Gordon Pty. Ltd. (100%)

Birla Maroochydore Pty. Ltd. (50%)

Canadian Subsidiary
Novelis Inc. (100%)

Joint Venture and Associates

Mahan Coal Limited (50%)
A joint venture with the Essar Power (MP) Limited. The two JV partners have been jointly allocated a coal block in Madhya Pradesh and so a JV is formed to mine the coal for offtake by parent companies An associate company, primarily a knowledge resource for the Aditya Birla Group, where some of the major Group companies, which are users of technology have a stake

Aditya Birla Science & Technology Company Limited (49%)

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HINDALCO OVERVIEW A GLOBAL NON - FERROUS METALS COMPANY

Copper business acquisition and expansion to 250,000 tpa

Acquisition of Nifty & Mt. Gordon Copper Mines

Increase stake in Utkal from 20% to 55%. Further increased to 100% in 2007.

JV agreement signed with Almex for aerospace alloys

Acquisition of Novelis

Hirakud Aluminum brownfield expansion

Utkal Alumina greenfield project

Aditya Alumina greenfield project

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

2011

2012

2013

Majority stake in Indal through largest all-cash acquisitio n in India

Aluminium Expansion at Renukoot to 342,000 tpa, Hirakud to 65,000 tpa

Doubling of copper capacity to 500,000 tpa

Listing of Aditya Birla Minerals Ltd. on ASX in May 2006

Doubling of Hirakud Smelter capacity to 143,000 tpa

Alumina Expansion at Muri

Aditya Aluminiu m greenfield project

Mahan Aluminiu m greenfield project

Jharkhand Aluminium greenfield project

Expansion

Acquisition

Others

Projects

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ADITYA BIRLA NUVO : PREMIUM CONGLOMERATE BY DESIGN

Growth Businesses
Telecom (27.02%) BPO (88.3%) Financial IT Services Services (70.4%) Life Insurance Apparel Retail (100%) Minacs (100%) (74%)*
Asset Management (50%) *

Value Businesses
Carbon Black

Garments

Rayon

Insulators Fertilisers Textiles

Represents Subsidiaries Represents JVs/Associates

Contract Exports (100%)

Distribution (49.99%) * Capital Market Insurance Advisory Retail broking^

* JV with Sunlife Financial, Canada

^ Acquisition of Apollo Sindhoori Capital Investments Ltd.
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De-risking with optimum blend of value & growth businesses

SUCCESSFUL HISTORY OF TRANSFORMATION & REJUVENATION OF BUSINESSES

Preferential allotment of 2.05 Cr. warrants to promoters convertible within 18 months into equity shares at Rs. 2007.45 per share

De merger of Cement unit / Surplus cash returned to shareholders through buyback of equity shares

Life Insurance JV with Sun Life, Canada

Acquisition of PSI Data Systems from Group Bull SA, France

Carbon Black Brownfield expansion by 40K MT to 160K MT

Increased stake from 4.3% to 20.74% in 2005; further to 35.74% in 2006

Insulators subsidiary merged with Nuvo w.e.f. April 1, 2007

1999 1999

2000

2001

2003

2004

2005

2006

2007

2008

Acquisition of Madura Garments

Foray into the BPO sector through the acquisition of Transworks

Merger of Indo Gulf Fertilisers and Birla Global with Company Indian Rayon rechristened as Aditya Birla Nuvo Acquired Minacs, a leading Canadian BPO

Raised Rs. 7.8 billion through rights issue Carbon Black Brownfield expansion by 60K MT to 230K MT

Acquired 56% stake in Apollo Sindhoori, a retail broking company, for Rs. 198.8 Cr.; Nuvo will make open offer for 20% stake after required approvals
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Entry into new age businesses with high growth-potential

BUSINESS

BRANDS

Viscos e Staple Fibre

Cemen t

White Cemen t

Textile s

Chemical s

AV Cell Birla Lao Pulp Birla Jingwei Fibres

CEMENT MAJOR AND GLOBAL LEADER VISCOSE STAPLE FIBRE

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BACKWARD INTEGRATION

Backward Integration
Right from plantation stage to the final VSF stage 1998 Acquires Atholville Pulp Mill Canada 2005 Acquired St. Anne Nackawic Pulp Mill, Canada Entire production is exclusively for the Group's captive consumption, supplies 1,25,000 tonnes of dissolving grade chemical pulp to its VSF units in India, Thailand, Indonesia and China. Value Addition and Integrated Supply Chain

PULP (RAW MATERIAL)

VSF (END PRODUCT)

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FORAY IN TO DRAGON LAND

Liaoning Birla Carbon:-

JV between Thai Carbon Black Co. Ltd., Thailand, (an ABG CO.), and Dashiqiao Ronghua Co. Ltd. Product :- Carbon black

Birla Jingwei Fibres Co. Ltd.:- JV between Aditya Birla Group and Hubei Jingwei Chemical Fibre Co. Ltd. Product :- Viscose Staple Fiber (VSF) Aditya Birla Grasun:JV between Aditya Birla Chemicals (Thailand) Ltd. and Fanchenggang Grasun Co.Ltd. , China Product :- Food Grade Phosphoric Acid

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WHY DO M & As HAPPEN?

Accelerated Growth

Diversification

Enhanced Profitability

To Create Value

Tax and Financial Benefits

Increase in Market Power

M & As promote not only growth and Creation of Value but they also Unlock Value through JVs, Spin Offs and total Divestment making them complementary concepts.

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FUELLING M & A GROWTH

DRIVERS:
Synergies & Scaling up of operations

Territorial & Capacity Expansion

Leveraging Competence

Tangible & Intangible Acquisition

Competitive Edge

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KEY CONSIDERATIONS
Business Environment

Cultural Issues

Business Dynamics

Accounting treatment

CROSS BORDER TRANSACTIONS

Legal & regulatory framework Tax regimes & treaties

Identifying and delivering synergies

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FUELLING M & A GROWTH Contd.. OVERSEAS

CONSOLIDATE POSITION INCREASE CAPACITIES

TATA - CORUS BIRLA NOVELIS

DR.REDDYBETAPHARM
ACCESS TO INTERNATIONAL MARKETS INTEGRATION BACKWARD/FORWARD

SUZLON - REpower STERLITE GROUP

ACQUIRE CERTAIN CAPABILITIES: Technology, People and R & D

BECOME GLOBAL PLAYER

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M & As IN SERVICE SECTOR

New Service given its profitability

Growth Oriented

SERVICE SECTOR

Cost Centre Becoming a Profit Centre

FINANCIAL SERVICES RETAIL ITeS

BPO LPO

Complement existing business

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CORPORATE RESTRUCTURING Contd

ACQUISITION Strategic Financial*

DEMERGER Division Spin Off

MERGER Combine Consolidate

JOINT VENTURE Strategic Financial*

DIVESTMENT OF CORE ASSETS

* With an appropriate Exit Mechanism

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GUIDELINES FOR STRATEGIC VISION

STRATEGIC VISION

OPERATING STRATEGY

COMPETITOR REACTION THE CERTAINTY OF

MISERY IS BETTER THAN THE MISERY OF UNCERTAINTY.

- Forbes Magazine

PROPER SYSTEM AND PROCEDURES

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INTEGRATION CHALLENGES

MANUFACTURING

REMUNERATION AND BENEFITS

MARKETING

POLICIES

LOGISTICS

PROCESSES (IT)
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HOW TO MAKE IT WORK

PRE MERGER
PLAN

C O M

KEY TO SUCCESS Structure a sustained communication plan - message, channels, mode, frequency Discuss future business plans and the synergies expected. Clarify revised roles and performance expectations Continuously communicate on the integration process progress

INVESTIGATE

M U

NEGOTIATE

N
IMPLEMENT

I C

POST MERGER

A T

INTEGRATE

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UNDERLYING PRINCIPLE OF M & A TRANSACTION 1 + 1 = 11 ADDITIONAL VALUE OF SYNERGIES

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CORPORATE RESTRUCTURING

The concept of growing organization is not about just growth but is all about its adaptability to global business dynamics and its ability to quickly change the way it does business and the tenacity to shed unwanted or unrelated businesses.

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THANK YOU

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