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Company Background

Incorporation Year Company Secretary

1958 Kumar Mangalam Birla Anil Malik Century Bhavan, 3rd Floor Dr Annie Besant

Chairman

Registered Office URL Listing Face Value (Unit

Road, Worli, , , Mumbai - 400030, Maharashtra


http://www.hindalco.com BSE, NSE 1.00 INR

Rs. INR)

HINDALCO INDUSTRIES LIMITED


Flagship company of Aditya Birla Group(1958). Two Strategic businesses, annual revenue US $14 billion. Largest integrated aluminium producer. Ranks among top quartile of low cost producers in the world.

Vision, Mission & Values


Vision

To be a premium metals major, global in size and reach, excelling in everything we do, and creating value for its stakeholders
Mission

To relentlessly pursue the creation of superior shareholder value, by exceeding customer expectation profitably, unleashing employee potential, while being a responsible corporate citizen, adhering to our values.

Values Integrity Honesty in Every Action Commitment Deliver on the promise Seamlessness Boundary less in letter and spirit Passion Energized Action Speed One Step Ahead Always

Introduction
Aluminium business in India recorded the

highest ever metal production All of the major strategic expansions in Brazil, South Korea and the United States are on track. The Group has been ranked fourth in the Global Top Companies for Leaders and first in Asia Pacific in the Top Companies for Leaders2011. There are 51 units located in 13 countries, with around 34000 workforce from 15+ nationalities.

Of the total annual revenue of Rs 80,821

crore. Aluminium Business contributed Rs 62,059 crore, up 10% over the last year. Aluminium EBIT for FY12 remained flat at Rs 4,495 crore compared to Rs 4,469 crore in FY11. The results were impacted by lower profits in Indian Aluminium operation due to macro-economic conditions. The year witnessed the highest ever production of aluminium in the history of the company.

The acquisition of Novelis Inc. in 2007 positioned Hindalco as one of the top five aluminium majors worldwide and the largest vertically integrated aluminium company in India. Today Hindalco metals powerhouse with high-end rolling capabilities and a global footprint in 13 countries. Our consolidated turnover of USD 15.85 billion (Rs. 72,078 crore) places us in the Fortune 500 league

Awards

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

Ramkrishna 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

Ingots and Billets

Aluminium Extrusions

Aluminium Rolled Products

Aluminium Foils

Performance
For Financial YEAR 2011-2012, the Company's

performance has been outstanding both at the Standalone and Consolidate level. The Companys net revenue on Consolidate basis stood at US$ 17 billion (Rs.80,821 crore) vis--vis US$ 15.85 billion (Rs. 72,202 crore) achieved in the previous year. Net profit is in excess of US$ 540 million (Rs.2456 crore).

BALANCE SHEET

SHAREHOLDERS FUND
Reserves and surplus - 31,299.68
There is an increase of 1719 INR(crores) in

reserves and surplus in comparison to the last year due to the companys decision to reserve equity shares for issuance under the Employee Stock Option Scheme. The Company has also reserved equity shares for issue against warrants allotted on preferential basis to the Promoter Group. Hence theri declaring dividends

EQUITY AND LIABILITIES


Shareholders' funds
The Money received against Share Warrants has

increased up to 541.31 and was nil the previous year. This increase is due to the Companys allotement of 150,000,000 warrants on a preferential basis to the Promoter Group. The Company has received Rs. 541.31 crore being 25% against these warrants. The entire amount so received is being utilised for various Greenfield and Brownfield projects expenditure.

Non-Current Liabilities
Long-term Borrowings
The long term borrowings as compared to last year has

grown upto 5967.59. The company has taken loans for their varied projects. 1. Term Loans from Banks Rs. 5,142.99 crore. Which has to be paid over the years. e.g: 2,146.66 crore, Rs. 2571.49 crore and Rs. 424.84 crore are repayable in FY14, FY15 and FY16, respectively. The company cannot use their shareholders fund for this repayment as shareholders fund has to be used to pay out dividends to their shareholders. First the preference shareholders and then the equity shareholders. In order to maintain the same sales turnover , the company has had to employ more capital via borrowings like term loans , etc. The increases in cost have not

Non Current Assets


Fixed assets No substantial part of fixed assets has been disposed of during the year which explains no major increase or decrease in the tangible and intangible assets. Capital Work-in-Progress Assets liabilities (liquidity). The stock produced are yet to be sold due to finalisation of prices

Ratio Analysis
Another way to analyse the financial statements

of the company. The liquidity, solvency and profitability ratios have been used. The ratios show that the liquidity of the company is good as the company is in an adequate position. The overall profitability of the company has gone down, so most of the ratios are low. However EPS and DPS have gone up which is not a prudent financial decision based on non financial reasons as the profitability of the business has come down. It can be to keep the investors happy

Liquidity Ratios
Current Ratio

2011-2012 1.642

2010-2011 1.618

The CR is stable for both the years. As the ratio is more than 1, the CR is fair. There is sufficient liquidity to meet the short term debts arising.

Liquidity Ratios
Quick Ratio

2011-2012 0.871

2010-2011 0.841

The QR is less than one which is a concern as there arent sufficient assets to pay for the current debts. This also implies that the a large amount (almost 0.771) is help up in stocks itself, showing a concentration in manufacturing.

Liquidity Ratios
Stock Turnover Ratio

2011-2012 2.318

2011 2012 NALCO 0.902 405

2010-2011 1.618 160

Stock Velocity (days)

157

As compared to another company NALCO in the same industry, the stock turnover of Hindalco is infinitely better. It implies that the generation from stock to cash takes place faster.

Liquidity Ratios
Debtors Turnover Ratio (DTR)

2011-2012 21.093

2011 2012 NALCO 53.02 7

2010-2011 19.643 19 days

Debtors Velocity (days)

17

The DTR of Hindalco has come down vis vis the previous year, so it takes lesser time for the company to collect money from its customers. But comparing with NALCO, the DTR of Hindalco is much higher .

Liquidity Ratios
Creditors Turnover Ratio

2011-2012 4.10

2011 2012 NALCO 1.717 212

2010-2011 4.49 81

Stock Velocity (days)

89

The CTR of Hindalco has gone up vis vis the previous year, so the company has a longer time to pay back its suppliers. But comparing the time period with NALCO, NALCO has a better creditors payback period.

Liquidity Ratios
Cash Converting Cycle
2011 2012
Cost of sales per day Average Inventory
64.36 7697.13

2010-2011
56.73 6786.8

Days Inventory Outstanding


Net Sales Per Day Average Accounts Receivable

119.60 (120)
72.87 1341.47

119.63 (120)
65.37 1290.43

Days Sales Outstanding


Cost of sales per day Average Accounts Payable

18.41 (18)
64.36 4371.36

19.73 (20)
56.73 3837.795

Days Payable Outstanding

67.9 (68)

67.65 (68)

Cash Conversion Cycle

206

208

Liquidity Ratios
Cash Converting Cycle
There is marginal difference in the cash

conversion cycles for both the years. The Sales collection from the customers has increased. It indicates that the money collected through Receivables is 3 times more than the Payables. Thus, it is a comfortable scenario for Hindalco.

LIQUIDITY RATIOS
Hindalco is more market oriented than NALCO

reflecting in a faster stick turnover. However the debtor collection and creditors payment is ineffective as compared to NALCO. Even though there is faster stock turnover by Hindalco, the debtor and creditor collection is poor as compared to NALCO, which shouldn't be there as there is faster finished good production (by almost double the amount) The current and quick ratio is much lesser , and it is important to look at these ratios to correct this and improve the quick ratios.

Profitability Ratios
Gross Profit Ratio

2011-2012
10.06%

2010-2011
10.72%

As compared to the previous year, the gross profit has come down. This is surprising as the Sales and Profit Amounts itself have gone up. It has gone down possibly due to larger expenditure in operations.

Profitability Ratios
Net Profit Ratio

2011-2012
8.22%

2010-2011
8.83%

The majority of the expenditure is for factory costs fuel, raw materials and for finance costs- interests and capital work in progress. This has reduced the income due to the higher outflows going out.

Profitability Ratios
Earnings Per Share Ratio (EPS) & Book Value

Of Share Ratio (BVS)


2011-2012 EPS BVS 11.69 167.32

2011 2012 (NALCO)


3.13

2010-2011 11.17 155.190

From the Profits, Rs 11 has been earned by the shareholders. This is better as compared to NALCO. The EPS has gone up due to issue of more shares. If Hindalco was to liquidate, each shareholder gets Rs 167.32 at the current rate.

Profitability Ratios
Dividend Per Share Ratio* (DPS) & Dividend

Yield
2011-2012 2010-2011

DPS
Dividend Yield

155*
132.36%

150*
119.56%

The DPS is growing, slowly over the few years which is a sign that the company is sustaining growth. The Dividend Yield has increased giving the shareholder more dividend for share purchased

Profitability Ratios
Return On Sales

2011-2012

2010-2011

8.22%

8.83%

The Return on Sales is Rs 8 received for every Rs 100 invested. The ratio has decreased over the year. This is because the company cannot increase sale price and transfer the cost increase to the consumer and reducing the profitability

Profitability Ratios
Return On Capital

2011-2012

2010-2011

4.91%

5.58%

Increasing market competitiveness has prevented the company from transferring cost of capital employed to the customer to protect sales and sales price is constant, leading to a reduced ROC

Profitability Ratios
Return On Equity

2011-2012

2010-2011

6.98%

7.194%

The reduced profitability has led to reduced equity compared to previous year.

Profitability Ratios
Asset Turnover

2011-2012 2010-2011

0.489

0.520

For every rupee invested, Hindalco is able to generate 48ps in sales. The value has decreased over the year. Care should be taken to correct this ratio as a lower ratio in the future could be more harmful for the company.

Solvency Ratios
Debt-Equity Ratio

2011-2012 (long Term DE Ratio)


0.424

2011-2012

2010-2011 (long Term DE Ratio) 0.235

2010-2011

0.824

0.567

When considering only long term liabilities, the ratio of debtequity has increased as the term loans taken has increased. The debt equity ratio for all liabilities has increased anyway , which may be a precarious situation as the company is more aggressive . A lot of debt is used to finance increased operations (high debt to equity, thus Hindalco could potentially generate more earnings than it would have without this outside financing.

Solvency Ratios
Interest Coverage Ratio

2011-2012

2010-2011

2.698

4.642

By having an ICR or more than 1.5, it shows that Hindalco has a preferable ability to payback debt. However, the ratio has decreased by almost half from the previous year, which may cause problems in the future.

CASH FLOW ANALYSIS

Cash Flow Analysis


The company have opted for a lot of automation for

which a lot of investments have been done in fixed assets keeping aside a proportional amount as provision which is a positive move. Secondly the number of shares issued and subscribed to have risen as compared to previous financial year. Also, the company has received a lot of dividend from their investments which is way above in comparisons to the previous financial year with regards to dividends. The interest received from the loans granted or issued by the company has risen as compared to the previous financial year, which indicates that the

Since, the company plans to automate its activities it has

planned a lot of investment but at the same time has also realized a lot of capital out of the sale of old assets.
The company is looking for substitutes for improving the

quality of their product. This would result in better product followed by improved sales and then followed by increase in revenue.
So from the above points, we conclude by saying that the

company is financially sound n stable and is improving its financial strength by keeping a tab on its expenses on investments, operations and financial decisions.

TREND ANALYSIS

Profit & Loss account

------------------ in Rs. Cr. -----------------Mar '12 12 mths

Mar '11 12 mths

Mar '10 12 mths

Mar '09 12 mths

Mar '08 12 mths

Mar'08 12 mths

Mar'09 12 mths

Mar'10 12 mths

Mar'11 12 mths

Mar'12

12 mths

Income Sales Turnover Excise Duty Net Sales Other Income Stock Adjustments Total Income Expenditure Raw Materials Power & Fuel Cost Employee Cost Other Manufacturing Expenses Selling and Admin Expenses Miscellaneous Expenses Preoperative Exp Capitalised Total Expenses

28,296.96 1,704.40 26,592.56 674.01 411.53 27,678.10 18,557.05 2,870.67 1,112.06 225.82 647.81 686.15 -91.85 24,007.71 Mar '12 12 mths

25,255.01 1,497.87 23,757.14 304.25 403.63 24,465.02 16,435.73 2,221.48 1,054.39 255.84 552.73 471.46 -390.3 20,601.33 Mar '11 12 mths 3,559.44 3,863.69 610.26 3,253.43 687.48 0 2,565.95 39.63 2,605.58 468.66 2,136.92

20,516.43 1,059.45 19,456.98 574.62 765.87 20,797.47 13,666.78 1,938.00 904.9 200.32 535.63 386.5 -335.78 17,296.35 Mar '10 12 mths 2,926.50 3,501.12 613.78 2,887.34 671.36 0 2,215.98 157.6 2,373.58 462.1 1,915.63

19,641.40 1,481.59 18,159.81 712.66 -537.81 18,334.66 10,855.14 2,231.56 675.05 143.46 447.53 357.12 0 14,709.86 Mar '09 12 mths 2,912.14 3,624.80 336.93 3,287.87 644.34 0 2,643.53 198.55 2,842.08 610.88 2,230.27

20,943.69 1,825.68 19,118.01 571.18 141.8 19,830.99 12,486.62 1,910.83 631.07 115.9 444.65 401.33 0 15,990.40 Mar '08 12 mths 3,269.41 3,840.59 280.63 3,559.96 587.81 3.62 2,968.53 597.74 3,566.27 705.34 2,860.94

100 100 100 100 100 100 100 100 100 100 100 100 100 100 100

93.78 81.15 94.99 124.78 92.45 86.93 116.78 106.97 123.78 100.65 88.98 91.99

97.96 105.78 101.77 100.6 104.87 109.45 101.42 143.39 172.84 120.46 96.3 108.17

120.59 82.04 124.27 53.27 123.37 131.63 116.26 167.08 220.74 124.31 117.47 128.84

135.11 93.36 139.09 118.00

139.57

148.62 150.23 176.22

194.84

145.69 170.97

150.14

Operating Profit PBDIT Interest PBDT Depreciation Other Written Off Profit Before Tax Extra-ordinary items PBT (Post Extra-ord Items) Tax Reported Net Profit

2,996.38 3,670.39 293.63 3,376.76 689.97 0 2,686.79 50.16 2,736.95 499.75 2,237.20

100 100 100 100 100 100 100 100 100 100 100

89.07 94.38 120.06 92.36 109.62 89.05 33.22 79.69 86.61 77.96

89.51 91.16 218.72 81.11 114.21 74.65 26.37 66.56 65.51 66.96

108.87 100.6 217.46 91.39 116.96 86.44 6.63 73.06 66.44 74.69

91.71 95.57 104.63 94.85 117.38

90.51 8.39 76.75 70.85 78.19

Trend Analysis
Compared to the base year, the sales has been

increasing consistently and the current increase is by 35%. The cost of all expenses has gone up and the increase in manufacturing and employee cost has significantly increases over the past years. The operating profit has decreased by 9% and the overall profit has decreased by 22%. Even though the sales has increased , the amount of expenses incurred does not enable the company to have a significant higher profit rate over the years.