HINDALCO NOVELIS

ACQUISITION

Introduction
Acquisition
Part of inorganic growth strategy Completed this acquisition through its wholly-owned subsidiary AV Metals Inc Novelis will operate as a subsidiary of Hindalco.

Hindalco

Hindalco established in 1958 Operation Started in 1962 Revenue and market capitalization Division in Product

'Our vision is to be a premium metals major, global in size and reach .... The acquisition of Novelis is a step in this direction -Kumar Mangalam Birla, Chairman, Hindalco Industries

Novelis
Novelis is the world leader in aluminium rolling, producing nearly 20 percent of the world's flat-rolled aluminium products. Created in 2005 as a spin-off from aluminium producer Alcan Inc. Industry leading assets and technology. Has a net Worth of $322 million and has debt of $2.33 billion. The company is No.1 rolled products producer in Europe, South America and Asia, and No 2 in North America.

Funding Of The Deal

Deal was agreed at approx $6 Billion. Deal would be financed through a Recourse debt of $2.8 billion. $2.4 billion will be raised on the balance sheet of Novelis. Hindalco would contribute $450 million from its cash reserves. SL Iron Ore Mining ,another A V Birla group company, will chip in with $300 million from its reserves. The group has tied up with ABN Amro Bank, Bank of America and UBS for the Asian leg of the transaction, while the nonrecourse debt raised on Novelis' books will be funded through ABN Amro and UBS.

The Rationale Behind Acquisition

Establish a global integrated aluminium producer with low-cost alumina and aluminium production facilities combined with high end aluminium rolled product capabilities. Make Hindalco the biggest rolled aluminium products maker and 5th largest integrated aluminium manufacturer in the world.
Management-I Strong presence inFinancial aluminums recycling business

Increasing scale of operation, entry into highend downstream market General Motors Corp. and Coca-Cola Co. Global presence Novelis Fusion

Post acquisition

Hindalco has undertaken aggressive plans to increase its capacities

Post the acquisition of Novelis effective 15 May 2007; Hindalco is now a global player with a strong presence in five continents and with a product portfolio which is a natural hedge against the volatility of aluminium prices. Novelis has reported a net profit of USD 28 million (under US GAAP) for the period 16 May 2007 to 31 March 2008. The total revenue for the year at Rs. 60,013 crore and PBIT at Rs. 4,835 crore were up by 211 per cent and 22 per cent respectively over last year. Aluminium business revenue was Rs. 47,054 crore and PBIT was Rs. 3,214 crore, while the copper revenue was Rs.12, 340 crore with a PBIT of Rs. 931 crore. Intigraton Process

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