HINDALCO+NOVELIS

What’s the big deal?

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 WHAT’S IN THE PAST IS THE
PROLOGUE……

2003
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 THE PROBLEM CHILD

NOVELIS

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 THE INHERITANCE OF LOSS

• Novelis inherited huge debt

• Financial losses
• High debt equity ratio of 7.23:1
• Chaos in financial reporting
• Loss of credibility
• Constant restructuring
• Search for CEO

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 HINDALCO…

• Two strategic businesses-Al, Cu

• Asia's largest integrated primary
producer of aluminum and among the
most cost-efficient producers globally
• Hindalco has operated at the lower
end of the value chain

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 “Novelis is a global leader
with presence in four
continents. It is very rare
to be able to acquire a
global leader in any
industry.”
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 WHY NOVELIS?
• Entry into new markets.
• 40% of Al consumed is in the form of rolled
products.
• Will become 5th largest Al company in the
world.
• Entry into list of Fortune 500 Co.
• Access to high technology
• Move up to the high end of the value chain
• Access to new customer base

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 Access to new set of customers…

• Coca-cola
• Budweiser
• Ford
• GM
• Audi
• BMW

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 THE BIG DEAL

• Divided into 2 parts-

• 1)100% of Novelis
equity @44.93$ per
share which add up to
$3.6b
• 2)$2.4b debt on Novelis
balance sheet
• Confidential bidding

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 Funding
• while $2.4 billion will be raised on the balance sheet
of Novelis
• Hindalco will raise a debt of $2.8 billion.
• $450 million from its cash reserves
• while Essel 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 non-recourse debt raised on Novelis' books
will be funded through ABN Amro and UBS.

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 Gains for Novelis….

• Good value for share holders

• Increase in credibility.
• Reduction in debt equity ratio.

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 Value Addition….

• Size
• Scale
• Cutting edge technology
• Explosive combination

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 THE COMPETITIVE ADVANTAGE

• Market Share.
• Expanding it’s wings.
• Perfect Synergy.
• The Fusion Technology.
• Forward Integration.

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 THE STORY THAT NUMBERS TELL……

JAN- JAN- FY2005 FY2004 FY2003

SEPT SEPT
2006
2005
Net 7,3777 6,337 8,363 7,755 6,221
sales
Operati 7,224 5,938 7,962 7,145 5,737
ng
expens
es
EBITDA 153 399 401 610 484

Interest 149 148 194 48 33

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 THE WORLD OF NOVELIS…..

N.AMER EUROP ASIA S.AMERI

ICA E CA
ASSETS 1,487 2,3912 1,021 814
NET 2,841 2,688 1,235 626
SALES
REGIONA 64 208 70 122
L
INCOME
DESCRIP 10 PLANTS 14 PLANTS 3 PLANTS 2 PLANTS
TION OF 2 1 2 SMELTERS
RECYCLING RECYCLING 1 REFINERY
ASSETS FACILITIES FACILITY 2 BAUXITE
MINE
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 Performance

2002-03 2003-04 2004-05 2005-06 2006-07

(Up to IIIrd Qtr.)

Quantity of Alumina 501270 591297 662064 701578 535757

Produced (MT)

Net Turnover 23159 29076 34420 39580 38096

(Rs. In Million)

PBT 7618 9894 13399 15742 18453

(Rs. In Million)

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 NOW,IT’S TIME FOR SOME
CRYSTAL BALL GAZING…..

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 FUTURE PERFECT-POST 2010

• Expiry of can contracts

• Business integration
• Sourcing of raw material from Hindalco at
low cost
• Geographical proximity to Malaysian
production facility of Novelis.
• Expiry of Hindalco’s supply contracts.

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 THANK YOU

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 ADITYA BIRLA GROUP
Worlds no.1 in Viscose Staple Fiber, Insulators, Palm Oil,
rolled products, No. 2 in Viscose Filament Yarn.
HINDALCO, Asia’s largest integrated Steel Plant.
After NOVALIS acquisition 5th largest Aluminum producer
in the world.
Leading producer of Carbon black, Cement and a premier
branded garments player
82000 employees spread over 18 countries across the
globe.
Young workforce, 75% below 40 years
Attrition 1.9%
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 Lighting our Path
Our Vision
To be a premium global conglomerate with a clear focus
on each business
Our Mission
To deliver superior value to our customers, Shareholders,
employees and society at large.
Our Values
• Integrity
• Commitment
• Passion
• Seamlessness &
• Speed
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 Performance

2002-03 2003-04 2004-05 2005-06 2006-07

(Up to IIIrd Qtr.)

Quantity of Alumina 501270 591297 662064 701578 535757

Produced (MT)

Net Turnover 23159 29076 34420 39580 38096

(Rs. In Million)

PBT 7618 9894 13399 15742 18453

(Rs. In Million)

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 Renukoot, Renusagar & Mines Operations

Integrated Aluminium Plant at Renukoot

Capacity
•Mines 13.00 Million Ton.
•Alumina Plant 07.00 Million Ton.
•Smelter Plant 03.45 Million Ton.
•Fabrication Plant
•Rolled 00.80 Million Ton.
•Extrusion 00.20 Million Ton.
•Rods 00.40 Million Ton.

Captive Power Plant at Renusagar : 741.7 MW

Total No.of Employees 14697.
Captive township & all related facilities at Renukoot,Renusagar
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 Key Success Factors

Captive Mines and Power Plant

Robust Manufacturing facilities

Continuous up gradation of Technology

Skills / Competencies developed over the years

33 Years of IR peace

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 PRODUCTIVITY (MT/ MAN-YEAR)

45
44.07
44
43.04
43

42

41 40.32
40

39

38
2004-05 2005-06 2006-07

Productivity annualized
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