The global scenario continues to be trapped in a low growth trajectory,
despite the steep drop in crude oil and commodity prices. Furthermore,
a barrage of monetary stimulus has driven down interest rates close to
zero in many of the advanced economies. With the monetary stimulus
option by and large exhausted, governments are more likely to turn to
fiscal and structural measures to revive growth.
The IMF projects global growth to inch up from 3.1% in 2015, to 3.2% in
2016, and increasing to 3.5% in 2017. Growth in the advanced economies
is projected at 1.9% in 2016, with US growth pegged at 2.4%, Europe at
1.5% and Japan at 0.5%. Growth in the emerging markets in 2016,
overall, is projected at 4.1%, much of it coming from China, India and
the ASEAN region. Growth in Latin America is expected to be only 0.5%,
on account of a 3.8% decline in growth in Brazil. No sustained upside
is seen in oil and commodity prices in 2016.
The path ahead for the global economy remains challenging, with greater
uncertainties thrown in. Concerns persist about the slowdown in China
and its ability to shift smoothly from export-led to domestic-led
growth. Fiscal pressures will accentuate in the oil producing
countries, including the rich Middle-East countries. Financial markets
remain nervous and exchange rate volatility has been pronounced. This
is reinforced by the impending reversal of the interest rate cycle in
Against the backdrop of a muted global economy, India''s economy is an
outperformer. For 2016-17, GDP growth is projected at 7.5%. This would
make it the fastest growing among the large economies. This is
particularly creditable in the context of two successive unfavourable
monsoons and a decline in exports. Recent data indicate a 5.7%
year-on-year growth in eight of the key core sector industries, against
2.3% growth registered last year.
Inflationary pressures have been contained. The rise in the consumer
price index averaged 4.9% in 2015-16, down from 5.9% in the previous
year. The wholesale price index declined 2.5% on an averaged basis,
compared to a rise of 2.0% in the previous year. In 2015-16,
merchandise exports and imports each fell over 15% over 2014-15. The
trade deficit in 2015-16 was US$ 118.5 billion, a decline of 14% over
the previous year. The current account deficit narrowed sharply from
US$ 26.1 billion to US$ 22.0 billion, representing 1.4% of GDP. India''s
foreign exchange reserves, as at March-end 2016 were US$ 360.2 billion.
The government is also committed to meeting the current year''s fiscal
target of 3.5% of GDP. Overall, the economic fundamentals are sound.
There have also been positive moves on the policy front, in areas
related to ease of doing business, promoting start-ups, rationalising
the tax structure and administration, and opening up more areas for
foreign investment through the automatic route. The government is
substantially stepping up infrastructure spending.
Having said that, some issues come to the fore. For instance, capital
investment will take time to revive, given stretched corporate balance
sheets, low capacity utilization, (at only 72.5% in the organized
industrial sector), and competition from imports. Slow global output
and trade growth will continue to impact exports. There is also the
overhang of non- performing assets in the banking sector. Much more
also needs to be done to monsoon-proof the Indian economy.
The growth in the manufacturing sector has been subdued, including a
decline in the output of capital goods.
Your Company''s Performance
Your Company attained a consolidated revenue of US$ 15 billion (Rs.
100,042 crore) and PBITDA of US$ 1.5 billion (Rs. 10,007 crore). This
was despite a sharp drop in LME and the decline in aluminium ingot
premium that caused a large adverse metal price lag. Further, the
interest and depreciation charges rose significantly in line with the
commissioning of new facilities. However, higher volumes and a
significant reduction in the cost of production enabled your Company
record a robust performance.
The year 2015-16 was indeed a milestone year for your Company.
Aluminium and alumina production at 1.1 million tons and 2.7 million
tons respectively has been the highest ever achieved as were the
shipments of fl at rolled products. Your Company''s three Greenfield
projects – Mahan Aluminium, Aditya Aluminium and Utkal Alumina ramped
up to their full capacity. Utkal, in fact, has positioned itself in the
lowest decile on the global alumina cost curve on the back of very
efficient logistics in a remote terrain and robust operational
Of the 4 coal blocks – two in Chhatisgarh and two in Jharkhand - bagged
by your Company in the auction process, both the Gare Palma mines in
Chhatisgarh have become operational.
Your Company''s Copper business also put in a commendable performance.
Copper production for the year was at a record level of 388 KT. The
continued thrust on value addition led to a higher production of
continuous cast rods.
The year also marked the culmination of Novelis'' large scale investment
programme, started four years ago. Novelis'' Aluminium recycling center
in Germany, the world''s largest of its kind, is stabilizing well.
Additionally, it commissioned two new automotive lines in the US and in
Europe. In all, the 5 automotive finishing lines consolidate Novelis''
leadership in the high growth Auto segment.
Importantly, Novelis'' auto shipments increased 47% during the year, in
line with the strategic portfolio shift that is underway.
The overall outlook for commodity markets continues to be challenging.
The macroeconomic headwinds persist and the uncertain global macros
pose many concerns. However, your Company''s structural positioning in
the markets that it serves has strengthened significantly, following
the completion of its ambitious Greenfield investments in India and the
ongoing enrichment of the product portfolio in Novelis.
Our People: Our Pride
Despite yet another challenging year, we have achieved good results.
This has been largely due to deft cost management, a concerted move
towards on-streaming of new capacities, focus on efficiency
improvement, productivity and customer centricity. Our employees have
unflinchingly rallied around us. And for this, I would say a big thank
you to all of them.
The Aditya Birla Group: In perspective
At the Group level, we have done well both in terms of revenue and
earnings. As a matter of fact, the EBIDTA attained has been the
Having worked extensively on the people front for over a decade, I am
happy to state that our leadership processes are now mature. At the
management level we have built quality bench strength.
The Chairman''s Series launched last year for senior leaders in the
areas of business strategy, finance and personal leadership saw 150 of
our senior most leaders recourse to these learning interventions.
To create a leadership pipeline to the Business Head roles within the
next couple of years, we have created the Aditya Birla Fellows
programme. The managers who have won this recognition are put in charge
of critical Group- wide projects under my personal oversight. Up until
now, we have named 14 managers who have tremendous potential to rise to
the stature of Business Heads, going forward.
A slew of other initiatives have been set afoot to grow leaders from
within. To do so, we have announced a hiring freeze at the middle and
senior management levels for the next 3 years. It paves the way for
accelerated talent growth.
In this context, I am happy to state that our accelerated leadership
programme Cutting Edge, which prepares high potential leaders for P&L
positions across our Group is gaining traction. It was launched last
year. Up until now, 20 of the 35 graduates of this programme have
already moved roles to take on higher responsibilities.
Furthermore, the 250 youngsters who joined us over 6 years ago as
Group Management Trainees, in our Leadership Associate Programmes
(Lead) and Leadership Programme for Experienced youngsters (Leap), are
shaping well. In the last 2 years nearly a 100 from this slot have
moved across functions and businesses. Additionally, we have 25
mid-career participants who have joined us in the Group Manufacturing
Leadership Programme. They too are making significant contributions in
our manufacturing business units.
The first batch of 14 participants in Spring Board, (a programme
designed specially for high calibre women) graduated commendably to
higher roles. The second batch of 39 women leaders is making good
progress on their way to greater responsibilities. As of now, we have
nearly 5,000 women – 14 percent in the managerial cadre.
In the last 3 years, we have had more than 1100 inter-business and over
1000 intra-business transfers of employees across levels.
At Gyanodaya, the Aditya Birla Global Centre for Leadership Learning
over 2000 managers enrolled for learning programmes. With a mix of
academics and live case studies, these programmes enable our people to
keep abreast of the developments in their area and stay contemporary.
Side by side the Gyanodaya Virtual Campus hosts more than 500
e-learning modules in multiple languages. During the year, over 25,000
employees chose to access these programmes.
The Aditya Birla Group Leadership Programme aimed at securing young
talent from the top tier Business Schools of India has become
aspirational. I am happy to record that our Group''s brand
attractiveness has taken a quantum leap across 35 top B-Schools in
India. Our Group features among the formidable Top-5 in the A C Nielsen
- CRI Campus Recruitment India Index 2015.
All these moves are a testament to our commitment to accord a World of
Opportunity for our people and they are leveraging it. Our people are
fully aware of what business needs to succeed. They are committed to
contribute their best to our values based, performance driven,
meritocratic culture. We are future ready.
Kumar Mangalam Birla