Hindalco Industries Chairman's Speech > Engineering - Heavy > Chairman's Speech from Hindalco Industries - BSE: 500440, NSE: HINDALCO

Hindalco Industries

BSE: 500440|NSE: HINDALCO|ISIN: INE038A01020|SECTOR: Aluminium
Sep 27, 15:58
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VOLUME 1,151,765
Sep 27, 15:58
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VOLUME 8,046,035
Mar 14
Chairman's Speech (Hindalco Industries) Year : Mar '15
Dear Shareholders,
 The Global Scenario
 The year 2014-15 continued to be a challenging year. The global economy
 growth was 3.4%, unchanged over the previous year. The world''s largest
 economy, the US saw better growth, while the countries in the Euro zone
 registered marginal growth. There was a marked slowdown in China, and
 Japan witnessed near stagnation.
 The key factors that affected the global economy included a steep
 decline in oil and commodity prices, and monetary easing by central
 banks in the US, EU and Japan. The global fi nancial markets
 experienced heightened volatility, largely due to expectations of a
 tightening of monetary policy by the US Federal Reserve. The impasse on
 resolving the debt crisis in Greece added to the uncertainty.
 Geopolitical risks compounded the situation.
 The IMF has projected economic growth at 3.3% in 2015, marginally lower
 than the growth recorded in 2014.
 The domestic scenario
 Among all the developing economies, India was a notable exception, with
 growth increasing to 7.3% in 2014.  Agriculture recorded a growth of
 only 0.2%, given the subnormal monsoon. This was compensated by a more
 vigorous manufacturing sector, which grew at 7.1% in FY 2014-15,
 compared to 5.3% in FY 2013-14. Headline infl ation fell sharply to 5%.
 On the external front, India''s vulnerability has reduced with the
 current account defi cit contained at below 2% of GDP and a relatively
 stable currency. The monetary policy through the year was largely
 A slew of initiatives reinforced the positive macro factors. One must
 particularly mention the deregulation of diesel prices, reforms in the
 coal and mineral sectors, measures to boost FDI, and faster
 environmental clearances.  The buoyant investor sentiment was manifest
 in capital infl ows of  billion.  As infrastructure projects get off
 the ground, the prospects for a revival of the capital investment cycle
 seem very strong.
 Your Company''s performance
 These developments on the global and domestic front have impacted your
 Company''s overall performance. Regardless, your Company attained a
 consolidated turnover of $ 17 billion (Rs. 1.04 lakh crore) and an
 PBITDA of $ 1.6 billion (Rs. 10,049 crore), a growth of 8% and an
 PBITDA margin of 9.6% which is commendable.
 The business set new records in terms of metal volumes and turnover, as
 our expansion projects stabilized and ramped up. Utkal Alumina refi
 nery has achieved near-full capacity utilization and is already amongst
 the lowest cost alumina refi neries globally. Mahan and Aditya smelters
 have ramped up to nearly 85% and 50% of their capacity respectively;
 and will hit full capacity levels this fi scal. On the back of these
 ambitious, new-age projects, aluminium volumes in India jumped 37% to
 0.8 million tons and alumina output increased 40% to 2.3 million tons.
 EBIDTA from Aluminium Business in India, including Utkal, increased 62%
 in FY15 to Rs. 2,345 crore.
 The deallocation of coal blocks by the Supreme Court last year was a
 disruptive change in the business environment for our Aluminium
 business.  Our expansion strategy was closely hinged on to the coal
 blocks allocated by the government in the past. In the changed
 scenario, Hindalco participated in the fi ercely competitive auctions
 of coal blocks and managed to bag four coal blocks, securitizing ~25%
 of its coal requirement.
 Copper business''s performance has been noteworthy, recording the
 highest ever volumes of 386,000 tons and EBITDA of 258 million dollars
 (Rs. 1,601 crore), a growth of 45% over last year. Operational effi
 ciencies, lower cost of production; coupled with the favourable trend
 in treatment and refi ning charges, have been their success drivers.
 Novelis came closer to the fruitioning of its strategic goals of
 realigning the product portfolio towards premium products, including
 auto; and increasing the recycled content in its input material.
 Novelis'' shipments grew in all regions, crossing the 3 million ton
 mark, driven by rolling expansions in Brazil and Korea. Adjusted EBITDA
 increased 2% to 902 million dollars, despite several market headwinds.
 The commodity markets, and in particular the aluminium industry, are
 going through a challenging phase at present because of the sharp slide
 in realizations.  This would impact your Company''s performance in the
 near term. Nevertheless, on the back of the addition of world-class
 assets in the recent years, your Company is well poised to ride the
 structural growth trends such as increasing urbanization,
 light-weighting of vehicles and growth in emerging markets.
 To our teams
 I would like to acknowledge the contribution of our teams in India and
 across the world. I believe, it is our people, who underpin everything
 else. They are the ultimate reason why we meet with success, in the
 face of all odds, year after year. Their commitment and dedication is
 beyond words.
 The Aditya Birla Group: In perspective
 We have had a good year at the Group level. Our Group''s consolidated
 revenue crossed the Rupees 2.5 trillion mark, setting a new milestone.
 We are up 9% over the last year. In dollar terms as well, regardless of
 the ups and downs in foreign currency, we reported revenues of $ 41
 billion, an 8% rise. Over 50% of our Group''s revenues fl ow in from our
 global operations.
 I believe, that the bottom line and the cash in the till is a greater
 parameter to gauge performance rather than simply revenues. On this
 score too, we have done well.
 Our EBIDTA in Rupee terms is an impressive Rs. 322 billion, again over
 9% vis- -vis FY14. In dollar terms, we achieved an EBIDTA of .25
 billion, refl ecting an 8% rise over that of the last year.
 I deeply believe that building our future can only be possible by
 building more leaders and through people development processes. Towards
 this, our endeavours continue to deliver results. Two of our programmes
 deserve a special mention. Cutting Edge  our leadership programme
 targeted at developing P&L leaders and Turning Point  aimed at
 building cost centre leaders and unit heads, have proved very
 promising. Over 70 talented managers have graduated from these
 programmes and have taken on leadership roles at senior levels.
 At the same time our senior leaders are being actively encouraged to
 take on cross business roles to gain multi-sectoral experience.
 We have a bench strength of over 250 youngsters who joined us 5 years
 ago as Group Management Trainees, and Leadership Associate Programme
 (Lead) and Leadership Programme for Experienced (Leap) members, have
 demonstrated great potential and grown signifi cantly. Some of them are
 already in key positions. I hope to see many of them occupy positions
 of critical importance in our businesses in the near future. As part of
 our globalisation agenda we have also been recruiting both interns and
 Lead and Leap participants from renowned International Business
 Similarly, our GMLP  Global Manufacturing Leadership Programme, aimed
 at reinforcing our technical and manufacturing strength is paying a
 rich dividend.  The Aditya Birla Group is being increasingly viewed as
 the most aspirational place for manufacturing professionals in India.
 Our focus on gender diversity and creating enabling policies and
 programmes to ensure that we provide a conducive, encouraging and an
 equitable place for women to thrive and excel is gaining momentum. We
 have launched Spring Board, the accelerated women''s leadership
 development programme, designed for high calibre women managers.
 Currently, we have more than 150 women positioned at middle management
 and senior management levels.
 Gyanodaya, our in-house world-class university, has aligned with the
 best-in- class global business schools, professors and consultants
 among others. Many of our best talent is also enlisted for short-term
 courses at these institutions.  Such a cross pollination and stoking of
 the intellect enables us move with the times and are continuously
 Ranked No. 1 in the Nielsen Corporate Image Monitor
 We are humbled that for the third year running, our Group has been
 ranked No. 1 in the Nielsen Corporate Image Monitor 2014-15. We have
 emerged as ''Best in Class'' across most of the pillars. This is a
 remarkable vote of confi dence by the stakeholder constituency in our
 leadership teams. It is a testament to our Group brand, governance
 standards, transparency, customer primacy and CSR engagement. The six
 pillars of Corporate Image on which organisations are engaged comprise
 of Vision and Leadership, Product & Service quality, Workplace
 Management, Financial Performance, Operating style and Social
 Nielsen''s Corporate Image Monitor measures the reputation of the 42
 leading companies in India across sectors (based on the Bombay Stock
 Exchange list and the Economic Times Ranked Top 50 Companies) and the
 fi ndings serve as an important indicator of the strength of the
 corporate brand.
 In sum
 We are gearing to ensure that we have the right talent at the right
 time and at the right place for each of our businesses. Additionally,
 enhancing customer centricity and excellence capability by developing
 customer value propositions that are unmatched, stepping up the focus
 on R&D to increase the share of value-added products across businesses,
 are our focus areas.  The thrust on digitisation across our business
 processes and using analytics and big data continue. These are our
 steps towards accelerating top-line and bottom-line growth and
 enhancing stakeholder value.
                                                  Your sincerely
                                            Kumar Mangalam Birla
Source : Dion Global Solutions Limited
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