The Directors are pleased to present the 53rd Annual Report alongwith
the audited annual Standalone and Consolidated accounts of your Company
for the year ended 31st March, 2012.
1. Financial Performance
Your Company''s Consolidated Revenue crossed Rs. 80,000 crore up 12% and
Consolidated Net Income is at a record Rs. 3,397 crore reflecting a rise
Financial Performance Summary (Rs. Crore)
Year Year Year Year
ended ended ended ended
Particulars 31/03/2012 31/03/2011 31/03/2012 31/03/2011
Revenue from Operations 26,597 23,859 80,821 72,202
Profit from Operations
before Other Income and
Finance Costs 2,415 2,467 5,320 5,169
Other Income 616 347 783 513
Profit before Finance Costs 3,031 2,815 6,103 5,683
Finance Costs 294 220 1,758 1,839
Profit before Tax 2,737 2,595 4,345 3,843
Tax Expenses 500 458 786 964
Profit before Minority
Interest and Share in
Associates 2,237 2,137 3,558 2,879
Share in Profit/ (Loss)
of Associates (Net) - - 50 (57)
Profit before Minority
Interest 2,237 2,137 3,608 2,822
Minority Interest - - 211 366
Net Profit for the Period 2,237 2,137 3,397 2,456
2. Standalone Results
Standalone Revenues for the year crossed the Rs. 25,000 crore mark and
stood at Rs. 26,597 crore driven by higher volume and realisation.
Profit before Interest and Depreciation was Rs. 3,721 crore, an increase
of over 6% compared to FY11, driven by higher volumes in the Aluminium
business and higher TcRc in the Copper Business, alongwith improved
efficiencies and higher other income.
In the Aluminium Business, there has been a significant increase in
costs, especially in case of Coal (by 20%), Furnace oil (by 40%),
Caustic Soda (by 25%) and Carbon (30%). The cost surge was partly
offset by asset- sweating and improving operational efficiencies,
coupled with better realisation. The Profit before Interest and Taxes
was at Rs. 1,822 crore for FY12 compared to Rs. 2,004 crore in FY11.
In the Copper Business, revenues stood at Rs. 17,560 crore compared to Rs.
15,897 crore in FY11, due to higher LME and by-product revenue. Profit
before interest and taxes was higher by 33% to Rs. 802 crore, due to
improved efficiencies, higher TcRc and by- product credit,
notwithstanding higher energy costs and a planned shutdown in FY12.
3. Consolidated Results
Hindalco''s consolidated Revenue at Rs. 80,821 crore has been the highest
Aided by better product mix and the depreciation of the Rupee Profit
before depreciation, interest and taxes stood at Rs. 8,973 crore as
against Rs. 8,441 crore in FY11.
Net profit attributable to the shareholders increased to Rs. 3,397 crore,
up by 38% over FY11, this is primarily attributable to the strong
performance at Novelis and Copper Business in India.
Despite economic headwinds, the balanced portfolio approach, low cost
operation and strong value added downstream operations resulted in a
commendable performance. With low cost advantage and strong downstream
presence, Hindalco is well set for being the Last Man Standing and
First Man Forward.
Of the total annual revenue of Rs. 80,821 crore, Aluminium Business
contributed to Rs. 62,059 crore, up 10% over the last year. Aluminium
EBIT for FY12 remained flat at Rs. 4,495 crore vis-a-vis to Rs. 4,469 crore
in FY11. The results were impacted by lower profits in Indian Aluminium
operation due to macro-economic conditions.
In the Copper Business, revenue is higher at Rs. 18,364 crore, a rise of
16% from Rs. 15,882 crore in FY11, mainly on account of higher volumes,
higher copper LME and by-product credits. EBIT of Rs. 1,119 crore vs. Rs.
1,082 crore in FY11.
4. Changes in Accounting Policy
Effective from the Financial Year 2011-12, the Company has changed its
accounting policy for preparation of the consolidated financial
statements relating to actuarial gains or losses arising out of
actuarial valuation of long term employee benefits and post employment
benefits with respect to one of its overseas subsidiaries (Novelis
Inc.). Until the previous year, the amount of actuarial gains or losses
was accounted through the Statement of Profit and Loss. Consequent to
the change in accounting policy, actuarial gains or losses along with
related deferred tax have been adjusted against Reserves and Surplus.
This is a non-cash item. Had the Company not changed the accounting
policy as above, the Employee Benefits Expenses would have been higher
by Rs. 1,014.91 crore, Tax Expenses would have been lower by Rs. 299.88
crore, Net Profit for the year would have been lower by Rs. 715.03 crore
and Foreign Currency Translation Reserve in Reserves and Surplus would
have been lower by Rs. 44.39 crore.
5. Business Reconstruction Reserve
Pursuant to a court approved scheme of financial restructuring under
sections 391 to 394 of the Companies Act 1956, Business Reconstruction
Reserve (BRR) was established during 2008-09 for adjustment of certain
specified expenses. Accordingly, costs in connection with exiting
certain business during the year have been adjusted against the BRR in
the consolidated financial statements. Had this adjustment not been
done, Other Expenses would have been higher by Rs. 536.33 crore, Tax
Expenses would have been lower by Rs. 35.86 crore and Net Profit for the
year would have been lower by Rs. 500.47 crore. A summary of adjustments
made so far against BRR is given in the following table:
(Rs. in Crore)
2008-09 2009-10 2010-11 2011-12
Opening Balance 8,580.39 8,580.39 8,580.39
Add: Transfer from
Account as per the
(a) Impairment loss - - - -
/ (reversal of
impairment loss) of
on consolidation of
Novelis Inc. while
of the Group
(b) Impairment of
fixed assets 66.80 - - -
(c) Interest and
Finance Charges on
loan taken by A V
B. V., a subsidiary
of the Company, for
Novelis Inc. by
the Company - - - -
(d) Costs in
exiting business - - - -
(e) Certain costs
in connection with
the Scheme 0.18 - - -
Closing Balance 8,580.39 8,580.39 8,580.39 8,580.39
2008-09 2009-10 2010-11 2011-12
Opening Balance - 4,030.50 3,726.11 7,165.40
Add: Transfer from
as per the Scheme 8,647.37
(a) Impairment loss/
of goodwill arising
on consolidation of
accounts of the Group 3,597.30 - (3,597.30) -
(b) Impairment of
fixed assets 111.30 - - -
(c) Interest and
Finance Charges on
long taken by
A V Minerals
B V a subsidiary
of the Company for
acquistion of Novelis
Inc, by the
Company 544.47 304.39 158.01 -
(d) Costs in connection
business 363.62 - - 500.47
(e) Certain costs in
the scheme 0.18 - - -
Closing Balance 4,030.50 3,726.11 7,165.0 6,664.93
6. Accounts of Idea Cellular Ltd.
Due to certain exceptional circumstances, the accounts of Idea Cellular
Limited (Idea), one of the associates of the Company, were not
available and hence could not be consolidated in the accounts for the
year ended 31st March, 2011. The Consolidated accounts for the year
include Rs. 62.02 crore being the share of profit of the Company in Idea
relating to the year ended 31st March, 2011 resulting in the net profit
for the current year being higher by the said amount.
The Board of Directors of the Company have recommended a dividend of Rs.
1.55 per share aggregating to Rs. 344.89 crore (including dividend
distribution tax of Rs. 48.14 crore) for the year ended 31st March, 2012.
Allocations and Appropriations of Surplus in Statement of Profit and
Loss are as under:
Standalone: (Rs. crore)
Surplus in the Statement of Profit and Loss 31/03/2012 31/3/2011
Balance as at the beginning of the year 350.00 300.00
Add: Profit for the year 2,237.20 2,136.92
Less: Dividend on Equity Shares (296.76) (287.17)
Less: Dividend Distribution Tax (38.41) (46.59)
Less: Transfer to General Reserve (1,852.03) (1,753.16)
Balance as at the end of the year 400.00 350.00
9. Growth plans underway in Aluminium
Your Company is aggressively pursuing various brownfield and greenfield
growth opportunities in Aluminium as described below:
Project Location Capacity Power Plant Timelines
expansion Hirakud 161 KTPA to 367 MW to 467 MW 2012
Flat Rolled Hirakud 135 KTPA NA 2012
[UAIL] Rayagada, 1.5 mio-
tonne 90 MW Captive 2012
Limited Odisha Alumina
Aluminium Mahan, MP 359 KTPA 900 MW CPP 2012
Aluminium Lapanga, 359 KTPA
Smelter 900 MW CPP 2013
Aluminium Sonahatu, Aluminium
Jharkhand Smelter 2015
These above smelters (Mahan, Aditya, and Jharkhand) have dedicated coal
blocks. Both Utkal and Aditya Alumina have captive Bauxite mines. The
Financial Closure has been already achieved for UAIL and Mahan
Aluminium. The Financial Closure for debt portion of Aditya Aluminium
is currently being pursued.
Mahan Coal: The Group of Ministers constituted by the Government of
India to consider environmental and developmental issues related to
coal mining etc, has recommended the granting of forest clearance by
the Ministry of Environment & Forest [MoEF] for the Mahan Coal block on
certain conditions. In this regard, further communication from MoEF is
Brazil: The previously announced expansion of the Pinda facility in
Brazil is expected to be commissioned at the end of 2012. Additionally,
plans to install a new coating line for beverage can end stock and to
expand the recycling capacity in the Pindamonhangaba, Brazil facility
are on the anvil.
Asia: The expansion of rolling and recycling capacity in Yeongju, South
Korea and Ulsan, South Korea is on schedule and are expected to become
operational at the end of 2013.
During the fourth quarter of FY12, an investment of 0 million into
an aluminum automotive heat treatment plant in China has been
announced, this will have annual capacity of approximately 120 Kt.
Construction of the new facility should begin in the fall of 2012 and
it is expected that the plant to be operational in late 2014.
Preferential warrants - The Company has allotted 150,000,000 warrants
on a preferential basis to the promoters on March 22, 2012, entitling
them to apply for and obtain allotment of one equity share of Rs. 1 each
at a price of Rs. 144.35 per share against each such warrant at any time
on or before the expiry of 18 months from the date of allotment in one
or more tranches. The Company has received an amount equal to 25 per
cent of the price of each such warrant.
Debenture issue - To further augment its financial resources, the
Company has issued 10 year 9.55 per cent Secured Redeemable
Non-Convertible Debentures for a total amount of Rs. 3,000 crore on
private placement basis on April 25, 2012. These debentures are listed
on the wholesale debt market segment of National Stock Exchange (NSE).
Term Loans from Banks Rs. 5,142.99 crore :
As per original loan agreement Rs. 2,146.66 crore, Rs. 2571.49 crore and Rs.
424.84 crore are repayable in FY14, FY15 and FY16, respectively.
However, in exercise of its prepayment option without payment of any
fees or penalty, the Company has served a notice on all lenders to
prepay this loan on June 29, 2012.
11. Consolidated Financial Statements
In accordance with the Accounting Standards AS-21 on Consolidated
Financial Statements read with Accounting Standard (AS) - 23 on
Accounting for investments in Associates and AS-27 on Financial
Reporting of Interest in Joint Ventures, the audited Consolidated
Financial Statements are provided in the Annual Report.
12. Management Discussion and Analysis Report
The Management & Discussion Analysis Report forming part of Directors''
Report for the year under review, as stipulated under Clause 49 of the
Listing Agreement with the Stock Exchange(s), forms part of Annual
Report. The report provides a strategic direction and a more detailed
analysis on the performance of individual businesses and their outlook.
13. Corporate Governance
Your Directors reaffirm their commitment to the corporate governance
standards as prescribed by The Securities and Exchange Board of India
(SEBI). A separate section on Corporate Governance together with a
certificate from the Auditors of the Company regarding full compliance
of conditions of Corporate Governance as stipulated under Clause 49 of
the Listing Agreement with the Stock Exchange(s) forms part of Annual
14. Directors'' Responsibility Statement
Your Directors affirm that the financial statements for the year
2011-12 are in full conformity with the requirements of the Companies
Act, 1956. They believe that the financial statements reflects fairly,
the form and substance of transactions carried out during the year and
reasonably present the Company''s financial condition and results of
operations. These financial statements were audited by the statutory
auditors of the Company, M/s. Singhi & Co., Chartered Accountants.
Your Directors further confirm that:
1) In the presentation of the financial statements, applicable
Accounting Standards have been followed.
2) That the accounting policies are consistently applied, except the
changes in accounting policy indicated in paragraph 4 of this report.
For preparation of the financial statements certain estimates are made
based on reasonable and prudent judgment so as to give a true and fair
view of the state of affairs of the Company at the end of the Financial
3) The Directors have taken proper and sufficient care for the
maintenance of adequate accounting records in accordance with the
provisions of the Act for safeguarding the assets of the Company and
for preventing and detecting fraud and other irregularities.
4) The Directors have prepared the Annual Accounts on a going concern
Your Company''s internal Auditors have conducted periodic audits to
provide reasonable assurance that established policies and procedures
have been followed.
15. Novelis Inc. (Wholly Owned Subsidiary)
Novelis reported strong operating results in FY12 despite challenging
market conditions globally. Its premium product portfolio, long- term
customer base and focused business model enabled Novelis to produce
solid results for the year.
Net sales for FY12 were .1 billion, a 5% increase compared to the
.6 billion reported for the same period a year ago, mainly the
result of favourable conversion premiums across all regions and an
increase in the average aluminum prices.
Novelis''s robust business model, good cost management and focus on
premium products resulted in a record EBITDA per tonne of 1 for the
year and the second straight year of billion plus adjusted EBITDA.
Shipments of aluminium rolled products totalled 2,838 Kt for FY12,
compared to 2,969 Kt in FY11. The decrease in shipments was primarily a
result of the overall economic slowdown and de-stocking by customers.
The continued optimization of Novelis''s footprint will improve its
competitive position; these include the divesture of three foil plants
in Europe and closure of an aluminum sheet mill in Canada. During the
year, Novelis invested in major recycling initiatives in all four
operating regions, including advanced equipment and technology to
process diversified scrap inputs, which will enable the Company to
achieve recycled content of 50 percent in its products by 2015.
During FY12, Novelis completed the acquisition of 31.3 percent of the
outstanding shares of its Korean subsidiary for $ 344 million raising
Novelis''s ownership of the Korean subsidiary to 99%.
16. Aditya Birla Minerals Ltd [51% subsidiary]
The production of Copper remained flat at 59.7 Kt in FY12. Net profit
for the year was AUD 27 million against AUD 57 million in FY11,
impacted by lower production at Nifty on account of the decline in the
mine grade (which was in line with the mining plan) and
slower-than-expected ramp-up at Mt Gordon.
The performance of your Company''s subsidiaries is covered elsewhere in
this Annual Report.
The Ministry of Corporate Affairs, Government of India vide its
Circular No.5/12/2007-CL-lll dated 8th February, 2011 has granted
general exemption under Section 212(8) of the Companies Act,1956, from
attaching the balance sheet, profit and loss account and other
documents of the subsidiary companies to the balance sheet of the
Company provided certain conditions are fulfilled. The Company has
satisfied the conditions stipulated in the Circular and hence is
entitled to the exemption. However annual accounts of the subsidiary
companies and the related detailed information will be made available
to the holding and subsidiary companies investor''s seeking such
information at any point of time. The annual accounts of the
subsidiary companies are available for inspection by any shareholder''s
at the Registered office of the Company. The annual accounts of the
subsidiary company is also available for inspection at their respective
registered office. Further, in line with the Listing Agreement and in
accordance with the Accounting Standard 21 (AS-21), the Consolidated
Financial Statements prepared by the Company include financial
information of its subsidiaries.
17. Employee Stock Option Scheme
The shareholders of the Company has approved on 23rd January, 2007 an
Employee Stock Option Scheme (ESOS 2006), formulated by your Company,
under which your Company may issue 3,475,000 options to its permanent
employees in the management cadre, in one or more tranches, whether
working in India or out of India, including its Whole Time Directors.
The shareholders have also approved giving discount up to 30% of the
average price of the equity shares of the Company in the immediate
preceding seven day period on the stock exchange. The ESOS 2006 is
administered by the Compensation Committee of the Board of Directors of
the Company (the Committee). Each option when exercised would be
converted into one fully paid-up equity share of Rs. 1/- each of the
Company. The options will vest in 4 equal annual instalments after one
year of the grant. The maximum period of exercise is 5 years from the
date of vesting. Further, forfeited/ lapsed options are available to
the Committee for grant. These options do not carry rights to dividends
or voting rights till the date of exercise. Further, on 23rd September,
2011 the ESOS 2006 has been partially modified by which the Company may
now issue 6,475,000 options.
However, under the ESOS 2006, so far the Committee has granted
3,545,550 options to its eligible employees in three tranches out of
which 706,901 options have been forfeited/ lapsed and are available to
the Committee for grant as per term of the Scheme.
The compensation cost of stock options granted to employees have been
accounted by the Company using the intrinsic value method. Accordingly,
Employee benefits expenses includes Rs. 1.29 crore (Previous Year Rs. 1.34
crore) being the amortization of intrinsic value for the year ending
31st March, 2012. Disclosure pursuant to the provisions of the
Securities and Exchange Board of India (Employee Stock Option Scheme)
Guidelines, 1999 is given in Annexure -A.
18. Particulars as per Section 217 of the Companies Act, 1956 The
information relating to the conservation of Energy, Technology
Absorption and Foreign Exchange Earnings and Outgo required under
section 217 (1)(e) of The Companies Act, 1956, is set out in a separate
statement attached to this report (Annexure B).
In accordance with the provisions of Section 217 (2A), read with the
Companies (Particulars of Employees) Rules, 1975, the names and other
particulars of employees are to be set out in the directors'' report, as
an addendum thereto. However, as per the provisions of Section 219 (1)
(b)(iv) of the Companies Act, 1956, the report and accounts, as therein
set out, are being sent to all members of the company excluding the
aforesaid information about employees. Any member, who is interested in
obtaining such particulars about employees, may write to the Company
Secretary at the Registered Office of the company.
19. Fixed Deposits
The Company has not accepted any public deposits and, as such, no
amount on account of principal or interest on public deposits was
outstanding as on the date of the Balance Sheet.
In accordance with Article 146 of the Articles of Association of the
Company, Mrs. Rajashree Birla, Mr. K. N. Bhandari and Mr. N. J. Jhaveri
retire from office by rotation, and being eligible, offer themselves
During the year Mr. M. Damodaran was appointed as an Additional
Director of the Company w.e.f 16th April, 2012 pursuant to Section 260
of the Companies Act, 1956.
21. Awards & Recognitions
Several accolades have been conferred upon your Company, in recognition
of its contribution in diverse fields. A selective list:
1. Hindalco:CII-EXIM Bank Award 2011 (Commendation Certificate) for
2. Birla Copper Dahej:IMC Ramakrishna Bajaj Quality Award 2011
3. Renukoot: Non-Ferrous Best Performance Award 2010-11 by the Indian
Institute of Metals, Non-Ferrous Division.
4. Birla Copper Dahej:Environment Protection Award 2011, for NP/NPK
Complex Fertilizer Plants, including captive Acids, presented by the
Fertilizer Association of India .
5. Renukoot: National Energy Conservation Award 2011, (2nd Prize),
presented by the Ministry of Power, Government of India.
6. Renukoof.Greentech Environment Platinum Award 2011 for outstanding
achievement in Environment Management, presented by the Greentech
Foundation, New Delhi.
7. Renusagar.Golden Peacock National Quality Award 2011 in the Service
8. Renusagar:Greentech Gold Safety Award 2011 in the Power Plant
category for exemplary efforts towards occupational health & safety,
presented by Greentech Foundation, New Delhi.
9. Renusagar:Greentech Environment Excellence Gold Award.
10. Birla Copper Dahej: Greentech Environment Gold Award.
11. Hirakud Smelter:Odisha State Safety Conclave Award 2011.
12. Hirakud Power:Cil Odisha State Award (1st Prize) for best
practices in Environment, Health, Safety (ESH) for 2011.
13. Belgaum Alumina Works:Government of Karnataka State Export
Excellence Award for the years 2009-10 and 2010-11, presented in March
14. Quality Circle Teams of Renukoot, Renusagar, Birla Copper Dahej
and Hirakud Complex :National Quality Convention 2011 for Excellence
and Distinguished performance awards.
15. Durgmanwadi, Chandgad and Lohardaga Mines Division : Awards at
regional / state level, during the Mines, Safety Productivity Week,
Environment Conservation Week and other such programmes.
22. Environment Protection and Pollution Control
Your Company is committed to sustainable development. Your Company is a
signatory to the Global Compact and subscribes to the principle of
triple-bottom line accountability.
A separate chapter in this report deals at length with your Company''s
initiatives and commitment to environment conservation.
The observations made in the Auditors'' Report are self-explanatory and
do not call for any further comments under Section 217 (3) of the
Companies Act, 1956.
M/s. Singhi & Company, Chartered Accountants and Auditors of the
Company, retire, and being eligible, offer themselves for appointment.
In pursuance to Section 233B(2) of the Companies Act, 1956 and
Notification dated 3rd June, 2011, 2nd May, 2011 and 24th January, 2012
and Order dated 30th June, 2011, your directors have appointed M/s. R.
Nanabhoy & Co, cost accountants and M/s. Mani & Co, cost accountants as
Cost Auditors for auditing the Cost Accounts of the Company for
Financial Year 2012-13, covering the relevant Product Groups as per the
statement placed under Central Excise Tariff and for the following
industries as relevant to your Company;
b) Mining & Metallurgy of Ferrous & Non- Ferrous Metals
d) Organic & Inorganic Chemicals
e) Engineering Machinery (including Electrical & Electronic Products)
The due date for filing Cost Audit Reports for the financial year
2010-2011 was 30th September, 2011 and the same was filed by the Cost
Auditors on 23rd September, 2011.
Your Directors place on record their sincere appreciation for the
assistance and guidance provided by the Honorable Ministers,
Secretaries and other officials of the Ministry of Mines, Ministry of
Coal, the Ministry of Chemicals and Fertilizers and various State
Governments. Your Directors thank the Financial Institutions and Banks
associated with your Company for their support as well.
Your Company''s employees are instrumental in your Company scaling new
heights, year after year. Their commitment and contribution is deeply
Your involvement as Shareholders is greatly valued. Your Directors look
forward to your continuing support.
For and on behalf of the Board
Dated 27th June, 2012