Hindalco Industries

1.  The Company has received a notice dated 24 March, 2007 from
 Collector (Stamp) Kanpur, Uttar Pradesh alleging that stamp duty of Rs.
 252.96 crores is payable in view of order dated 18th November, 2002 of
 Hon’able High Court of Allahabad approving scheme of arrangement for
 merger of Copper business of Indo Gulf Corporation Limited with the
 Company. The Company feels that it has a strong case as there is no
 substantive/computation provision for levy/calculation of stamp duty on
 court order approving scheme of arrangement under Companies Act, 1956
 within the provisions of Uttar Pradesh Stamp Act. The Company has filed
 a writ petition before the Hon’able High Court of Allahabad, inter
 alia, on the above said ground and also that the properties in question
 are located in the state of Gujarat and thus the collector has no
 territorial jurisdiction. Hearing on this matter has taken place but
 order is awaited.
 
 2.  Sales include own manufactured items capitalized / used Rs. 26.96
 crores (previous year Rs. 31.82 crores) at cost (inclusive of excise
 duty).
 
 3.  Sale of Di-Ammonium Phosphate (DAP) and other complex fertilizers
 are covered under the concessional schemes for decontrolled fertilizers
 by the Government of India. During this year, the Company has received
 differential concession of Rs. 53.68 crores pertaining to previous
 year.
 
 4.  Export and Other Incentives under Operating Revenues in Schedule
 14:- i) Rs. nil (previous year Rs. 116.59 crores) being sales tax
 collected during the year and retained as Sales
 
 Tax Incentive allowed by Government of Gujarat to the Units enjoying
 Sales Tax exemption on Domestic Sales.
 
 ii) Rs. 8.03 crores (previous year Rs. 22.46 crores) being benefit
 under Duty Free Import Entitlement Scheme received during the year in
 relation to export made during 2003-04.
 
 5.  (a) Purchase of copper concentrate is accounted for provisionally
 pending finalization of content in the
 concentrate, price, and custom duty. Variations are accounted for in
 the year of settlement.
 
 (b) Sale of Continuous Cast Copper Rod and Copper Cathode are accounted
 for provisionally pending finalization of price variations in the year
 of settlement.
 
 (c) Final price payable on purchase of copper concentrate for which
 quotational period, price and quantity was not finalized in previous
 year, were realigned based on monthly average of LME & LBMA rate at the
 year end copper and precious metals respectively and accordingly an
 additional provision for Rs. 252.00 crores (previous year Rs. 54.68
 crores) was made. During the year final price payable was settled at
 Rs. 235.47 crores (previous year Rs. 196.27 crores) and reversal of
 Rs.16.54 crores (previous year additional liabilities of Rs. 141.58
 crores) have been adjusted in raw material consumption.  Further,
 additional provisions for Rs. 161.93 crores (previous year Rs. 252.00
 crores) were made on realignment of such class of liabilities as on 31
 March, 2009. Actual outflow is expected on finalization of quotational
 period price and quantity in the next financial year.
 
 (d) Final price receivable from sale of Copper for which quotational
 price was not finalized in previous year, were realigned at year end
 rate based on LME Rate and additional provisional sales for Rs.16.15
 crores (previous year Rs.43.09 crores) were accounted for. During the
 year final price was settled at Rs. 21.80 crores (previous year
 Rs.49.02 crores) and credit for further sales for Rs 5.64 crores
 (previous year Rs.5.93 crores) was taken into account. As on 31 March
 2009, sale of Copper, Gold, Silver & Anode Slime amounting to Rs.
 212.19 crores (previous year Rs. 197.58 crores) pending for price
 finalization were realigned at year-end rate of LME and an additional
 sales of Rs. 0.08 crores (previous year Rs.16.15 crores) was accounted
 for. Actual inflow or outflow is expected on finalization of price in
 next financial year.
 
 6.  A part of electricity supplied by the Company, which has been
 treated by Uttar Pradesh Power Corporation Limited (UPPCL) as sale, has
 been accounted for on the basis of provisional rates till 2007-08.
 During the current year UPPCL / UPERC has passed the order and
 finalised the rate. Accordingly, differential amount of price, for
 units supplied in earlier years, has been accounted for during the year
 amounting to Rs. 6.65 crores.
 
 7.  Income amounting to Rs. 163.93 crores of dividend (previous year
 Rs. 149.97 crores), Rs. 1.90 crores of interest (previous year Rs.
 17.57 crores) and Rs. 46.29 crores of profit on sale of investments
 (previous year Rs. 132.55 crores) derived from temporary deployment of
 surplus fund out of specific borrowing for various projects has been
 deducted from borrowing costs incurred.
 
 8. Tax adjustment for earlier years (net) includes write back of
 provision for tax resulting from change in estimation of tax liability
 on progress in tax assessments.
 
 9. Loans and Advances include :-
 
 (i) Due from Officers (Maximum balance during the
 
 year Rs. 0.07 crores, previous year Rs. 0.07 crores) 0.07 0.07
 
 (ii) To Subsidiary Companies:-
 
 (iii) Inter Corporate Deposits include:
 
 (a) Rs. nil, (previous year Rs. 15.21 crores) given to Aditya Birla
 Power Company Limited bearing interest pursuant to MOU entered into
 with the Company for development of new projects.  Maximum balance
 outstanding during the year was Rs. 18.49 crores, (previous year Rs
 21.24 crores).
 
 (b) Rs. 13.23 crores, (previous year Rs. 12.89 crores) given to Aditya
 Birla Science and Technology Company Limited, an Associate Company,
 bearing interest. Maximum balance outstanding during the year was Rs.
 13.23 crores, (previous year Rs. 12.89 crores).
 
 (c) The Company is one of the promoter members of Aditya Birla
 Management Corporation Private Limited (ABMCPL), a Company limited by
 guarantee which has been formed to provide common facilities and
 resources to its members, with a view to optimize the benefits of
 specialization and minimize cost for each member. The Company is one of
 the participants in the common pool and shares the expenses incurred by
 ABMCPL and accounted for under appropriate heads.
 
 Rs. 24.02 crores, (previous year Rs. 24.02 crores) is given to ABMCPL,
 bearing interest. Maximum balance outstanding during the year was Rs.
 24.02 crores, (previous year Rs. 24.90 crores).
 
 (iv) Loan to employees as per Company’s policy are not considered.
 
 (v) Balances with Trident Trust representing 16,316,130 equity shares
 of Re.1/- each of the Company issued pursuant to the Scheme of
 Arrangement approved by the Hon’ble High Courts at Mumbai and Allahabad
 vide their Orders dated 31st October, 2002 and 18th November, 2002,
 respectively, to the Trident Trust, which is created wholly for the
 benefit of the Company and is being managed by trustees appointed by
 it.  The tenure of the trust has been extended up to 23rd January,
 2017.
 
 Cash Credit and Export Credit
 
 Working Capital Loan of Aluminium Business (Renukoot) is secured by
 hypothecation of Raw Materials inventory, Consumable Stores, Spares,
 Work- in-Process and Finished Products of Renukoot plant, Working
 Capital Loan of the balance Aluminium Business is secured by
 hypothecation of stocks of Raw Materials, Consumable Stores, Spares,
 Work-in-Process and Finished Products of all other aluminium plants
 (other than Renusagar Power plant) and Working Capital Loan of Copper
 Business is secured by hypothecation of stocks of Raw Materials,
 Consumable Stores, Spares, Work-in-Process and Finished Products of
 Copper Business, both present and future, secured by way of joint
 equitable mortgage of the immovable assets, on second charge basis, of
 Copper Business, ranking pari-passu with other Lenders/Institutions.
 
 10.  Although the book value of certain unquoted investments (amount
 not ascertained) is lower than cost, considering the strategic and long
 term nature of the investments and asset base of the investee
 companies, in the opinion of the management such decline is temporary
 in nature and no provision is necessary for the same.
 
 11.  The Company has earmarked 6.83% GOI, bonds 2039 of the face value
 of Rs. 20.00 crores and book value being Rs. 20.13 crores in compliance
 with the provisions of Rule 3A of the Companies (Acceptance of
 Deposits) Rules, 1975 (as amended).
 
 12.  In the Annual General Meeting held on 19th September, 2008 the
 shareholders of the Company have approved, under Section 61 of the
 Companies Act, 1956, utilization of the previous rights issue (of
 January, 2006) proceeds for the purpose of repayment of bridge loan of
 US$ 3.03 billion taken for acquisition of Novelis Inc.  and other
 general corporate purpose, in addition to the utilization of issue
 proceeds as discussed in the rights issue letter of offer dated 25th
 November 2005. Accordingly, the balance amount of Rs. 1,682.63 crores
 has been utilized to repay the bridge loan in November, 2008.
 
 13.  The Company had issued equity shares of Re. 1 each on rights basis
 at a price of Rs. 96 per share in the ratio of 3:7 in September, 2008
 aggregating to 525,802,403 shares. Against a total amount receivable of
 Rs. 5,047.70 crores, the Company has received Rs. 4,545 crores against
 which 473,398,534 equity shares have been allotted on fully paid-up on
 23rd October, 2008. Out of this amount received, an amount of Rs.
 124.90 crores has been spent on related expenses of the rights issue
 and the balance amount has been utilized to repay the bridge loan taken
 for acquisition of Novelis.
 
 14.  In terms of the facility agreement for foreign currency borrowing
 of US$ 981.80 million availed by A V Minerals (Netherlands) B.V., a
 wholly owned subsidiary, the Company has entered into a deed of pledge
 of registered shares in A V Minerals (Netherlands) B.V. in favour of
 HSBC Bank USA, N.A. as pledgee.
 
 15.  (a) The Company has entered into a joint venture agreement with
 Mahanadi Coalfields Limited (MCL, a
 subsidiary company of Coal India Limited) and Neyveli Lignite
 Corporation Limited (NLCL) and has formed MNH Shakti Limited for mining
 of coal. Both Hindalco and NLCL hold 15% stake in the company by
 severally acquiring 15,000 equity shares of Rs. 10 each and MCL holds
 70% stake in the company by acquiring 70,000 equity shares of Rs. 10
 each. In absence of any control or significant influence by the
 Company, the amount spent for acquiring shares as stated earlier has
 been accounted for as investment.
 
 (b) The Company has entered into a Memorandum of Understanding with
 Dubai Aluminium Company Limited (Dubal) and Hydromine, Inc (Hydromine)
 for development of an Alumina Project in Cameroon. The Company along
 with its partners, Dubal and Hydromine, is developing an alumina
 project through a joint venture company, Hydromine Global Minerals GMBH
 Limited incorporated in British Virgin Islands. Hindalco holds 45%
 stake in the Joint venture and 45% is held by Dubal and the balance 10%
 is held by Hydromine. The Company has invested a total amount of Rs.
 8.30 crores till 31 March, 2009.
 
 16. Business Reconstruction Reserve
 
 (a) The Company has formulated a scheme of financial restructuring to
 deal with various costs associated with its organic and inorganic
 growth plan. The recent economic downturn particularly in the commodity
 space is also expected to result in impairment / diminution in value of
 certain assets/ investments. Accordingly, as per a scheme of
 Arrangement under Sections 391 to 394 of the Companies Act 1956 (“the
 Scheme”) between the Company and its equity shareholders approved by
 the High Court of Judicature of Bombay, a separate reserve account
 titled as Business Reconstruction Reserve (“BRR”) has been created by
 transferring balance standing to the credit of Securities Premium
 Account of the Company for adjustment of certain expenses as prescribed
 therein. Accordingly, Rs. 8,647.37 crores has been transferred to BRR
 and following expenses incurred during the year have been adjusted
 against the same as per the Scheme:
 
 (i) Impairment of fixed assets amounting Rs. 66.80 crores, net of
 deferred tax of Rs. 34.40 crores (refer Note no 24 in this schedule).
 
 (ii) Certain costs amounting to Rs. 0.18 crores in connection with the
 Scheme.
 
 (a) Subsidiaries of the Company
 
 1) Aditya Birla Minerals Limited.
 
 2) Birla (Nifty) Pty Limited.
 
 3) Birla Maroochydore Pty Limited.
 
 4) Birla Mt Gordon Pty Limited.
 
 5) Birla Resources Pty Limited.
 
 6) Dahej Harbour and Infrastructure Limited.
 
 7) Aditya Birla Chemicals (India) Limited (Formerly, Bihar Caustic &
 Chemicals Limited)
 
 8) Hindalco - Almex Aerospace Limited.
 
 9) Indal Exports Limited.
 
 10) Lucknow Finance Company Limited.
 
 11) Minerals and Minerals Limited.
 
 12) Renuka Investments & Finance Limited.
 
 13) Renukeshwar Investments & Finance Limited.
 
 14) Suvas Holdings Limited.
 
 15) Utkal Alumina International Limited.
 
 16) East Coast Bauxite Mining Company Private Limited.
 
 17) Tubed Coal Mines Limited.
 
 18) A V Minerals (Netherlands) B.V.
 
 19) A V Metals Inc.
 
 20) A V Aluminum Inc.
 
 21) HAAL (USA) Inc.
 
 22) Novelis Inc.
 
 23) Novelis Belgique SA.
 
 24) Novelis Benelux NV.
 
 25) Albrasilis - Aluminio do Brasil Industria e Commercia Ltda
 
 26) Novelis do Brasil Ltda.
 
 27) 4260848 Canada Inc.
 
 28) 4260856 Canada Inc.
 
 29) Novelis Cast House Technology Ltd.
 
 30) Novelis No. 1 Limited Partnership.
 
 31) Novelis Foil France SAS.
 
 32) Novelis Lamines France SAS.
 
 33) Novelis PAE SAS.
 
 34) Novelis Aluminium Beteiligungs GmbH.
 
 35) Novelis Deutschland GmbH.
 
 36) Novelis Aluminium Holding Company.
 
 37) Novelis Italia SpA.
 
 38) Novelis Luxembourg SA.
 
 39) Alcom Nikkei Specialty Coatings Sdn Berhad.
 
 40) Aluminium Company of Malaysia Berhad.
 
 41) Al Dotcom Sdn Berhad.
 
 42) Novelis (India) Infotech Ltd.
 
 43) Novelis de Mexico SA de CV.
 
 44) Novelis Korea Ltd.
 
 45) Novelis Sweden AB.
 
 46) Novelis AG.
 
 47) Novelis Switzerland SA.
 
 48) Novelis Technology AG.
 
 49) Novelis Automotive UK Ltd.
 
 50) Novelis Europe Holdings Limited.
 
 51) Novelis UK Ltd.
 
 52) Aluminium Upstream Holdings LLC (Delaware).
 
 53) Eurofoil, Inc. (USA) (New York).
 
 54) Logan Aluminium Inc. (Delaware).
 
 55) Novelis Corporation (Texas).
 
 56) Novelis Brand LLC (Delaware).
 
 57) Novelis PAE Corp (Delaware).
 
 58) Novelis South America Holdings LLC.
 
 59) Novelis Madeira, Unipessoal, Ltd.
 
 60) Novelis Services Limited.
 
 (b) Trust of the Company
 
 Trident Trust.
 
 (c) Joint Ventures
 
 IDEA Cellular Limited. (up to 31st December, 2008).  Hydromine Global
 Minerals GMBH Limted.  Mahan Coal Limited.
 
 (d) Associates of the Company
 
 Aditya Birla Science and Technology Company Limited.
 
 Consorcio Candonga.
 
 France Aluminium Recyclage SA.
 
 Aluminium Norf GmbH.
 
 Deutsche Aluminium Verpackung Recycling GmbH.
 
 MiniMRF LLC (Delaware).
 
 IDEA Celluar Litmited (w.e.f. 1st January, 2009).
 
 (e) Key Managerial Personnel:
 
 Mr. D. Bhattacharya- Managing Director
 
 17. Segment Reporting
 
 (a) Primary Segment Reporting (by Business Segment):
 
 i) The Company has two reportable segments viz. Aluminium and Copper
 which have been identified in line with the Accounting Standard 17 on
 Segment Reporting, taking into account the organizational structure as
 well as differential risk and return of these segments. Details of
 products included in each segments are as under:
 
 Aluminium : Hydrate & Alumina, Aluminium and Aluminium Products.
 
 Copper : Continuous Cast Copper Rods, Copper Cathode, Sulphuric Acid,
 DAP & Complexes, Gold
 
 and Silver.
 
 ii) Inter-segment transfers are based on market rates.
 
 18.  The amount transferable to Investor Education and Protection Fund
 does not include any amount due and outstanding to be transferred to
 said fund except Rs. 0.07 crores (previous year Rs. 0.07 crores) which
 is held in abeyance due to legal case pending.
 
 19.  The Company has not received any memorandum (as required to be
 filed by the suppliers with the notified authority under Micro, Small
 and Medium enterprises development Act, 2006) claiming their status as
 micro, small or medium enterprises. Consequently the amount paid /
 payable to the parties during the year is nil.
 
 20. Figures of the previous year have been regrouped / rearranged
 wherever necessary.