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Hindalco Industries Ltd.

BSE: 500440 | NSE: HINDALCO |

Represents Equity.Intra - day transactions are permissible and normal trading is done in this category
Series: EQ | ISIN: INE038A01020 | SECTOR: Aluminium

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506,591
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499,684
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1,056,667
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10-Day
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30-Day
19,576,763
17,978,012
  • Prev. Close

    390.85

  • Open Price

    387.30

  • Bid Price (Qty.)

    0.00 (0)

  • Offer Price (Qty.)

    380.25 (3046)

Annual Report

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Director’s Report

The Directors are pleased to present the 48th Annual Report along with the audited annual accounts for the year ended 31st March, 2007. A major Strategic Initiatives The Company has entered into a definitive agreement with Novelis Inc. on 10th February, 2007 for acquiring all outstanding common shares @ USD 44-93 per share in cash for a total consideration of approx. USD 3.5 billion. For this purpose, the Company has secured firm commitments of USD 3.1 billion bridge loan of 18 months against the corporate guarantee of the Company and the balance of USD 450 million will be financed by the Company by way of infusing equity/preferred stock/other securities in its wholly owned subsidiaries. The acquisition will be effected through one or more of its wholly owned subsidiaries. The transactions were duly completed and V1&A closure achieved as per plan. The strategic rationale for this acquisition as well as the acquisition financing process are more fully dealt with in the MD&A section of this Annual Report. Cost Reduction Initiatives With the commissioning of the second 100MW power unit at Hirakud, Orissa in December, 2006 in line with schedule, there has been a substantial cost saving of operation. Growth plans underway in Aluminium The Company is aggressively pursuing various brownfield and greenfield growth opportunities in Aluminium as described below: Brownfield Expansions The Company's brownfield expansion projects are on track. The expansion of Muri Alumina Refinery from 110 KTPA to 450 KTPA is expected to be commissioned in the second quarter of the next fiscal. The commissioning of Phase 1 of Hirakud Smelting capacity from 65 KTPA to 100 KTPA has been completed with all 150 pots energized. Phase - II of the project, which will enhance smelting capacity to 143 KTPA, is on track. The conversion of Pot Line-3 commenced in Nov'06 in a phased manner. The first lot of 64 Pots were completed ahead of schedule. The 2nd 100 MW power plant was commissioned in Dec'06 in line with the schedule while the third 100 MW plant is slated to go on stream by December 2007. Greenfield Projects Utkal Work on the 1,500 KTPA Alumina project is in progress. The pile foundation for the precipitation area is progressing well and will be completed by May'07. The layout of the non-plant buildings has been finalized. The Detailed engineering for Mines has started and is expected to be over by March 2009. The second phase of rehabilitation and resettlement process is on track. The joint venture partner i.e. Alcan Inc. has decided to exit the project and Hindalco is yet to exercise its pre-emption right. Aditya Alumina & Aluminium This Greenfield integrated project of 1,500 KTPA Alumina, 325 KTPA of Aluminium smelting and a Captive Power Plant of 750 MW is on track. The proposed smelter has been accorded an SEZ status. The Rehabilitation and Resettlement plan for both the smelters and CPP sites have been submitted for statutory approval. The work on the Railway siding and Energised Grid connectivity is underway. Mahan Aluminium This project envisages setting up of a 325 KTPA Smelter and 750 MW Captive Power Plant supported by Captive Coal Mine. The Coal block was allotted in April'06 in a JV with Essar. The production of coal is likely to start from April 2009. The Govt. of Madhya Pradesh has sanctioned an allocation of 1213 hectares of land and accorded an SEZ status. Lathehar Aluminium For this project entailing the setting up a 325 KTPA Aluminium Smelter with 750 MW Captive Power Plant, supported by 5 million TPA Captive Coal Mine in Jharkhand, the allotment of coal block has reached its final stages. Land acquisition is in progress. An application has also been filed for environmental clearance, water, construction power and other necessary infrastructure. Other Significant Developments Employee Stock Option Scheme The Company appreciates the critical role its employees play in its growth. Your Company strongly feels that the value created by its employees should be shared by them. To promote the culture of employee ownership in your company, the Board, of Directors of your Company at their meeting held on 7th December, 2006 resolved to introduce the Employee Stock Option Scheme - 2006 as per the provisions of the Securities and Exchange Board of India (Employee Stock Option Scheme and Employee Stock Purchase Scheme) Guidelines, 1999. The shareholders have also approved the ESOP by the requisite majority through postal ballot. However, no option has been granted to the employees during the year under review. First call money notice As per the right offer documents, the Board of Directors in their meeting held on 18th October, 2006 decided to send the first call money notice @ Rs. 24 per share. Trading of the new 50% partly paid shares commenced on the stock exchanges (BSE and NSE) on December 17, 2006. (BSE Code: 890120, NSE Code: HINDALCO Market Type: E2) Performance The Company registered its best ever performance during the year under review. Higher capacity utilization, increased realization, product mix enrichment and improved operational efficiencies resulted in both revenues and profits surpassing their previous levels. Alumina and Aluminium plants continued to operate at utilization levels well above their rated capacities. With the stabilization of the Hirakud brownfield expansion, metal production rose by 3.2% to 442,686 MT. The production of Value Added-Products i.e. Rolled and Extrusions increased due to acquisitions completed in FY06 as well as higher utilization of available assets. Of the total sales volume, the share of value added products was an impressive 55%. Despite falling aluminn prices in the international market, your Company was able to maintain high realizations, largely because of its focus on Speciality business as well as a prudent mix of forward contracts and spot sales. The production of Copper cathodes went up by 38% to 290,529 MT in comparison to previous year on the back of the expanded capacity commissioned last year. Production of value added CC rods grew 23% to 109,029 MT. Sulphuric acid output was up by 40% to 892,597 MT. In view of the overall economics, Copper II operations remained suspended for a part of year with copper concentrate in international markets becoming more expensive due to supply constraints. The Company expects this situation to be transient. The Chairman's letter to shareholders and the Management's Discussion & Analysis, which form a part of this Annual Report, provide the strategic direction and a more detailed analysis on the performance of individual businesses and their outlook. Rs. in Million Financial Results for the year ended 31.03.2007 31.03.2006 Net Sales & Operating Revenue 183,130 113,965 Profit before Extraordinary Items and Tax 35,046 21,027 Extraordinary Items - 30 Profit Before Tax 35,046 21,057 Provision for Current Tax 9841 3241 Provision for Deferred Tax (551) 1160 Provision for Fringe Benefits Tax 113 100 Net Profit 25,643 16,556 Appropriations Transfer to Debenture Redemption Reserve 187 751 Dividend 1,773 2,168 Tax on Dividend 249 304 Transfer to General Reserve 24,434 14,395 Dividend The Directors have recommended interim dividend of Rs. 1.70 per share (Last Year Rs. 2.20 per share). The total outgo including tax on divided would be Rs. 2,022.2 million (Last Year: Rs. 2,472.5 million). Financing An amount of Rs. 3,890 crores was drawn at an average rate of 8.62% p.a. against the 10 year Secured Rupee Term Loan facility syndicated in earlier years. The Company met all its obligation on payment of interest and repayment of principal. As part of the bidding process under Canadian Law for undertaking the arrangement transaction for the acquisition of Novell, your Company obtained commitment letter from ABN AMRO, Bank of America and UBS of US$3.1 Billion with recourse to your Company and secured by Hindalco's corporate guarantee for paying the shareholders of Novelis. It also obtained back-stop facility of approximately US$2.4 Billion from UBS and ABN AMRO for refinancing the existing loans of the Novelis Balance Sheet with recourse limited to the cash flows and assets of Novelis. The Company was adjudged the successful bidder and all steps are being taken to complete the legal and other formalities required to draw the committed funds. Preferential Issue The Company has embarked on major growth plans to increase the smelting capacity to 1.5mn tonnes and Alumina capacity to around 4.5mn tonnes over the medium term. The total fund requirement to implement these plans will be about US$7bn. To finance such organic growth, Hindalco syndicated about US$1.5bn debt from the domestic market in 2005. This was followed up with a partly-paid rights issue of around US$500mn on which the final call (50%) is expected to be made in August'07. This equity issue was considered sufficient to maintain prudential balance sheet ratios after factoring in the expansion plans. As mentioned earlier, your Company also put in a bid for acquiring 100% of the equity of Novelis. The recommendation of our bid by the Novelis Board for acceptance by the shareholders, followed by the signing of a definitive agreement, paves the way for a transformational acquisition which will see your Company emerge as a Fortune 500 company when the transaction is consumated. Our bid envisages US$ 3.55bn payment to equity shareholders. This has been underwritten to the tune of US$3.1 bn by a consortium of banks and the balance US$ 450 mn represents Hindalco's equity infusion for the bid by the liquidation of free treasury. While this ensured certainty of financing for our bid, the loan of US$ 3.1 bn represents a 18 month bridge facility which will need to be refinanced to put in place an efficient permanent capital structure at the opportune time. The company issued securities to Promoters/Promoter Group on a preferential basis in the following manner @ Rs. 173.87 per shares of Re. 1/- each amounting to Rs. 25,646 Million : 1. Issuance of upto 67,500,000 equity shares of Re. 1/- each on a preferential basis to the Promoters/Promoters Group in accordance with the provisions of Chapter XIII of the Securities and Exchange Board of India (Disclosure & Investor Protection) Guidelines, 2000 (SEBI (DIP) Guidelines). 2. Issuance of upto 80.000,000 warrants on a preferential basis to the Promoters/Promoters Group entitling the holder of warrant to apply for and obtain allotment of one equity share against one warrant in accordance with the provisions of Chapter XIII of SEBI (DIP) Guidelines. Consolidated Financial Statements In accordance with Accounting Standards 21, 23 and 27 issued by the Institute of Chartered Accountants of India, your Company is presenting its consolidated financial statements. These Consolidated Financial Statements form part of the Annual Report. Corporate Governance The Securities and Exchange Board of India (SEBI) has prescribed corporate governance standards. Your Directors reaffirm their commitment to these standards and this annual report carries a section on Corporate Governance. Environmental Protection and Pollution Control The 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. Human Resource Development & Industrial Relations The Chairman in his letter at the beginning of this annual report, has already highlighted the importance of the people processes of a meritocratic organization like our Group. These processes span across the Group Companies globally and your company is one of the flagship of the Group. The Company has an enviable track record of successful human capital management, which has remained the source of sustainable competitive advantage. Fostering people development and harnessing their potential has always remained the thrust area of your company. Identifying and grooming management talent has helped in people capability building and leadership development at all levels. Programmes launched over the years in the areas of people development have enabled company to attract, retain and develop talent. The company's growth and success spanning over decades has generated a reservoir of talent and expertise, helping company realize its vision. A proactive and an effective succession management has not only helped in passing on the baton but has also catalyzed continuous knowledge replication and retention. Introducing global HR practices, systems and best practices in the areas of talent development, compensation management, recruitment etc is enabling and preparing us to address future challenges effectively. Implementation of People soft systems, Variable Pay plan, Job Banding, online recruitment are the major initiatives taken in this direction. The company has launched various new projects to strengthen HR processes. The Recently concluded Organizational Health Study revealed that more than 70% employees are satisfied with their business unit as a place to work, 62% would advocate their business to others and close to 68%) would continue to remain in the business. Awards & Recognitions Several accolades have been conferred upon your Company, in recognition of its contribution in diverse fields. A selective list :- 1. National Energy Conservation Award-2006 First Prize in Aluminium Sector by Government of India, Ministry & Power. Award given by Honourable Union Minister of Power. 2. National Award on Economics of Quality by Quality Council of India. Award given by HE AQ P J Abdul Kalam, President of India. 3. National Award of Excellence in Energy Management 2006 conducted by CII. Hindalco smelter won the Excellence Energy Efficient Unit Award. 4. The prestigious Qualtech Award was won by Hindalco Renukoot Fabrication plant Hot Mill team. Quimpro College, Mumbai. constituted this award. 5. The International Aluminium Institute-IAI has awarded Hindalco Aluminium Smelter as well as Alumina Refinery of Renukoot the Best Safety Performance 2005 award. 6. Prestigious Greentcch Safety Award for its outstanding performance towards organization health and safety and Environmental Excellence. 7. IMC Ramkrishna Bajaj National Quality Award, 2006 - Certificate of Merit. 8. Rajiv Gandhi National Quality Award, 2006 - Commendation Certificate. 9. Hirakud's Quality Circle `Jagruti' bagged national level honours at the 20th National Convention of Quality Circles, organised by the Quality Circle Forum of India. 10. Hirakud Power Plant Team received the State Safety Award-2006 for their act of bravery in saving lives and preventing a disaster, by their proactive initiative to arrest the chlorine leakage at the Railway Colony in Sambalpur. Subsidiary Companies Dahej Harbour and Infrastructure Limited (DHIL) has recorded an impressive performance this year. Its total income is up by 12% to Rs.627 million as compared to Rs. 560 million last year. Net profit at Rs.375 million has increased by 13.3% vis-a-vis Rs. 331 million in the preceding year. Indian Aluminium Company, Limited (Indal) has posted a turnover of Rs.767 million and net loss of Rs. 25 million. Bihar Caustic and Chemicals Limited (BCCL) has reported a stellar performance. Net sales have increased by 28.3% to Rs. 1,430 million vis-a-vis Rs. 1,115 million last year. Net profit at Rs. 336 million has soared by 28.7% against Rs. 261 million in the preceding year. The Central Government has granted an exemption to your Company under Section 212(8) of the Companies Act, 1956, from attaching a copy of the Balance Sheet, Profit and Loss Account, Report of the Board of Directors and the Report of the Auditors to all the Subsidiary Company except AV Metals Inc. and AV Aluminum Inc. Subsidiary Companies, which will not be attached with the financial statements of your company. The Company has also applied to the Central Government for exemption from attaching copy of Balance Sheet, P&.L A/c report of the Board of Directors and report of the auditors for the remaining two subsidiaries i.e. AV Metals Inc. and AV Aluminum Inc. These documents can be requested by any member, investor of the company/subsidiary company. Further, in line with the Listing Agreement and in accordance with the Accounting Standard 21 (AS-21), Consolidated Financial Statements prepared by the Company include financial information of its subsidiaries. Particulars as per Section 217 of the Companies Act, 1956 The particulars of employees, as required under Section 217 (2A) of the Companies Act, 1956, are given as an Annexure to this Report. A separate statement attached to this Report, which forms a part of the Report, provides you with additional 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. Directors In accordance with Article 146 of the Articles of Association of the Company, Mr. K.M. Birla, Mr.A.K.Agarwala and Mr. E.B. Desai retire from office by rotation, and being eligible, offer themselves for reappointment. Directors' Responsibility Statement The Directors affirm that the audited accounts containing financial statements for the financial year 2006-07 are in full conformity with the requirements of the Companies Act, 1956. They believe that the financial statements reflect 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 statements are audited by the statutory auditors M/s. Singhi & Co. The Directors further confirm that: (i) In the presentation of the Annual Accounts, applicable Accounting Standards have been followed. (ii) That the accounting policies are consistently applied and reasonable, prudent judgement and estimates are made so as to give a true and fair view of the state of affairs of the Company at the end of the Financial Year. (iii) 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. (iv) The Directors have prepared the Annual Accounts on a going concern basis. The Company's internal Auditors have conducted periodic audits to provide reasonable assurance that established policies and procedures have been followed. Auditors' Report The observations made in the Auditors' Report are dealt with separately in the Notes to the Profit & Loss Account and the Balance Sheet in Schedule 22 of the Accounts. These are self-explanatory and do not call for any further comments. Auditors M/s. Singhi & Company, Chartered Accountants and Auditors of the Company, retire, and being eligible, offer themselves for appointment. Appreciation The Directors place on record their sincere appreciation for the assistance and guidance provided by the Honourable 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. The Company's employees are instrumental in your Company scaling new heights, year after year. Their commitment and contribution is deeply acknowledged. The involvement as Shareholders is greatly valued. Your Directors look forward to your continuing support. For and on behalf of the Board Chairman Mumbai Dated the 4th Day of May, 2007 ANNEXURE `A' TO THE DIRECTORS' REPORT [Statement of particulars under the Companies (Disclosure of particulars in the Report of the board of Directors) Rules 1988] A. CONSERVATION OF ENERGY Energy Conservation is an effective key value driver to reduce cost of production. Your Company has a well structured Energy Management System with top down and bottom up approach where employees are encouraged to give suggestions resulting in energy savings. Efforts in this direction are focused through a Central Energy Cell whose mandate is to initiate, facilitate, and sustain energy conservation throughout the organization. Efforts to optimize process parameters, modernize and upgrade technology as well as equipments, with the objective of increasing Energy Productivity are continuous and ongoing. Competent authorities have consistently recognized the company's efforts in Energy Conservation. Different units of your Company's Aluminium business have been recently awarded the First Prize and the Second Prize in the National Awards for Energy Conservation instituted by the Ministry of Power, Government of India for the year 2006. Your company's Smelter Plant at Renukoot is also the recipient of National Award for Excellence in Energy Management 2006 from CII. (a) ENERGY CONSERVATION MEASURES TAKEN GENERAL i. Regular auditing/optimization of Steam, Furnaces and Compressed air. ii. Control on idle running of auxiliary equipment by interlocking with main equipment. iii. Installation of Variable Frequency Drive in phased manner. iv. Using energy efficient lubes in Gearboxes. v. Providing Limit Switches, Timers & PLC etc. vi. Replacement of higher wattage luminaries with low watt energy efficient ones.. vii. Optimization of process to enhance production. ALUMINIUM BUSINESS 1. ALUMINA PLANT: i. Reduction in water pumping Energy by implementing rain water harvesting. ii. Installation of Energy Efficient Plate heat exchangers for better heat recovery. iii. Using Energy efficient Gear Oil in Gear Boxes of Ball Mills. iv. Optimization of motor ratings of pumps. v. Replacement of ultrasonic level indicators by DP Transmitters indicator in Washer tanks to regulate speed of pumps, vi. Optimization of pumping system. 2. SMELTER PLANT: i. Use of modified anode stub in Pot Line 2 & 3. ii. Modification in point feeder airline circuit in remaining 10 pot lines. iii. Replacement of existing Open type Fan with Backward Curve type Fan in Baking Furnace # 3. iv. Modification of Charging stand & spacers to increase the throughput of Homogenizing Furnace. v. Suitable modification in pulse air supply circuit of DSS Pot Line # 4. 3 FABRICATION PLANT: i. Optimization of soaking and aging cycles. ii. Revamping of one Properzi furnace. iii. Modification in door of Ageing Furnace # 1 to enhance capacity. iv. Elimination of intermediate annealing of coil by partial annealing. v. Conversion of coil annealing furnace from electrical heating to coal gas heating. 4. POWER PLANT i. Using Coagulant & Flocculants in feed water to reduce colloidal silica in Boilers. ii. Recovery of kinetic energy from cooling tower makeup water. iii. Replacement of old Turbine internals with modern Energy efficient internals. iv. Replacement of gland packing with mechanical seal. v. Higher size inefficient impeller replaced with energy efficient matching impeller. 5. FOIL AND WHEEL DIVISION i. Replacement of 7.5 KW hydraulic power pack motor with 5.0 kw of separator m/c ii. Optimization/modification of thermopack and power distribution system 6. COPPER BUSINESS i. Replacement of propane burners with RLNG burners ii. Installation of HT and LT capacitor bank to improve power factor iii. Optimization of motor rating iv. Cooling tower MS blades replaced with FRP blades (b) ADDITIONAL INVESTMENT AND PROPOSALS BEING IMPLEMENTED ALUMINIUM BUSINESS 1. ALUMINA PLANT: i. To convert existing Digestion technology with energy efficient double digestion technology. ii. To replace energy inefficient pumps (2Rx & 3 Rx) with energy efficient pumps. iii. Close circuit grinding for the ball mill. iv. Energy efficient evaporators for better heat recovery. v. To optimize air consumption in Precipitation area by modification in air injection piping. vi. Additional PHE installation for improved Heat recovery. vii. Modernisation of Vanadium sludge unit. 2. SMELTER PLANT: i. To use modified stub in Pot Line 1 and 4 to 11. ii. Replacement of existing Open type Fan with Backward Curve type Fan in Baking Furnace # 1& 3. iii. Fabrication of small cruces to take back the drain out material into furnace instead of making cake in Billet Casting furnace. iv. Optimization of Point Feeder Header Pipe size of Compressed air line. v. To install CFF heater in Billet Casting Furnace, vi. Change over of smelting technology from HSS to Prebake at Hirakud. 3. FABRICATION PLANT: i. Revamping of one no Properzi Furnace, 1 no. Homo Furnace and 3 nos. Soaking Pits, ii. Conversion of another annealing furnace from electrical to coal gas heating. 4. POWER PLANT i. Heat recovery from gland steam condenser. ii. Modification in piping of VAM system to reduce running of Cooling Tower fan in winter season, iii. Replacement of HP Heaters. iv. Replacement of inefficient Boiler Feed Pumps of Unit # 3 & 4. v. Cooling Tower upgradation. vi. Replacement of higher size inefficient impeller with energy efficient matching impeller in CW Pumps of Unit #6,7&8. 5. FOIL AND WHEEL DIVISION i. Replacement of Flat belt into V-Belt in compressors. ii. Installation of VFD in Air Circulating Fan. iii. Conversion of fuel from LPG to furnace oil in melting furnaces. 6. COPPER BUSINESS i. VFD tor combustion air fan of smelter. ii. Installation of power capacitor in 3.3 kv panel. (c) IMPACT OF MEASURES IN (a) AND (b) ABOVE The various Energy Conservation Measures undertaken by your Company have yielded encouraging results in most production centers. Efforts continue to further optimize energy productivity through ongoing and planned measures. B. TECHNOLOGY ABSORPTTON FORM- B RESEARCH & DEVELOPMENT (R & D) A. ALUMINIUM BUSINESS 1. Specific areas in which R&D carried out: * Development of new products of special hydrates, aluminas, aluminium and new applications for existing products. * New product development e.g. Roofing Sheets, Colour Coated Coils, Alclad sheets and Roof on roof structural and LPG Cylinder. * Conservation of raw material and resources e.g Study of different bauxites, their characterization and optimization of processing parameters. * Optimization of process parameters for better efficiency like flocculant consumption. * Development of Indigenous Lubricant for use in DC casting of Aluminium Hard Alloys and post-lubrication of Semi Rigid Container Foils, used in food packaging. * Optimization of process parameters for casting practice and thermal treatment of different aluminium alloys for Defence and other sectors. * Development of software logic for heat regulating system for baking furnaces. * Performance evaluation of modified Carbon Cathode Blocks for reduction in specific energy consumption. * Development of Virtual Pot & Thermal Modelling for assessment of changes in Pot variables. * Superheat measurement of Electrolyte for better ratio control & pot performance. * Development of Advanced Process Control Software for Dynamic Feed control of Alumina. * Optimization of Process Parameters &. Process Up gradation through increased Line amperage, metal pad, anode size & stub diameter. * Development of analytical facilities to assess the health of Oils & Lubricants. * Development of process for life enhancement for boiler super heater parts. * Waste minimization and reutilization : Reduced red mud generation by increasing the extraction efficiency by process optimization. Utilization of Fly ash in brick manufacturing. ETP Sludge in red mud plantation. Reduction in steam consumption through optimization of process parameters thereby reducing wastes upstream. * Environment preservation and sustenance e.g. Recycling of treated industrial and domestic effluent for process use. 2. Benefits derived as a result of the above R&D: * New market for special alumina and aluminium applications enabling the company to maintain its leading position. * Branding of Hindalco Products with pentration in new market segments. * Increase in operating efficiency of different plants. * Reduction in specific consumption of raw materials. * Reduction in specific energy consumption in total production cycle. * Improved waste management and better environmental condition in the plant. * Development of import substitute spares indigenously e.g turbine parts, ECL Cranes etc. * Sustenance in purity of metal. * Better water resource management through chemistry control and recycling and recovery from plant/colony effluents. * Development of special alloy has opened avenue for inexpensive Import substitution. * Improvement in surface quality of aluminium ingots. * Better health of equipment and machinery through improved lubrication management. * Hi-tech application of sheet products in auto industry. 3. Future plan of action: * Exploratory research in the field of finer and speciality alumina with thrust in application. * To develop new aluminium product variant. * To work for new application of aluminium alloys in transport particularly in motor vehicles, railways, building & construction and packaging sectors. * To effectively use waste products e.g. Dross, Fly ash etc. * To interact with reputed educational and industrial institutions to explore joint projects in field of aluminium. * Monitoring of thermal efficiency and identification of process improvement areas. * Laboratory simulation of heat treatment process for dies and tooling. * Analytical method development for better process control. * Virtual pot & Thermal Modelling for design of High amperage Cells and develop facilities for enhanced throughput. * Explore possibility of increasing the production volumes for Defence Sector & other import substitution alloys. * Simulation studies for improvement in Rolled products manufacturing. B. COPPER BUSINESS 1. Specific area in which R&D has been carried out: * Enhanced campaign life of converter refractory. * SAP-I & III cooling tower blow down water (500M3/day) being utilized for PRJS make up water. Commissioning of additional water reservoir of 1,50,000 M3 capacity. * Improvements in A1F3 operation. * Modification of C furnace feed tank nozzle from 3 mm to 6 mm and dry concentrate carrying system screen of S furnace feed. * In-house modification of anode scrap charging machine of Smelter-III. * Integration of CPP-I/II , CPP-III and SAP-III steam network. * Elimination of roots blower operation for ash conveying by utilizing air from PA fan. * In-house re-engineering and manufacturing of CJD burner of Smelter-I. 2. Benefits derived as a result of above improvement: * Improvement in plant availability and cost saving. * Improved productivity and product quality. * Reduced nozzle choking and downtime of equipment has resulted in increased plant availability, cost saving and improved environment. * Reduction in specific energy consumption for smelting. 3. Future plan of Action: * To install new scrubbing system as per Monsanto design in Phosphoric acid plant. * CFD modeling and optimization of PS Converter. * Flow and heat transfer studies in S-Furnace waste heat boiler. * Simulations of hot gas generators for understanding the swirl pattern inside the HGG of Captive Power plant. * New technology for removal of Arsenic and Bismuth from Copper electrolyte. Expenditure on R&D (Rs in Million) 2006-2007 2005-2006 a. Capital 7.22 24.35 b. Recurring 98.03 74.26 c. Total - A+B 105.25 98.61 d. Total R&D Expenditure as % of total turnover 0.06% 0.09% Technology Absorption, Adaptation and Innovation i. Efforts in brief The Company continued to make efforts to absorb the imported technology and its assimilation in Indian environment to fully harness the same. Areas of technology absorptions are : * Process control for special automobile application products. * Surface treatment for speciality sheet products. * Better gauge and dimensional tolerance for sheet products. ii. Benefits derived: Efforts have resulted in better understanding of imported technologies and utilize the same with cost competitiveness and enhanced product range. iii. Details of technology imported in the past 5 years Technology imported Year of Has technology If not fully absorbed, for Import been fully areas where this has absorbed not taken place, reason thereof and future plan of action ALUMINIUM Anode moulding 2003-04 Yes N.A. Separation of red mud from pregnant liquor 2004-05 Yes N.A. Sheet surface treatment and flatness 2004-05 Yes N.A. Clad sheet manufacturing 2005-06 Yes N.A. COPPER Ausmelt technology for Copper-II 2002-03 Yes N.A. Cryogenic air separation for Oxygen-III 2002-03 Yes N.A. Mitsubishi Technology for Copper-III 2003-04 Yes N.A. Cryogenic air separation for Oxygen-IV 2005-06 Yes N.A. Cryogenic air separation for Oxygen-V 2006-07 Yes N.A. C. FOREIGN EXCHANGE EARNINGS & OUTGO a) Activities related to Exports The Company has taken successful initiatives to increase exports during the year to Rs. 69,732.05 million. b) Total Foreign Exchange used and earned Foreign exchange used Rs. 100,831.85 million Foreign exchange earned Rs. 69,775.37 million

Director’s Report