Hindalco Industries Limited · NSE:HINDALCO
Hindalco Industries — Investor Presentation (November 2009)
51 slides from Hindalco Industries's investor presentation, November 2009
Slide 1: Hindalco Industries Limited Investor Presentation
Hindalco Industries Limited Investor Presentation November 2009
Slide 2: Disclaimer
Disclaimer This presentation may not be copied, published, distributed or transmitted. The information in this presentation is being provided by Hindalco Industries Limited (the “Company”). Any reference in this presentation to “Hindalco Industries Limited” shall mean, collectively, the Company and
Slide 3: Presentation Outline
Presentation Outline Key Investment Themes Robust Project Pipeline Hindalco – An Overview
Slide 4: Presentation Outline
Presentation Outline Key Investment Themes Robust Project Pipeline Hindalco – An Overview
Slide 5: Hindalco – Key Investment Themes
Hindalco – Key Investment Themes 1 7 Strong Industry: Parentage and Improving Experienced aluminium management sector team across fundamentals product groups Leading integrated Strategic road domestic 2 map towards aluminium 6 diversifying our player and operations low cost producer Novelis, a Robus
Slide 6: Hindalco – Key Investment Themes
Hindalco – Key Investment Themes 1 7 Strong Industry: Parentage and Improving Experienced aluminium management sector team across fundamentals product groups Leading integrated Strategic road domestic 2 map towards aluminium 6 diversifying our player and operations low cost producer Novelis, a Robus
Slide 7: Global Economies: Early signs of revival
Global Economies: Early signs Of Revival Improved GDP growth outlook 12 9.0 8.5 9.0 7.3 8 6.4 5.4 5.6 5.1 3.5 4 1.5 1.2 1.7 1.5 0.9 0.9 0.9 (% ) 0.3 0.3 0.4 0.7 0 (0.7) (0.7) (0.7) (4) (2.4) (2.7) (3.8) (4.4) (5.3) (5.4) (8) (7.5) China India Russia Brazil Germany France Spain Japan US UK 2008 2009E
Slide 8: Strong outlook driven by consumption fundamentals
Strong outlook driven by consumption fundamentals Aluminium pricing has started to look up… Usage set to increase as countries progress on development path US$ /To n 3,000 2,500 30.0 Developed countries 2,000 25.0 Aluminiium consumption per capita (kg) Germany 1,500 Canada S. Korea 1,000 20.0 Oct-08
Slide 9: Demand-supply situation
Demand-supply situation Tightness in the market resulting in increasing premiums aluminium demand - supply gap Regional Premiums 5.0 160 Deficit in relevant markets 3.7 120 3.2 3.0 US$/Mt 2.7 2.7 80 2.5 2.2 40 1.4 1.1 1.1 0.9 0.8 0.6 0 Q308 Q408 Q109 Q209 Q309 0.0 MT 0.0 Rotterdam, D-U, Western, Pro
Slide 10: Drivers for consumption growth in India in place
Drivers for consumption growth in India in place Robust growth outlook… …to drive Aluminium consumption % 2,000 1. 6 5.7 7.0 8.4 8.2 9.9 4.4 3.5 6.5 2) –1 1,802 12 201 09- 9.4 9.1 ( 20 1,601 8.5 GR CA 7.5 7.3 1,443 8 6.4 1,500 0.5% 08) – 1 1,297 5.4 R (2003-20 1,239 (%) (ktpa) CA G 1,207 3.8 1,080 4
Slide 11: Hindalco – Key Investment Themes
Hindalco – Key Investment Themes 1 7 Strong Industry: Parentage and Improving Experienced aluminium management sector team across fundamentals product groups Leading integrated Strategic road domestic 2 map towards aluminium 6 diversifying our player and operations low cost producer Novelis, a Robus
Slide 12: Hindalco: Leading Integrated domestic aluminium player
Hindalco: Leading Integrated domestic aluminium player Smelting Conversion into Refining Mining Power (Aluminium and Value added (Alumina) Copper) products (VAP) Raw Materials and Upstream Operations Downstream • Total reserves (incl. proven, • Current Generation capacity • Current: 1.5 mtpa* Alumin
Slide 13: Low cost position and VAPs driving margins
Low cost position and VAPs driving margins Hindalco Aluminium smelters are in the best quartile (25th percentile) on cost VAP: Key driver for Hindalco’s downstream operations US$/ t ; VAP sales: One of the key drivers for Hindalco’s sales in 3,000 India CRU Site Operating Cash Cost Curve ; Key brand
Slide 14: De-risked business and balanced non-ferrous product portfolio
De-risked business and balanced non-ferrous product portfolio Hindalco Copper business’ unique characteristics enabled it to While Aluminium business enjoys higher margins, Copper has high move up on the global cost curve absolute earning potential & cash generation By product Access to value additi
Slide 15: Hindalco – Key Investment Themes
Hindalco – Key Investment Themes 1 7 Strong Industry: Parentage and Improving Experienced aluminium management sector team across fundamentals product groups Leading integrated Strategic road domestic 2 map towards aluminium 6 diversifying our player and operations low cost producer Novelis, a Robus
Slide 16: Novelis – Significant value addition to Hindalco’s strategy
Novelis – Significant value addition to Hindalco’s strategy Global presence Research & Development Bauxite Primary Executive Office Rolled products Regional Office Sales Center Recycling Power High-end technology ; Novelis FusionTM technology for multi-alloy aluminium sheet products 1/3rd of Novelis
Slide 17: Novelis – Turnaround in operations
Novelis – Turnaround in operations Uptick in volumes... …coupled with cost saving and risk management measures… ; Operational efficiency initiatives, manufacturing 800 excellence and procurement 759 693 ; Closure and streamlining of facilities in Europe and US 700 650 633 ; Prudent working capital m
Slide 18: Novelis – Well poised to benefit from recovery in end markets
Novelis – Well poised to benefit from recovery in end markets North America Europe Automotive Automotive Construction Construction 60 75 57 Cans 33 Cans 37 15 Q4FY09 Q1FY10 Q2FY10 Q4FY09 Q1FY10 Q2FY10 South America Asia Automotive Automotive Construction 48 Construction 36 38 10 11 Cans 3 Cans Q4FY0
Slide 19: Hindalco – Key Investment Themes
Hindalco – Key Investment Themes 1 7 Strong Industry: Parentage and Improving Experienced aluminium management sector team across fundamentals product groups Leading integrated Strategic road domestic 2 map towards aluminium 6 diversifying our player and operations low cost producer Novelis, a Robus
Slide 20: Strong liquidity, improving capital position and requisite financial headroom
Strong liquidity, improving capital position and requisite financial headroom Hindalco - Standalone Novelis Loan Recourse Novelis – Consolidated Debt Profile US$ 1,519mn* US$ 982mn** US$ 2,835mn *** Sep’08 Rights Issue: Proceeds used towards repayment of Over 90% of debt due after 4 years (2014) bri
Slide 21: Hindalco Debt: Favourable repayment schedule and financial headroom
Hindalco Debt: Favourable repayment schedule and requisite financial headroom No major debt pay-outs over the next 3 years Reset covenant provides greater financial headroom 3,000 5.5x 5.25x Repayment schedule* 5.0x 4.75x 4.50x 4.5x 4.00x 23 2,000 4.0x 3.85x 3.85x 3.5x 3.85x 3.85x 3.85x 3.85x 982 3.
Slide 22: Novelis Debt: Improving financial position and back-ended debt schedule
Novelis Debt: Improving financial position and back-ended debt schedule Over 90% of debt principal is repayable after 4 years Improving Operating and Financial Performance in FY10 3,000 40 41 44 43 40 41 Operating Cashflow (US$ mn) Repayment schedule* 900 400 FRP Shipments (kt) 258 800 759 2,000 206
Slide 23: Hindalco – Key Investment Themes
Hindalco – Key Investment Themes 1 7 Strong Industry: Parentage and Improving Experienced aluminium management sector team across fundamentals product groups Leading integrated Strategic road domestic 2 map towards aluminium 6 diversifying our player and operations low cost producer Novelis, a Robus
Slide 24: Robust project pipeline
Robust project pipeline Key Benefits Smelting Capacity (ktpa) 2,000 Novelis Current Projects (expected commissioning post FY12) Well timed capacity 9 Planned capacity increase may coincide with global economic 1,600 359 recovery and ride the next commodity cycle increase 1,200 359 800 58 359 1,733 1
Slide 25: Overview of current expansion plans
Overview of current expansion plans Utkal Alumina, Mahan aluminium, Aditya aluminium, Aditya Alumina Jharkhand aluminium Hirakud, Orissa Orissa Madhya Pradesh Orissa Refinery, Orissa Jharkhand Nature 9 Refinery 9 Smelter 9 Smelter 9 Smelter 9 Refinery 9 Smelter Capacity 9 1,500 ktpa 9 359 ktpa 9 359
Slide 26: Hindalco – Key Investment Themes
Hindalco – Key Investment Themes 1 7 Strong Industry: Parentage and Improving Experienced aluminium management sector team across fundamentals product groups Leading integrated Strategic road domestic 2 map towards aluminium 6 diversifying our player and operations low cost producer Novelis, a Robus
Slide 27: Strategic road map towards diversifying our operations
Strategic road map towards diversifying our operations value m s hareholder ng-ter roving lo goa l of imp rtfolio with the iness po e rs ify our bus to div seeks • Diversified operations owing to presence Strategy across the value chain • Aim to have: • Hindalco’s cost advantage coupled with – Globa
Slide 28: Hindalco – Key Investment Themes
Hindalco – Key Investment Themes 1 7 Strong Industry: Parentage and Improving Experienced aluminium management sector team across fundamentals product groups Leading integrated Strategic road domestic 2 map towards aluminium 6 diversifying our player and operations low cost producer Novelis, a Robus
Slide 29: Strong Parentage: The Aditya Birla Group
Strong Parentage: The Aditya Birla Group $29bn $17bn • Over 50 years of excellence • Operations across 25 countries and presence in 30 countries • Over 130,000 strong workforce employed in 123 locations globally. 32,000 employed outside India, 30 nationalities • Presence in diverse businesses spanni
Slide 30: Experienced leadership and management team
Experienced leadership and management team Kumar Mangalam Birla, Chairman S Talukdar, Chief Financial Officer Debu Bhattacharya, Managing Director Experience – 19 years Experience – 26 years Experience – 35 years • Joined group operations in 1990, • Took over as Chief Financial Officer • Also holds
Slide 31: Presentation Outline
Presentation Outline Key Investment Themes Robust Project Pipeline Hindalco – An Overview
Slide 32: Expansion in strategic locations and key highlights
Expansion in strategic locations and key highlights MAHAN ALUMINIUM Key highlights & MAHAN COAL BLOCK 9 Access to high quality bauxite reserves JHARKHAND 9 ALUMINIUM Abundant coal reserves with high reserve life ADITYA ALUMINIUM 9 Relatively cheap labor HIRAKUD ALUMINIUM 9 Power plants located at pi
Slide 33: Overview of capacity build up during expansion
Overview of capacity build up during expansion Salient features Refinery Alumina expansion (KTPA) • Greenfield and Brownfield expansion significantly lower 5,000 Current Projects (expected commissioning post FY12) than global benchmark – economies of scale 4,500KTPA 4,000 • quality and proximity of
Slide 34: Utkal Alumina – Rayagada, Orissa (1,500 ktpa)
Utkal Alumina – Rayagada, Orissa(1,500 ktpa) Key Features Progress overview Total spread • 6,578 acres Power plant capacity • 90 MW Technology • Alcan Bauxite mining • 8.5 mtpa/MN Dasturco capacity/Consultant Coal linkage • 1 mtpa Captive railway siding • 18 km Date of commissioning • July 2011 Fund
Slide 35: Mahan aluminium – Bargawan, MP (359 ktpa)
Mahan aluminium – Bargawan,MP (359 ktpa) Key Features Progress overview Total spread • 3,750 acres Power plant capacity • 900 MW Technology • aluminium Pechiney Coal block • Mahan Coal Ltd. (JV with Essar Power) Coal allocation • 3.6 mtpa Date of commissioning • July 2011 Funding (INR mn) 82,140 24,
Slide 36: Aditya aluminium – Lapanga, Orissa (359 ktpa)
Aditya aluminium – Lapanga,Orissa (359 ktpa) Key Features Progress overview Total spread • 3,328 acres Power plant capacity • 900 MW Technology • aluminium Pechiney Coal block • MNH Shakti Ltd. (JV with Neyveli Lignite) Coal allocation • 3.0 mtpa Date of commissioning • October 2011 Funding (INR mn)
Slide 37: Hirakud aluminium – Hirakud, Orissa (58 ktpa)
Hirakud aluminium – Hirakud,Orissa (58 ktpa) Key Features – Smelting capacity Progress overview Existing capacity • 155 ktpa (smelter) & 367.5 MW (power) Expansion • 58 ktpa (smelter) & 100 MW( power) Project schedule • 24 months Technology • GAMI design Land • Acquisition completed Statutory cleara
Slide 38: Aditya Alumina – Lapanga, Orissa (1,500 ktpa)
Aditya Alumina – Lapanga,Orissa (1,500 ktpa) Key Features Location Total spread • 1,881 acres Power plant capacity • 90 MW Technology • Alcan • MNH Shakti Ltd. (JV with Neyveli Lignite & Coal block Mahanadi Coal Limited) Coal allocation • 3.0 mtpa Date of commissioning • June 2013 Bauxite Mine & Ref
Slide 39: Jharkhand aluminium – Jharkhand (359 ktpa)
Jharkhand aluminium – Jharkhand (359 ktpa) Key Features Location Total spread • 3,328 acres Power plant capacity • 900 MW Technology • aluminium Pechiney Coal block • Auranga Coal Fields. (JV with Tata Power) Coal allocation • 4.6 mtpa Date of commissioning • June 2013 Projected Site Statutory clear
Slide 40: Presentation Outline
Presentation Outline Key Investment Themes Robust Project Pipeline Hindalco – An Overview
Slide 41: Appendix A – Operations overview and highlights
Appendix A – Operations overview and highlights
Slide 42: Experienced Leadership and Management Team
Experienced Leadership and Management Team Kumar Mangalam Birla Non-Executive Chairman Board of Directors 60% Independent 90% Non-Executive Audit Committee Finance Committee Investor Grievance Committee Risk Management Board 50% Independent 100% Independent 100% Independent 50% Non-Executive 50% Non
Slide 43: Leader in chosen businesses
Leader in chosen businesses Copper Aluminium 3 Years ago A India: One of the largest single India: India’s largest aluminium producer having low Bluechip location Smelters with integrated cost upstream operations with bauxite, power, coal Indian port facilities located at Dahej, backup, and strategi
Slide 44: Hindalco – A global non-ferrous metals major today
Hindalco – A global non-ferrous metals major today Acquisition of Copper Acquisition of Increase stake Pennar JV agreement Acquisition of Hirakud Utkal Alumina Aditya Annapurna business Nifty & Mt. in Utkal from aluminium signed with Novelis Aluminium greenfield Alumina Foils acquisition Gordon 20%
Slide 45: Market leader in India with strong brand identity
Market leader in India with strong brand identity Market leader in India* Primary Aluminium (incl. imports) Flat rolled products Extrusions Hindalco Hindalco 24% 20% Others 47% Hindalco 53% Others (incl. Others imports) 80% 76% Our brands *Source: Aluminium Association of India 45
Slide 46: Global Leader in Aluminium Recycling
Global Leader in Aluminium Recycling • Novelis is one of the world’s largest recyclers of aluminium − 9 plants on 4 continents • Aluminium recycling only requires 5% of energy used to produce primary aluminium • Aluminium recycling avoids 95% of GHG emissions of primary aluminium smelting • Novelis
Slide 47: Appendix B – Financial highlights
Appendix B – Financial highlights
Slide 48: Consolidated financials
Consolidated financials Revenues EBITDA 20,000 2,000 15,000 1,500 1,518 13,804 12,629 (US$m) (US$m) 10,000 1,000 1,007 763 5,000 500 651 4,106 2,581 - - FY06 FY07 FY08 FY09 FY06 FY07 FY08 FY09 EBIT Net profit 1,200 800 1,001 600 900 845 559 (US$m) (US$m) 600 400 457 486 329 300 200 101 132 - - FY06
Slide 49: Consolidated financials – Segment overview
Consolidated financials – Segment overview Revenues – Business Segment (FY09) Revenues – Business Segment (FY08) Others Others Copper 1.1% Copper 1.1% 16.4% 20.6% Aluminium Aluminium 82.5% 78.4% Revenues – Geographic split (FY09) Revenues – Geographic split (FY08) India India 20.7% 22.5% Rest of Res
Slide 50: Standalone financials – Segment overview
Standalone financials – Segment overview India operations (Revenues) - Business Segment (FY09) India operations (Revenues) - Business Segment (FY08) Hydrate and Hydrate and Alumina Aluminium Ingots SAP, DAP and Complexes, Alumina Aluminium Ingots 4% and billets Precious Metals 3% and billets SAP, DA
Slide 51: Novelis Income Statement
Novelis Income Statement Reconciliation to Adjusted EBITDA (in $m) Q1 FY09 Q2 FY09 Q3 FY09 Q4 FY09 FY 09 Q1 FY10 Q2 FY10 YTD FY10 Net income (loss) attributable to our common shareholder 24 (104) (1,814) (16) (1,910) 143 195 338 Interest, net (40) (41) (44) (43) (168) (40) (41) (81) Income tax (prov
Hindalco Industries — Investor Presentation (November 2009) on 6ix