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An Industry Leader in Aluminium & Copper
September 2010
Hindalco Industries LimitedInvestor Presentation
2Hindalco Industries Limited: Investor Presentation
DisclaimerThis 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 its subsidiaries. This presentation has been prepared for
informational purposes only. This presentation does not constitute a prospectus, offering circular or offering memorandum and is not an offer or invitation to buy or sell any
securities, nor shall part, or all, of this presentation form the basis of, or be relied on in connection with, any contract or investment decision in relation to any securities.
Furthermore, this presentation is not an offer of securities for sale in the United States, India or any other jurisdiction.
This presentation may contain forward-looking statements based on the currently held beliefs and assumptions of the management of the Company, which are expressed in
good faith and, in their opinion, reasonable. Forward-looking statements involve known and unknown risks, uncertainties and other factors, which may cause the actual results,
financial condition, performance, or achievements of the Company or industry results, to differ materially from the results, financial condition, performance or achievements
expressed or implied by such forward-looking statements. Given these risks, uncertainties and other factors, recipients of this presentation are cautioned not to place undue
reliance on these forward-looking statements. The Company disclaims any obligation to update these forward-looking statements to reflect future events or developments.
The Company, as such, makes no representation or warranty, express or implied, as to, and does not accept any responsibility or liability with respect to, the fairness,
accuracy, completeness or correctness of any information or opinions contained herein. The Company assumes no responsibility to publicly amend, modify or revise any
forward-looking statements, on the basis of any subsequent development, information or events, or otherwise. Unless otherwise stated in this presentation, the information
contained herein is based on management information and estimates. The information contained herein is subject to change without notice and past performance is not
indicative of future results. The Company may alter, modify or otherwise change in any manner the content of this presentation, without obligation to notify any person of such
revision or changes.
By attending this presentation you acknowledge that you will be solely responsible for your own assessment of the market and the market position of the Company and that
you will conduct your own analysis and be solely responsible for forming your own view of the potential future performance of the business of the Company.
Disclaimer
Our VisionStrategy –to build upstream
and buy downstream
ABG aspires to be in the Fortune 200 with a $65bn turnover by
FY15 and Hindalco expected to be the torchbearer..
Towards a new Hindalco
“To be a premiummetals major, Global
in size and reach, excelling in everything we do, and creating value for its
stakeholders”
4Hindalco Industries Limited: Investor Presentation
Hindalco : A promise delivered through stellar performance
Stronger NovelisStronger Novelis
Paradigm shift in focus – from volume driven to EBITDA drivenHigher premiums and permanent cost cutsWell positioned in emerging markets with strong growth fundamentalsOne of the world’s largest recyclers of aluminium – reduces costs and enables signficant reduction in energy consumptionSignficant market share in FRP with strong global market outlook
From turnaround to outperformer-
EBITDA of US$1bn
From turnaround to outperformer-
EBITDA of US$1bn
Existing Indian Operations
Existing Indian Operations
Asset sweating, Brownfield expansion on trackExploiting low cost baseIncreasing mix of VAP and domestic salesDominant market share
Better profitability
amongst peers
Better profitability
amongst peers
Focus on delivering expansion plans
Focus on delivering expansion plans
Well timed capacity increases – expected to be in the global best quartile for manufacturing costsSignificant progress achieved – reinforcing timely delivery capabilities
Ensures full coverage across the value chain
Ensures full coverage across the value chain
1. Novelis : Successful Turnaround Story
6Hindalco Industries Limited: Investor Presentation
Key themes
Industry: Improved aluminium sector fundamentals with a positive demand outlook
Novelis turnaround: Dual benefit of pricing power and cost cutting, coupled with strong liquidity
Way forward for Novelis: On the threshold of robust
growth I
III
II
7Hindalco Industries Limited: Investor Presentation
Global Economies : Showing on the road to recovery
Major emerging economies such as China and India have rebounded strongly from global downturn
7.9
6.0
2.4
1.4
10.3
9.3
(5.3
)
(0.7
)
US Europe China India
Q209 Q309 Q409 Q110 Q210
Global economic recovery continues …YOY % GDP growth rate from Q2 2009 to Q2 2010
(%)
Q2 2010 growth rates for Europe and India are estimates
… with improved sector outlook
(CY09-14)
4-8% 8-10% >10% 8%
4%
4%
7%
6%10%>10%3-5%
2-3%
6%
7%
10%
4-6%
10%
>15% 8-10%0%
Asia
N. America
Europe
S. America
Global
Can Sheet Automotive Industrial/ Electronics
Overall demand
I
8Hindalco Industries Limited: Investor Presentation
Novelis – Turnaround in operations
Uptick in volumes...
Turnaround driven by a number of cost cutting initiatives…
Restructuring globally across the Company to reduce labour and overhead costs through capacity and staff reductions
– Reduced manpower by 11%
Annual cost savings of US$140m achieved ahead of schedule
Transfer of production facilities to low-cost regions – relocation of Rogerstone facility to Hirakud
Proactive risk management for commodity pricing, foreign exchange and interest rate risks
746756
632 605 650693
649716
263
231199200
124
5388
127
500
550
600
650
700
750
800
Q2FY09 Q3FY09 Q4FY09 Q1FY10 Q2FY10 Q3FY10 Q4FY10 Q1FY110
50
100
150
200
250
300Shipments (kt) Adjusted EBITDA (US$mn)
116 201 88 191 289 307 323 353
Adjusted EBITDA/ton (US$)
II
9Hindalco Industries Limited: Investor Presentation
Novelis – Convergence of Adj. EBITDA and EBITDA
Over time, Novelis has witnessed a gradual convergence between EBITDA and adjusted EBITDA
213
(124)
(1,868)
214 413 434
264
164
263231
199
200124
5388127
(2,000)
(1,500)
(1,000)
(500)
0
500
Q2FY09 Q3FY09 Q4FY09 Q1FY10 Q2FY10 Q3FY10 Q4FY10 Q1FY11
EBITDA (US$mn) Adjusted EBITDA (US$mn)
II
Novelis’ strong risk management practices combined with the termination of certain ceiling contracts have led to a gradual
convergence of EBITDA and adjusted EBITDA numbers
10Hindalco Industries Limited: Investor Presentation
Novelis shipments – sustained improvement across markets
Automotive
Industrial
Cans
Automotive
Industrial
Cans
Automotive
Industrial
Cans
Automotive
Industrial
Cans
North America Europe
South America Asia
246 254 258 243274 278
Q4 Q1 Q2 Q3 Q4 Q1
II
1018999755737
Q4 Q1 Q2 Q3 Q4 Q1
188 185203 188
227 232
Q4 Q1 Q2 Q3 Q4 Q1
889460603315
Q4 Q1 Q2 Q3 Q4 Q1
Shipments (kt)
Segment income (US$mn)
85 81
9384
86 90
Q4 Q1 Q2 Q3 Q4 Q1
49382636119
Q4 Q1 Q2 Q3 Q4 Q1
86130 139 134 129 146
Q4 Q1 Q2 Q3 Q4 Q1
4441394838
3
Q4 Q1 Q2 Q3 Q4 Q1
Shipments (kt)
Segment income (US$mn)
Shipments (kt)
Segment income (US$mn)
Shipments (kt)
Segment income (US$mn)
Current trend in Aluminium demand Novelis’ Shipments Novelis’ Segment Income
11Hindalco Industries Limited: Investor Presentation
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 recycled 40 billion cans in FY2009
− Reduced the need for primary aluminium by 530,000 metric tons
− Saved 73 million MMBTUS
− Avoided 5 million tonnes of GHG emissions
Recycling drives low cost position; positions the cans as environmentally preferred package
II
12Hindalco Industries Limited: Investor Presentation
Sustained turnaround with strong liquidity
Q1FY10 Q2FY10 Q3FY10 Q4FY10 Q1FY11
Cash and cash equivalents Availability under the ABL facility
$446$555
$634
$1,026 $1,051
Strong liquidity (Mn)
Strong liquidity: Now focuses on strategic capital allocation decision
Excess cash may be utilized by Novelis towards future capex (the Company recently announced Pinda Project in Brazil)
On its way to fuel Greater Hindalco growth
Visibly sustained turnaround in Operating and Financial Performance
649
746716
693650
756
632 605
263231
199
88
200
12453
127
500
600
700
800
Q2FY09 Q3FY09 Q4FY09 Q1F10 Q2FY10 Q3FY10 Q4FY10 Q1FY110
100
200
300
400
FRP Shipments (LHS) Adjusted EBITDA (RHS)
FRP
Ship
men
ts (k
t)
41 44 43 40 41 41 3642
Interest, net (US$ mn)
Adjusted EB
ITDA
(US$m
n)
II
13Hindalco Industries Limited: Investor Presentation
Novelis today III
High end products focusContinues to build on its strong market position in FRPMajority of product portfolio comprised of premium productsMarket leader in can recycling with strong technology focus
Inventory controlSignificant reduction in inventory through effective supply chain management
Worldwide assets and expertise provide unique capabilities to regional/ global customers
1
2
34
5
6
De-risked business modelSimple converter business (LME pass through)
Well Balanced geographic mixOver 33% revenues from emerging markets
Effective Risk ManagementStrong controls and systems in place to reduce volatility
Cost initiativesRelocation of facilities to low-cost regions Greater application of Novelis technology for global projects
Novelis’ initiatives and multi-pronged strategy have successfully enabled it to turnaround operations
14Hindalco Industries Limited: Investor Presentation
Novelis going forward III
Novelis is on the threshold of robust growth, with plans to exceed $1B of Adjusted EBITDA per annum going forward
“One Novelis” Drive Efficiencies and Reduce Costs
Expand and further consolidate leadership position
Build on Novelis’ focused business model to become a fully integrated global company
Strategic &Opportunistic Investments
Reduce overall cost base and improve manufacturing efficiency
Leverage and streamline procurement
Standardize financial and IT platforms
Greater application of Novelis technology for global projects (such as Tata Motors)
Governed by operating efficiency gains and IRR hurdle rates
Explore potential opportunities and identify optimum option for deployment of excess cash reserves
Achieve plant optimization in developed markets
Emerging markets and brownfield expansion focus
Pinda Project in Brazil
15Hindalco Industries Limited: Investor Presentation
Strong Outlook for FRP ProductsFRP growth worldwide from 2010 to 2015 (kt)
967222
343639
3383,088
16,493
22,090
10,000
12,000
14,000
16,000
18,000
20,000
22,000
24,000
2010 Asia MENA West. Europe East. Europe S. America N. America 2015
Areas of focus
III
Focusing capex on growing economies; Europe & N.A to return to pre-recession levels
16Hindalco Industries Limited: Investor Presentation
Novelis continues to be strong player in global can business
Beverage can portfolio – Immune to economic downturn~58% can body stockRecycling – Go Green initiativeNovelis bought over 40bn cans in FY10
Novelis – Dominant player in global can business
FY09 – Can shipments – 1,557 KT FY10 – Can shipments – 1,580 KT
Advantages of the CanCans have considerable advantages over bottles in
all relevant areas for retail and industry
Branding Freshness
Variety Logistics
16%
3%6%
4%
17%
45%9%Beverage cans Foil & Packaging
Industrial Transport
Construction Lithography
Others
10%
2%4%
8%
15%
54%
7%Beverage cans Foil & Packaging
Industrial Transport
Construction Lithography
Others
Steady increase in contribution by beverage can segment
FY08
FY10
III
2. Continued impressive performance of Indian operations
18Hindalco Industries Limited: Investor Presentation
Key themes
IIIndustry : Improved Domestic aluminium sector fundamentals with a positive demand outlook
Focused growth of Indian operations – All round improvement in Al
Copper business: Steady margins despite decline in TcRc rates, with good by-product realizations; situation expected to improve
I
III
II
19Hindalco Industries Limited: Investor Presentation
Hindalco at the forefront of the explosive growth in India
Large scope for metal consumption to rise from current levels
End user segments have a strong/positive outlook – i.e. Power, Transport, Construction, Industrial etc
Rising per capita consumption of Al in India
Strong metal sector growth – Al consumption and Cu consumption
India: Strong growth in end user industries
390
435
FY10 Q1 FY11 Q1
11.5%
Aluminium consumption (kt)
Copper consumption (kt)
3.8%
160
166
FY10 Q1 FY11 Q1
Electrical & Electronics
Building & Construction
Consumer Durable
Automobile & Transport
Industrial Machinery
Packaging
I
Insulated from global pressures due to exposure to Power sector in India – accounts for c.48% of aluminium usage in India
20Hindalco Industries Limited: Investor Presentation
Indian Al operations – robust growth prospects
Alumina (kt) Metal (kt)
Higher alumina and metal production on he back of Brownfield expansions… increased volumes of downstream value added products
Wire rod (kt) FRP (kt) Extrusions (kt)
1,237
1,307
FY09 FY10
6%
523
555
FY09 FY10
6%
75
92
FY09 FY10
23%
182
205
FY09 FY10
13%
36
39
FY09 FY10
8%
II
21Hindalco Industries Limited: Investor Presentation
Cost control initiatives launched proactively ahead of the global downturn have helped
The Company has been able to maximize production output at Hirakud, which has access to captive coal
Costs to reduce further as Greenfield projects come on stream
Hindalco: Low cost positionHindalco Aluminium smelters are in the best quartile (25th percentile)
on cost Further set to benefit from Hirakud Cost Advantage
Hindalco’s Indian aluminium operations ranked amongst the lowest cost producers of aluminium globally
0
500
1,000
1,500
2,000
2,500
3,000
1% 25% 41% 52% 63% 75% 85% 94% 100%
Hirakud Business Operating Costs
Renukoot Business Operating Costs
% of World Production
Site Operating Cash Cost Curve
100
94
FY09 FY10
Aluminium conversion cost (Rs/t, Indexed)
29.0
28.0
28.5
27.0
707580859095
100105110115120
FY10Q1 FY10Q2 FY10Q3 FY10Q426.0
26.5
27.0
27.5
28.0
28.5
29.0
29.5
95
102
100
114
86
107
110
84
102 99
104
86
Hirakud
Renukoot
Hirakud sharein output (%)
Overall
US$/ t
II
The only smelter which uses captive coal and power
22Hindalco Industries Limited: Investor Presentation
VAP to drive margins
Hindalco expects to increase VAP going forward and maintain its dominant market share going forward
Healthier product-mix and geographic mix (kt)
60% 57 %
43%40%
FY09 FY10
VAP
Primary
6%521 555
82%69%
18%31%
FY09 FY10
Exports
Domestic
521 555
VAP sales: One of the key drivers for Hindalco’s sales in IndiaKey brands commanding significant market share; has 53% market share in domestic Rolled Products sales*Increasing downstream applications in India; Hindalco’s well balanced product portfolio would consolidate market leader positionHigh margins further enhanced with duty protection
VAP: Key driver for Hindalco’s downstream operations
Key Brands
Hindalco’s downstream products command market premium with significant market share in India
II
Hindalco has a dominant market share in FRP
23Hindalco Industries Limited: Investor Presentation
Al Railway Wagon in India
New initiatives undertaken by Hindalco
Hindalco has pioneered new range of futuristic value added product range with a potential to improve margins
II
Development of Aluminium hoods & roof
Al. Swing Arm
Aluminisation in Automotives
Al Roofing's for Construction Al Bicycle Frames
Al Boats
24Hindalco Industries Limited: Investor Presentation
Hindalco: Long on Alumina
China’s dependence is positive for Hindalco’s long alumina position
II
Contract alumina prices up from 12-12.5% of LME historically to 13-13.5% in 2009 and to 14-15% in 2010
8.110.8
16.4 16
2.3
18
1980 1990 2000 2010
ROW China
China increasingly dependent on ROW for its alumina requirement
Rising Alumina cost further adds to Chinese costs
Global Alumina Third Party Market (mn tons)
Alumina Aluminium
1.5 0.6
Hindalco 2010: Integrated Upstream Operations
mtpa
Upstream
Alumina Aluminium
3.0 1.4
Upstream
Hindalco 2012: Integrated Global Upstream Operations
Going forward Hindalco will be long in Alumina
Delinking of Alumina prices from the LME and introduction of spot price would benefit Hindalco’s long alumina position
25Hindalco Industries Limited: Investor Presentation
A cost effective “Upstreaming” strategyMining acquisitionStrategic alliances/partnership
Long Term feedstock securitisation
By-Products value extractionValue added downstreaming
Value Chain Enhancement
Global ScaleTop Quartile Cost Curve
Global Cost Competitiveness
Jetty /port infrastructure to overcome locational disadvantageSourcing Mix optimisationRegional redistribution points
Service level differentiationQuality edge
Cost effective brown field expansionStrategic advantage through technologyAsset sweating
Drivers
Leadership in domestic market offering better realisation
Supply Chain Reengineering
Capital Efficiency
Key focus areas
Steps taken by Hindalco to strengthen copper business III
1
2
3
4
5
6
Transforming the copper business into a globally competitive smelting value chain
26Hindalco Industries Limited: Investor Presentation
999
182 333
1,043
170 298
DAP (kt) Cathode (kt) Sulfuric Acid (kt)
FY09 FY10
Copper Operations - Good performance despite tough market conditions
Sustained improvement in key parameters like recovery and energy consumptionEnergy-mix : more usage of petcoke and LNGRatio of VAP to cathode production up from 37% to 53%DAP production increased significantly
12%
Cathode (kt)
Copper Cathode cost w/o any credits (c/lb, indexed)100
73
FY09 FY10
4%7%56,450
49,600
FY09 FY10
14%
Overall production down 19% to 57kt due to conscious idling of Mt. Gordon
Nifty production (tons)
448
166
72
(89)
440
(60)
Sales (US$mn) EBIDTA (US$mn) PAT (US$mn)
FY09 FY10
Performance at ABML (US$mn)
III
27Hindalco Industries Limited: Investor Presentation
Strong financial performance (standalone)
68
181132 163 182 196
820 847
1,0691,155
1,1751,126
1,4011,530
1,836
2,037
2,1992,122
(100)
100
300
500
700
900
1,100
1,300
1,500
Q4FY09 Q1FY10 Q2FY10 Q3FY10 Q4FY10 Q1FY110
500
1,000
1,500
2,000
2,500Sales (US$mn) EBITDA (US$mn) LME prices (US$)
8% 21% 12% 14% 15%
EBIDTA Margin (%)
Exchange Rate: US$1: INR46
17%
3. Expansion Projects : Aggressively focused on delivery with calibrated financial closure on course
29Hindalco Industries Limited: Investor Presentation
Robust project pipeline – backbone to deliver growth future growth
Total land requirement of c.4,000 acres for the project. Application for acquisition of private land has been submittedWater drawl clearance received for 55 MCM and DFR is complete
US$ 2,174 mnQ1 FY14JharkhandAluminium
c.1,387 Acres of land registered in name of company, process forbalance land is in progressWater drawl agreement to draw upto10.42 cusecs obtained
US$ 1,304 mnQ1 FY14Aditya Refinery
Q2FY12
Q3FY12
Q2FY12
Timing – Expected Completion
US$ 1,217 mn
US$ 2,000 mn
US$ 2,000 mn
Project Cost (US$mn)
Detailed Engg-59% Complete for smelter & 25 % complete for CPPMajor approvals received. Forest land stage I clearance received. Permission to start project site consolidation activities received. Stage II clearance is progressing
Aditya Aluminium
Basic Engg-100 % Complete, Detailed Engg-92% CompletedAll statutory clearances have been obtainedMore than 5000 people working at site. Major Contractors like L & T, Simplex, GDC mobilized fully at site
Utkal Alumina
Basic Engg-94 % Complete, Detailed Engg-60% CompleteMajor approvals in placeOrders for all major, long delivery equipment placedMore than 10,000 people at site. Major Contractors like L&T, BHEL, Rohan Builders etc have been mobilized fully
Mahan Aluminium
CommentsProject
Exchange Rate: US$1: INR46
30Hindalco Industries Limited: Investor Presentation
Update on Project : Greenfield
% committed
6,578 acres3,328 acres3,750 acresLand spread
Q2FY12Q3FY12Q2FY12Expected Completion
Capex ramp up (US$mn)
US$ 1,217 mnUS$ 2,000 mnUS$ 2,000 mnProject Cost (US$mn)
1,500 ktpa359 ktpa smelter900MW power plant
359 ktpa smelter900MW power plant
Scope
RefinerySmelterSmelterNature
Mahan aluminium, Madhya Pradesh Aditya aluminium, Orissa Utkal alumina, Orissa
57%83%
%committedat time of
QIP
%committed
current
49%66%
%committedat time of
QIP
%committed
current
66% 82%
%committedat time of
QIP
%committed
current
370522
28344
2010 2011 2012 2013
217
924
522300
2010 2011 2012 2013
109
630870
337
2010 2011 2012 2013
Key Benefits
Well timed capacity increase
Lower Production Cost
Lower Capex Cost ( on a per
ton basis)
Raw Material Coverage
Greater Integration
Exchange Rate: US$1: INR46
31Hindalco Industries Limited: Investor Presentation
Progress of Key Projects
Basic Engineering – 100% and Detailed Engineering – 92% completed
Statutory approvals – obtained
Site progress – c.5,000 people working at site; major contractors have been mobilized; 87% of Piling work completed; RCC, structural fabrication – 33% complete; Tankages erection – under progress
Power plant – Erection of BTG units under progress
Financial closure achieved -Syndication launched for US$1,087mn against which a response received for c. US$2,391mn and Documentation completed
Utkal Alumina
Basic Engineering – 94% and Detailed Engineering – 60% completed
Statutory approvals – major approvals in place
Site progress – c.10,000 people working at site;
Smelter - Site Grading –55% complete; structural - under progress
Power plant – 5 boiler units, 4 ESP units, 2 power units completed, First chimney 88 m completed, second chimney 40 m completed
Financing - DFR completed, preliminary discussion with banks for financing has commenced and Banks are willing to underwrite entire fund requirement
Mahan Aluminium
Detailed Engineering – 59% completed for smelter and 25% complete for CPP
Statutory approvals – major approvals in place - Forest land stage I clearance received.
Site progress – c.10,000 people working at site;
Smelter - Site Grading –65% complete; structural - under progress. R & R houses-30 % houses completed
Financing - DFR completed, financing being launched shortly
Aditya Aluminium
Bauxite Mine & Refinery
Exchange Rate: US$1: INR46
32Hindalco Industries Limited: Investor Presentation
Update on Project : Brownfield
Nature and Scope – Expansion of the VAP facility to 600 ktpa. The expansion is expected to cost c.$300mProgress – recently conceivedProject Schedule - To be completed by Q3FY13
Pinda, Brazil
Nature and Scope – Transfer of Novelis UK can factory to IndiaProgress - 98 % dismantling completed. Containers are being dispatched and some have arrived in India. Cold and Hot Mill – orders placed with vendors (Achenbach and ABB). Site office developed for project team. Site Grading and Boundary Wall Construction in progress. 165 persons working at site.Project Schedule – To be completed by Q2FY12
FRP, Hirakud, Orissa
Smelter Expansion - Capacity increase from 161 to 213 KTPA through addition of 80 Pots of 235 kA. The plan is to expand the capacity to 360 KTPower Plant Expansion - Capacity to increase to 467.5 MW by addition of 100 MWProgress - DCPL has been engaged as the EPCM consultant . Basic Engineering by GAMI-LOT A & B –Basic Engineering documents recd. 3rdLot also in final stage. Orders placed for 100 MW turbine/generator and boilers. Enquiries for FTP, Rectifier station, PTM have been floated. Orders to be placed by end August. Site grading 80 % completed.Project Schedule - 30 pots to be commissioned by Dec’2011 & balance 50 pots by Mar’2012.
Hirakud, Orissa
HIRAKUD, ORISSAHIRAKUD, ORISSA PINDA, BRAZIL
33Hindalco Industries Limited: Investor Presentation
Project Capital expenditure and financing need
391
1,217
2,000
2,000
5,217
3,652
1,174
0
1,000
2,000
3,000
4,000
5,000
6,000
Utkal Alumina Mahan Aluminium Aditya Aluminium Total Project Finance Equity contribution
Project spending for key projects (US$mn)
70%
Exchange Rate: US$:INR 1:46
Already spent
Treasury
Post the successful QIP transaction, Hindalco is well positioned to raise additional debt for its planned projects… Hindalco has over US$1 bn in Treasury
Impressive financial performance with upward momentum in profitability
35Hindalco Industries Limited: Investor Presentation
Strong financial performance (consolidated*)
121305 332 362 413 459
2,759 2,807
3,250 3,267
3,595 3,6591,401
1,530
1,836
2,037
2,1992,122
0
1,000
2,000
3,000
4,000
5,000
6,000
Q4FY09 Q1FY10 Q2FY10 Q3FY10 Q4FY10 Q1FY110
500
1,000
1,500
2,000
2,500Sales (US$mn) EBITDA (US$mn) LME prices (US$)
4.4% 10.9% 10.2% 11.1% 11.5%
EBIDTA Margin (%)
Exchange Rate: US$1: INR46
12.5%
* Consolidated: comprises Hindalco standalone and Novelis results
36Hindalco Industries Limited: Investor Presentation
Debt Position (Consolidated)
* Hindalco Repayment Schedule includes Hindalco Standalone Debt consisting of secured loans & unsecured foreign currency loan and Novelis Loan Recourse; does not include working capital loansExchange Rate : US$1: INR 46
1011
354 3041418
61 173 234 448 763540
1,000
2,000
3,000
Debt (30 Jun 2010) 2010-11 2011-12 2012-13 2013-14 2014-15 2015-16
Secured Loan Novelis Loan Recourse
2,631
2416 16
2,414
16145
0
1,000
2,000
3,000
Debt (30 June 2010) Within 1 yr 2 years 3 years 4 years 5 years After 5 years
US$
in m
n
Repayment schedule
US$
in m
n
Novelis
Hindalco
• Over 90% of debt back-ended
Repayment schedule*
• Repayment of Novelis loan commences in FY12
Favourable Market Outlook
38Hindalco Industries Limited: Investor Presentation
Robust world consumption for Al post rebound in 2010
2010E Consumption
Sustained robust demand for Aluminium over the next few years
Projected primary aluminium consumption by region (in MMT)
China
Europe
North America
Asia w/o China, India and Russia
Latin AmericaIndia
RussiaRest of World
14.0%
2%
0%
12%
7%
-13%
-19%
-25%
16%
6%
7%
14%
6%
9%
8%
7%
15%
3.4%
3.6%
4.6%
3.1%
4.7%
4.2%
0.4%2009 Actual2010 Forecast2011E
2009 Global demand growth rate: -4%
2010 Global demand growth rate: 11% (2010 ex-China: 8%)
2011 Global demand growth rate: 8%(2011 ex-China: 4%)
China
Europe
North America
Asia w/o China, India and Russia
Latin America
India
Russia
Rest of World
Source: Industry Reports
39Hindalco Industries Limited: Investor Presentation
50
100
150
200
Jan-08 May-08 Sep-08 Jan-09 May-09 Sep-09 Jan-10 May-10
1 yr contango Storage + Financing cost
Robust world consumption for Al post rebound in 2010
Positive Outlook for Aluminium to continue with China and India aluminium demand consumption to outpace production
21,43423,148
25,000
20,87919,306
12,84615,025 16,115 17,600
18,93416,60514,446
2009 2010E 2011E 2012E 2013E 2014E
Production ConsumptionChina India
1,588 1,5971,439
1,563 1,636 1,712 1,755 1,7981,5501,503
1,3041,473
2009 2010E 2011E 2012E 2013E 2014E
Production Consumption
Regional Premiums close to all time highs due to paucity of aluminium in the physical markets One year contango still higher than storage costs (US$/T)
Source: Industry reports
Contango flat for last one year
0%
100%
200%
300%
400%
500%
May-09 Jul-09 Sep-09 Nov-09 Jan-10 Mar-10 May-10
Midwest Japan Europe
China was a net exporter of aluminium in June 2010 for the first time since 2008 – production was at record levels
Source: Industry reports
Source: Industry reports Source: Industry reports
40Hindalco Industries Limited: Investor Presentation
Drivers for consumption growth in India in place
Industrial 7%
Others17%
Power48%
Transportation15%
Construction13%
Robust growth outlook…
Consumption by various industry segments…
…to continue to drive Aluminium consumption
Source: Aluminium Association of India
Source: Industry reports
…is expected to continue showing robust demand
Generation capacity to increase by 68,869 MW in 2007-12
− Privatization of electricity T&D and emphasis on improving existing infrastructure to strengthen domestic aluminium demand
Increased use of aluminium in automobile and two-wheeler manufacturing to further bolster domestic demand
Underpenetration in India also augurs well for future demand
− Per capita consumption 1.1 kg in 2009 as compared 10-25 kg in developed European countries and USA
1.08 1.21 1.281.45
1.681.85
2.07
0.86 0.96
2004
2005
2006
2007
2008
2009
2010
E
2011
E
2012
E
2013
E
2014
E
9.06.7 7.2
8.49.99.4
7.5
0
4
8
12
FY05 FY06 FY07 FY08 FY09 FY10 FY11
Source: Office of Economic Advisor (India), IMF, Industry reports
Industrial Production growth (%)GDP growth (%)
8.4 8.2 11.6 8.5 2.8 10.4 9.4
41Hindalco Industries Limited: Investor Presentation
Favorable Demand outlook: Reflected in Al forward prices
2,000
2,050
2,100
2,150
2,200
2,250
2,300
Sep-10 Dec-11 Mar-13 Jun-14 Sep-15
Last Price
1.6%
-0.9%
-13.6%-13.0%
12.0%
Aluminium Copper Nickel Lead Zinc
Source: Bloomberg (August 2010)
Aluminium forward price curve (US$/t) – Steadily rising 5 year forward curve price change (Sept 2010- Nov 2015)
Aluminium continues to be the only major non-ferrous metal with a double digit forward price growth (over a 5-year time horizon)
Recovery of US/ European markets and continued robust growth in Asia/ Latin America; China to witness acceleration phase in demand for AluminiumReduced production capacity, declining global aluminum inventories growing tightness in prime and value added products Launch of physical backed Aluminum Exchange Traded Funds (ETF)Wider application of Aluminum, especially in Auto and Industrial segments
Key Drivers for Aluminium Prices
Source: Bloomberg (August 2010)
Re-rating due to visibility of growth and focused strategy in place
43Hindalco Industries Limited: Investor Presentation
Well defined Growth drivers for Hindalco
Alumina Greenfield Projects Value Added Products
Long on Alumina - from 1.5 mtpa currently to 3 mtpa in the future
Amongst the largest producers of Specialty Alumina (expanding capacity to 350 kta) globally with a 90% domestic market share in India
JV in Cameroon in place to mine bauxite and set up alumina refinery
Greenfield projects expected to be in global best quartile for manufacturing costs
Scalability of Greenfield projects to provide uptick in margins in the future
Strong EBITDA profile for new projects to improve growthfundamentals and capital structure
Expansion of the Pinda projectwould increase emerging market exposure to over c.40%
Expects to increase mix of VAP and introduce futuristic value added product’s to provide further upsides to revenues and margins
To deliver high end products in Hirakud (Project Blue Fox)
Hindalco Today
Revenue (FY10) USD 12.9bn
EBITDA (FY10) USD 1.4bn
Hindalco Tomorrow
ABG aspires to be a $65bn turnover by FY15 and Hindalco expected to be the torchbearer..
44Hindalco Industries Limited: Investor Presentation
Towards Sustainable LeadershipDomestic operations Expansion Projects Novelis
Driver
User industries of aluminum have a bullish outlook Robust sector fundamentalsLong on AluminaIntroduction of new futuristic value added products (Al)New avenues for copper use
Financial closure on track for key Greenfield projectsGreenfield projects expected to be in global best quartile for manufacturing costsInfrastructure available for further scalability in the futureBrownfield capacity increase advantage
Improving product mix to drive margins and growthSuccessful relocation of Roger StoneConvergence of EBITDA and Adjusted EBITDALeader in Al Recycling
Highlight’s
Strategy
Sustainable growth Achieve potential Stabilize and transform
Strong risk management practices in placeLeading market share in VAPContinued focus on operational excellence for both Aluminum and CopperLow cost base and robust de-risked business model
Focus on timely delivery of planned projectsMaintain high quality of executionGreenfield projects will further sharpen the competitive positioningLow capex cost per ton with best in class operating capacities
Financial turnaround with continued operational improvementLeverage on high end technologyBrownfield expansion – Pinda project, Brazil
Price Leader Cost Leader Capability Leader
Seamless Global “One Metal” business
Thank You!
46Hindalco Industries Limited: Investor Presentation
Hindalco’s Copper Operations - Focused Value Extraction in Copper
Ability to extract value from By-Products and Captive Infrastructure
Smelter
Phosphoric Acid Plant
Cu Anodes
Sulphuric Acid
RockPhosphate
Ammonia
Cu Conc.Refinery
Precious Metals Refinery
Cu Cathodes
Anode Slime
Silver(150 ktpa)
Di-Ammonium Phosphate(400 ktpa)
Gold(15 ktpa)
Phosphoric Acid
Captive All-Season Jetty Captive 135MW power plant Captive Oxygen Plant