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Directors Report of Hindalco Industries Ltd.

Mar 31, 2015

Dear Shareholder,

The Directors have pleasure in presenting the 56th Annual Report and the audited standalone and consolidated financial statements of your company for the year ended 31st March, 2015.

FINANCIAL HIGHLIGHTS:

Rs. Crore

Standalone Consolidated

FY15 FY14 FY15 FY14

Revenue from Operations 34,525 27,851 1,04,281 87,695

Other Income 882 1,124 1,105 1,017

PBITDA 4,299 3,616 10,049 9,303

Depreciation 837 823 3,591 3,553

PBIT 3,462 2,793 6,458 5,751

Finance Cost 1,637 712 4,178 2,702

Profit before Exceptional Items and Tax 1,825 2,081 2,280 3,049

Exceptional Items 578 396 1,940 396

Profit before tax 1,247 1,685 340 2,653

Tax Expenses 322 272 256 525

Profit before Minority Interest and Share in profit/(loss) of 925 1,413 84 2,128 Associates

Minority Interest in Profit/ (Loss) (596) 20

Share in Profit/(loss) of Associates 175 67

Net Profit 925 1,413 854 2,175

EPS (Basic) - Rs. 4.48 7.09 4.14 10.91

Note: Certain descriptions and /or fi gures of earlier periods have been changed/regrouped to conform to current practices

The amounts proposed to be carried to reserves Standalone Accounts:

(Rs. Crore)

As at As at 31/03/2015 31/03/2014

Surplus in the Statement of Profit and Loss

Balance as at the 750.00 750.00 beginning of the year

Add: Profit for the year 925.16 1,413.33

Less: Transferred to (150.00) (150.00) Debenture Redemption Reserve

Less: Dividend on Equity (206.52) (206.46) Shares

Less: Dividend (39.29) (0.90) Distribution Tax

Less: Transferred to - (1,055.97) General Reserve

Balance as at the end of 1,279.35 750.00 the year

Dividend:

For the year ended 31st March,2015, the Board of Directors of your Company have recommended dividend of Re. 1 per share (Previous year Rs.1 per share) to equity shareholders aggregating to Rs. 246.11 crore (Previous year Rs. 241.55 Crore) including Dividend Distribution Tax.

Equity shares that may be allotted upon exercise of Options granted under the Employee Stock Option Scheme before the Book Closure for payment of dividend will rank pari passu with the existing shares and shall also be entitled to receive the aforesaid dividend.

OVERVIEW AND STATE OF THE COMPANY''S AFFAIRS:

Standalone results

For the year ended March 31, 2015, net sales are up by 24% with Profi t before depreciation, interest and tax growth at 19%.

Depreciation stood at Rs. 837 crore compared to Rs. 823 crore in the previous year, refl ecting a change in the manner of calculation of depreciation w.e.f. 1st April, 2014 by considering revised useful life of assets to bring it in line with Schedule II of the Companies Act, 2013.

The increase in Finance cost from Rs. 712 crore in FY14 to Rs. 1,637 crore in FY15 refl ects the lower capitalisation of finance charges in line with progressive commissioning of facilities.

Profit before exceptional items at Rs. 1,825 crore was lower by 12% compared to FY14 resulting from higher interest.

Exceptional Items (Net) of Rs. 578 crore include:

(a) Rs. 563 crore towards additional levy of Rs. 295/- per MT on extracted coal for the period up to 30th September, 2014.

(b) Rs. 258 crore towards provision for diminution in the carrying value of investments in Aditya Birla Minerals Limited, Australia, a subsidiary of the Company.

(c) Reversal of Rs. 29 crore out of the liability provided for in the previous year on account of the UP Tax on Entry of Goods into Local Areas Act, 2007 (UP Entry Tax), following completion of assessment.

(d) Foreign exchange gain of Rs. 361 crore in connection with Rs.1,394 crore received from A V Minerals (Netherlands) N. V., a wholly owned subsidiary of the Company, towards return of capital by reducing nominal value of shares.

(e) Rs. 147 crore liability provided towards Renewable Power Obligations (RPO) under the Electricity Act, 2003.

Net profi t stood at Rs. 925 crore compared to Rs. 1,413 crore in previous year.

Consolidated results

The Consolidated Revenue and Profi t before Depreciation, Interest and Taxes grew by 19% and 8% respectively, in comparison to the last year''s corresponding figures.

Net profi t was lower at Rs. 854 Crore, because of higher interest cost and exceptional items. The exceptional items (in addition to items included in standalone as mentioned above) mainly relate to a sinkhole incident at one of the subsidiary companies in Australia and change in macro-economic conditions. This has resulted in the impairment of fi xed assets, write down in value of inventories and expenses incurred towards restoration of operations.

Novelis Inc. (a wholly owned subsidiary)

Revenue of Fiscal 2015 increased 14% to $11.1 billion compared to $9.8 billion in fi scal 2014. Revenue growth was driven by record shipments of rolled aluminium products of 3,050 kilotonnes in fi scal year 2015. Higher average metal prices in fi scal year 2015 also contributed to the increase in revenues.

Novelis reported net income of $148 million for fi scal year 2015, a 42% increase from $104 million reported in fi scal 2014. Excluding certain tax-effected items, net income increased four percent to $161 million in fi scal 2015.

Adjusted EBITDA grew 2% to $902 million in fi scal 2015 compared to the $885 million reported in fi scal 2014. The increase was primarily driven by higher shipments, favourable product mix due to a strategic shift to grow automotive shipments and cost benefi ts from using a higher percentage of recycled metal inputs. Partially offsetting these gains were higher costs associated with the start-up and support of new capacity, lower pricing in some Asian markets, as well as unfavourable foreign exchange and metal price lag.

The company reported free cash flow of $71 million for the year, an $87 million increase over the prior year. Novelis generated positive free cash fl ow for fi scal year 2015 as a result of strong operating results, lower capital spending, and structural reductions to working capital, despite volatile metal prices and higher working capital requirements as it ramped up new assets.

At the end of the fi scal 2015, the company reported liquidity of $1.1 billion.

Utkal Alumina International Limited (UAIL) (a wholly-owned subsidiary)

The Alumina Refi nery at UAIL produced 1 million ton of Alumina in FY15 compared to 0.2 million ton in FY14. Of this, 288 kilotonnes of Alumina was exported, the balance was supplied to smelters at Hindalco. The cost of production of Alumina at UAIL is comparable to world benchmark cost of production.

UAIL reported an EBITDA of Rs. 261 crore. Its Net loss stood at Rs. 496 crore after interest charge of Rs. 519 crore and Depreciation of Rs. 238 crore.

Aditya Birla Minerals Limited (ABML) (a 51% subsidiary)

Aditya Birla Minerals Limited, Australia reported a net loss of AUD 219.7 million in FY15 compared to AUD 0.2 million in FY14. The sinkhole incident in March 2014 resulted in a cost of approximately $22m during the suspension period. Its Copper production volume after recommencement of operations was lower and Impairment charges of ~$219 million had an adverse impact on the Company''s fi nancials in FY15.

The suspension of operations for more than 4.5 months in FY15 resulted in signifi cantly lower operating performance compared to the previous year FY14. The Nifty Copper Sulphide Concentrator produced 12,698 metric tonnes of copper in concentrate as compared to 44,071 metric tonnes of contained copper the previous year, a decrease of 71%. The management is now focussed on implementation of various cost optimisation initiatives and rationalisation of capex spending.

ABML has resolved to undertake a review of the Company''s strategic options with a view to maximise value for all shareholders (Strategic Review). The Strategic Review will consider corporate and operational strategies, and include a review of ownership options available to the Company.

Business Reconstruction Reserve:

The Company had formulated a scheme of fi nancial restructuring 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 to deal with various costs associated with its organic and inorganic growth plan. Pursuant to this, a separate reserve account titled as Business Reconstruction Reserve ("BRR") was created during the year 2008-09 by transferring balance standing to the credit of Securities Premium Account of the Company for adjustment of certain expenses as prescribed in the Scheme. Accordingly the Company had transferred Rs. 8,647.37 crore from Securities Premium Account to BRR and till 31st March, 2014, Rs. 153.04 crore and Rs. 2,068.50 crore have been adjusted against BRR in standalone and consolidated accounts respectively. During the year, following expenses has been adjusted with BRR in both accounts:

(a) Impairment loss of Rs. 62.29 crore (Net of deferred tax Rs. 32.97 crore) arising on deteriorating operating performance in one of its cash generating unit of Aluminium Business.

(b) Provision of Rs. 35.00 crore towards diminution in value of investment of Mahan Coal Limited, joint venture of the Company, and Tubed Coal Mines Limited, subsidiary of the Company, made following de-allocation of coal blocks by the Hon''ble Supreme Court.

CORPORATE DEVELOPMENTS:

There are no signifi cant and material orders passed by the regulators or courts or tribunals impacting the going concern status of the Company.

The Supreme Court of India by its judgment dated 25th August, 2014 read with its Order dated 24th September, 2014 cancelled 204 coal blocks which had been allocated earlier for the purposes of mining coal for captive consumption. These include three Coal blocks allotted to your Company jointly with others, viz. Tubed Coal Block, Mahan Coal Block, Talabira II/III coal block and one Coal block allotted to your Company i.e Talabira I Coal block in Orissa. No mining activity had commenced at Tubed, Mahan and Talabira II & III Coal Blocks.

Subsequent to the Supreme Court judgment, the Central Government promulgated Ordinances dated 21st October, 2014 and 26th December, 2014 for allotment and auction of 204 coal blocks. The Ministry of Coal has also framed Rules u/s 29 of The Coal Mines (Special Provision) Ordinance, 2014 and notifi ed on 11th December, 2014 the auction and allotment of all the above mentioned coal blocks. Your Company participated in the e-auction conducted by the Central Government for allocation of the coal blocks and has been awarded the Gare Palma IV/4 and Gare Palma IV/5 coal mines situated in Chhattisgarh, which has about 11 Million Tonnes and about 41 Million Tonnes of coal reserve respectively, Kathautia Coal Mine in Jharkhand which has about 26 Million Tonnes of coal reserve and Dumri Coal Mine in Jharkhand which has about 46 Million Tonnes of coal reserve.

Commercial production from the mines is expected to commence in Q2 of FY16. The primary consideration for obtaining the mines is to ensure your Company''s coal security.

HUMAN RESOURCES:

Several innovative people - focused initiatives have been instituted at the Group level, and these are translated into action at all of the Group Companies. Our basic objective is to ensure that a robust talent pipeline and a high-performance culture, centred around accountability is in place. We feel this is critical to enable us retain our competitive edge.

RESEARCH AND DEVELOPMENT

Your Company''s Research & Development (R&D) activities are focused on providing innovative, cost-effective and sustainable solutions to support consistent growth of business.

The R&D activities of your Company include process, product and application development, to develop short term as well as long term solutions to the issues faced by nonferrous sector, such as raw material quality, cost effective management of waste generated during processing, recovery of value from by product as well as any waste products, developing better understanding of the science of processes, reducing the specifi c energy consumption and carbon footprint etc. Specifi c programs have also been initiated to foster better understanding of the requirement of existing and prospective customers, and to provide a better service through application development, so as to increase your company''s market share in the chosen market space. Technical competencies developed by your company will go a long way in terms of quick absorption of technologies, enabling pushing boundaries of our processes, so as to increase the economic performance and improve our new product/ new application pipeline to address the impending market opportunities.

Your company already operates two Hindalco Innovation Centres (HIC), one HIC-Alumina at Belgaum working on R&D of bauxite, alumina and specialty alumina products, and one HIC-SemiFab located at Taloja, near Mumbai, working in the area of aluminium fabricated products. In addition, your company engages the Aditya Birla Group''s corporate research and development centre, Aditya Birla Science and Technology Company Private Limited ("ABSTCPL"), for conducting R&D in select areas of work through chartered R&D projects. These are based on the domain expertise and R&D facilities available in ABSTCPL. The engagement has resulted into some patent applications, which have been and will be assigned to your company on the grant of the patent. ABSTCPL''s forte of having multi-disciplinary teams of technical experts, scientists and engineers, enables your company to develop building competencies in select areas, as a long term value to business.

AWARDS & RECOGNITIONS

Several accolades have been conferred upon your Company, in recognition of its contribution in diverse fi elds. A selective list:

1. Aditya Aluminium wins Kalinga Safety Award for Best Practices in Safety & CSR, presented at the Odisha State Safety Conclave.

2. Utkal Alumina International Limited wins the Think Media Best CSR Case Study Award 2014 on the theme of "Access to Quality Health Care Services".

3. Hirakud wins Greentech CSR Silver Award 2014 for its initiatives in Sustainable Livelihood in and around the unit location.

4. Hirakud Smelter wins CII Easter Region Quality Award 2014-15 (Certifi cate of Appreciation) in the large scale category.

5. Birla Copper Dahej wins Greentech CSR Silver Award 2014 for Education Upliftment in 85 surrounding Government schools.

6. Birla Copper Dahej wins Greentech Environment Gold Award 2014 for continual sustainable development approach.

7. Birla Copper Dahej wins Greentech CSR Silver Award 2014 for outstanding achievement in Safety Management System.

8. Birla Copper Dahej wins 2nd Runners Up Award & Advocacy Award at the All India Kaizen Competition organized by Baroda Productivity Council.

9. Taloja wins Greentech Safety Silver Award 2014 for excellence in Fire & Safety Management.

10. Taloja wins Greentech Environment Silver Award 2014 for continual sustainable development approach.

11. Taloja wins CII-EXIM Bank Award (Commendation Certifi cate) 2014, for Strong Commitment to Excel.

12. Mouda Works received First Prize for Best Safety Practice in a Competition organized by the National Safety Council, Vidharba Action Centre in collaboration with Directorate, Industrial Safety & Health - Government of Maharashtra.

13. Maliparbat Mines wins awards in Training, OHS, Welfare & Amenities, Safety Performance & Consciousness during the Odisha Metalliferrous Mines Safety Week programme.

14. Teams from Renukoot, Renusagar, Hirakud, Dahej win at the National level Quality Circle Conventions.

15. Belur participant wins First Prize under Trade Electrician at the National level Work Skills Competition.

CONSOLIDATED FINANCIAL STATEMENTS:

The Consolidated Financial Statements have been prepared by your Company in accordance with the provisions of the Companies Act, 2013, read with the Companies (Accounts) Rules, 2014, applicable Accounting Standards and the provisions of the listing agreement with the Stock Exchanges and forms part of the Annual Report.

EMPLOYEE STOCK OPTION SCHEMES:

ESOS - 2006

During the year ended 31st March, 2015, the Company has allotted 373,666 fully paid-up equity share of Rs. 1/- each of the Company (Previous year 4,800) on exercise of options under ESOS 2006 for which the Company has realised Rs. 3.83 crore (Previous year Rs. 0.05 crore) as exercise money. The weighted average share price at the exercise date was Rs. 168.73 per share (Previous yearRs. 115.20).

ESOS - 2013:

During the year ended 31st March, 2015, the Company has allotted 18,848 fully paid-up equity share of Rs. 1/- each of the Company (Previous year Nil) on exercise of options under ESOS 2013 for which the Company has realised Rs. 0.22 crore (Previous year Nil) as exercise money. The weighted average share price at the exercise date was Rs. 154.54 per share (Previous year NIL).

The details of Stock Options and Restricted Stock Units granted under the above mentioned Schemes are available on your Company''s website viz. www. hindalco.com.

A certificate from the statutory auditor on the implementation of your Company''s Employees Stock Option Schemes will be placed at the ensuing Annual General Meeting for inspection by the members.

CORPORATE GOVERNANCE

Your Directors reaffi rm their continued commitment to good corporate governance practices. Your Company fully adheres to the standards set out by the Securities and Exchange Board of India for Corporate Governance practices and has implemented all of its stipulations.

As required by Clause 49 of the Listing Agreement of Stock Exchanges, a separate section on Corporate Governance, together with a certifi cate from your Company''s statutory auditors, forms part of this Annual Report.

DIRECTORS'' RESPONSIBILITY STATEMENT

As stipulated in Section 134(3)(c) of the Companies Act, 2013 "the Act", your Directors subscribe to the "Directors'' Responsibility Statement" and confi rm that:

a) in the preparation of the annual accounts, applicable accounting standards have been followed along with proper explanations relating to material departures;

b) the accounting policies selected have been applied consistently and judgments and estimates have been made that are reasonable and prudent so as to give a true and fair view of the state of affairs of the company as at 31st March,2015 and of the profi t of your company for that period;

c) proper and suffi cient care has been taken for the maintenance of adequate accounting records in accordance with the provisions of the Act for safeguarding the assets of your company and for preventing and detecting fraud and other irregularities;

d) the annual accounts of your Company have been prepared on a going concern basis;

e) your Company had laid down internal fi nancial controls and that such internal fi nancial controls are adequate and were operating effectively;

f) your Company has devised proper system to ensure compliance with the provisions of all applicable laws and that such systems were adequate and operating effectively.

ENERGY, TECHNOLOGY AND FOREIGN EXCHANGE:

The information on conservation of Energy, Technology Absorption and Foreign Exchange Earnings and Outgo stipulated under Section 134(3)(m) of the Companies Act, 2013, read with Companies (Accounts) Rules,2014 is set out in Annexure-I to this Report.

PARTICULARS OF EMPLOYEES:

In accordance with the provisions of Section 197(12) of the Companies Act,2013 "the Act" read with the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, the names and other particulars of employees are to be set out in the Directors'' Report, as an addendum thereto. However, in line with the provisions of Section 136(1) of the Act, the Report and Accounts as set out therein, are being sent to all Members of your Company excluding the aforesaid information about the employees. Any Member, who is interested in obtaining these particulars about employees, may write to the Company Secretary at the Registered Offi ce of your Company.

Disclosures pertaining to remuneration and other details as required under section 197(12) read with Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 are attached as Annexure-II.

DIRECTORS:

Board constitution and changes:

The Board of Directors of the Company had appointed existing Independent Directors viz. Mr. M.M. Bhagat, Mr. N.J. Jhaveri, Mr. K.N. Bhandari, Mr. Jagdish Khattar and Mr. Ram Charan as Independent Directors under the Companies Act, 2013 for a term of fi ve years which was also approved by the members in the Annual General Meeting held on 24th September, 2014.

All Independent Directors have given declarations that they meet the critera of Independence as laid down under Section 149(6) of the Companies Act,2013 and Clause 49 of the Listing Agreement.

At the same Annual General Meeting Mr. A.K. Agarwala and Smt. Rajashree Birla were reappointed as the Directors of the Company.

In the Financial Year 2014-15, our Independent Director Mr. C.M. Maniar passed away, hence ceased to be a Director w.e.f 29th June, 2014.

Mr. Kumar Mangalam Birla and Mr. Satish Pai retire from offi ce by rotation, and being eligible, offer themselves for reappointment. Brief resumes of the directors being reappointed form part of the notice of the ensuing Annual General Meeting.

Policy on appointment and remuneration of Directors and Key Managerial Personnel:

The Nomination and Remuneration Committee has formulated the remuneration policy of your company which is attached as Annexure-III to this Report.

Meetings of the Board:

The Board of Directors of your Company met 8 times during the year details of which are given in the Corporate Governance Report forming part of Annual Report.

Annual Evaluation:

Pursuant to the provisions of the Companies Act, 2013 and Clause 49 of the Listing Agreement, the Directors has carried annual performance evaluation of Board, Independent Directors, Non Executive Directors, Executive Directors, Committee and Chairman of the Board. The Nomination and Remuneration Committee approved the evaluation framework and during the year, the fi rst evaluation cycle was completed by the Company.

The evaluation framework focused on various aspects of the Board and Committees such as review, timely information from management etc. Also, the performance of individual directors was divided into Executive, Non Executive and Independent Directors and based on the parameters such as contribution, attendance, decision making, action oriented, external knowledge etc.

Board members were requested to evaluate Independent Directors, Non executive Directors, Executive Directors, Committee and Chairman of the Board. The results of evaluation were shared with the Board of Directors.

AUDIT COMMITTEE:

The Audit Committee comprises of Mr. M.M. Bhagat, Mr. K.N. Bhandari, Mr. N.J. Jhaveri, Independent Directors of your Company. Mr. D. Bhattacharya: Managing Director, Mr. Satish Pai: Deputy Managing Director and Mr. Praveen Kumar Maheshwari: Chief Financial Offi cer are the permanent invitees. Further details relating to the Audit Committee are provided in the Corporate Governance Report forming part of this Annual Report.

KEY MANAGERIAL PERSONNEL:

In terms of provisions of Section 203 of the Companies Act,2013, Mr. D. Bhattacharya: Managing Director, Mr. Satish Pai: Deputy Managing Director, Mr. Praveen Kumar Maheshwari : Chief Financial Offi cer and Mr. Anil Malik: Company Secretary are the Key Managerial Personnel of your Company.

VIGIL MECHANISM:

Your Company has in place a vigil mechanism for directors and employees to report concerns about unethical behaviour, actual or suspected fraud or violation of your Company''s Code of Conduct. Adequate safeguards are provided against victimisation to those who avail of the mechanism and direct access to the Chairman of the Audit Committee in exceptional cases is provided to them.

The vigil mechanism is available on your Company''s website viz. www.hindalco.com.

AUDITORS

Statutory Auditors

Pursuant to provisions of Section 139 of the Companies Act, 2013 read with the Companies (Audit and Auditors) Rules, 2014,, M/s Singhi & Co, Chartered Accountants were appointed as Statutory Auditors of the Company from the conclusion of fi fty fi fth Annual General Meeting held on 24th September,2014, until the conclusion of fi fty-eighth Annual General meeting to be held in the calendar year 2017, subject to ratifi cation of their appointment at every Annual General Meeting.

Resolution seeking your ratifi cation is included in the Notice convening the Annual General Meeting. The observation made in the Auditor''s Report are self explanatory and therefore, do not call for any further comments under Section 134(3)(f) of the Act.

Cost Auditors

In terms of the provisions of Section 148 of the Companies Act, 2013 read with the Companies (Cost Records and Audit) Amendment Rules, 2014, the Board of Directors of your Company have on the recommendation of the Audit Committee, appointed M/s. Nanabhoy & & Co., Cost Accountants, Mumbai as Cost Auditors, to conduct the cost audit of your Company for the fi nancial year ending 31st March, 2016, at a remuneration as mentioned in the Notice convening the Annual General Meeting. As required under the Act, the remuneration payable to the cost auditor is required to be placed before the Members in a general meeting for their ratifi cation. Accordingly, a resolution seeking Member''s ratifi cation for the remuneration payable to Cost Auditors forms part of the Notice of the ensuing Annual General Meeting.

Secretarial Auditors

Pursuant to provisions of Section 204 of the Companies Act,2013 read with the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, the Company has appointed BNP& Associates, Company Secretaries, Mumbai as Secretarial Auditor for conducting the Secretarial Audit of your Company for the financial year ended 31st March,2015. The Report of the Secretarial Auditors is annexed herewith as Annexure-IV.

The Secretarial Audit Report does not contain any qualification, reservation or adverse remark.

ENVIRONMENT PROTECTION AND POLLUTION CONTROL

Your Company is committed to sustainable development. A separate chapter in this report deals at length with your Company''s initiatives and commitment to environment conservation.

PARTICULARS OF LOANS, GUARANTEES AND INVESTMENTS:

Details of Loans, Guarantees and Investments covered under the provisions of Section 186 of the Companies Act, 2013 read with Companies (Meetings of Board and its Powers) Rules, 2014 are given in the notes to Financial Statements.

CORPORATE SOCIAL RESPONSIBILITY:

In terms of the provisions of Section 135 of the Companies Act, 2013 ("the Act") read with Companies (Corporate Social Responsibility Policy) Rules, 2014, the Board of Directors of your Company has constituted a Corporate Social Responsibility ("CSR") Committee which is chaired by Mrs. Rajashree Birla.

The other Members of the Committee are Mr. N.J. Jhaveri, Independent Director, Mr. A.K. Agarwala, Non Executive Director and Mr. D. Bhattacharya, Managing Director. Dr. Pragnya Ram, Group Executive President, Corporate Communication & CSR is a permanent invitee to the Committee. Your Company also has in place a CSR Policy and the same is available on your Company''s website viz. www.hindalco.com. The Committee recommends to the Board activities to be undertaken during the year.

Your Company is a caring corporate citizen and lays significant emphasis on development of the communities around which it operates. Your Company has identified several projects relating to Social Empowerment & Welfare, Infrastructure Development, Sustainable Livelihood, Health Care and Education during the year and initiated various activities in neighbouring villages around plant locations.

The Annual Report on CSR activities is attached as Annexure-V forming part of this report.

RISK MANAGEMENT

Pursuant to the requirement of Clause 49 of the Listing Agreement, the Company has constituted Risk Management Committee, which is mandated to review the risk management plan/process of your company.

Risk evaluation and management is an ongoing process within the Organization. Your Company has comprehensive risk management policy which is periodically reviewed by the Risk Management Committee.

CONTRACTS AND ARRANGEMENTS WITH RELATED PARTIES:

During the fi nancial year, your Company entered into related party transactions which were on arm''s length basis and in the ordinary course of business. There are no material transactions with any related party as defi ned under Section 188 of the Act read with Companies (Meetings of Board and its Powers) Rules, 2014. All related party transactions have been approved by the Audit Committee of your Company.

The policy on Related Party Transactions as approved by the Audit Committee and the Board is available on your Company''s website viz. www.hindalco.com.

EXTRACT OF ANNUAL RETURN:

In terms of the provisions of Section 92 (3) of the Companies Act, 2013 ("the Act") read with the Companies (Management and Administration) Rules, 2014, an extract of the Annual Return of your Company for the fi nancial year ended 31st March, 2015 is given in Annexure-VI to this report.

BUSINESS RESPONSIBILITY REPORT:

As per Clause 55 of the Listing Agreement with the Stock Exchanges, a separate section of Business Responsibility Report forms part of this Annual Report.

INTERNAL CONTROL SYSTEM AND THEIR ADEQUACY:

Your Company has an Internal Control System, commensurate with the size, scale and complexity of its operations. The scope and authority of the Internal Audit (IA) function is defi ned by the Audit Committee.

The Internal Audit Department monitors and evaluates the effi cacy and adequacy of internal control system in the Company, its compliance with operating systems, accounting procedures and policies at all locations of the Company.

Based on the report of internal auditors, the process owners undertake corrective action in their respective areas and thereby strengthen the controls. Signifi cant audit observations and corrective actions thereon are presented to the Audit Committee of the Board.

INTERNAL FINANCIAL CONTROL

Your directors confi rm having laid down internal fi nancial controls and that such internal fi nancial controls are adequate and were operating effectively

SUBSIDIARY, JOINT VENTURES OR ASSOCIATE COMPANIES:

The fi nancial statements of your Company''s subsidiaries and related information have been placed on the website of your Company viz. www.hindalco. com and also available for inspection during business hours at the registered offi ce of your Company. Any Member, who is interested in obtaining a copy of fi nancial statements of your Company''s subsidiaries, may write to the Company Secretary at the Registered Offi ce of your Company.

In accordance with the provisions of the section 129 (3) of the Act, read with the Companies (Accounts) Rules, 2014, a report on the performance and fi nancial position of each of the subsidiaries, associates and Joint Venture is attached as Annexure-VII to this Report.

The names of Companies which have become or ceased to be subsidiaries, Joint Ventures and associates are also provided in the aforesaid statement.

OTHER DISCLOSURES:

— There were no material changes and commitments affecting the fi nancial position of your Company between end of fi nancial year and the date of report.

— Your Company has not issued any shares with differential voting.

— There was no revision in the fi nancial statements.

— Your Company has not issued any sweat equity shares.

— Mr. D. Bhattacharya and Mr. Satish Pai are directors on the Board of Novelis Inc, wholly owned subsidiary. They are in receipt of annual fee of US$ 1,55,000 and US$ 1,50,000 respectively in the calendar year 2014.

— There was no change in the nature of business.

— During the year under review, your Company has not accepted any fi xed deposits from the public falling under Section 73 of the Act read with the Companies (Acceptance of Deposits) Rules, 2014. Thus, as on March 31, 2015, there were no deposits which were unpaid or unclaimed and due for repayment.

Further, as the Company had not accepted any deposit under Section 58A of the Companies Act, 1956 read with Companies (Acceptance of Deposits) Rules, 1975, in the previous year(s) and as there were no deposits which were unclaimed and due for repayment, as on March 31, 2014, there has been no default in repayment of deposits or payment of interest thereon during the year under review.

APPRECIATION

Your Directors place on record their sincere appreciation for the assistance and guidance provided by the Hon''ble Ministers, Secretaries and other offi cials of the Ministry of Mines, Ministry of Coal, the Ministry of Chemicals and Fertilizers and various State Governments. Your Directors thank the Financial Institutions and Banks associated with your Company for their support as well.

Your Company''s employees are instrumental in your Company scaling new heights, year after year. Their commitment and contribution is deeply acknowledged.

Your involvement as Shareholders is greatly valued. Your Directors look forward to your continuing support.

For and on behalf of the Board

Mumbai Kumar Mangalam Birla

Dated : 28th May, 2015 Chairman

(DIN: 00012813)


Mar 31, 2014

Dear Shareholder,

The Directors have pleasure in presenting the 55th Annual Report and the Audited Accounts of the Company for the year ended 31st March, 2014.

As the Management Discussion and Analysis Section of the Annual Report focuses on your Company''s strategies for growth and the performance review of the businesses/operations of the Company in depth, your Board is providingonly a brief overview in this Report.

FY 2014, was a watershed year for your company. All the Greenfield projects viz. Aditya Aluminium and Mahan Aluminium as well as Alumina Refi nery under Utkal Alumina International Ltd, a wholly owned subsidiary of the Company, have commenced operations. All these projects are ramping up their capacity utilization.

In July 2013, Novelis began the commissioning phase of two automotive sheet finishing lines at Oswego, its New York facility. The construction of new automotive sheet finishing plant in Changzhou, China is also on track.

In December 2013, Novelis announced plans to further expand its global production of aluminium automotive sheet products by building a third finishing line at its Oswego, New York facility and a second fi nishing line at its Nachterstedt, Germany facility. These projects are expected to begin commissioning in late calendar year 2015. Each of these will add approximately 120 kt of auto-finishing capacity. With these expansions, the Novelis'' global automotive sheet capacity will rise to approximately 900 kt per year.

FINANCIAL PERFORMANCE

Standalone performance for the year ended March 31, 2014 witnessed the net sales grew by 7% with Profi t before depreciation, interest and tax growth at 13%. Interest costs went up significantly consequent to higher borrowing and capitalization of some assets at projects. Due to higher interest cost and exceptional items, the standalone Net Profi t was lower at Rs. 1,413 crore.

An exceptional item of Rs. 396 crore relates to a liability of Rs. 324 crore under The UP Tax on Entry of Goods into Local Areas Act, 2007 (UP Entry Tax) and a Liability of Rs. 72 crore under The Madhya Pradesh Gramin Avsanrachna Tatha Sarak Vikas Adhiniyam (MPGATSVA). Both these levies have been contested by the Company and appeals against these are pending before the Hon''ble Supreme Court.

The Consolidated Revenue as well as Profi t before Depreciation, Interest and Taxes extended by 9% and 5% respectively in comparison to the last year''s corresponding fi gures. Net profi t was lower at Rs. 2,175 crore, because of higher interest and depreciation and exceptional items.

BUSINESS RECONSTRUCTION RESERVE

The Company had formulated a scheme of financial restructuring 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 to deal with various costs associated with its organic and inorganic growth plan. Pursuant to this, a separate reserve account titled as Business Reconstruction Reserve ("BRR") was created during the year 2008-09 by transferring balance standing to the credit of Securities Premium Account of the Company for adjustment of certain expenses as prescribed in the Scheme. Accordingly, the Company has transferred Rs. 8,647.37 crore from Securities Premium Account to BRR and till 31st March, 2013, Rs. 66.98 crore has been adjusted against BRR.

During the year, a provision of Rs. 86.06 crore has been made for diminution in value of investment in Hindalco-Almex Aerospace Limited, a subsidiary of the Company. The entire amount of provision has been adjusted against BRR.

DIVIDEND

For the year ended 31st March, 2014, the Board of Directors of the Company have recommended dividend of Rs. 1.00 per share (Previous year Rs. 1.40 per share) to equity shareholders aggregating to Rs. 241.55 crore (Previous year Rs. 313.60 crore) including Dividend Distribution Tax.

Equity shares that may be allotted upon exercise of Options granted under the Employee Stock Option Scheme and out of the Share Capital Suspense, and before the Book Closure for payment of dividend will rank paripassu with the existing shares and shall also be entitled to receive the aforesaid dividend.

SUMMARY FINANCIALS

Rs. Crore

Consolidated Standalone

2013-14 2012-13 2013-14 2012-13

Revenue from Operations (Net) 87,695.5 80,192.8 27,850.9 26,056.9

Profit before Interest, Depreciation/ Amortisation and Tax 9,303.5 8,849.0 3,616.3 3,186.8 (PBIDT)

Less: Finance Costs 2,701.6 2,079.1 711.7 436.0

Less: Depreciation and Amortisation 3,552.8 2,861.1 823.3 704.2

Profit before Exceptional Item and Tax 3,049.1 3,908.8 2,081.4 2,046.6

Exceptional Item 396.0 - 396.0

Profit Before Tax 2,653.1 3,908.8 1,685.4 2,046.6

Tax Expense 524.9 885.7 272.1 347.4

Profit After Tax 2,128.2 3,023.1 1,413.3 1,699.2

Add: Share in Profit/(Loss) of Associates 66.8 (15.8)

Less: Minority Interest 20.0 (19.6)

Profit for the Year 2,175.0 3,026.9 1,413.3 1,699.2

Balance brought forward from Previous Year 2,853.0 1,182.3 750.0 400.0

Adjustment on Acquisition, disposal and change in holding (0.2) (0.1) interest in Group Companies

Surplus available for Appropriation 5,027.8 4,209.1 2,163.3 2,099.2

Appropriations:

- General Reserve 1,062.9 901.8 1,056.0 899.5

- Debenture Redemption Reserve 151.0 150.6 150.0 150.0

- Proposed Dividend 206.5 268.1 206.5 268.1

- Corporate Dividend Tax 37.7 34.8 0.9 31.7

- Transfer on Capital Reduction (86.1) -

- Special Reserve 1.0 0.8

- Balance carried to Balance Sheet 3,654.8 2,853.0 750.0 750.0

5,027.8 4,209.1 2,163.3 2,099.2

ESOS 2006

During the year ended 31st March, 2014, the Company has allotted 4,800 fully paid-up equity share of Rs. 1/- each of the Company (Previous year 40,760) on exercise of options under ESOS 2006 for which the Company has realisedRs. 0.05 crore (Previous year Rs. 0.40 crore) as exercise money. The weighted average share price for the year ended 31st March, 2014 over which options exercised was Rs. 115.20 (Previous year Rs. 117.41).

ESOS 2013

During this year, the Company has instituted Employee Stock Option Scheme 2013 ("ESOS 2013"), under which the Company may grant 5,462,000 stock options and restricted stock units (RSU) to the permanent employees in the management cadre and Managing/Whole time Directors of the Company and its subsidiary companies in India and abroad, in one or more tranches. The ESOS 2013 is administered by the Compensation Committee of the Board of Directors of the Company ("the Committee"). The option exercise price would be determined by the Committee whereas the RSU exercise price shall be the face value of the equity shares of the Company as on the date of grant of RSUs. Each option and each RSU entitles the holders to apply for and be allotted one fully paid-up equity share of Rs. 1/- each of the Company upon payment of exercise price during exercise period. The options will vest in 4 equal annual instalments after one year of the date of grant whereas RSU will vest at the end of three years from the date of grant. The maximum period of exercise is 5 years from the date of vesting and these option/ RSU do not carry rights to dividends or voting rights till the date of exercise. Further, cancelled/ lapsed options and RSU are also available for grant.

In terms of ESOS 2013, during the year ended 31st March, 2014 the Company has granted 1,930,004 stock options and 1,931,289 RSUs to the eligible employees of the Company and some of its subsidiary companies.

Disclosure pursuant to the provisions of the Securities and Exchange Board of India (Employee Stock Option Scheme) Guidelines, 1999 is given in Annexure –A.

FINANCE

We continued with further fi nancing initiatives to strengthen our balance sheet and progress on the chartered growth path. During the year, Your Company refi nanced project loans for all three greenfield projects and this resulted in an annual savings to the tune of Rs. 350 Crore in interest payments.

In accordance with the provisions of Chapter VII of the SEBI (Issue of Capital and Disclosure Requirements) Regulations 2009, the Company had allotted 150,000,000 warrants on a preferential basis to the Promoter Group on 22nd March, 2012 entitling them to apply for and obtain allotment of one equity share of Rs. 1/- each fully paid-up at a price of Rs. 144.35 per share against each such warrant at any time after the date of allotment but on or before the expiry of 18 months from the date of allotment in one or more tranches for which the Company has received Rs. 541.31 crore being 25% against these warrants. The Promoter Group Companies applied for conversion of warrants into equity shares at predetermined price, accordingly the Company has issued and allotted 150,000,000 equity shares of Rs. 1/- each at a premium of Rs. 143.35 per share on 20th September, 2013 to the Promoter Group on payment of balance amount of these warrants. The entire amount so received has been utilised for various Greenfield and brownfield projects expenditure.

FIXED DEPOSITS

The Company has not accepted any public deposits and, as such, no amount on account of principal or interest on public deposits was outstanding as on the date of the Balance Sheet.

AWARDS & RECOGNITIONS

Renukoot Aluminum Complex wins Greentech HR Platinum Award, in the Best Strategy category, the highest in this segment.

Renukoot Aluminium Complex wins Greentech Silver award for CSR presented by the Greentech Foundation New Delhi

Renukoot Aluminium Complex wins Greentech Platinum Environment Award for environmental excellence, presented by the Greentech Foundation, New Delhi

Renukoot Complex wins the Janeshwar Mishra Exports Award, for 2009-10, First Prize in Engineering & Builders Hardware Category, presented by the Uttar Pradesh Export Promotion Bureau, Department of MSME, Government of U.P. in September 2013.

Renusagar Power Division wins the Greentech Safety Gold Award-2013 in the Thermal Power Sector, presented by the Greentech Foundation, New Delhi, for its outstanding achievements in the field of Occupational Health and Safety.

Renusagar Power Division wins the Safety Innovation Award-2013 in Power Plant category, presented by the Institute of Engineers (India) for its outstanding innovative achievements in the field of Occupational Health and Safety.

Renusagar Power Division Hospital wins the FICCI Healthcare Excellence Award 2013''.

Dahej Copper Complex wins Greentech Environment Platinum Award 2013, for its environmental initiatives such as water conservation by recycling of plant effl uents, utilization of solid wastes, installation of continuous ambient air quality monitoring stations, development of green belt at plant and township .

Dahej Copper Complex wins Greentech Silver Award-2013 for its outstanding CSR work in the 85 surrounding Government Schools, where Dahej has contributed towards improvement in education.

Hirakud Smelter wins the CII (ER) Quality Award in the Large & Medium Scale category, in recognition of its pursuit of Total Quality Management.

Hirakud Smelter wins 2nd Prize in Longest Accident free period till 2009 from Directorate of Factories & Boilers, presented at Bhubaneswar in February 2014

Talabira-I Coal Mines wins the IME Journal Mining Innovation Award 2012 for Innovative Mine Development and Production System with blast free coal mining

Taloja Rolling Plant was awarded the Employers'' Federation of India (EFI) National Award- 2013, for Excellence in Employee Relations.

Taloja Rolling Plant wins National Safety Awards presented by the National Safety Council (Maharashtra Chapter) for Longest Accident Free Period 2012 and Lowest Accident Frequency Rate, 2012.

Taloja Rolling Plant awarded Best Supplier in aluminum metal category by Tata Toyo Radiators for the year 2013-14.

Alupuram Extrusions team earned third place in the Productivity Competition conducted by the Indian Institution of Industrial Engineering, Kerala Chapter, held in April 2013.

Muri Alumina Plant wins Greentech Environment Gold Award for environmental excellence, in recognition of its achieving a major target to reduce water and energy consumption.

Belgaum Alumina Plant wins the Government of Karnataka State Export Excellence Gold Awards, under the product category Chemicals & Plastics for medium/large enterprises for the years 2011-12 and 2012-13. The award was presented on 21st February 2014.

Belgaum Plant - Boilers is awarded "First Prize" in "Best Safe Industrial Boiler", by the Karnataka State Safety Institute, Department of Factories & Boilers, Government of Karnataka, at the State Level Safety Competition held on the eve of 43rd National Safety Day Celebrations - 2014.

Lohardaga Mines Division wins 1st Prize of Overall performance during Metalliferous Mine Safety Week Celebration-2013 held under the aegis of Directorate General of Mines Safety, Ranchi Region.

Lohardaga Mines Division wins 1st and 2nd Prize respectively of Overall performance under the category of Fully Mechanized mines during Mine Environment and Mineral Conservation Week Celebration 2013-14, held under the aegis of Indian Bureau of Mines, Ranchi Region.

ENVIRONMENT PROTECTION AND POLLUTION CONTROL

Your Company is committed to sustainable development. Your Company is a signatory to the Global Compact and subscribes to the principle of triple-bottom line accountability.

A separate chapter in this report deals at length with your Company''s initiatives and commitment to environment conservation.

HUMAN RESOURCES

Several innovative people - focused initiatives have been instituted at the Group level, and these are translated into action at all of the Group Companies. Our basic objective is to ensure that a robust talent pipeline and a high-performance culture, centredaround accountability is in place. We feel this is critical to enable us retain our competitive edge.

CORPORATE GOVERNANCE

Your Directors reaffirm their continued commitment to good corporate governance practices. Your Company fully adheres to the standards set out by the Securities and Exchange Board of India for Corporate Governance practices and has implemented all of its stipulations.

As required by Clause 49 of the Listing Agreement of Stock Exchanges, a separate section on Corporate Governance, together with a certifi cate from your Company''s statutory auditors, forms part of this Annual Report.

There has been news item about pending investigation in respect of allocation of a coal block to the Company. Your Directors wish to reassure you that the project fully deserved allocation of coal block on its own merits and that no illegality has been committed in this regard. Your Company has produced all documents in support thereof to the investigating agencies.

BUSINESS RESPONSIBILITY REPORT

As per Clause 55 of the Listing Agreement with the Stock Exchanges, a separate section of Business Responsibility Report forms part of this Annual Report.

DIRECTORS'' RESPONSIBILITY STATEMENT

As stipulated in Section 217(2AA) of the Companies Act, 1956, your Directors subscribe to the "Directors'' Responsibility Statement" and confirm that:

i) in the preparation of the annual accounts, the applicable accounting standards have been followed along with proper explanation relating to material departures;

ii) the accounting policies selected have been applied consistently, and judgements and estimates are made that are reasonable and prudent so as to give a true and fair view of the state of affairs of your Company as at the end of the financial year and of the profi t or loss of your Company for that period;

iii) proper and suffi cient care has been taken for the maintenance of adequate accounting records in accordance with the provisions of this Act for safeguarding the assets of your Company and for preventing and detecting fraud, and other irregularities; and

iv) the annual accounts have been prepared on a going concern basis.

CONSOLIDATED FINANCIAL STATEMENTS AND RESULTS OF SUBSIDIARY COMPANIES

Consolidated Financial Statements have been prepared by your Company in accordance with the applicable Accounting Standards (AS-21, AS-23 and AS-27) issued by the Institute of Chartered Accountants of India and the provisions of the listing agreement with the Stock Exchanges. Together with the Auditors'' Report, these form part of the Annual Report.

In terms of the General Circular of the Ministry of Corporate Affairs (MCA), Government of India, the copy of Balance Sheet, Statement of Profi t and Loss, Directors'' Report, Auditors'' Report, etc., of the subsidiary companies is not attached with the Annual Report of the Company. The related information on the Annual Accounts of the subsidiary companies shall be made available to the shareholders of the Company and of the subsidiary companies, who shall seek such information at any point of time. The Annual Accounts of the subsidiary companies will also be kept for inspection by any shareholder at the Registered Offi ce of the Company and that of the subsidiary companies concerned. The Statement pursuant to Section 212 of the Companies Act, 1956, containing the details of the Company''s subsidiaries and the gist of the financial performance of the subsidiary companies forms part of the Consolidated Financial Statements of this Annual Report.

Novelis Inc (wholly owned subsidiary)

Shipments of fl at rolled products increased from 2,786 kt in fiscal 2013 to 2,895 kt in fiscal 2014. The recent rolling expansion in Pindamonhangaba (Pinda) facility, coupled with the strong demand in Brazil, contributed to the higher shipments and strong operating results in South America. Shipments were also up in Europe in fiscal 2014 compared to fiscal 2013, driven by higher automotive and can product shipments. The recent rolling expansion project in South Korea contributed to the higher shipment levels in Asia region. Shipments in North America were down compared to the prior year, as can product shipments were lower.

Under US GAAP, Novelis reported "Net income" of $104 million for the year ended March 31, 2014, compared to $203 million in the year ended March 31, 2013. Cash fl ow provided by operating activities was $702 million compared to $203 million in the previous year.

Aditya Birla Minerals Limited (51 per cent subsidiary)

Aditya Birla Minerals Limited, Australia reported a net loss of AUD 0.2 million in FY14 compared to loss of AUD 8.3 million in FY13. Mount Gordon mines operations is currently placed under care and maintenance and various strategic options are being evaluated including divestment. Nifty mines is currently under suspension post development of a sink hole on March 20, 2014.

PARTICULARS AS PER SECTION 217 OF THE COMPANIES ACT, 1956

Information on Conservation of Energy, Technology Absorption and Foreign Exchange Earnings and Outgo, stipulated under Section 217(1)(e) of the Companies Act, 1956, is set out in a separate statement, attached to this Report and forms part of it as Annexure "B".

In accordance with the provisions of Section 217(2A) of the Companies Act, 1956, read with the Companies (Particulars of Employees) Rules, 1975, as amended, the names and other particulars of employees are to be set out in the annexure to the Directors'' Report. Having regard to the provisions of Section 219(1)(b)(iv) of the said Act, the Report and Accounts as set out therein are being sent to all members of the Company excluding the information about the employees. Any member, interested in obtaining such particulars, may write to the Company Secretary at the Registered Offi ce of the Company.

AUDITORS

The observations made in the Auditors'' Report are self- explanatory and do not call for any further comments under Section 217 (3) of the Companies Act, 1956.

COST AUDITORS

The Board of Directors of your Company have on the recommendation of Audit Committee appointed M/s R. Nanabhoy & Co. Cost Accountants, Mumbai to conduct the cost audit of your Company for the financial year ending 31st March, 2015 at a remuneration as Mentioned in the Notice convening the AGM, subject to ratifi cation of remuneration by Members of your Company.

The Audit Committee has received a certifi cate from Cost Auditors certifying their independence and arm''s length relationship with your Company in accordance with the Companies (Cost Audit Report) Rules 2011 the due date for fi ling Cost Audit Report in XBRL for the financial year ended 31st March 2013 was 30th September 2013 vide SRN No. S22374656 with the Ministry of Corporate Affairs, New Delhi.

APPRECIATION

Your Directors place on record their sincere appreciation for the assistance and guidance provided by the Honorable Ministers, Secretaries and other offi cials of the Ministry of Mines, Ministry of Coal, the Ministry of Chemicals and Fertilizers and various State Governments. Your Directors thank the Financial

Institutions and Banks associated with your Company for their support as well.

Your Company''s employees are instrumental in your Company scaling new heights, year after year. Their commitment and contribution is deeply acknowledged.

Your involvement as Shareholders is greatly valued. Your Directors look forward to your continuing support.

For and on behalf of the Board

D. Bhattacharya – Managing Director

M.M. Bhagat – Director

Mumbai

Dated : 29th day of May, 2014


Mar 31, 2013

Dear Shareholders,

The Directors are pleased to present the 54th Annual Report along with the audited annual standalone and consolidated accounts of your Company for the year ended 31st March, 2013.

1. Financial Performance

The FY 13 was one of the toughest years for non-ferrous metal industry. Globally Aluminum prices continued to remain depressed, plagued with overcapacity, inventory overhang to add to the weak sentiments for the commodities.

In the Indian context, slowdown in manufacturing sector and power sector impacted demand in a low pricing (LME) scenario, the cost continued to remain high, primarily driven by high crude prices. While the prices of crude and its derivatives continued to remain globally high, depreciating rupee resulted in an additional burden. The coal prices continued to increase in India, even as the Global coal prices cooled off.

Financial Performance Summary (Rs. Crore)

Standalone Consolidated

Year Year Year Year Ended Ended Ended Ended Particulars 31/03/2013 31/03/2012 31/03/2013 31/03/2012

Revenue from Operations 26,057 26,597 80,193 80,821

EBITDA 2,204 3,105 7,837 8,184 Other income 983 616 1,012 783

Profit Before Interest, Tax, Depreciation and Amortisation 3,187 3,721 8,849 8,967

Depreciation 704 690 2,861 2,864

Finance Costs 436 294 2,079 1,758

Profit Before Tax 2,047 2,737 3,909 4,345

Tax Expenses 348 500 886 786

Net Profit Before Minority Interest and Share in Associates 1,699 2,237 3,023 3,559

Share in Profit/(Loss) of Associates (Net) (16) 50

Minority Interest (20) 211

Net Profit for the Period 1,699 2,237 3,027 3,397

Basic EPS 8.88 11.69 15.81 17.74

2. Standalone Results

The Standalone revenue for the year is flat at Rs. 26,057 crore as in FY 12. Profit before interest and depreciation was Rs. 3,187 crore vs. Rs. 3,721 crore in FY 12. This was achieved despite a significantly lower LME and a constant escalation of input costs, largely mitigated by improved efficiencies and higher other income.

Net profit for the year stood at Rs. 1,699 crore vs. Rs. 2,237 crore in FY 12.

The Financial Year 2013 was marked by consistently low Aluminium LME and constantly increasing costs. As a result, Aluminium companies across the globe suffered during this year. However, Hindalco was able to mitigate impact of the above factors by improved efficiencies and higher volumes. Consequently, the Company''s results in this business segment stand out on almost every parameter in the peer group - both domestic and international.

3. Consolidated Results

Despite a sluggish market and headwinds in all businesses of the Company, the Consolidated Revenue as well as Profit before Depreciation, Interest and Tax for the year at Rs. 80,193 and Rs. 8,849 crore, respectively, compare well with last year''s corresponding figures. With regard to segment results, Aluminium Segment has done particularly well by maintaining its EBIT at Rs. 4,388 crore on consolidated basis.

Net profit attributable to the shareholders stood at Rs. 3,027 crore.

4. Dividend

For the year ended 31st March, 2013, the Board of Directors of the Company have recommended dividend of Rs. 1.40 per share (Previous year Rs. 1.55 per share) to equity shareholders aggregating to Rs. 313.60 crore (Previous year Rs. 344.89 crore) including Dividend Distribution Tax of Rs. 45.56 crore for the year ended 31 st March, 2013.

5. Appropriations:

Allocation and Appropriations of surplus in the statement of Profit and Loss account in FY13 are as under:

Summary of appropriation FY 13 FY 12 of Profit and Loss Account

Balance as at the beginning of the year 400.00 350.00

Add: Profit for the year 1,699.20 2,237.20

Less: Transferred to Debenture Redemption Reserve (150.00) -

Less: Dividend on Equity Shares - (a) (268.05) (296.76)

Less: Dividend Distribution Tax - (a) & (b) (31.67) (38.41)

Less: Transferred to General Reserve (899.48) (1,852.03)

Balance as at the end of the year 750.00 400.00

(a) Dividend on Equity Shares and Tax on Dividend include Rs. 0.01 crore (Previous year Rs. 0.01 crore) pertaining to previous year for Equity shares issued before the record date of dividend.

(b) Tax on Dividend is net of Rs. 13.89 crore (Previous year Rs. 9.73 crore) being dividend distribution tax paid by a subsidiary.

6. Growth Plans underway in Aluminium

Your Company is pursuing various brownfield and greenfield growth oppurtunities in Aluminium as described below:

Projects - in India

Estimated Actual or estimated Capacity Location Description of Expansion (at full Commission Date/ capacity) Progress Update

Hirakud, Odisha Smelter Expansion 52 Kt

Captive Power Plant 100 MW Under Commissioning Expansion

Rolling Plant 135 Kt Partially Commissioned

Rayagada, Odisha Alumina Refinery 1500 Kt

(Utkal Alumina) Under Commissioning Captive Power Plant 90 MW

Bargawan, Aluminium Smelter 360 Kt First Metal Tapped, Madhya Pradesh commissioning being (Mahan Aluminium) Captive Power Plant 900 MW undertaken in phased manner

Lapanga, Odisha Aluminium Smelter 360 Kt 2013

(Aditya Aluminium) Captive Power Plant 900 MW

All these ongoing projects of the Company with a cumulative investment of around Rs. 28,000 crores have either been commissioned or are in advanced stages of commissioning/implementation.

Project - Overseas

Estimated Actual or Estimated Capacity Location Description of Expansion (at full Commission Date/ capacity) Progress Update

North America

Oswego, NY Automotive Sheet 200 Kt Mid CY 2013

Finishing Plant

Europe

Nachterstedit, Germany Recycling Expansion 250 Kt Mid CY 2014

Asia

Ulsan and Yeoungiu, Rolling Expansion 350 Kt Mid CY 2013 South Korea

Yeoungiu, South Korea Recycling Expansion 265 Kt October 12

Changzhou, China Automotive Sheet 120 Kt End CY 2014 Finishing Plant

South America

Pinda Brazil Rolling Expansion 220 Kt December 12

Pinda, Brazil Can coating line 100 Kt End CY 2013

Pinda, Brazil Recycling expansion 190 Kt End CY 2013

7. Finance

Financial closure of Aditya Smelter was achieved of Rs. 9,896 crore. The tenure of the loan has been kept at 12.50 years to allow the project to have enough operational cash surplus for servicing the loan. The Company received an overwhelming response from the lenders despite a tight credit market.

Debenture Issue: To further augment financial resources, the Company has issued 10-year 9.55 per cent and 9.60 per cent secured redeemable non-convertible debentures for a total amount of Rs. 4,500 crore and Rs. 1,500 crore respectively on private placement basis. These debentures are listed on the wholesale debt market segment of National Stock Exchange (NSE). Repayment of Term Loan: During the year, your Company also repaid the loan taken earlier of Rs. 5,143 crore.

8. Consolidated Financial Statements

In accordance with Accounting Standards AS-21 on Consolidated Financial Statements read with Accounting Standard AS-23 on Accounting for investments in Associates and AS-27 on Financial Reporting of Interest in Joint Ventures, the audited Consolidated Financial Statements are provided in the Annual Report.

9. Management Discussion and Analysis Report

The Management Discussion and Analysis Report forming part of Directors'' Report for the year under review, as stipulated under Clause 49 of the Listing Agreement with the Stock Exchange(s), forms part of the Annual Report. The report provides a strategic direction and a more detailed analysis on the performance of individual businesses and their outlook.

10. Corporate Governance

Your Directors reaffirm their commitment to the corporate governance standards as prescribed by the Listing Agreement with the Stock Exchange(s). A separate section on Corporate Governance together with a certificate from the Auditors of the Company regarding full compliance of conditions of Corporate Governance as stipulated under Clause 49 of the Listing Agreement forms part of the Annual Report.

11. Directors'' Responsibility Statement

Your Directors affirm that the audited accounts containing financial statements for the financial year 2012-13 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 were audited by the statutory auditors of the Company, M/s. Singhi & Co., Chartered Accountants.

Your Directors further confirm that:

(i) In the preparation of the annual accounts, the applicable accounting standards have been followed, along with proper expl anations rel ating to material departures, if any;

(ii) the accounting policies have been selected and applied consistently and judgements and estimates have been made that are reasonable and prudent so as to give a true and fair view of the state of affairs of the Company at the end of the financial year and of the profit of the Company for the financial year;

(iii) proper and sufficient care has been taken 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; and

(iv) the annual accounts have been prepared on a going-concern basis.

Your Company''s internal Auditors have conducted periodic audits to provide reasonable assurance that the established policies and procedures have been followed.

12. Novelis Inc. (wholly owned subsidiary)

The performance of Novelis was negatively impacted by pricing pressures from competitors, supply chain disruptions due to the implementation of a new ERP system in two North American plants, as well as production challenges and softer demand.

Shipments of flat rolled products are marginally lower at 2,786 Kt for the year ended 31st March, 2013, compared to 2,838 Kt in the prior year. Net sales was 11% lower, primarily driven by a 15% decline in average aluminium prices and a fall in flat rolled product volumes by 2%.

13. Aditya Birla Minerals Limited (51 per cent subsidiary)

The Company''s copper production extended by 16% mainly on account of restart of Mt Gordon mine. Sales volume is up by 14% compared to the previous year. The revenue in value terms was sustained. Profitability was adversely affected given lower realisation of copper compared to the previous year and higher average unit cost of production, because of higher volume from Mt Gordon operations at higher cost.

At Nifty, the ore mined was 2.27 million tonnes up by 8% over the previous year. At Mt Gordon, the ore mined was 1.10 million tonnes representing a step up of 59% over the previous year.

Mt Gordon mines operations is currently placed under care and maintenance.

14. Employee Stock Options Scheme ESOS-2006

The shareholders of the Company has approved an Employee Stock Options Scheme ("ESOS-2006"), formulated by the Company, under which the Company may issue 6,475,000 options to its permanent employees in the management cadre, in one or more tranches, whether working in India or out of India, including the Whole-Time Directors of the Company. Each option when exercised would be converted into one fully paid-up equity share of Rs. 1/- each of the Company. The ES0S-2006 is administered by the Compensation Committee of the Board of Directors of the Company ("the Committee"). Under the ESOS 2006, the Committee has granted 3,545,550 options to its eligible employees in three tranches. Disclosure pursuant to the provisions of the Securities and Exchange Board of India (Employee Stock Options Scheme) Guidelines, 1999, is given in Annexure-A.

ES0S-2013

At a meeting held on 28th May, 2013, the Board of Directors approved the formulation of a new Employee Stock Options Scheme, viz., "Hindalco Industries Limited Employee Stock Options Scheme-2013" (ESOS-2013) in terms of the SEBI Guidelines. The Board mandated the existing ESOS Compensation Committee to implement and administer the ESOS-2013. Resolutions seeking your approval for introduction and implementation of ESOS- 2013 and granting such number of Stock Options exercisable into not more than 54,62,000 equity shares of Rs. 1/- each to the permanent employees, including any Managing or Whole-time Director(s) of your Company and its holding and/or subsidiary companies are included in the Notice convening the Annual General Meeting together with the Explanatory Statement.

15. Particulars as per Section 217 of the Companies Act, 1956

The information relating to the conservation of Energy, Technology Absorption and Foreign Exchange Earnings and Outgo required under Section 217 (1)(e) of the Companies Act, 1956, is set out in a separate statement attached to this report (Annexure B).

In accordance with the provisions of Sections 217 (2A), read with the Companies (Particulars of Employees) Rules, 1975, the names and other particulars of employees are to be set out in the Directors'' Report, as an addendum thereto. However, as per the provisions of Section 219 (1)(b)(iv) of the Companies Act, 1956, the report and accounts, as therein set out, are being sent to all members of the Company excluding the aforesaid information about employees. Any member, who is interested in obtaining such particulars about employees, may write to the Company Secretary at the Registered Office of the Company.

16. Fixed Deposits

The Company has not accepted any public deposits and, as such, no amount on account of principal or interest on public deposits was outstanding as on the date of the Balance Sheet.

17. Directors

In accordance with Article 146 of the Articles of Association of the Company, Mr. Kumar Mangalam Birla, Mr. Askaran Agarwala retire from office by rotation and, being eligible, offer themselves for reappointment.

Mr. Jagdish Khattar was appointed as a Director in casual vacancy caused due to demise of Mr. E.B. Desai and holds office upto the forthcoming Annual General Meeting, and is eligible for reappointment.

The term of appointment of Mr. D. Bhattacharya as Managing Director is expiring on 30th September, 2013. The Board has reappointed him as Managing Director for the further period of five years w.e.f 30th September, 2013. The approval of the members in the ensuing Annual General Meeting would be sought for his reappointment.

During the year, Mr. Satish Pai was appointed as an Additional Director under Section 260 of the Companies Act, 1956, and as a Whole-time Director for a period of five years. The approval of the members in the ensuing Annual General Meeting would be sought for his appointment, subject to approval of Central Government.

18. Awards and Recognitions

Several accolades have been conferred upon your Company, in recognition of its contribution in diverse fields. A selective list:

- Renukoot Complex wins Greentech Safety Gold Award-2012 in the Mining & Metals category, for exemplary efforts towards Occupational Health and Safety, presented by Greentech Foundation, New Delhi.

- Renukoot Complex wins the Safety Innovation Award-2012, for implementing innovative safety management systems, presented by the The Institute of Engineers (India).

- Renukoot Complex wins the Greentech CSR Gold Award-2012, presented by Greentech Foundation, New Delhi. The award recognises the noteworthy efforts towards "Land and Watershed Management" carried out in various villages surrounding Renukoot, Renusagar and Mines Division - Jharkhand & Chattisgarh.

- Renukoot Complex wins the Greentech Environment Excellence Gold Award-2012 under the category of Mining & Metal Sector for its outstanding efforts towards Environment Management by Greentech Foundation, New Delhi.

- Renukoot Complex is conferred the Golden Peacock National Quality Award- 2012, in the Mining & Metals sector, presented by the Institute of Directors, for its efforts towards "Quality", meeting international parameters.

- Renukoot Complex wins Greentech Platinum Award for Best HR Practices 2012-13, in the Best Strategy category, presented by Greentech Foundation, New Delhi.

- Renusagar Power Plant wins the Greentech Environment Excellence Gold Award-2012, for the fifth consecutive year, for its outstanding contribution towards Environment Management System, presented by Greentech Foundation, New Delhi.

- Renusagar Power Plant wins Greentech Safety Gold Award-2012, in the power Plant category, for exemplary efforts in Occupational Health and Safety, presented by Greentech Foundation, New Delhi.

- Renusagar Power Division wins the Safety Innovation Award-2012, in the Power Sector category, for outstanding achievement in safety management, presented by Institute of Directors.

- Renusagar was awarded the Greentech Training Excellence Gold Award-2012 and 3rd Annual Greentech HR Award-2013 for Training Excellence, by Greentech Foundation, Delhi.

- Dahej Harbour & Infrastructure Ltd. (DHIL), wins the Gujarat Star Award (Runners Up) 2011-12, as the "Dry Bulk/ Break Bulk Handling Port of the Year", for its impressive performance and improvements in the areas of vessel turnaround time in port, increased productivity and accident-free operations.

- Dahej Copper Complex wins the Greentech Gold Environment Award- 2012, for its outstanding achievement in Environment Management.

- Muri Alumina Plant wins the Greentech Gold Environment Award-2012, presented by Greentech Foundation, New Delhi.

- Hirakud Power Plant wins CII Odisha Award- 2012 (2nd Runners Up), for Best Practices in Environment, Safety and Health.

- Taloja Rolling Plant wins the overall title for "Maharashtra Safety Awards-2011", competition organised by the National Safety Council - Maharashtra Chapter, in the Heavy Engineering category for its commendable safety performance, Scheme-I, Lowest Average Accident Frequency Rate.

- The Quality Circles from Renukoot earned Six Gold Medals and one Silver Medal at the Kanpur Chapter Convention.

- The Quality Circles of Renusagar earned "Par Excellence" awards at the national convention of Quality Circle Forum of India.

- Quality Circle of Birla Copper Dahej won the Bronze medal at Gujarat State Level Quality Circle Competition-2012, organised by Quality Circle Forum of India.

- Hirakud Quality Circle won the Best Analysis & Process Award at the 17th All Odisha Quality Circle Convention.

- Hirakud members earned the Certificate of Appreciation at the 12th CII National Supervisory Skill Competition in Repair & Maintenance Category.

Jharkhand & Chhattisgarh Mines Division

- National Safety Awards for 2009-10 and 2010-11 presented to Samri Mines Division during 2012.

- Overall Best in Mines Safety Week-2012 and "Minerals Exploration & Minerals Conservation Week-2012 Award" to Bagru Hill Bauxite Mines during 2012-13, for Ranchi region.

- Mr. D Bhattacharya, Managing Director, received the "Fray International Sustainability Award" for leadership in developing & applying new innovative business plans & operations for sustainability development of the Company in the environmental economic & social point of view.

19. Environment Protection and Pollution Control

Your Company is committed to sustainable development. A separate chapter in this report deals at length with your Company''s initiatives and commitment to environment conservation.

20. Auditors

The observations made in the Auditors'' Report are self-explanatory and do not call for any further comments under Section 217 (3) of the Companies Act, 1956.

M/s. Singhi & Company, Chartered Accountants and Auditors of the Company, retire, and being eligible, offer themselves for appointment.

Cost Auditors

For the Financial Year 2012-13 M/s R. Nanabhoy & Co. and M/s Mani & Co. were joint cost auditors of the Company. For timely completion of Company level audit as per the new cost audit rules and to avoid coordination and logistical issues, your directors have appointed a single cost auditor, M/s. R. Nanabhoy & Co.

In pursuance to Section 233 B (2) of the Companies Act, 1956, read with Ministry of Corporate Affairs, Cost Audit Branch Order dated 6th November 2012, your directors have appointed M/s. R. Nanabhoy & Co, cost accountants as Cost Auditors, subject to approval of the Central Government, to conduct cost audit of the Company, for the financial year 2013-14, pertaining to products or activities related to Aluminium and Aluminium Products, Inorganic Chemical and their Derivatives, Mineral Products, Miscellaneous Chemical Products, Copper and Copper Products, Pearl, Diamonds, Stones and Jewellery Articles, Mineral / Chemical Fertilizers - Others, and any other products as are covered under the subject Order of Ministry of Corporate Affairs.

The due date for filing Cost Audit Reports for the Financial Year 2011-12 was February 28, 2013 and the same was filed by the Cost Auditors on January 20, 2013.

21. General Exemption under Section 212(8) of the Companies Act, 1956

The Ministry of Corporate Affairs, Government of India vide its Circular No.5/12/2007-CL-III dated 8th February , 2011 has granted general exemption under Section 212(8) of the Companies Act, 1956, from attaching the balance sheet, profit and loss account and other documents of the subsidiary companies to the balance sheet of the Company provided certain conditions are fulfilled. The Company has satisfied the conditions stipulated in the Circular and hence is entitled to the exemption. However annual accounts of the subsidiary companies and the related detailed information will be made available to the holding and subsidiary companies investor''s seeking such information at any point of time. The annual accounts of the subsidiary companies are available for inspection by any shareholder''s at the Registered office of the Company. The annual accounts of the subsidiary companies are also available for inspection at their respective registered office. Further, in line with the Listing Agreement and in accordance with the Accounting Standard 21 (AS-21), the Consolidated Financial Statements prepared by the Company include financial information of its subsidiaries.

22. Appreciation

Your Directors place on record their sincere appreciation for the assistance and guidance provided by the Honorable Ministers, Secretaries and other officials of the Ministry of Mines, Ministry of Coal, the Ministry of Chemicals and Fertilizers and various State Governments. Your Directors thank the Financial Institutions and Banks associated with your Company for their support as well.

Your Company''s employees are instrumental in your Company scaling new heights, year after year. Their commitment and contribution is deeply acknowledged.

Your involvement as Shareholders is greatly valued. Your Directors look forward to your continuing support.

For and on behalf of the Board

Mumbai Chairman

Dated 13th August, 2013


Mar 31, 2012

The Directors are pleased to present the 53rd Annual Report alongwith the audited annual Standalone and Consolidated accounts of your Company for the year ended 31st March, 2012.

1. Financial Performance

Your Company's Consolidated Revenue crossed Rs. 80,000 crore up 12% and Consolidated Net Income is at a record Rs. 3,397 crore reflecting a rise of 38%

Financial Performance Summary (Rs. Crore)

Standalone Consolidated Year Year Year Year ended ended ended ended Particulars 31/03/2012 31/03/2011 31/03/2012 31/03/2011

Revenue from Operations 26,597 23,859 80,821 72,202

Profit from Operations before Other Income and Finance Costs 2,415 2,467 5,320 5,169

Other Income 616 347 783 513

Profit before Finance Costs 3,031 2,815 6,103 5,683

Finance Costs 294 220 1,758 1,839

Profit before Tax 2,737 2,595 4,345 3,843

Tax Expenses 500 458 786 964

Profit before Minority Interest and Share in Associates 2,237 2,137 3,558 2,879

Share in Profit/ (Loss) of Associates (Net) - - 50 (57)

Profit before Minority Interest 2,237 2,137 3,608 2,822

Minority Interest - - 211 366

Net Profit for the Period 2,237 2,137 3,397 2,456

2. Standalone Results

Standalone Revenues for the year crossed the Rs. 25,000 crore mark and stood at Rs. 26,597 crore driven by higher volume and realisation.

Profit before Interest and Depreciation was Rs. 3,721 crore, an increase of over 6% compared to FY11, driven by higher volumes in the Aluminium business and higher TcRc in the Copper Business, alongwith improved efficiencies and higher other income.

In the Aluminium Business, there has been a significant increase in costs, especially in case of Coal (by 20%), Furnace oil (by 40%), Caustic Soda (by 25%) and Carbon (30%). The cost surge was partly offset by asset- sweating and improving operational efficiencies, coupled with better realisation. The Profit before Interest and Taxes was at Rs. 1,822 crore for FY12 compared to Rs. 2,004 crore in FY11.

In the Copper Business, revenues stood at Rs. 17,560 crore compared to Rs. 15,897 crore in FY11, due to higher LME and by-product revenue. Profit before interest and taxes was higher by 33% to Rs. 802 crore, due to improved efficiencies, higher TcRc and by- product credit, notwithstanding higher energy costs and a planned shutdown in FY12.

3. Consolidated Results

Hindalco's consolidated Revenue at Rs. 80,821 crore has been the highest ever.

Aided by better product mix and the depreciation of the Rupee Profit before depreciation, interest and taxes stood at Rs. 8,973 crore as against Rs. 8,441 crore in FY11.

Net profit attributable to the shareholders increased to Rs. 3,397 crore, up by 38% over FY11, this is primarily attributable to the strong performance at Novelis and Copper Business in India.

Despite economic headwinds, the balanced portfolio approach, low cost operation and strong value added downstream operations resulted in a commendable performance. With low cost advantage and strong downstream presence, Hindalco is well set for being the Last Man Standing and First Man Forward.

Segment Performance

Of the total annual revenue of Rs. 80,821 crore, Aluminium Business contributed to Rs. 62,059 crore, up 10% over the last year. Aluminium EBIT for FY12 remained flat at Rs. 4,495 crore vis-a-vis to Rs. 4,469 crore in FY11. The results were impacted by lower profits in Indian Aluminium operation due to macro-economic conditions.

In the Copper Business, revenue is higher at Rs. 18,364 crore, a rise of 16% from Rs. 15,882 crore in FY11, mainly on account of higher volumes, higher copper LME and by-product credits. EBIT of Rs. 1,119 crore vs. Rs. 1,082 crore in FY11.

4. Changes in Accounting Policy

Effective from the Financial Year 2011-12, the Company has changed its accounting policy for preparation of the consolidated financial statements relating to actuarial gains or losses arising out of actuarial valuation of long term employee benefits and post employment

benefits with respect to one of its overseas subsidiaries (Novelis Inc.). Until the previous year, the amount of actuarial gains or losses was accounted through the Statement of Profit and Loss. Consequent to the change in accounting policy, actuarial gains or losses along with related deferred tax have been adjusted against Reserves and Surplus. This is a non-cash item. Had the Company not changed the accounting policy as above, the Employee Benefits Expenses would have been higher by Rs. 1,014.91 crore, Tax Expenses would have been lower by Rs. 299.88 crore, Net Profit for the year would have been lower by Rs. 715.03 crore and Foreign Currency Translation Reserve in Reserves and Surplus would have been lower by Rs. 44.39 crore.

5. Business Reconstruction Reserve

Pursuant to a court approved scheme of financial restructuring under sections 391 to 394 of the Companies Act 1956, Business Reconstruction Reserve (BRR) was established during 2008-09 for adjustment of certain specified expenses. Accordingly, costs in connection with exiting certain business during the year have been adjusted against the BRR in the consolidated financial statements. Had this adjustment not been done, Other Expenses would have been higher by Rs. 536.33 crore, Tax Expenses would have been lower by Rs. 35.86 crore and Net Profit for the year would have been lower by Rs. 500.47 crore. A summary of adjustments made so far against BRR is given in the following table:

(Rs. in Crore) Standalone 2008-09 2009-10 2010-11 2011-12

Opening Balance 8,580.39 8,580.39 8,580.39

Add: Transfer from Securities Premium Account as per the Scheme 8,647.37

Less: Adjustment made:

(a) Impairment loss - - - - / (reversal of impairment loss) of goodwill arising on consolidation of Novelis Inc. while preparing consolidated accounts of the Group

(b) Impairment of fixed assets 66.80 - - -

(c) Interest and Finance Charges on loan taken by A V Minerals (Netherlands) B. V., a subsidiary of the Company, for acquisition of Novelis Inc. by the Company - - - -

(d) Costs in connection with exiting business - - - -

(e) Certain costs in connection with the Scheme 0.18 - - -

Closing Balance 8,580.39 8,580.39 8,580.39 8,580.39

Consolidated 2008-09 2009-10 2010-11 2011-12

Opening Balance - 4,030.50 3,726.11 7,165.40

Add: Transfer from Securities Premium Account as per the Scheme 8,647.37

Less: Adjustment Mad:

(a) Impairment loss/ (reversal of impairment loss) of goodwill arising on consolidation of Novelis Inc. while perparing consolidated accounts of the Group 3,597.30 - (3,597.30) -

(b) Impairment of fixed assets 111.30 - - -

(c) Interest and Finance Charges on long taken by A V Minerals (Netherlands) B V a subsidiary of the Company for acquistion of Novelis Inc, by the Company 544.47 304.39 158.01 -

(d) Costs in connection with exiting business 363.62 - - 500.47

(e) Certain costs in connection with the scheme 0.18 - - -

Closing Balance 4,030.50 3,726.11 7,165.0 6,664.93

6. Accounts of Idea Cellular Ltd.

Due to certain exceptional circumstances, the accounts of Idea Cellular Limited (Idea), one of the associates of the Company, were not available and hence could not be consolidated in the accounts for the year ended 31st March, 2011. The Consolidated accounts for the year include Rs. 62.02 crore being the share of profit of the Company in Idea relating to the year ended 31st March, 2011 resulting in the net profit for the current year being higher by the said amount.

7. Dividend

The Board of Directors of the Company have recommended a dividend of Rs. 1.55 per share aggregating to Rs. 344.89 crore (including dividend distribution tax of Rs. 48.14 crore) for the year ended 31st March, 2012.

8. Appropriations

Allocations and Appropriations of Surplus in Statement of Profit and Loss are as under:

Standalone: (Rs. crore)

Surplus in the Statement of Profit and Loss 31/03/2012 31/3/2011

Balance as at the beginning of the year 350.00 300.00

Add: Profit for the year 2,237.20 2,136.92

Less: Dividend on Equity Shares (296.76) (287.17)

Less: Dividend Distribution Tax (38.41) (46.59)

Less: Transfer to General Reserve (1,852.03) (1,753.16)

Balance as at the end of the year 400.00 350.00

9. Growth plans underway in Aluminium

Your Company is aggressively pursuing various brownfield and greenfield growth opportunities in Aluminium as described below:

India

Project Location Capacity Power Plant Timelines

Hirakud smelter expansion Hirakud 161 KTPA to 367 MW to 467 MW 2012 213 KTPA

Hirakud Flat Rolled Hirakud 135 KTPA NA 2012 Products [FRP] project

Utkal Alumina [UAIL] Rayagada, 1.5 mio- tonne 90 MW Captive 2012 Inter national Limited Odisha Alumina Refinery Co-generation Power with integrated Plant Bauxite Mines

Mahan Aluminium Mahan, MP 359 KTPA 900 MW CPP 2012 Aluminium Smelter

Aditya Aluminium Lapanga, 359 KTPA Odisha Aluminium Smelter 900 MW CPP 2013

Aditya Alumina Koraput; Odisha Alumina Refinery 2014 with integrated Bauxite Mines

Jharkhand Aluminium Sonahatu, Aluminium Jharkhand Smelter 2015

These above smelters (Mahan, Aditya, and Jharkhand) have dedicated coal blocks. Both Utkal and Aditya Alumina have captive Bauxite mines. The Financial Closure has been already achieved for UAIL and Mahan Aluminium. The Financial Closure for debt portion of Aditya Aluminium is currently being pursued.

Mahan Coal: The Group of Ministers constituted by the Government of India to consider environmental and developmental issues related to coal mining etc, has recommended the granting of forest clearance by the Ministry of Environment & Forest [MoEF] for the Mahan Coal block on certain conditions. In this regard, further communication from MoEF is awaited.

Brazil: The previously announced expansion of the Pinda facility in Brazil is expected to be commissioned at the end of 2012. Additionally, plans to install a new coating line for beverage can end stock and to expand the recycling capacity in the Pindamonhangaba, Brazil facility are on the anvil.

Asia: The expansion of rolling and recycling capacity in Yeongju, South Korea and Ulsan, South Korea is on schedule and are expected to become operational at the end of 2013.

During the fourth quarter of FY12, an investment of $100 million into an aluminum automotive heat treatment plant in China has been announced, this will have annual capacity of approximately 120 Kt. Construction of the new facility should begin in the fall of 2012 and it is expected that the plant to be operational in late 2014.

10. Finance

Preferential warrants - The Company has allotted 150,000,000 warrants on a preferential basis to the promoters on March 22, 2012, entitling them to apply for and obtain allotment of one equity share of Rs. 1 each at a price of Rs. 144.35 per share against each such warrant at any time on or before the expiry of 18 months from the date of allotment in one or more tranches. The Company has received an amount equal to 25 per cent of the price of each such warrant.

Debenture issue - To further augment its financial resources, the Company has issued 10 year 9.55 per cent Secured Redeemable Non-Convertible Debentures for a total amount of Rs. 3,000 crore on private placement basis on April 25, 2012. These debentures are listed on the wholesale debt market segment of National Stock Exchange (NSE).

Term Loans from Banks Rs. 5,142.99 crore :

As per original loan agreement Rs. 2,146.66 crore, Rs. 2571.49 crore and Rs. 424.84 crore are repayable in FY14, FY15 and FY16, respectively. However, in exercise of its prepayment option without payment of any fees or penalty, the Company has served a notice on all lenders to prepay this loan on June 29, 2012.

11. Consolidated Financial Statements

In accordance with the Accounting Standards AS-21 on Consolidated Financial Statements read with Accounting Standard (AS) - 23 on Accounting for investments in Associates and AS-27 on Financial Reporting of Interest in Joint Ventures, the audited Consolidated Financial Statements are provided in the Annual Report.

12. Management Discussion and Analysis Report

The Management & Discussion Analysis Report forming part of Directors' Report for the year under review, as stipulated under Clause 49 of the Listing Agreement with the Stock Exchange(s), forms part of Annual Report. The report provides a strategic direction and a more detailed analysis on the performance of individual businesses and their outlook.

13. Corporate Governance

Your Directors reaffirm their commitment to the corporate governance standards as prescribed by The Securities and Exchange Board of India (SEBI). A separate section on Corporate Governance together with a certificate from the Auditors of the Company regarding full compliance of conditions of Corporate Governance as stipulated under Clause 49 of the Listing Agreement with the Stock Exchange(s) forms part of Annual Report.

14. Directors' Responsibility Statement

Your Directors affirm that the financial statements for the year 2011-12 are in full conformity with the requirements of the Companies Act, 1956. They believe that the financial statements reflects fairly, the form and substance of transactions carried out during the year and reasonably present the Company's financial condition and results of operations. These financial statements were audited by the statutory auditors of the Company, M/s. Singhi & Co., Chartered Accountants.

Your Directors further confirm that:

1) In the presentation of the financial statements, applicable Accounting Standards have been followed.

2) That the accounting policies are consistently applied, except the changes in accounting policy indicated in paragraph 4 of this report. For preparation of the financial statements certain estimates are made based on reasonable and prudent judgment so as to give a true and fair view of the state of affairs of the Company at the end of the Financial Year.

3) The Directors have taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of the Act for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities.

4) The Directors have prepared the Annual Accounts on a going concern basis.

Your Company's internal Auditors have conducted periodic audits to provide reasonable assurance that established policies and procedures have been followed.

15. Novelis Inc. (Wholly Owned Subsidiary)

Novelis reported strong operating results in FY12 despite challenging market conditions globally. Its premium product portfolio, long- term customer base and focused business model enabled Novelis to produce solid results for the year.

Net sales for FY12 were $11.1 billion, a 5% increase compared to the $10.6 billion reported for the same period a year ago, mainly the result of favourable conversion premiums across all regions and an increase in the average aluminum prices.

Novelis's robust business model, good cost management and focus on premium products resulted in a record EBITDA per tonne of $371 for the year and the second straight year of $1 billion plus adjusted EBITDA. Shipments of aluminium rolled products totalled 2,838 Kt for FY12, compared to 2,969 Kt in FY11. The decrease in shipments was primarily a result of the overall economic slowdown and de-stocking by customers. The continued optimization of Novelis's footprint will improve its competitive position; these include the divesture of three foil plants in Europe and closure of an aluminum sheet mill in Canada. During the year, Novelis invested in major recycling initiatives in all four operating regions, including advanced equipment and technology to process diversified scrap inputs, which will enable the Company to achieve recycled content of 50 percent in its products by 2015.

During FY12, Novelis completed the acquisition of 31.3 percent of the outstanding shares of its Korean subsidiary for $ 344 million raising Novelis's ownership of the Korean subsidiary to 99%.

16. Aditya Birla Minerals Ltd [51% subsidiary]

The production of Copper remained flat at 59.7 Kt in FY12. Net profit for the year was AUD 27 million against AUD 57 million in FY11, impacted by lower production at Nifty on account of the decline in the mine grade (which was in line with the mining plan) and slower-than-expected ramp-up at Mt Gordon.

The performance of your Company's subsidiaries is covered elsewhere in this Annual Report.

The Ministry of Corporate Affairs, Government of India vide its Circular No.5/12/2007-CL-lll dated 8th February, 2011 has granted general exemption under Section 212(8) of the Companies Act,1956, from attaching the balance sheet, profit and loss account and other documents of the subsidiary companies to the balance sheet of the Company provided certain conditions are fulfilled. The Company has satisfied the conditions stipulated in the Circular and hence is entitled to the exemption. However annual accounts of the subsidiary companies and the related detailed information will be made available to the holding and subsidiary companies investor's seeking such information at any point of time. The annual accounts of the subsidiary companies are available for inspection by any shareholder's at the Registered office of the Company. The annual accounts of the subsidiary company is also available for inspection at their respective registered office. Further, in line with the Listing Agreement and in accordance with the Accounting Standard 21 (AS-21), the Consolidated Financial Statements prepared by the Company include financial information of its subsidiaries.

17. Employee Stock Option Scheme

The shareholders of the Company has approved on 23rd January, 2007 an Employee Stock Option Scheme ("ESOS 2006"), formulated by your Company, under which your Company may issue 3,475,000 options to its permanent employees in the management cadre, in one or more tranches, whether working in India or out of India, including its Whole Time Directors. The shareholders have also approved giving discount up to 30% of the average price of the equity shares of the Company in the immediate preceding seven day period on the stock exchange. The ESOS 2006 is administered by the Compensation Committee of the Board of Directors of the Company ("the Committee"). Each option when exercised would be converted into one fully paid-up equity share of Rs. 1/- each of the Company. The options will vest in 4 equal annual instalments after one year of the grant. The maximum period of exercise is 5 years from the date of vesting. Further, forfeited/ lapsed options are available to the Committee for grant. These options do not carry rights to dividends or voting rights till the date of exercise. Further, on 23rd September, 2011 the ESOS 2006 has been partially modified by which the Company may now issue 6,475,000 options.

However, under the ESOS 2006, so far the Committee has granted 3,545,550 options to its eligible employees in three tranches out of which 706,901 options have been forfeited/ lapsed and are available to the Committee for grant as per term of the Scheme.

The compensation cost of stock options granted to employees have been accounted by the Company using the intrinsic value method. Accordingly, Employee benefits expenses includes Rs. 1.29 crore (Previous Year Rs. 1.34 crore) being the amortization of intrinsic value for the year ending 31st March, 2012. Disclosure pursuant to the provisions of the Securities and Exchange Board of India (Employee Stock Option Scheme) Guidelines, 1999 is given in Annexure -A.

18. Particulars as per Section 217 of the Companies Act, 1956 The information relating to the conservation of Energy, Technology Absorption and Foreign Exchange Earnings and Outgo required under section 217 (1)(e) of The Companies Act, 1956, is set out in a separate statement attached to this report (Annexure B).

In accordance with the provisions of Section 217 (2A), read with the Companies (Particulars of Employees) Rules, 1975, the names and other particulars of employees are to be set out in the directors' report, as an addendum thereto. However, as per the provisions of Section 219 (1) (b)(iv) of the Companies Act, 1956, the report and accounts, as therein set out, are being sent to all members of the company excluding the aforesaid information about employees. Any member, who is interested in obtaining such particulars about employees, may write to the Company Secretary at the Registered Office of the company.

19. Fixed Deposits

The Company has not accepted any public deposits and, as such, no amount on account of principal or interest on public deposits was outstanding as on the date of the Balance Sheet.

20. Directors

In accordance with Article 146 of the Articles of Association of the Company, Mrs. Rajashree Birla, Mr. K. N. Bhandari and Mr. N. J. Jhaveri retire from office by rotation, and being eligible, offer themselves for reappointment.

During the year Mr. M. Damodaran was appointed as an Additional Director of the Company w.e.f 16th April, 2012 pursuant to Section 260 of the Companies Act, 1956.

21. Awards & Recognitions

Several accolades have been conferred upon your Company, in recognition of its contribution in diverse fields. A selective list:

1. Hindalco:CII-EXIM Bank Award 2011 (Commendation Certificate) for Business Excellence.

2. Birla Copper Dahej:IMC Ramakrishna Bajaj Quality Award 2011 (Commendation Certificate).

3. Renukoot: Non-Ferrous Best Performance Award 2010-11 by the Indian Institute of Metals, Non-Ferrous Division.

4. Birla Copper Dahej:Environment Protection Award 2011, for NP/NPK Complex Fertilizer Plants, including captive Acids, presented by the Fertilizer Association of India .

5. Renukoot: National Energy Conservation Award 2011, (2nd Prize), presented by the Ministry of Power, Government of India.

6. Renukoof.Greentech Environment Platinum Award 2011 for outstanding achievement in Environment Management, presented by the Greentech Foundation, New Delhi.

7. Renusagar.Golden Peacock National Quality Award 2011 in the Service category.

8. Renusagar:Greentech Gold Safety Award 2011 in the Power Plant category for exemplary efforts towards occupational health & safety, presented by Greentech Foundation, New Delhi.

9. Renusagar:Greentech Environment Excellence Gold Award.

10. Birla Copper Dahej: Greentech Environment Gold Award.

11. Hirakud Smelter:Odisha State Safety Conclave Award 2011.

12. Hirakud Power:Cil Odisha State Award (1st Prize) for best practices in Environment, Health, Safety (ESH) for 2011.

13. Belgaum Alumina Works:Government of Karnataka State Export Excellence Award for the years 2009-10 and 2010-11, presented in March 2012.

14. Quality Circle Teams of Renukoot, Renusagar, Birla Copper Dahej and Hirakud Complex :National Quality Convention 2011 for Excellence and Distinguished performance awards.

15. Durgmanwadi, Chandgad and Lohardaga Mines Division : Awards at regional / state level, during the Mines, Safety Productivity Week, Environment Conservation Week and other such programmes.

22. Environment Protection and Pollution Control

Your Company is committed to sustainable development. Your Company is a signatory to the Global Compact and subscribes to the principle of triple-bottom line accountability.

A separate chapter in this report deals at length with your Company's initiatives and commitment to environment conservation.

23. Auditors

The observations made in the Auditors' Report are self-explanatory and do not call for any further comments under Section 217 (3) of the Companies Act, 1956.

M/s. Singhi & Company, Chartered Accountants and Auditors of the Company, retire, and being eligible, offer themselves for appointment.

In pursuance to Section 233B(2) of the Companies Act, 1956 and Notification dated 3rd June, 2011, 2nd May, 2011 and 24th January, 2012 and Order dated 30th June, 2011, your directors have appointed M/s. R. Nanabhoy & Co, cost accountants and M/s. Mani & Co, cost accountants as Cost Auditors for auditing the Cost Accounts of the Company for Financial Year 2012-13, covering the relevant Product Groups as per the statement placed under Central Excise Tariff and for the following industries as relevant to your Company;

a) Aluminium

b) Mining & Metallurgy of Ferrous & Non- Ferrous Metals

c) Fertiliser

d) Organic & Inorganic Chemicals

e) Engineering Machinery (including Electrical & Electronic Products)

The due date for filing Cost Audit Reports for the financial year 2010-2011 was 30th September, 2011 and the same was filed by the Cost Auditors on 23rd September, 2011.

24. Appreciation

Your Directors place on record their sincere appreciation for the assistance and guidance provided by the Honorable Ministers, Secretaries and other officials of the Ministry of Mines, Ministry of Coal, the Ministry of Chemicals and Fertilizers and various State Governments. Your Directors thank the Financial Institutions and Banks associated with your Company for their support as well.

Your Company's employees are instrumental in your Company scaling new heights, year after year. Their commitment and contribution is deeply acknowledged.

Your involvement as Shareholders is greatly valued. Your Directors look forward to your continuing support.

For and on behalf of the Board

Mumbai Chairman

Dated 27th June, 2012

 
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