Mar 31, 2023
The Board of Directors of Hindalco Industries Limited ("Your Company" or "the Company") is pleased to present 64th (Sixty-Fourth) Annual Report and Fourth Integrated Annual Report of your Company along with Audited Financial Statements for the financial year ended March 31, 2023 ("year under review / FY 2022-23").
Management Discussion and Analysis Overview
Hindalco Industries Limited, the metals flagship of the Aditya Birla Group, is the world''s largest aluminium rolling and recycling company, a major copper player, and one of Asia''s largest producers of primary aluminium. For the past three years, Hindalco has received the highest score for its ESG performance in the aluminium industry in the S&P Dow Jones Sustainability Indices (DJSI) Corporate Sustainability Assessment (CSA). Industry leaders are the top-performing companies in the Index.
In India, Hindalco''s aluminium manufacturing units cover the complete value chain, from bauxite mining, alumina refining, coal mining, captive power generation and aluminium smelting, to downstream value-addition of aluminium rolling, extruding, and foil making. Hindalcoâs copper division in India comprises, among other facilities, a world-class custom copper smelter and captive jetty with capability to manufacture copper rods. Hindalco is one of the largest suppliers of copper to the Indian Railways and meets more than half of the country''s copper requirements.
Guided by its Purpose of building a greener, stronger, smarter world, Hindalco provides innovative solutions that nurture a sustainable planet. Today, Hindalco''s global footprint spans 52 manufacturing units across 10 countries. Its wholly owned subsidiary Novelis is the leading producer of flat-rolled aluminium products and is the world''s largest recycler of aluminium. It delivers innovative solutions to customers in the beverage cans, automobile, aerospace, and high-end speciality markets, including foil packaging, certain transportation products, architectural, industrial, and consumer durables.
Novelis operates an integrated network of technically advanced rolling and recycling facilities across North America, South America, Europe, and Asia. Novelis, which has recycling operations in 15 operating facilities across the world, recycles over 82 billion used beverage cans a year, enough to circle the globe more than 160 times.
In FY2022-23, Hindalco delivered resilient financial and operational results backed by the exceptional performance of its Indian operations, and product mix.
This resilience, despite macro-economic headwinds, was driven by higher volumes, strategic product mix, stability in operations and outstanding performance of its copper business in India. On a consolidated basis, Hindalco continued to maintain its strong balance sheet in FY2022-23, resulting in a 1.39x Net Debt-to-EBITDA of at the end of the year against 1.36x in the previous year.
FY 2022-23: Key Highlights
Achieved
⢠Aluminium metal production at 1,322 Kt
⢠Aluminium metal sales at 1,350 Kt
⢠Alumina production at 3,525* Kt
⢠Aluminium Downstream production at 350 Kt and Sales
at 354 Kt
⢠Record Copper Cathode Production at 407 Kt and Metal Sales at 439 Kt
⢠Record Copper Rods production at 347 Kt and Sales at 347 Kt
⢠Overall shipments in Novelis of 3,790 Kt
⢠Adjusted EBITDA at $1.8 billion in Novelis
⢠Yearly adjusted EBITDA/ton of $478 in Novelis
⢠Yearly Net Income from continuing operations of US$ 659 million in Novelis
⢠Consolidated Revenue of H2,23,202 Crore
⢠Consolidated EBITDA of H24,131 Crore
⢠Consolidated PAT of H10,097 Crore
"includes production of Utkal Alumina International Limited (Utkal Alumina) the wholly-owned subsidiary.
Key Initiatives during the Year
Through its cost-optimisation initiatives across the value chain, Hindalco India successfully enhanced its operational efficiencies and lowered the overall cost of production across all its facilities.
Factors such as Utkal Alumina''s low-cost alumina, better coal mix and improved operational efficiencies contributed to Hindalco being able to reduce the overall cost of production across its Indian operations.
Hindalco''s sustainable business model and its strong focus on expanding the portfolio of downstream products in India will enable it to nearly double its existing downstream capacity in the next five years. Hindalco''s acquisition of Hydro''s Kuppam Extrusions facility and the copper CCR facility of Polycab (Ryker Base) in India in the previous financial year has also delivered positive results in margin expansion in the value-added segment.
Utkal Alumina, with its current capacity of over 2.3 million tonnes, is on its way to improve debottlenecking by 350 Kt and expand its capacity to around 2.6 million tonnes by FY2023-24.
In line with its growth strategy of organic expansions,
Hindalco is progressing well on its announced investments in downstream value-added products and capex, which will be spread out between FY23 and FY28 across the businesses of aluminium, copper, specialty alumina and resource securitisation through new commercial coal mines. These investments amount to about $ 1.13 billion. To reduce its dependency on external sources, and strengthen the supply chain and improve the quality of coal, the Company is acquiring captive coal mines in India. The Company''s intent is to build a larger value-added product portfolio over the next few years and delink this business from the volatility of global aluminium prices.
Novelis launched a multi-year strategy to transform and improv< the profitability of its business through significant investments in new capacity and capabilities across all operating regions. It remains committed to this strategy with $3.3 billion worth of organic growth expansion projects, expected to be completed in the next five years. These investments in new capacities and facilities shall be funded by its stable cash flow generation.
Of the estimated range of total investments, ~$3.0 billion investments has been earmarked for the US region.
Hindalco''s digital transformation initiative LEAD (Leverage, Efficient, Augment and Digital Savvy) has been designed to impart employees with the analytical skills and insights needed to take decisions with speed and confidence. LEAD will help the Company capture benefits across the entire manufacturing value chain, from increasing production capacity, reducing material losses, to improving customer service and delivery times and reducing environmental impact.
In addition to retaining its position as top ESG scorer in the aluminium industry in the 2022 S&P Dow Jones Sustainability Indices (DJSI) Corporate Sustainability Assessment (CSA), Hindalco was also recognised as a ''Sustainability Leader'' S&P Global Gold Class category in the Dow Jones Sustainability Yearbook for 2022 and 2023.
In Calendar Year (''CY'') 2022, the Global GDP grew by 3.4%. In the same year, the global production of aluminium increased 2% yoy to ~69 million tonnes, while global consumption was flattish at 69 million tonnes due to inflation-led slowdown in demand. Hence, global markets were balanced in the year. In a region-wise split in CY2022, production in China grew 4% yoy to 40.2 million tonnes, led by increases in Yunnan, Gansu, and Inner Mongolia.
Aluminium consumption in China grew by 1% to 40.6 million tonnes led by the sharp increase in demand for EVs and solar power capacity installations. However, the demand was subdued in the sectors of building and construction, packaging, and consumer durables. With consumption of 40.6 million tonnes, and production of 40.3 million tonnes, China saw a deficit of 0.4 million tonnes.
In the rest of the world, production of aluminium was flattish yoy at ~28.9 million tonnes in CY2022. A major drop in production was seen in the European region but was offset by the increased production in the Middle East, Central & South America, and India. The global transport segment grew on account of pent-up demand in this sector. However, other sectors like consumer durables and construction saw some headwinds. Hence, overall consumption declined by 1% yoy to 28.6 million tonnes, with a marginal surplus of 0.3 million tonnes in CY2022. (See Figure 1 and 2)
Table 1: Global Production and Consumption (in Million Tons) |
||||
Particulars |
CY 2019 |
CY2020 |
CY 2021 |
CY 2022 |
Production |
63.3 |
64.7 |
67.4 |
69.1 |
Consumption |
64.6 |
62.9 |
69.0 |
69.2 |
Metal Balance Surplus/(Deficit) |
(1.3) |
1.8 |
(1.6) |
(0.1) |
With the global markets being balanced, inventory levels were also stable at 9.3 million tonnes. In CY2022, the global prices of aluminium averaged at US$2,703/tonne as against US$2,480/ tonne in CY2021. Global aluminium prices witnessed significant volatility all through CY2022. In Q1CY22, prices saw a spike due to the impact of the Russia-Ukraine war on the global economy.
In Q2CY22, the slowdown in the Chinese markets on account of China''s Zero COVID policy led to the decline in global aluminium prices. In the second half of CY22, prices continued to slide as a result of tightening of monetary policy and global recessionary fears. The graph here shows the pricing trend over the past seven years:
China Demand Drivers |
|
Sectors |
Demand Drivers |
Transport |
Significant aluminium demand due to rising EV sales both in domestic and exports. |
Construction |
Monetary stimulus to stabilise demand |
Packaging |
Stable demand from food and pharmaceutical |
Foil stock |
sectors |
Electrical |
Sharp growth in solar and wind installations. Current capacity of wind and solar is ~800 GW (~2/3rd of 2025 target of 1200 GW) |
Consumer durables |
Stable domestic demand. |
The Indian market is likely to see a broad-base growth across all sectors. Imports of aluminium products, including scrap, continue to remain a major concern for domestic aluminium producers. Over the last few years, imports of flat rolled products (including foils) have seen a surge in imports at dumped prices from China and FTA countries.
The regional premiums also saw volatility during CY2022.
The average spot Main Japanese Port (MJP), duty-paid European Rotterdam Ingot and US Midwest premium was $99/t, $462/t and $30 cents/lb respectively in CY2022, versus $156/t, $268/t and $27 cents/lb respectively in CY 2021.
Domestic Consumption
Indian Consumption: As economic activity resumed, domestic consumption saw significant improvement across all sectors. Domestic consumption is likely to grow by 15% yoy in FY2022-23. However, import of aluminium continues to be a concern for domestic players. Overall imports, including scrap, touched ~2.5 million tonnes in FY2022-23 from ~2.3 million tonnes in FY2021-22.
The Table (table 2) shows the sector-wise change in domestic consumption of aluminium in FY2022-23 vs previous year.
Table 2: Sector Wise Domestic Consumption for FY2022-23 vs FY2021-22 |
|
Sector |
FY2021-22/ FY2022-23 |
Electrical |
20-25% |
Building and construction |
10-20% |
Auto |
10-15% |
Industrial and Defence |
5-15% |
|
0-10% |
Packaging |
10-20% |
Consumer Durables |
0-5% |
Others |
0-5% |
Overall India Consumption |
15% |
Outlook
In CY2023, global GDP growth rate is likely to be around 2.8%, as per the IMF projections. India and China, the two largest emerging market economies, are expected to contribute to around half of the global growth in CY2023, current outlook remains uncertain amid high inflation, tight monetary policy, the ongoing Russia-Ukraine conflict, and the lingering impact of three years of COVID-19. Overall, advanced economies are likely to grow by 1.3% impacted by inflation-led slowdown, while the emerging economies are likely to grow by 4%.
Overall, in CY2023, global primary aluminium demand is likely to experience a flattish growth to around 69.5 million tonnes. Global production is expected to grow by 2% to over 70 million. Hence, the market is likely to be in a surplus. Production in the world, excluding China, is expected to increase by ~1% to around 29 million tonnes. Primary aluminium supply in China is likely to grow by ~2% to around 41 million tonnes in CY2023. Consequently, inventories are likely to grow to 9.8 million tonnes by the end of CY2023.
World Excluding China Demand Drivers |
|
Sectors |
Demand Drivers |
Transport |
Government provides purchase incentives to the buyers of EVs. Overall sales of cars and commercial vehicle likely to increase by 5% in CY2023 due to pent-up demand. |
Construction |
To face headwinds due to elevated interest rates |
Consumer Durables |
Slowdown in demand due concerns of recession |
Packaging |
Substitution against PET bottles in Europe and North America. |
The government has supported the aluminium industry by imposing Anti-Dumping Duty (''ADD'') on imports of flat-rolled products from China.
In CY2022, on a yearly basis, overall global production of refined copper grew by approximately 1.9% to 24.7 million tonnes. China''s production increased by around 3% yoy, whereas in the rest of the world growth was up by 1.1% yoy.
In CY2022, on a yearly basis, global consumption of refined copper increased by around 2% to 24.9 million tonnes against 24.5 million tonnes in CY2021.
Copper consumption in China grew by ~2% yoy to 13.6 million tonnes, whereas in the world (excluding China) consumption grew by ~1% yoy at 11.3 million tonnes in CY2022. The global deficit was 0.2 million tonnes in CY22 versus 0.3 million tonnes on CY2021.
In CY2022, on a yearly basis, global consumption of refined copper increased by around 2% to 24.9 million tonnes against 24.5 million tonnes in CY2021. Copper consumption in China grew by ~2% yoy to 10.6 million tonnes, whereas in the world (excluding China) consumption grew by ~1% yoy at 14.1 million tonnes in CY2023. The global deficit was 0.2 million tonnes in CY22 versus 0.3 million tonnes on CY2021.
Table 3: Global Production and Consumption (in Million Tons)
Particulars |
CY2021 |
CY2022 |
Production |
24.2 |
24.7 |
Consumption |
24.5 |
24.9 |
Metal Balance Surplus/ (Deficit) |
(0.3) |
(0.2) |
On a yearly basis, domestic demand for refined copper increased by 22% to 746 KT in FY2022-23 from 612 KT in FY2021-22. Of this, the share of imports was 24% at 177 KT in FY2022-23 versus 26% at 158 KT in FY2021-22, reflecting a yoy decline of 11%.
The benchmark TC/RC for CY2023 was finalised at 88/8.8 (22.6 c/lb) between miners and smelters, which is ~35% higher than CY2022.
For CY2023, while fundamentally the market is expected to be in surplus of ~ 240 KT - which should support spot TC/RC during Q1CY2023 - multiple disruptions in some large mines in Panama, Indonesia, and Peru adversely affected the spot TC/RC resulting in it sliding lower than the annual benchmark TC/RC.
Outlook
Global demand for refined copper is expected to increase by ~2% in CY2023. China is expected to grow by ~1.8% and the rest of world is expected to grow by ~3.5%. Demand for refined copper in India is likely to improve and revert to pre-COVID levels of around 790 Kt in FY2023-24.
The world copper mine supply grew by 3.5% in CY2022 mainly on account of ramp up in output from new mines in Congo, Peru, etc. The ramp up of projects will continue to support concentrate supply in 2023, but high level of disruptions will restrict annual growth rate to 2.3%. While the copper market is likely to be balanced in CY2024, deficit is expected to emerge in CY2025. Recycling along with product substitutions shall be key in helping to mitigate some of this gap.
We believe that the global long-term demand for aluminium-rolled products will remain strong, on the back of anticipated economic growth, material substitution, and sustainability considerations including increased environmental awareness around polyethylene terephthalate plastics. Disruptions in demand for aluminium- rolled products caused by the pandemic and semiconductor shortages in the automotive industry have moderated.
However, we believe the challenging inflationary and geopolitical environment has increased economic uncertainty and is negatively impacting near-term demand in some end markets such as building and construction.
In addition, we are seeing reduced can sheet demand in the near term, attributed to can-makers reducing their excess inventory as they adjust to a more moderated level of demand.
Despite the current market uncertainty, we believe that the long-term demand for aluminium-rolled products would remain intact. Increasing customer preference for sustainable packaging options and package mix shift towards infinitely recyclable aluminium are driving higher demand for aluminium beverage packaging worldwide.
We believe that the long-term demand for aluminium automotive sheet will continue to grow, primarily driven by the benefits of using lightweight aluminium in vehicle structures and components. Automakers have aligned themselves to the stricter government regulations regarding emissions and fuel economy, while prioritising improvement of vehicle safety and performance. This has led to an increase in the use of high-strength steel.
We are also seeing an increased demand for aluminium for EVs, as aluminium''s lower weight can help with extended battery range.
We expect the long-term demand for building and construction and other specialty products to grow due to increased customer preference for lightweight, sustainable materials. The demand for aluminium plate in Asia is also expected to receive a boost driven by the development and expansion of industries serving aerospace, rail, and other technically demanding applications.
Shipments of aerospace aluminium plate and sheet have improved in FY2022-23, as demand for air travel has recovered to near pre-COVID levels. Looking ahead, we believe significant order backlogs for key OEMs including Airbus and Boeing will translate into growth in the future. Our multi-year supply agreements have positioned us to benefit from this future demand.
FY2022-23 was challenging, with added pressure from softer demand in some end markets and intensified cost inflation driven by macro-economic and geo-political uncertainty. However, the Company managed to mitigate some of these headwinds through a combination of hedging, passing costs to customers, favourable pricing environments, and increased benefits from recycling.
While these headwinds will curb the Company''s near-term margins, the fundamentals driving the long-term demand for aluminium products remain intact. Novelis continues to be disciplined in its approach to capital investment, prioritising growth investments to meet increasing customer demand and sustainability goals across the value chain.
For a region-wise detailed business overview, please refer to the 10K filed by Novelis Inc. dated May 10, 2023 for the year ended
The Company delivered a resilient performance in its aluminium business in FY2022-23 supported by higher volumes and better operational efficiencies. The production of aluminium stood at 1.322 million tonnes in FY2022-23 versus 1.294 million tonnes in the previous year.
Overall alumina production stood at 3.525 million tonnes versus 3.235 million tonnes in FY2021-22. Utkal Alumina recorded production of 2.311 million tonnes in FY2022-23, and continues to be the most economical and efficient alumina producer globally, providing strong support to most of Hindalco''s India smelting facilities, leading to better cost optimisation and quality input material (alumina).
The overall third-party sales of metal in all forms was at 1.350 million tonnes in FY2022-23 against 1.302 million tonnes in FY2021-22, up 4% yoy on account of market recovery in FY2022-23. Production of aluminium VAP was flat yoy at 350 Kt in FY2022-23 vs 349 Kt in the previous year. Third-party sales of aluminium VAP was higher by 2% at 354Kt in FY2022-23 vs 348 Kt in FY2021-22.
Financial Overview Aluminium Upstream
Revenue for Hindalco''s aluminium upstream segment was up 7%, at ''33,010* Crore in FY 2022-23 from ''30,844* Crore in FY 2021-22 on account of higher volumes. EBITDA was down 33% at ''8,402 Crore versus ''12,496 Crore a year earlier impacted by inflationary pressures. The EBITDA margins were at 25.5% in FY2022-23, continues to be one of the best in the industry.
*The above numbers are without elimination of Inter-segment revenue.
('' Crore) |
|||
Description |
FY2022-23 |
FY2021-22 |
Change |
Revenue |
33,010 |
30,844 |
7% |
EBITDA |
8,402 |
12,496 |
(33%) |
Note: In the consolidated financial statements, within the aluminium segment, the significant entities are Hindalco and Utkal Alumina International Ltd. Utkal Alumina is a wholly owned subsidiary of Hindalco and supplies a substantial quantity of its production to Hindalco hence we have analyzed the combined performance of Hindalco''s aluminium business along with Utkal Alumina.
Aluminium Downstream
Revenue for Hindalco''s aluminium downstream segment was ''11,009* Crore in FY 2022-23 in line with previous year. Record EBITDA at ''627 Crore up 64% versus ''382 Crore a year earlier as a result of better pricing and volumes.
Financial Overview
Copper segment revenue for FY 2022-23 was at ''41,702* Crore (vs. ''36,723* Crore in FY2021-22), up 14% on account of higher global prices of copper and higher volumes in FY2022-23. Copper business recorded an all-time high EBITDA of ''2,253 Crore (vs. ''1,390 Crore in FY 2021-22) up 62% yoy, on account of higher volumes of Copper Cathode Rods, better operational efficiency and Tc/Rc in FY2022-23.
*The above numbers are without elimination of Inter-segment revenue.
('' Crore) |
|||
Description |
FY2022-23 |
FY2021-22 |
Change |
Revenue |
11,009 |
11,009 |
0% |
EBITDA |
627 |
382 |
64% |
*The above numbers are without elimination of Inter-segment revenue
('' Crore) |
|||
Description |
FY2022-23 |
FY2021-22 |
Change |
Revenue |
41,702 |
36,723 |
14% |
EBITDA |
2,253 |
1,390 |
62% |
Operational Overview
The copper business delivered its best-ever operational and financial performance during FY2022-23. Production of copper cathode was 407 Kt in FY2022-23, up 13% from the previous year. Production of continuous cast rods was at a record 347 Kt ii FY2022-23 versus 259 Kt in FY2021-22.
Total Copper metal sales in all forms were at a record 439 Kt in FY2022-23 up by 9% compared to 405 Kt in the previous year which was in-line with its higher production and overall market demand. The sales of Copper VAP (Copper Rods) were at a record 347 Kt in FY2022-23 versus 262 Kt in the previous year up by 33% yoy. The share of VAP (Copper Cathode Rods) to total metal sales was 79% in FY 2022-23, from 65% in the previous year.
Operational Overview
- Novelis Inc., is the global leader in flat-rolled aluminium products and the world''s largest recycler of aluminium.
Driven by its purpose of shaping a sustainable world, Novelis works alongside its customers to provide innovative solutions to the beverage can, automotive, aerospace and speciality markets (which include foil packaging, certain transportation products, architectural, industrial, and consumer durables).
It operates an integrated network of technically advanced rolling and recycling facilities across North America, South America, Europe, and Asia, and leverages its global manufacturing and recycling footprint to consistently deliver high-quality products around the world.
In FY2022-23, Novelis reported an Adjusted EBITDA of $1.811 billon vs $2.045 billon, a drop of 11% yoy, primarily due to lower shipments, inflationary environment, higher energy costs due to geopolitical instability, and less favorable metal benefits. These headwinds were partially offset by higher product pricing, including some cost passthroughs to customers, and favorable product mix.
Driven mainly by lower adjusted EBITDA, Net Income (without special items) from continuing operations is down 16% yoy at $781 million in FY 2022-23 against $934 million in FY 2021-22.
($ Million |
|||
Description |
FY2022-23 |
FY2021-22 |
Change |
Net Sales |
18,486 |
17,149 |
8% |
Adjusted EBITDA |
1,811 |
2,045 |
(11)% |
Net Income/ (loss) w/o Exceptional Item* |
781 |
934 |
(16)% |
*Tax-effected special items may include restructuring & impairment, metal price lag, gain/loss on assets held for sale, loss on extinguishment |
|||
of debt, loss/gain on sale of business. |
Financial Analysis and Outlook
The financial statements of Hindalco Industries Limited and its subsidiaries are prepared in accordance with the Indian Accounting Standards (referred to as ''Ind AS'') prescribed under section 133 of the Companies Act, 2013, read with the Companies (Indian Accounting Standards) Rules, as amended from time to time. Significant accounting policies used in the preparation of the financial statements are disclosed in the notes to the consolidated financial statements which forms part of this Integrated Annual Report.
In FY2022-23, total shipments were down by 2% over the past year, at 3.790 million tonnes. This was a result of lower beverage can shipments on account of customer inventory reductions in the latter half of the fiscal year, as the broader beverage supply chain normalised post-pandemic, and also due to lower demand for specialty products in a less robust macro-economic climate.
In FY2022-23, total shipments were down by 2% over the past year, at 3.790 million tonnes. This was a result of lower beverage can shipments on account of customer inventory reductions in the latter half of the fiscal year, as the broader beverage supply chain normalised post-pandemic, and also due to lower demand for specialty products in a less robust macro-economic climate.
In FY2022-23, the share of beverage can sheet shipments were 58%, automotive body sheet shipments were at 19%, and specialities and aerospace shipments were at 20% and 3%, respectively. Novelis leveraged its extensive recycling footprint and favourable market conditions to utilise 61% recycled content in its shipments in the reporting period.
The company operates in four key geographies: North America, Europe, Asia, and South America. In North America in FY2022-23 total shipments were at 1,515 Kt up from 1,467 Kt in FY2021-22, on the back of recovery in the automotive end market that was previously impacted by semiconductor chip shortages. In Europe, the Company shipped 998 Kt in FY2022-23, a decline from 1,038 Kt in FY2021-22 due to weaker consumer demand in the beverage can, and specialties markets. In Asia, Novelis
shipped 678 Kt of rolled products in FY2022-23 versus 737 Kt in the previous year predominantly due to destocking of beverage cans by customers in the Americas. In South America, Novelis shipped 599 Kt in FY2022-23 down from 616 Kt in the previous year due to the impact of customer destocking in this region.
In FY2022-23, Novelis reported an overall EBITDA/tonne of US$478 versus US$530/tonne in the last year.
Financial Overview
Novelis'' net sales in FY2022-23 were at $18.5 billion, up 8%, higher average aluminium prices, higher product pricing and favorable product mix, partially offset by a 2% decrease in total flat rolled product shipments.
(? in Crore) |
||||
Description |
Hindalco Standalone |
Consolidated |
||
FY2022-23 |
FY2021-22 |
FY2022-23 |
FY2021-22 |
|
Revenue from Operations |
76,878 |
67,653 |
2,23,202 |
1,95,059 |
Earnings Before Interest, Tax and Depreciation (EBITDA) |
||||
Novelis* |
14,543 |
15,229 |
||
Aluminium Upstream |
8,402 |
12,496 |
||
Aluminium Downstream |
627 |
382 |
||
Copper |
2,253 |
1,390 |
||
Inter-segment Profit/ (Loss) Elimination (Net) |
414 |
(264) |
||
Unallocable Income/ (Expense) - (Net) & GAAP Adjustments |
(2,108) |
823 |
||
Total EBITDA |
8,061 |
11,828 |
24,131 |
30,056 |
Depreciation & Amortisation (including impairment) |
1,927 |
1,847 |
7,294 |
6,884 |
Finance Cost |
1,300 |
1,417 |
3,646 |
3,768 |
Earning before Exceptional Items, Tax & Share in Profit/(Loss) in Equity accounted Investments |
4,834 |
8,564 |
13,191 |
19,404 |
Share in Profit/ (Loss) in Equity Accounted Investments (Net of Tax) |
- |
9 |
6 |
|
Earning before Exceptional Items and Tax |
4,834 |
8,564 |
13,200 |
19,410 |
Exceptional Income/ (Expenses) (Net) |
41 |
(107) |
41 |
164# |
Profit Before Tax (After Exceptional Items) |
4,875 |
8,457 |
13,241 |
19,574 |
Tax Expense |
1,549 |
2,950 |
3,144 |
5,373 |
Profit/ (Loss) from Continuing Operations |
3,326 |
5,507 |
10,097 |
14,201 |
Profit/ (Loss) from Discontinued Operations |
- |
- |
- |
(471) |
Profit/ (Loss) After Tax |
3,326 |
5,507 |
10,097 |
13,730 |
Other Comprehensive Income / (Loss) |
1,702 |
(397) |
7,460 |
(1,148) |
Total Comprehensive Income |
5,028 |
5,110 |
17,557 |
12,582 |
Basic EPS - Continuing Operations (?) in '' |
- |
- |
45.42 |
63.85 |
Basic EPS - Discontinued Operations (?) in ? |
- |
- |
- |
(2.12) |
Basic EPS (?) in ? |
14.96 |
24.76 |
45.42 |
61.73 |
* As per US GAAP
#Pertains to the Consolidated Exceptional Income / (Expenses) for the year ended March 31, 2022, ?418 Crore, which represents the principal portion of (a) PIS/COFI NS related tax credit income in Brazil of ?358 Crore (net of litigation cost of ''9 Crore) for FY22 and (b) tax rebates for sales to Manaus, Brazilian Free Trade Zone ?60 Crore for FY22, as it is included in the results of Novelis segment.
EBITDA
Consolidated EBITDA for FY 2022-23 was lower by 20% to ''24,131 Crore from ''30,056 Crore in the previous year. This was due to lower EBITDA in the aluminium business in India and higher input costs. The EBITDA margin in FY 2022-23 was at 10.8% compared to 15.4% in FY 2021-22. The graphs below show the consolidated EBITDA split by businesses in FY 2022-23 and trends over the past five years.
Appropriations to Reserves |
||
Appropriations |
FY2022-23 |
FY2021-22 |
Opening Balance in Retained Earnings and Other Comprehensive Income |
15,280 |
11026 |
Total Comprehensive Income for the Current Year |
5,028 |
5,110 |
Dividends paid |
(890) |
(667) |
Hedging (Gain)/ Loss and cost of hedging transferred to non-financial assets |
- |
(41) |
Employee Share Based Transactions |
(3) |
2 |
Transferred to Debenture Redemption Fund |
1500 |
(150) |
Closing Balance in Retained Earnings and Other Comprehensive Income |
20,915 |
15,280 |
The graphs below show the split of Consolidated Revenues by businesses in FY2022-23 and the trend of revenues over the past five years.
(including net impairment loss/ (reversal) of non-current assets)
Depreciation and amortisation (excluding net impairment loss/ (reversal) of non-current assets) increased to ''7,086 Crore in FY2022-23 from ''6,729 Crore in FY2021-22. This increase is due to reorganisation/amortisation activities on account closure of certain outdated processes at Novelis''s Richmond plant in North America amounting to ''139 Crore, and the suspension of certain plants and equipment amounting to ''65 Crore in FY2022-23.
In FY2022-23, total exceptional income was at ''41 Crore compared to ''164 Crore in FY2021-22. This decline in exceptional income can be attributed to the reversal of certain provisions made in FY2017-18 and FY2018-19 related to Cross Subsidy Surcharge (CSS) and Additional Surcharge (ASC).
This reversal was affected pursuant to the undertaking given by MSEDCL (Maharashtra State Electricity Distribution Co. Ltd.) to Maharashtra Electricity Regulatory Commission (MERC) on 29th July 2022 to refund CSS and commence the ASC refund.
Provision for taxes was at ''3,144 Crore in FY2022-23 against ''5,373 Crore in FY2021-22. This decrease was due to lower profitability of the Company in FY2022-23, and the Group''s decision to write back its net deferred tax liability amounting to ''609 Crore, during the reporting period.
Profit After Tax (PAT) in FY2022-23 was at ''10,097 Crore down 26% from ''13,730 Crore a year ago. The net profit margin in FY2022-23 was at 4.52% versus 7.04% in FY2021-22. The PAT for continuing operations in the reporting period saw a decline of 29% at ''10,097 Crore versus ''14,201 in the previous year.
Profit after Tax
(D Crore)
For the year ended March 31, 2023, the Board of Directors of your Company has recommended dividend of ''3.00 per equity share of face value of '' 1/- each (Previous year ''4.00) to equity shareholders.
Consolidated Financial Statements
Hindalco''s consolidated revenue was up 14% at ''2,23,202 Crore in FY2022-23 compared to ''1,95,059 Crore in FY2021-22, largely influenced by higher global aluminium prices, and local market premiums.
Finance Cost decreased 3% and was at ''3,646 Crore in FY 202223 from ''3,768 Crore in FY 2021-22. This was mainly on account of repayment of ''6,000 Crore, Redeemable Non-Convertible Debentures (NCDs) and pre-payment of Utkal Alumina International Limited term loan of '' 2,574 Crore scheduled in September, 2030 and repayment of a term loan of ''76 Crore in Hindalco in FY2022-23.
Consolidated Net Debt to EBITDA |
|||
The consolidated balance sheet continued to remain strong with the Net Debt to EBITDA at 1.39 times at the end of March 2023 versus 1.36 times at the end of March 2022. (Net Debt to EBITDA = Consolidated Business EBITDA/Consolidated Net Debt) |
|||
Financing & Debt Redemption a) Redemption of Secured Non-Convertible Debentures |
|||
Your Company has redeemed the following Secured, Listed and Non-Convertible Debentures on its maturity dates. |
|||
Date of Allotment |
Coupon Rate |
Amount ('' in Crore) |
Date of Maturity |
April 25, 2012 |
9.55% |
3000 |
April 25, 2022 |
June 27, 2012 |
9.55% |
1500 |
June 27, 2022 |
August 02, 2012 |
9.60% |
1500 |
August 02, 2022 |
b) Issue of Non-Convertible Debentures |
|||
During the year under review, your Company raised ''700 Crore through issuance of Unsecured, Listed, Rated, Redeemable, NonConvertible Debentures (NCDs) of face value of ''1,00,000 each on private placement basis. Details pertaining to such issue is mentioned as below: |
|||
Coupon Rate 0f No. of NCDs Allotment |
Total Amount ('' in Crore) |
Tenor |
Maturity Date |
7.60% Unsecured, Listed, Rated, Redeemable, Non-Convertible January 18, 2023 70,000 Debentures |
700 |
14 months |
March 18, 2024 |
The aforesaid debentures are listed on National Stock Exchange of India Limited. |
vii. Net Profit Margins
The Consolidated Net Profit Margins as on 31st March 2023 stands at 4.52% compared to 7.04% as on 31st March 2022. The decline is on account of lower consolidated profits recorded during the reporting period. It is calculated as Net Profit/Net Sales.
Cash generated from operations for Hindalco Consolidated stands at ''19,208 Crore in FY 2022-23 versus ''16,838 Crore in FY 2021-22. The table below shows the comparative movement of Cash flows:
i. Debtors Turnover (Days)
The Consolidated Debtors Turnover Days on 31st March 2023 was 30 days compared to 32 days on 31st March 2022. This displays the Company''s consistency in managing its credit with customers and also reflects the Companyâs strong financial position with respect to its customers. The Debtor Turnover (Days) is calculated as Average Debtors/ Total Consolidated Sales * 365 days.
ii. Inventory Turnover (Days)
The Consolidated Inventory Turnover Days on 31st March 2023 was at 77 days versus 79 days at the end of 31 March 2022. This indicates the Companyâs effective management of its inventory levels throughout the year. Inventory (days) is calculated by dividing the Average Inventory by the Cost of Goods Sold (Cost of Sales Depreciation) * 365 days.
iii. Interest Coverage Ratio
The Consolidated Net Interest Coverage Ratio on 31st March 2023 stands at 6.62 times compared to 7.87 times on 31st March 2022. This is lower from the previous year because of lower earnings (EBIT). This ratio reflects the Companyâs ability and strength to meet its interest obligations.
iv. Current Ratio
The Consolidated Current/Liquidity Ratio as on 31st March 2023 stands at 1.51 times versus 1.30 times at the end of 31 March 2022 and is reflective of the Company''s strengthening of liquidity or solvency position compared to the previous year.
v. Debt to Equity Ratio
The Consolidated Debt-to-Equity Ratio as on 31st March 2023 is well below 1.0x, at 0.64x times compared to 0.82x times as on 31st March 2022. This is indicative of the Companyâ strong balance sheet and ability to meet its current short-term obligations.
vi. Return on Net Worth (RoNW)
The Consolidated Return on Net Worth as on 31st March 2023 is 11.67%, compared to 18.97% on 31st March 2022. This was lower from the previous year due to the lower profits in the reporting period. This is calculated as Profit After Tax/Average Net Worth
vi. Operating Margins
The Consolidated Operating Margins for FY2022-23 stands at 10.25% versus 14.61% in FY2021-22 indicating lower operating profit in the reporting period compared to the previous year. Operating Margin is calculated as Operating Profit/Net Sales.
Particulars |
(J Crore) Year ended |
|
31/03/2023 |
31/03/2022 |
|
A. CASH FLOW FROM OPERATING ACTIVITIES |
||
Operating Cashflow before working capital changes |
22,445 |
29,726 |
Changes in working capital |
(457) |
(9,132) |
Cash generated from operations before Tax |
21,988 |
20,594 |
(Payment)/Refund of Direct Taxes |
(2,733) |
(3,773) |
Net Cash generated/ (used) -Operating Activities - Continuing Operations |
19,255 |
16,821 |
Net Cash Generated/ (Used) - Operating Activities - Discontinued Operations |
(47) |
17 |
Net Cash Generated/ (Used) - Operating Activities (a) |
19,208 |
16,838 |
B. CASH FLOW FROM INVESTMENT ACTIVITIES |
||
Net Capital Expenditure |
(9,742) |
(5,355) |
Disposal of Investments in Subsidiaries (Net)/Business |
24 |
66 |
(Purchase) / Sale of treasury instrument (Net) |
(214) |
4,226 |
Acquisition of business, net of cash acquired |
- |
(412) |
Investment in equity accounted investees |
(17) |
(1) |
Loans & Deposits (given) / received back (Net) |
1,393 |
(6,209) |
Interest and dividends received |
479 |
239 |
Investment in Equity Shares at FVTOCI |
(57) |
363 |
Others |
13 |
9 |
Net Cash Generated/ (Used) - Investing Activities - Continuing Operations |
(8,121) |
(7,074) |
Net Cash Generated/ (Used) - Investing Activities - Discontinued Operations |
- |
- |
Net Cash Generated/ (Used) - Investing Activities (b) |
(8,121) |
(7,074) |
C. CASH FLOW FROM FINANCING ACTIVITIES |
||
Equity Raised / Debentures Redeemed |
- |
6 |
Treasury shares acquired & Proceeds from Shares Issued by ESOP Trust |
(125) |
(79) |
Net Debt inflows/Outflows |
(5,485) |
(2,775) |
Interest & Finance Charges paid |
(3,845) |
(3,250) |
Dividend Paid (including Dividend Distribution Tax) |
(890) |
(667) |
Net Cash generated/ (Used) - Financing Activities - Continuing Operations |
(10,345) |
(6,765) |
Net Cash Generated/ (Used) - Financing Activities - Discontinued Operations |
- |
- |
Net Cash Generated/ (Used) - Financing Activities (c) |
(10,345) |
(6,765) |
Net Increase/(decrease) in Cash and Cash Equivalents (a) (b) (c) |
742 |
2,999 |
On Standalone basis, your Company registered a revenue of D76,878 Crores for the fiscal year 2023 vs D67,653 Crores in the previous year up 14% on account of higher volumes and prices of copper in FY23. EBITDA (Earnings before Interest, Tax, Depreciation and Amortisation) stood at D8,061 Crores, down 32% compared to the last year, impacted by unsupportive macros and higher input costs. Depreciation(including net impairment loss/(reversal) of non-current assets) was up 4% at D1,927 Crore in FY23 versus D1,847 Crores in FY22. The Finance Cost was lower on Year by 8% at D1,300 Crores in FY23 versus D1,417Crores in FY22. This reduction in finance cost was mainly due to overall reduction in the average cost of long-term loans on account of repayment of high cost loans such as the NCDs worth D6.000 Crore during the year. The Profit before Tax (and Before Exceptional Items) stood at D4,834 Crore, down 44% compared to the previous year due to lower EBITDA. Net Profit for FY23 stood at D3,326 Crores as compared to Dw5,507 Crore down 40% Year on Year compared to the previous year.
Hindalco''s relentless focus is on product innovation, better efficiencies, complete digitalisation, and organic expansions with a diversified product mix and cost competitiveness.
The Company continues to focus on cash conservation while maintaining adequate liquidity and deliver sustained performance while catching up with market recovery. Its longterm strategic investments in Novelis and the India downstream expansion projects will enhance its capabilities across the FRP and the Extrusion segments in the country.
Demand for aluminium sheet across specialties markets, including electronics, electric vehicle battery enclosures, painted products, container foil, and building and construction markets also remains strong over the long-term, despite current economic headwinds impacting near-term demand for building and construction and some industrial products.
The automotive segment is poised to display strong near-and long-term demand and is expected to grow at a CAGR of 11% over the next five years. This expansion will be led by elevated levels of pent-up demand, supported by rising consumer demand for vehicles with a higher share of aluminium like EVs, and easing of supply chain challenges with the availability of semi-conductor chips and recovery in vehicle production levels.
The aerospace segment is also expected to remain strong with travel picking up after the removal of pandemic restrictions. Aircraft OEMs are forecasting a strong growth in aircraft build rates over the next decade.
In this sector, sustainability is also gaining importance leading to higher consumption of aluminium. However, inflationary cost pressures that began in FY 2021-22, resulting from global supply chain disruptions and geopolitical instability impacted the availability and prices of materials and services, including freight, energy, coatings, and alloys like magnesium. The disruptions intensified during the reporting period, and are expected to continue for the foreseeable future.
From Q4-FY22, Novelis has been impacted by the rise in energy prices globally, especially in Europe. The Russia-Ukraine conflict further exacerbated the situation, leading to reduced manufacturing and industrial demand. The Company expects this situation to continue until energy prices and economic conditions stabilise. Other costs, such as labour and borrowing costs, have been influenced by inflation and higher interest rates. To counter this, the Company has implemented cost-control measures across our global operations, with a focus on employment, professional services, and travel costs. However, there is no assurance that it will be able to mitigate these higher costs in the future.
In India, the acquisition of Hydro''s Kuppam extrusions facility and Polycab''s Ryker CCR helped bolster Hindalco''s presence in the upper end of the value-added market and further strengthen its long-term sustainable business model.
Domestic copper demand is driven largely by rods, which is the downstream product for the copper business. Hindalco''s strategy of enhancing copper VAP capacity through copper rods and copper inner grooved tubes will help it gain a larger market share and meet the growing demand for copper in the domestic market.
To boost the Company''s position as a sustainability leader in the industry, Hindalco has established strategic priorities and allocated capital aimed at promoting organic growth in both India and Novelis. These priorities also focus on enhancing value through ESG-driven practices.
Company''s Research, Development & Technology (RD & T) activities are focused on developing and commercializing premium differentiated products, improving our competitive cost position, product quality and environmental sustainability.
To support these goals, we are managing a pipeline of projects at four Hindalco Innovation centres in collaboration with corporate and external research institutes. The project portfolio addresses near and mid-term needs, as well as the exploration of future opportunities.
This year members of Hindalco Innovation Centre Team continued development in the area of making our processes greener & sustainable and value added products & applications.
These initiatives helped our plants to mitigate challenges of raw material quality, reducing specific energy consumption and carbon footprint, cost effective management of waste generated during processing, recovery of value from by-product as well as any waste products. Specific programs have also been initiated to adopt new digitalisation techniques such as soft sensors, digital twins, etc. The predictive and prescriptive models based on AI /ML data analytics coupled with physics based models are helping better process control & achieve desired process performance. These tools also help in understanding the requirement of existing and prospective customers, and provide a better service, in order 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, challenging & 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.
Bauxite & Alumina RD&T: Hindalco Innovation Centre (''HIC'') Alumina at Belagavi is focused on bauxite ore & alumina refining processes and specialty alumina, hydrate products & their applications in different market segments. The projects on improving productivity of Refineries & hydrate product quality were successfully implemented. This year key projects on development for Low Soda Hydrate, white hydrate. Hydratable alumina for castables, spherical alumina for advanced refractory & special hydrates for FRP composite applications were successfully developed and commercialised in collaboration with operations & marketing team.
Team along with Aditya Birla Science & Technology Company Private Limited (''ABSTC''), an Aditya Birla Group Corporate R&D successfully demonstrated trials of novel process for production of 4N High Purity alumina (99.99%). The process knowhow is protected by filing 3 patents.
Primary Aluminium RD&T: In collaboration with ABSTC, we have developed expertise in advanced pot design and process control to reduce the specific energy consumption. The range of technology solutions are being implemented, which includes next generation Cu-insert collector bars, digital twin to predict current efficiency, advance process control logic, at smelters. In our journey of creep capacity increase, we have developed novel HiPot 400 KA cell design, the cell lining pilots are in progress at Mahan & Aditya smelter. Team has also developed advance process control for Hirakud smelter which is under implementation.
Aluminium downstream RD&T: HIC-Semifab team along with SMEs are continuing research on optimising the product quality and also developing new products and applications.
Our technology team is also focusing on new coating for both extrusion & FRP products segment. Towards greening the planet, technology team has facilitated development of light weighting applications in transport segment and new products for battery technology & electrical vehicles.
Copper RD&T: HIC-Copper along with ABSTC is focusing on improving the smelter productivity and CCR product quality. Blend adviser, soft sensor for matter grade & temperature prediction, optimum operating region for production of high quality CCR were developed & implemented under digital initiatives this year. Team also participated in start-up and optimising the process conditions for new Cu-Mg wire rod at Bhiwadi.
Your company also has series of collaborative programs with IITs, CSIR labs and domestic & international start-ups which enables your company to develop & build competencies in select areas, to create long term value to business. We actively evaluate new transformational technologies including battery technology, decarbonisation, etc. These engagements along with in-house research has resulted in increased filing of patent applications and also publications in international journals & conferences. The RD&T activities thus span a wide range of present and future needs of Hindalco.
Sustainability
At Hindalco, sustainability is the foremost priority and the Company strives to create value from revenue streams that benefit both the planet and people. The Company''s strong commitment to ESG is reflected in its remarkable performance in the DJSI CSA assessments, where it achieved the highest ESG score in the aluminium industry for the third year in a row. Through collaboration and by working closely with stakeholders across the value chain, Hindalco has demonstrated its commitment to addressing critical sustainability issues. This approach reflects its plan for mutual growth, thereby earning the trust of all partners in the process.
The Apex Sustainability Committee, chaired by the Managing Director, drives sustainability at the highest level ensuring the implementation and monitoring of sustainability initiatives across the organisation. Hindalco''s task forces and ESG SPOCs from all functions work together to bring about positive change with task forces focusing on ground-level implementation of sustainability initiatives and ESG SPOCs taking up projects to further the cause of ESG implementation.
A roadmap to achieve net carbon neutrality by 2050 has been established, and the Company has already installed 100 MW of renewable energy capacity, with plans to scale it up to 300 MW by 2025. Through various energy-efficiency projects and pilot demonstrations of technologies in the pipeline, the Company has showcased its sustainability efforts.
The Company''s goal is to achieve overall water positivity by 2050; with a sub-target of making its mining operations water positive by 2025. Towards this, it has ramped up its freshwater conservation efforts by using water from treated and rainwater sources. With an aim to achieve Zero Waste in Landfill by 2050, Hindalco extracts value from the waste generated and has amplified its material recycling. The Company is committed to protecting biodiversity and has developed BMPs for critical sites in collaboration with IUCN, aiming to achieve No Net Loss by 2050. The Sustainable Mining Charter and KPIs under seven thematic areas are the other crucial steps taken by Hindalco to make its mining vertical more sustainable.
Building safer workplaces and fostering a high-performance work culture for its employees, launching initiatives to increase their productivity and supporting their mental and physical health are some of the steps taken to ensure the well-being of the organisation''s workforce. Hindalco engages with local communities to ensure mutual prosperity, and this is achieved through programmes in education, healthcare, livelihood, infrastructure, and social reforms. The Company strongly believes in inclusive growth. This motivates Hindalco to deploy all the resources necessary to bring about a positive change in the spaces in which it operates and in society at large. The initiatives and performance are detailed in the âOur Capitalsâ section of this report.
As a responsible corporate citizen, Hindalco is fully dedicated to human health and safety. All the plants and mines follow occupational health and safety management standards that integrate occupational health, hygiene, and safety responsibilities into everyday business. A strong safety culture is required to prevent fatalities and achieve good safety performance. Supported by the efforts made to further strengthen its safety culture, Hindalco''s safety performance this year has been the best in its history. In FY2022-23, we achieved an LTIFR of 0.25-a 24% reduction on a yoy basisâand TRIFR of 0.69-a 5% decline from last year.
While there were no fatalities among employees, the Company lost two contract workmen to work-related injuries. Hindalco regrets the loss of these valuable lives and will work to strengthen its safety culture to achieve a Zero Harm status.
Hindalco''s entire operations are audited every year and all the businesses are set to meet the defined health and safety performance requirements and defined targets.
In FY2022-23, cross-entity safety audits were led by business heads/cluster heads. Audits conducted under the leadership of business heads is an industry-first move, and clearly shows the commitment of Hindalcoâs senior leaders towards safety and the goal of becoming a Zero-harm organisation.
During the reporting year, the focus on Contractor Management System (CSM) was intensified to establish a strong and continuous performance evaluation of contractors across Hindalco. This was done via Contractor Field Safety Audits.
The Serious Injuries and Fatality (SIF) prevention programme, which was introduced in FY2021-22, has started delivering results. With these programmes, the Company currently has 10 technical safety standards, nine administrative safety standards, four occupational health standards and 10 guidance notes. These standards and procedures help the Company maintain a consistent approach in managing major hazards across its operations. To effectively implement the standards,
137 new Subject Matter Experts (SMEs) have been trained and developed. This is in addition to the 1,308 SMEs developed over the past few years.
The Behaviour-based Safety Programme established at Hindalco has set a milestone through the reinforcement of safe behaviours and reduction in unsafe behaviours.
Hindalco invested approximately 4.21 man-days towards classroom safety training per person (including direct employees and contract workmen) this year, against a set target of 3 man-days. The focus was more on on-the-job training, resulting in a 51% increase in man-hours dedicated to training compared to the previous year.
A good safety culture depends heavily on the participation of line function employees. Which is why the Company has set up safety task forces and six safety sub-committees at each unit, for employees to participate in safety programs.
Each member of each task force and sub-committee is deemed a Safety Officer and contributes to the safety of the units and mines at every level. Going further, the Company constituted the Safety 360 (off-the-job safety) task force, comprising members from factory, colonies, schools, contractors'' family, school, and college students, SMEs, etc. This task force has the responsibility of driving various safety awareness campaigns and off the job safety enhancements for our internal as well as external stakeholders.
In FY2022-23, Hindalco completed Qualitative Exposure Assessment (QIEA) and Quantitative Exposure Assessment (QnEA) studies of all its manufacturing facilities and mining operations. By the end of FY2022-23, more than 98% of the recommendations to emerge from the studies were implemented, and progress has been positive across all recommendations.
In FY2022-23, the Company continued to offer psychological safety training sessions to its employees. Each unit also ran a comprehensive wellness programme recognising the value of good physical and mental health of employees, their families, and the community. Hindalco has an active Crisis Management Plan that ensures an appropriate response to all crisis, natural disasters, or other emergencies, at all units and mines.
Hindalco''s workforce comprising 36,000 employees worldwide has always been its biggest asset in driving cultural transformation in the Company and in aligning with its Purpose of building a Greener, Stronger and Smarter future.
The Great Place to Work Institute certified Hindalco as a ''Great Place to Work'' in 2022 for the second consecutive time. In comparison to the last survey, there has been a remarkable jump of 12 points in Trust levels and a jump of 16 points in Fairness. Pride, as always, stands out as an area of strength while Credibility and Respect have shown steep growth.
This signifies that the efforts towards establishing Hindalco as a High Performing Contemporary Organisation is yielding results. Hindalco added one more feather to its cap with the Great Place To Work Institute certifying it as India''s 40 Best Workplaces in Health & Wellness, based on the Company''s psychologically and emotional healthy work culture that inspires high performance. A high Workplace Wellness Index© is a testimony to Hindalco''s focus on the well-being of employees.
The sixth edition of Shillim, branded ''Shillim 365'', is meant to ensure the practice of adopting the culture journey all through the year. The emphasis on creating a high-performance culture was the inspiration for taking Shillim 365 to the shop floor. With the active collaboration of over 2,800 employees across the organisation, 30 ''Shillim 365'' workouts have been conducted so far.
These sessions aim to foster dialogue with every member of the workforce to generate ideas from all levels, emphasise on continuous improvement, and implement valuable inputs across the Company. This bottom-up approach of including employees at each level with ''Apni Zimmedari'' as the tagline for their contributions towards making Hindalco an HPCO.
This approach also helps in creating more opportunities of involving employees in decisions affecting them directly and can strengthen uniform implementation of the ideas and Innovation practices across the organisation.
The amplified focus on building the leadership pipeline, investing in talent development is helping the Company take bold bets on people, resulting in their placement in leading positions in newer plants and upcoming projects. Hindalco''s multi-pronged talent management strategy continues to focus on hiring young talent, creating structured training and development initiatives, promoting gender diversity, and building technical and specialist capability. This has also helped the Company venture into newer technical areas of capability building. The organisation''s human rights policy safeguards its employees and contractual workmen against harassment and discrimination. Focused efforts have been made to enhance employee productivity through various tailored programs focusing on their well-being. By investing in people and culture, Hindalco continues to inspire its workforce to go above and beyond and deliver consistent superior performance even in the most challenging times.
The Company''s internal control systems are commensurate with the nature of its business, the size and complexity of its operations and such internal financial controls with reference to the Financial Statements are adequate. A strong culture of internal controls is pervasive throughout the Group. Regular internal audits at all locations are undertaken to ensure that the highest standards of internal control are maintained. The effectiveness of a businessâ internal control environment is a component of senior management performance appraisals. The primary aim of the internal control system is to manage business risks with a view to enhance shareholder value and safeguard the Groupâs assets. It provides reasonable assurance on the internal control environment and against material misstatement or loss. The Company has in place a robust mechanism to deal with Internal audit that involves having a dedicated Assurance & Control function having personnel specialised in the field of the subject and having two internal auditors duly appointed by the Audit Committee and Board., viz. M/s. Ernst & Young for the Aluminium Business and M/s. Suresh Surana & Associates for the Copper business. The Audit Committee discusses audit plans, findings and observations made by the internal auditors at its meetings. The findings made by the internal auditors are reviewed and suggestions implemented.
DISCLOSURES IN TERMS OF THE PROVISIONS OF THE COMPANIES ACT,
2013 (''the Act'') & SECURITIES AND EXCHANGE BOARD OF INDIA (LISTING OBLIGATIONS AND DISCLOSURE REQUIREMENTS) REGULATIONS, 2015 (''SEBI Listing Regulations"
(i) Number of Meetings
The Board met five times during the year, details of which are given in the Corporate Governance Report forming part of the Integrated Annual Report.
(ii) Appointments and Resignations
a) Appointments/Re-Appointments
i. Ms. Alka Bharucha (DIN: 00114067) completed her first term of five years as Independent Director of the Company on July 11, 2023. On recommendation of the Nomination & Remuneration Committee (''NRC'') and the Board of Directors, the Shareholders of the Company approved the re-appointment of Ms. Bharucha as an Independent Director of the Company for a second term of five years commencing from July 11, 2023 upto July 10, 2028. The said approval was received on February 09, 2023 by way of a special resolution passed through Postal ballot.
ii. Mr. Praveen Kumar Maheshwari (DIN: 00174361) was reappointed as the Whole-time Director of the Company for a period of one year effective May 28, 2022 upto May 27, 2023. Based on the recommendation of the NRC, the Board of Directors, at its meeting held on May 24, 2023, re-appointed Mr. Maheshwari as the Whole-time Director for a further period effective from May 28, 2023 to March 31, 2024, subject to approval of the shareholders at the ensuing Annual General Meeting.
b) Resignations/Retirements/Retirement by rotation
i. During the year under review, no director has resigned.
ii. Mrs. Rajashree Birla (DIN: 00022995) is due to retire by rotation at ensuing Annual General Meeting and being eligible, offers herself for reappointment.
Mrs. Rajashree Birla has given required declaration under the Act.
Resolution seeking the re-appointment of Mr. Praveen Kumar Maheshwari & Mrs. Rajashree Birla along with the brief profiles, forms part of the Notice of the 64th Annual General Meeting.
(iii) DECLARATION OF INDEPENDENCE
[S. 149(6),150(1) & Schedule IV of the Act along with rules thereunder &
R. 16(1)(b), 25(8)]
The Independent Directors have submitted declarations that each of them meets the criteria of independence.
In the opinion of board there has been no change in the circumstances affecting their status as independent directors of the Company and the Board is satisfied of the integrity, expertise, and experience of all Independent Directors on the Board. Further based on declaration received from directors, the Board confirms, that the Independent Directors fulfil the conditions.
(iv) Board Evaluation
The Board evaluated the effectiveness of its functioning, the performance of its committees, the Chairman, Independent Directors, Non-Executive Directors, and Executive Directors.
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, NonExecutive and Independent Directors and based on the parameters such as contribution, attendance, decision making, action oriented, external knowledge etc. Board members have evaluated Independent Directors, Nonexecutive Directors, Executive Directors, Committee and Chairman of the Board.
Outcome of the Evaluation
The results of Board evaluation was satisfactory. Board fully agreed and rated 100% on its functioning, skill sets and working atmosphere. Independent Directors scored well on expressing their views and in understanding the Company and its requirements. Non Executive Directors scored well in all aspects of evaluation. Executive Directors are action oriented and ensures timely implementation of the Board decisions. Board is completely satisfied with the functioning of various Committees. Board has full faith in the Chairman in leading the Board effectively and ensuring contribution from all its members.
The manner in which the evaluation has been carried out has been set out in the Corporate Governance Report, which forms part of this Integrated Annual Report.
The Board has constituted six committees, viz. Audit Committee, Corporate Social Responsibility Committee, Risk Management Environment Social and Governance (ESG) Committee, Nomination and Remuneration Committee, Stakeholders Relationship Committee,
Finance Committee and is authorised to constitute other functional Committees, from time to time, depending on business needs.
During the year under review a Functional Committee named ''Capital Raising Committee'' was constituted for deciding on various matters related to the issue of 7.60% Unsecured, Listed, Rated, Redeemable, Non-Convertible Debentures of ''700 Crore.
Details with respect to the composition, terms of reference, number of meetings held, etc. of the above Committees are included in the Report on Corporate Governance, which forms part of this Integrated Annual Report.
C. Key Managerial Personnel (KMPs)
[S. 203 of the Act]
During the period under review, the Key Managerial Personnel of your Company are:
1) Mr. Satish Pai, Managing Director;
2) Mr. Praveen Kumar Maheshwari, Chief Financial Officer & Whole Time Director;
3) Mr. Anil Malik, Company Secretary, until November 30, 2022; and
4) Ms. Geetika Anand, Company Secretary & Compliance Officer w.e.f. December 1, 2022
D. Remuneration of Directors and Employees
[. 136,S. 197(12) of the Act & Rule 5(2) and 5(3) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014]
The names and other particulars of Top 10 employees ought to be set out in the Directors'' Report, as an addendum thereto. However, the Report and Accounts 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 Office of your Company.
Disclosures pertaining to remuneration and other details is attached as Annexure I to this Report.
E. Employee Stock Option Schemes and Share Based Employee Benefits
Employee stock options is a conditional share plan for rewarding performance on pre-determined performance criteria and continued employment with the Company.
In terms of the provisions of applicable laws and pursuant to the approval of the Board and the members of the Company, the NRC has duly implemented the following schemes:
(a) Employee Stock Option Scheme -2006 ("Scheme 2006")
(b) Hindalco Industries Limited Employee Stock Options Scheme-2013 ("Scheme 2013")
(c) Employee Stock Option Scheme 2018'' ("Scheme 2018")
(d) ''Hindalco Industries Limited Employee Stock Option and Performance Stock Unit Scheme 2022'' ("Scheme 2022")
The above Schemes are in line with the SEBI (Share Based Employee Benefits and Sweat Equity) Regulations, 2021 ("SBEB Regulations"). The details as required to be disclosed under the SBEB Regulations can be accessed at www.hindalco.com
A certificate from Secretarial Auditors, with respect to the implementation of the Company''s ESOS schemes, would be placed before the shareholders at the ensuing Annual General Meeting. A copy of the same will also be available for inspection through electronic mode.
[Section 134(3)(h) of the Act and Rule 8 of the Companies (Accounts) Rules, 2014 & R.23 of SEBI Listing Regulations]
During year under review, all the contract(s)/ arrangement(s)/transaction(s) entered into by the Company with its related parties were in compliance with the applicable provisions of the Act and the SEBI Listing Regulations.
Prior omnibus approval of the Audit Committee is obtained for such related party transactions, which are foreseen and of repetitive nature.
Pursuant to the said omnibus approval, details of transactions entered into are also reviewed by the Audit Committee on a periodic basis.
Further, all the related party transactions entered into during year under review were on an arm''s length basis and in the ordinary course of business of the Company.
In terms of the revised materiality thresholds as per the amended Listing Regulations, 2015, approval of the Shareholders was obtained for certain material related Party transactions by way of a Postal Ballot. The said approval was received on February 09, 2023 by way of a special resolution passed through Postal ballot.
Since, there were no transactions requiring disclosure under provisions of the Act, Form AOC-2 does not form a part of this report.
Details of RPTs entered into by the Company, in terms of Ind AS-24 have been disclosed in the notes to the standalone/consolidated financial statements forming part of this Report.
In line with the requirements of the Act and the SEBI Listing Regulations, the Company has formulated a Policy on Related Party Transactions. The Policy can be accessed on the Company''s website at www.hindalco.com
[R. 43A of SEBI Listing Regulations]
Your Company has formulated a Dividend Distribution Policy, with an objective to provide the dividend distribution framework to the Stakeholders of the Company. The policy sets out various factors, which shall be considered by the Board in determining the dividend pay-out. The policy is annexed as Annexure II to this Report and is also available on the website of the Company i.e. www.hindalco.com
[R.129(3) of the Act read with Companies (Accounts) Rules, 2014]
A statement containing salient features of financial statements of your Company''s subsidiaries, associates and joint venture companies are provided, in the prescribed Form AOC-1, as Annexure III to this Report.
The Company has adopted a policy on determination of material subsidiaries in line with the SEBI Listing Regulations. The policy aims to determine the Material Subsidiaries of the Company and to provide the governance framework for such subsidiaries.
Utkal Alumina International Limited & Novelis Inc. are the material unlisted subsidiaries of your Company. Your Company does not have any material listed subsidiary Company. The Audit Committee and the Board reviews the financial statements, significant transactions, investments, working of all subsidiary Companies, and the minutes of unlisted subsidiary Companies are placed before the Board.
The financial statements of your Company''s subsidiaries and policy on determination of material subsidiaries may be accessed at www.hindalco.com
[S. 135 of 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 for the financial year ending March 31, 2023 were Mr. Yazdi Dandiwala, Independent Director,
Mr. Askaran Agarwala, Non-Executive Director and Mr. Satish Pai: Managing Director. Dr. Pragnya Ram, Group Executive President, Group Head - CSR, Legacy Documents & Archives & Corporate Communication is a permanent invitee to the Committee.
Your Company also has in place a CSR Policy and the same is available on Company''s website viz. www.hindalco. com The Committee recommends to the Board what all activities are 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. During the year, the Company has spent 36.04 Crores and has transferred 9.5 Crores to unspent CSR account relating to ongoing project.
The Annual Report on CSR activities is attached as Annexure IV to this Integrated Annual Report.
[S. 134(3)(m) of the Act read with the Companies (Accounts) Rules, 2014]
The information on Conservation of Energy, Technology Absorption and Foreign Exchange Earnings and Outgo is given in Annexure V to this Report.
[R. 21 of SEBI Listing Regulations]
Pursuant to the requirement of Securities and Exchange Board of India (Listing and Disclosures Requirement) Regulations, 2015, the Company has constituted Risk Management Committee (RMC), which is mandated to review the risk management plan/process of your company. The Company has in place a Risk Management Policy which has been uploaded on the website of the Company at www.hindalco.com
Our risk management is guided by our Enterprise Risk Management Policy which is regularly reviewed by Risk Management and ESG Committee. The policy is applicable across all our operations. We follow both bottom-up and top-down approach to risk management. The Board-level Risk Management and ESG committee (''RM&ESG''), headed by one of the Board members, is the apex body that oversees risk management across the organisation.
The committee meets every quarter and provides guidance and strategic directions to manage risks.
Hindalco ERM framework is developed in accordance with COSO and ISO 31000. The framework is fully integrated with our strategic priorities. During the reporting period, we bolstered the framework to adapt to the BAN I world and embraced the RAAT (Resilience, Attention, Adaption, Transparency) approach.
The Chief Risk Officer (CRO) is responsible for the functioning of enterprise risk management and heads the central risk management team. The latter is the custodian
of the risk management process at all locations. To manage the risks at the grassroots we have an established team structure at cluster, site, and department levels. These teams are responsible for implementing risk mitigation plans and report to the Risk Management Head at regular intervals. Risk management and compliance with risk procedures are a part of the Key Result Areas (KRAs) of senior management and is linked to their variable incentives.
The company remained vigilant about rapid shifts in consumer preferences, dynamic geo-political environment, increasing impacts of climate change and a swiftly evolving regulatory landscape and therefore integrated approach of risk management with the decision-making helped managing risks proactively. Identification and monitoring of Key risk indicators and mitigation plans has enabled us to become resilient to uncertainties and deliver the performance.
The risk management framework is audited internally and externally during the Integrated Management System (IMS) audits. In addition, we regularly monitor and evaluate existing and emerging risks.
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
The Company''s remuneration policy is directed towards rewarding performance based on review of achievements. The remuneration policy is in consonance with existing industry practice. There has been no change in the policy during the year.
The Remuneration Policy of your Company, as formulated by the Nomination and Remuneration Committee of the Board of Directors, is given in Annexure VI to this Report and is also available on your Company''s website at www.hindalco.com
[R.34(2)(f) of SEBI Listing Regulations]
The Securities and Exchange Board of India (''SEBI''), in May, 2021, introduced new sustainability related reporting requirements to be reported in the specific format of Business Responsibility and Sustainability Report. A separate section on BRSR forms part of this Integrated Annual Report.
[S. 134(3) (c) of the Act]
Your Directors state that:
a) in the preparation of the annual accounts, applicable accounting standards have been followed along with proper explanations relating to material departures if any;
b) 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 March 31, 2023 and of the profit of your company for that period;
c) 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 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) Company had laid down internal financial controls and that such internal financial controls are adequate and were operating effectively;
f) Company has devised proper system to ensure compliance with the provisions of all applicable laws and that such systems were adequate and operating effectively.
g) the Company has been in compliance with the applicable Secretarial Standards issued by the Institute of Company Secretaries of India
P. Auditors : FY23 |
|
Statutory Auditor |
⢠M/s Price Waterhouse & Co. Chartered Accountants LLP (Firm Registration No. 304026E/E-300009) had been appointed as the Statutory Auditors of the Company in the 63rd Annual General Meeting to hold office for a period of five (5) years to the conclusion of 68th Annual General Meeting. |
⢠Statutory Auditorâs Report do not contain any qualification, reservation, adverse remark or disclaimer and and therefore, do not call for any further comments under Section 134(3)(f) of the Act. |
|
Secretarial Auditor |
⢠M/s BNP & Associates, Practising Company Secretaries had been appointed by the Board to conduct the secretarial audit of the Company. |
⢠The Secretarial Audit Report for the financial year ended March 31, 2023 forms part of this report as Annexure VII and confirms that the Company has complied with the provisions of the Act, Rules, Regulations and Guidelines and that there were no deviations or non-compliances. |
|
⢠The Secretarial Audit Report of its unlisted material subsidiary i.e Utkal Alumina is annexed as Annexure VIIA to this report. |
|
Cost Auditor |
⢠M/s. Nanabhoy & Co., Cost Accountants were appointed as the Company''s Cost Auditor. |
⢠The cost accounts and records of the Company are duly prepared and maintained by the Company as required under Section 148(1) of the Act pertaining to cost audit. |
|
Internal Auditors |
⢠M/s. Ernst & Young LLP were appointed as the Company''s Internal Auditor of Aluminium Business. |
⢠M/s Suresh Surana & Associates LLP were appointed as the Company''s Internal Auditor of Copper Business. |
|
⢠Internal Audit Reports are placed on halfyearly basis before the Audit Committee for their review. |
[Para C,E of Schedule Vof SEBI Listing Regulations]
Your Company is committed to maintain the highest standards of Corporate Governance and adheres to the Corporate Governance requirements set out by the SEBI. The report on Corporate Governance as stipulated under the SEBI Listing Regulations forms part of this Annual Report.
Your Company has duly complied with the Corporate Governance requirements as set out under Chapter IV of the SEBI Listing Regulations and M/s. Dilip Bharadiya & Associates, Company Secretaries, vide their certificate, have confirmed that the Company is and has been compliant with the conditions stipulated in the Chapter IV of the SEBI Listing Regulations. The said certificate is annexed as Annexure VIII to this Report.
[S186 of the Act read with Companies (Meetings of Board and its Powers) Rules, 2014]
Details of Loans, Guarantee and Investments are given in the notes to Financial Statements of this Integrated Report.
[S.923) of the Act read with Companies (Management and Administration) Rules, 2014]
An extract of the Annual Return of your Company for the financial year ended March 31, 2023 is available at Company''s website www.hindalco.com
Your Company has in place a policy on Prevention of Sexual Harassment at Workplace, which is in line with requirements of the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013 (''POSH Act''). The objective of this policy is to provide an effective complaint redressal mechanism if there is an occurrence of sexual harassment. This policy is applicable to all employees, irrespective of their level.
Your Company has also set up an Internal Complaints (IC) Committee at all our locations which is duly constituted in compliance with the provisions of the POSH Act. Further, the Company also conducts interactive sessions for all the employees, to build awareness amongst employees about the policy and the provisions of the POSH Act.
During the year under review, the Committee has received 9 complaints, all of which were disposed of with appropriate action.
⢠In addition to the accolades/awards mentioned in the Social Report, we received the following Awards & Recognitions during the year.
⢠Hindalco recognised as ''India''s Best Employers among Nation Builders'' for the second consecutive year (2023) by Great Place to Work® Institute.
⢠Hindalco is among top 40 of India''s best workplaces in Health and Wellness 2022 by The Great Place to Work® Institute.
⢠Hindalco is in the top 1% S&P Global ESG score in the aluminium industry in 2022 (a score of 83/100) Hindalco continues to be a part of S&P Global Sustainability Yearbook 2023 for the second consecutive year.
⢠Hindalco won award for Environmental and Social Initiatives at KPMG ESG Conclave and Awards â23.
⢠Hindalcoâs Integrated Annual Report FY 2021-22 won Indiaâs best Annual Report Award in the Mining and Metals Sector, by The Free Press Journal & Grant Thornton Bharat LLP.
⢠Hindalco emerges as one of the ''Top Leadership Factories of India'' for creating leaders at scale by Great Manager Institute®.
⢠Aditya unit conferred Corporate Governance and Sustainability Vision Award 2023 in CSR category by Indian Chamber of Commerce.
⢠Mahan unit CPP wins âExcellent Energy Efficient Unitâ in National Award for Excellence in Energy Management by CII.
⢠Mahan unit gets first-runner up award for ''Indian Manufacturer of the Year'' at the India Manufacturing Excellence Awards by Frost & Sullivan.
⢠Aditya Aluminium unit bags Golden Bird National Award (Platinum Category) for its Vision Centre project.
⢠Aditya and Mahan plants bag ''Gold at the India Green Manufacturing Challenge Award''
⢠Muri Alumina Refinery receives Gold Award at IRIM (International Research Institute for Manufacturing) Annual Awards 2023.
⢠Utkal plant won the IMC RBNQ Performance Excellence Award 2022 in manufacturing category.
⢠Utkal plant won 9th CSR Times Award 2022 during 9th CSR Summit in December 2022.
⢠Renukoot unit won ''Excellent Energy Efficient Unit'' award from CII in September 2022
In terms of the applicable provisions of the Act and the
SEBI Listing Regulations, your Company additionally
discloses that, during the year under review:
⢠there was no change in the nature of business of your Company;
⢠it has not accepted any fixed 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, 2023, there were no deposits which were unpaid or unclaimed and due for repayment, hence, there has been no default in repayment of deposits or payment of interest thereon;
⢠it has not issued any shares with differential voting rights;
⢠it has not issued any sweat equity shares;
⢠it has not made application or no proceeding is pending under the Insolvency and Bankruptcy Code, 2016 and
⢠it has not made any one-time settlement for the loans taken from the Banks or Financial Institutions.
⢠there were no material changes and commitments affected the financial position of your Company between end of financial year and the date of report;
⢠there was no revision in the financial statements;
⢠Mr. Satish Pai: Managing Director is a director on the Board of Novelis Inc, wholly owned subsidiary.
He is in receipt of annual fee of US$ 1,50,000 in the calendar year 2023 from Novelis;
⢠Mr. Praveen Kumar Maheshwari: Whole Time Director and Chief Financial Officer has not received any commission/ Remuneration from your Company''s subsidiaries;
⢠there are no significant and material orders passed by the regulators or courts or tribunals impacting the going concern status and company''s operations in future
⢠there were no frauds reported by the Auditors u/s 143(12) of the Act.
Statements in this "Management Discussion and Analysis" describing the Company''s objectives, projections, estimates, expectations or predictions may be "forward looking statements" within the meaning of applicable securities laws and regulations.
Actual results could differ materially from those expressed or implied. Important factors that could make a difference to the Company''s operations include global and Indian demand supply conditions, finished goods prices, feedstock availability and prices, cyclical demand and pricing in the Company''s principal markets, changes in the government regulations, tax regimes, economic developments within India and the countries within which the Company conducts business and other factors such as litigation and labour negotiations.
The Company assumes no responsibility to publicly amend, modify or revise any forward looking statements, on the basis of any subsequent development, information events or otherwise.
We would like to record by gratitude and appreciation to all our stakeholders, including the Central and State Government Authorities, Stock Exchanges, Financial Institutions, Analysts, Advisors, Local Communities, Customers, Vendors, Business Partners, Shareholders, and Investors forming part of the Hindalco family for their continued support during the year. Your faith and vote of confidence hold in good stead, and motivate us in pursuing greater opportunities, responsible growth and enhanced delivery on our strategy. Let us also take this opportunity to thank our employees, whose enthusiasm, energy, and zeal, help us progress along our vision. The contribution our people make is the base on which we build further, and is integral to Hindalco''s high performing culture.
For and on behalf of the Board
Satish Pai Kailash Nath Bhandari
Managing Director Independent Director DIN: 06646758 DIN: 00026078
Place: MumbaI Dated: July 12, 2023
Mar 31, 2022
Your Directors have pleasure in presenting the 63rd Annual Report and the audited standalone and consolidated financial statements of your company for the year ended 31st March, 2022.
'' in Crore |
||||
Consolidated |
Standalone |
|||
2021-22 |
2020-21 |
2021-22 |
2020-21 |
|
Revenue from Operations |
1,95,059 |
1,32,008 |
67,653 |
42,701 |
Other Income |
1,136 |
1,199 |
535 |
650 |
Profit Before Interest, Tax and Depreciation (PBITDA) |
29,638 |
18,896 |
11,828 |
4,884 |
Depreciation and Amortisation |
6,729 |
6,628 |
1,752 |
1,708 |
Impairment Loss/(Reversal) of Non Current Assets (Net) |
155 |
138 |
95 |
140 |
Finance Costs |
3,768 |
3,738 |
1,417 |
1,469 |
Profit before Exceptional Items and Tax Share in Profit / (Loss) in Equity Accounted Investments |
18,986 |
8,392 |
8,564 |
1,567 |
Share of Equity Accounted Investments |
6 |
5 |
- |
- |
Profit before Exceptional Items and Tax |
18,992 |
8,397 |
8,564 |
1,567 |
Exceptional Items |
582 |
(492) |
(107) |
7 |
Profit before Tax |
19,574 |
7,905 |
8,457 |
1,574 |
Tax Expenses |
5,373 |
2,723 |
2,950 |
581 |
Profit/ (Loss) for the year from Continuing Operations |
14,201 |
5,182 |
- |
- |
Profit/ (Loss) for the Year from Discontinued Operations |
(464) |
(2,066) |
- |
- |
Tax Expense/ (Benefit) of Discontinued Operations |
7 |
(367) |
- |
- |
Profit/ (Loss) for the year from DiscontinuedOperations |
(471) |
(1,699) |
- |
- |
Profit/ (Loss) for the year |
13,730 |
3,483 |
5,507 |
993 |
Other Comprehensive Income / (Loss) |
(1,148) |
4,784 |
(397) |
3,780 |
Total Comprehensive Income |
12,582 |
8,267 |
5,110 |
4,773 |
Basic EPS - Continuing Operations (?) |
63.85 |
23.30 |
- |
- |
Basic EPS - Discontinued Operations (?) |
(2.12) |
(7.64) |
- |
- |
Basic EPS (?) |
61.73 |
15.66 |
24.76 |
4.46 |
Appropriations to Reserves : |
'' in Crore |
|||
Appropriations |
2021-22 |
2020-21 |
||
Opening Balance in Retained Earnings and Other Comprehensive Income |
11,026 |
6,624 |
||
Total Comprehensive Income for the Current Year |
5,110 |
4,773 |
||
Dividends paid |
(667) |
(222) |
||
Hedging (Gain)/ Loss and cost of hedging transferred to non financial assets |
(41) |
(1) |
||
Employee Share Based Transactions |
2 |
2 |
||
Transferred to Debenture Redemption Fund |
(150) |
(150) |
||
Closing Balance in Retained Earnings and Other Comprehensive Income |
15,280 |
11,026 |
Dividend:
For the year ended 31st March, 2022, the Board of Directors of your Company has recommended dividend of '' 4.00 per share (Previous year '' 3.00 per share) to equity shareholders.
Equity shares that may be allotted upon exercise of Options granted under the Employee Stock Option Scheme and out of the Share Capital Suspense 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.
In terms of provisions of Regulation 43A of the Securities and Exchange Board of India (Listing Obligations & Disclosure Requirements) Regulations, 2015, herein after referred to as " Listing Regulations" your Company has formulated a Dividend Distribution Policy. The Policy is given in Annexure I to the Annual Report and is also accessible from your Company''s Website www.hindalco.com.
Overview and State of the Company''s Affairs:
The Standalone and Consolidated Financial Statements for the Financial Year ended 31st March, 2022 have been prepared in accordance with the Indian Accounting Standards (IND AS) as notified by the Ministry of Corporate Affairs.
Standalone full year highlights
Your Company registered a revenue of '' 67,653 crores for the fiscal year 2022 vs '' 42,701 crores in the previous year up 58% on account of higher global prices of aluminium and copper in FY22 versus EBIDTA of '' 4,884 crores in FY21. EBITDA (Earnings before Interest, Tax, Depreciation and Amortisation) stood at '' 11,828 crores, up 142% compared to the last year, on account of higher profitability in Aluminium business supported by improved macros, higher volumes, and cost optimization. Depreciation was up 3% at '' 1,752 crore in FY22 versus '' 1,708 crores in FY21. The Finance Cost was lower on Year by 4% at '' 1,417 crores in FY22 versus '' 1,469 crores in FY21. This reduction in finance cost was mainly due to overall reduction in the average cost of long-term loans on account of re-financing. The Profit before Tax (and Before Exceptional Items) stood at '' 8,564 crore, up by 447% compared to the previous year due to higher EBITDA. Net Profit for FY22 stood at '' 5,507 crores as compared to '' 993 crore up 455% Year on Year compared to the previous year.
Consolidated Full Year Highlights
Hindalco''s Consolidated Revenue stood at '' 1,95,059 crore for FY22 compared to '' 1,32,008 crore in the previous year up 48% on account of higher global prices of aluminium and copper in FY22 versus FY21. The Company recorded consolidated EBITDA (Earnings before Interest, Tax, Depreciation and Amortisation) of '' 29,638 crore, up by 57% due to favorable macros, strategic product mix and an improved performance by the downstream business in FY22 versus FY21. Consolidated Profit before Tax (and Before Exceptional Items) was '' 18,992 crore in FY22, up by 126% compared to the previous year on account of higher EBITDA. Net Profit after Tax in FY22, stood at '' 13,730 crores compared to '' 3,483 crores in the previous year up 294% Year on Year on account of exceptional performance by India Business in FY22. For detailed analysis, refer to the Management Discussion and Analysis section of the Integrated Annual Report.
Highlights of the Company''s Subsidiaries:
1. Utkal Alumina International Limited
Utkal Alumina revenues were '' 4,594 crore in FY22 compared to '' 2,787 crore in FY21 up by 65% because of higher transfer pricing compared to last year on account of higher average global alumina prices in FY22 versus FY21. The EBITDA for FY22 stood at '' 2,215 crore higher by 62% compared to '' 1,371 crore in FY21. The Profit after Tax in FY22 was '' 1,099 crore versus '' 605 crore in FY21 up by 82% Year on Year on account of higher EBITDA in FY22. (Refer to the table below for comparison in FY22 versus FY21 key financial number).
Particulars (? in Crore) |
FY22 |
FY21 |
% Change |
Revenue |
4,594 |
2,787 |
65% |
EBITDA |
2,215 |
1,371 |
62% |
PAT |
1,099 |
605 |
82% |
During the year, all these expansion projects are in line with Company''s Capital Allocation framework, focussed on value enhancing growth, its product enrichment, maintaining a robust capital structure for maximising shareholder value.
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 developing and commercializing premium differentiated products, improving our competitive cost position, product quality and environmental sustainability. To support these goals, we are managing a pipeline of projects that address near and mid-term needs, as well as the exploration of future opportunities. This year R&D team continued development in the area of making our processes greener & sustainable and value added products & applications. These initiatives helped our plants to mitigate challenges of raw material quality, reducing specific energy consumption and carbon footprint, cost effective management of waste generated during processing, recovery of value from by-product as well as any waste products. Specific programs have also been initiated to adopt new digitalisation techniques such as soft sensors, digital twins, etc. The predictive and prescriptive models based on AI /ML data analytics coupled with physic based models are helping better process control & achieve desired process performance. These tools also help in understanding the requirement of existing and prospective customers, and provide a better service, in order 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 three Hindalco Innovation Centres (HIC), one HIC-Alumina at Belagavi working on R&D of bauxite ore, alumina refining and specialty alumina, hydrate products and their application in different end uses; as well as waste management; and one HIC-SemiFab located at Taloja, near Mumbai, working in the area of tribology, energy and environment management and aluminium fabricated products and new applications. Additionally, R&D Team at Birla Copper, Dahej, is focusing on maximisation of copper recovery as well recovery of various metal values, such as, Selenium, Tellurium, Nickel, Bismuth, etc., from the effluent generated in the plant and value added applications of the solid wastes. In addition, your company engages the Aditya Birla Group''s corporate
There is no material change in the Schemes and the aforementioned schemes are in compliance with SEBI ( Share Based Employee Benefits) Regulations, 2014.
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.
The entire report on Corporate Governance forms part of Integrated 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 confirm 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, 2022 and of the profit of your company for that period;
c) 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 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 financial controls and that such internal financial 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 II to this Report.
2. NoveLis Inc.
The Performance highlights of NoveLis Inc. are provided in detail for FY22 versus FY21 in the Management Discussion and Analysis Section of the Integrated Annual Report.
In India operations, Hindalco successfully completed its 500Kt UtkaL''s Alumina refinery brownfield capacity expansion in FY22. This project was at a capital outlay of around '' 1,500 crore. This has strengthened the Company''s integration and boosted the availability of best- in-class alumina and in a reduction of the overall cost of production in FY22.
In FY22, Hindalco made two acquisitions valued $79 million of Hydro''s Kuppam Extrusion facility in India to expand its presence in the upper end of the value-added to enhance our capabilities in high-end extrusions and a fabricated solutions and a Copper cCr facility of Ryker (now Asoj) with capacity of 225 kt, expanding overall capacities in the value-added segment. This will not only enhance the Company''s capabilities but also help the Company to move towards a more sustainable business model.
In addition to the above, Hindalco announced certain organic growth investments in India in the businesses of Aluminium, Copper, Specialty Alumina and also Resource Securitisation over the next five years in the range of $3.0-3.3 billion, including some certain projects which are under appraisal. The company continues to focus on its downstream strategy to increase its downstream capacities in the Flat Rolled Products, Extrusions and other flat rolled products. All these investments are mainly targeted towards catering the rising demand of downstream products in the domestic market.
Novelis has identified more than $4.5 billion of potential organic capital investment opportunities to grow Novelis'' business through debottlenecking, recycling, and new capacity investments over the next five years focused on increasing capacity and capabilities that meet growing customer demand and align with its sustainability commitments. This includes expansion of cold rolling and recycling capacity in Zhenjiang, China, a highly advanced recycling center for automotive in the U.S. and a recycling center at UAL joint venture in South Korea.
This also includes Novelis'' $2.5 billion greenfield, fully integrated rolling and recycling plant in Bay Minette, Alabama. This new U.S. plant will support strong demand for sustainable beverage can and automotive aluminum sheet and advance towards a circular economy.
Novelis continues to focus on its safe integration of Aleris'' continuing operations to drive several strategic benefits and is expected to generate over $220 million in synergies, through traditional integration cost synergies and strategic synergies created by enhancing and integrating operations in Asia.
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. ABSTCPL''s forte of having multidisciplinary teams of technical experts, scientists and engineers, enables your company to develop building competencies in select areas, as a long term value to business. Both the HICs at Belagavi and Taloja as well as ABSTCPL are DSIR, GOI recognised R&D Centres. Parallelly, we also work with different R&D institutes of national and international reputes to develop technologies for our mutual benefits. The engagement has resulted into patent applications, which have been and will be assigned to your company on the grant of the patent.
Consolidated Financial Statements:
The Consolidated Financial Statements for the year ended 31st March, 2022 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 Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015 "Listing Regulations" and forms part of the full Annual Report.
Employee Stock Option Schemes:
ESOS - 2006
During the year ended 31st March 2022, the Company has allotted 391,304 fully paid-up equity share of '' 1/- each of the Company (Previous year 65,652) on exercise of options under ESOS 2006.
ESOS - 2013:
During the year ended 31st March 2022, the Company has allotted 97,173 fully paid-up equity share of '' 1/- each of the Company (Previous year 3,95,908) on exercise of options under ESOS 2013.
ESOS - 2018:
During the year, the Company has granted 18,72,984 stock options (Previous year 5,82,240) and 612,560 RSUs (Previous year 20,487) under ESOS 2018. Hindalco Employee Welfare Trust has transferred 8,78,968 fully paid-up equity share of '' 1/- each of the Company during the year on exercise of Options under ESOS 2018.
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 Secretarial Option Schemes wi ll be placed at the ensuing Annual General Meeting for inspection by the members.
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 IV to the Integrated Annual Report.
Meetings of the Board:
The Board of Directors of your Company met Seven times during the year, detaiLs of which are given in the Corporate Governance Report forming part of the Integrated Annual Report.
Annual Evaluation:
Pursuant to the provisions of the Companies Act, 2013 and Securities and Exchange Board of India (Listing and DiscLosures Requirement) Regulations, 2015, the Directors has carried annual performance evaluation of Board, Independent Directors, Non Executive Directors, Executive Directors, Committee and Chairman of the Board.
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 have evaluated Independent Directors, Non executive Directors, Executive Directors, Committee and Chairman of the Board. The resuLt of evaLuation was satisfactory and meets the requirements of the Company. Board fuLLy agreed and rated 100% on its functioning, skiLL sets and working atmosphere. Independent Directors scored weLL on expressing their views and in understanding the Company and its requirements. Non-Executive Directors scored weLL in understanding the Company and its requirements and keep themseLves current on the areas to be discussed. Executive Directors are action oriented and ensures timeLy implementation of the Board decisions. Board is completely satisfied with the functioning of various Committees. Board has fuLL faith in the Chairman in Leading the Board effectiveLy and ensuring contribution from all its members.
Audit Committee:
The Audit Committee comprises Mr. K.N. Bhandari, Independent Director, Mr. Vikas BaLia, Independent Director & Mr. Y.P. DandiwaLa, Independent Director. Mr. Satish Pai :Managing Director and Mr. Praveen Kumar Maheshwari: Chief FinanciaL Officer and WhoLe-Time Director are the permanent invitees. Further details relating to the Audit Committee are provided in the Corporate Governance Report forming part of the Integrated Annual Report.
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 Office 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 III to the Integrated Annual Report.
Board constitution and changes:
Mr.Kumar MangaLam BirLa (DIN: 00012813) wiLL retire from office by rotation at Annual General Meeting, and being eligible, offers himseLf for reappointment. Mr. Kumar MangaLam BirLa has given required declaration under Companies Act, 2013.
Mr. Praveen Kumar Maheshwari (DIN:00174361) is re-appointed as the WhoLe-time Director for a term of 1 Year w.e.f. 28th May, 2022, subject to shareholders approval at the ensuing Annual GeneraL Meeting. He is aLso the Chief Financial Officer of the Company.
Brief resume of the Directors being appointed and re-appointed form part of the Notice of the ensuing Annual General Meeting.
The Board recommends, re-appointment of Mr. Kumar MangaLam BirLa and Mr. Praveen Kumar Maheshwari. Item seeking your approvaL is incLuded in the Notice convening the Annual General Meeting.
Brief resumes of the directors being appointed/ reappointed form part of the notice of the ensuing Annual General Meeting.
All the directors being appointed/reappointed have given required declaration under Companies Act, 2013 and Listing Regulations.
Independent Directors Statement:
Independent Directors on your Company''s Board have submitted decLarations of independence to the effect that they meet the criteria of independence as provided in Section 149(6) of the Companies Act, 2013 and Regulation 16(1)(b) of the Listing Regulations.
In terms of provisions of Section 203 of the Companies Act, 2013, Mr. Satish Pai: Managing Director, Mr. Praveen Kumar Maheshwari : Chief FinanciaL Officer and WhoLe Time Director and Mr. AniL MaLik: Company Secretary are the Key ManageriaL Personnel of your Company.
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
M/s. Price Waterhouse & Co. Chartered Accountants LLP (ICAI Registration No. 304026E/E-300009) were appointed as the Statutory Auditors of the company to hoLd office from the conclusion of Fifty Eighth Annual General Meeting held in 2017 tiLL the concLusion of the Sixty third AnnuaL GeneraL Meeting of the Company, to be held in the Calendar year 2022.
The Company has received confirmation from the Auditors to the effect that their appointment, if made, wiLL be in accordance with the Limits specified under the Companies Act, 2013 and the firm satisfies the criteria specified in Section 141 of the Companies Act, 2013 read with RuLe 4 of Companies (Audit & Auditors) Rules 2014.
The Board is of the opinion that continuation of M/s. Price Waterhouse & Co. Chartered Accountants LLP, as Statutory Auditors wiLL be in the best interests of the Company and therefore, the members are requested to consider their reappointment as Statutory Auditors of the Company, for a term of five years, from the concLusion of the ensuing AnnuaL General Meeting, till the Annual General Meeting to be held in the calendar year 2027, at such remuneration mutually agreed and approved by the Board.
The observation made in the Auditor''s Report are selfexpLanatory 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 Act 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 financiaL year ending 31st March, 2023, 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 ratification. Accordingly, a resoLution seeking Member''s ratification 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, 2022. The Report of the SecretariaL Auditors is annexed herewith as Annexure V to the Integrated Annual Report.
The SecretariaL Audit Report does not contai n any quaLification, reservation or adverse remark.
As per Regulation 24A of the Listing Regulations, material unlisted subsidiaries of a listed entity incorporated in India is required to annex a SecretariaL Audit Report issued by a Company Secretary in practice. In compLiance with the above requirement, the SecretariaL Audit Report of UtkaL ALumina International Limited, a material subsidiary of your Company, is given in Annexure VB to the Annual Report. The Secretarial Audit Report do not contain any quaLification, reservation or adverse remark.
Environment Protection and Pollution Control
Your Company is committed to sustainable development. A detailed report of the Company''s initiatives and commitment to environment conservation is part of the Integrated Annual Report.
Particulars of Loans, Guarantees and Investments:
Details of Loans, Guarantee 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 of the Integrated Report.
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
Other Disclosures:
⢠There were no material changes and commitments affecting the financial position of your Company between end of financial year and the date of report.
⢠Your Company has not issued any shares with differential voting.
⢠There was no revision in the financial statements.
⢠Your Company has not issued any sweat equity shares.
⢠Mr. Satish Pai is a director on the Board of NoveLis Inc, wholly owned subsidiary. He is in receipt of annuaL fee of US$ 1,50,000 in the caLendar year 2022. Mr. Praveen Kumar Maheshwari: WhoLe Time Director and Chief Financial Officer has not received any commission/ Remuneration from your Company''s subsidiaries.
⢠There is no change in the nature of business.
⢠During the year under review, your Company has not accepted any fixed 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, 2022, there were no deposits which were unpaid or uncLaimed and due for repayment.
⢠There are no significant and materiaL orders passed by the regulators or courts or tribunals impacting the going concern status and company''s operations in future.
⢠There were no frauds reported by the Auditors u/s 143(12) of the Companies Act, 2013.
("CSR") Committee which is chaired by Mrs. Rajashree BirLa. The other Members of the Committee for the Financial year ending 31st March 2022 were Mr. Y.P. DandiwaLa, Independent Director, Mr. A.K. AgarwaLa, Non Executive Director and Mr. Satish Pai: 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. During the financial Year 2021-22 the Company has spent '' 38 Crores under Section 135 of the Companies Act, 2013 on CSR activities , which is more than 2% of average net profits of the Company for immediately preceeding three financial years.
The Annual Report on CSR activities is attached as Annexure VI to the full Annual Report.
Pursuant to the requirement of Securities and Exchange Board of India (Listing and Disclosures Requirement) Regulations, 2015, 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 financial 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 defined under Section 188 of the Act read with Companies (Meetings of Board and its Powers) Rules, 2014 and SEBI (Listing Obligations and Disclosures Requirement) Regulations, 2015. The related party transactions have been approved by the Audit Committee and Board of your Company, as required under the Companies Act 2013 and SEBI (Listing Obligations and Disclosure Requirement) Regulations, 2015 .
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.
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 financial year ended 31st March 2022 is available at www.hindaLco.com .
Business Responsibility Report:
As per Listing Regulations, a separate section of Business Responsibility Report forms part of Integrated 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 defined by the Audit Committee.
The Internal Audit Department monitors and evaluates the efficacy 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. Significant audit observations and corrective actions thereon are presented to the Audit Committee of the Board.
Your directors confirm having Laid down internal financial controls and that such internal financial controls are adequate and were operating effectively
Subsidiary, Joint Ventures or Associate Companies:
The financial statements of your Company''s subsidiaries and related information have been placed on the website of your Company viz. www.hindaLco.com
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 financiaL 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.
⢠As per the requirement of the SexuaL Harassment of Women at the WorkpLace (Prevention, Prohibition and Redressal) Act, 2013, your Company has complied with provisions reLating to the constitution of InternaL Complaint Committee under POSH.
⢠Directors of your Company hereby state and confirm that the Company has compLied with aLL the appLicabLe Secretarial Standards.
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
Satish Pai K.N. Bhandari
Managing Director Independent Director DIN:06646758 DIN:00026078
PLace: Mumbai Dated: 22nd JuLy, 2022
Mar 31, 2021
Dear Shareholders,
Your Directors have pleasure in presenting the 1st Integrated Annual Report and 62nd Annual Accounts of your company for the year ended 31st March, 2021.
FINANCIAL HIGHLIGHTS
'' in Crore |
||||
Consolidated |
Standalone |
|||
2020-21 |
2019-20 |
2020-21 |
2019-20 |
|
Revenue from Operations |
131985 |
118144 |
42701 |
40242 |
Other Income |
1222 |
1186 |
650 |
739 |
Profit Before Interest, Tax and Depreciation (PBITDA) |
18896 |
15536 |
4884 |
4403 |
Depreciation and Amortisation |
6628 |
5091 |
1708 |
1708 |
Impairment Loss/(Reversal) of Non Current Assets (Net) |
138 |
44 |
140 |
- |
Finance Costs |
3738 |
4197 |
1469 |
1679 |
Profit before Exceptional Items and Tax Share in Profit / (Loss) in Equity Accounted Investments |
8392 |
6204 |
1567 |
1016 |
Share of Equity Accounted Investments |
5 |
4 |
- |
- |
Profit before Exceptional Items and Tax |
8397 |
6208 |
1567 |
1016 |
Exceptional Items |
(492) |
(284) |
7 |
(64) |
Profit before Tax |
7905 |
5924 |
1574 |
952 |
Tax Expenses |
2723 |
2157 |
581 |
332 |
Profit/ (Loss) for the year from Continuing Operations |
5182 |
3767 |
- |
- |
Profit/ (Loss) for the Year from Discontinued Operations |
(2066) |
- |
- |
- |
Tax Expense/ (Benefit) of Discontinued Operations |
(367) |
- |
- |
- |
Profit/ (Loss) for the year from Discontinued Operations |
(1699) |
- |
- |
- |
Profit/ (Loss) for the year |
3483 |
3767 |
993 |
620 |
Other Comprehensive Income / (Loss) |
4784 |
(2723) |
3780 |
(3400) |
Total Comprehensive Income |
8267 |
1044 |
4773 |
(2780) |
Basic EPS - Continuing Operations (?) |
23.30 |
16.94 |
- |
- |
Basic EPS - Discontinued Operations (?) |
(7.64) |
- |
- |
- |
Basic EPS (?) |
15.66 |
16.94 |
4.46 |
2.79 |
Appropriations to Reserves : |
'' in Crore |
|||
Appropriations |
2020-21 |
2019-20 |
||
Opening Balance in Retained Earnings and Other Comprehensive Income |
6624 |
9865 |
||
Total Comprehensive Income for the Current Year |
4773 |
(2780) |
||
Dividends paid |
(222) |
(316) |
||
Transition Impact - Leases (Ind AS 116) |
- |
(9) |
||
Hedging (Gain)/ Loss and cost of hedging transferred to non financial assets |
(1) |
14 |
||
Employee Share Based Transcations |
2 |
- |
||
Transferred to Debenture Redemption Fund |
(150) |
(150) |
||
Closing Balance in Retained Earnings and Other Comprehensive Income |
11026 |
6624 |
Dividend:
For the year ended 31st March,2021, the Board of Directors of your Company has recommended dividend of '' 3.00 per share (Previous year '' 1.00 per share) to equity shareholders.
Equity shares that may be allotted upon exercise of Options granted under the Employee Stock Option Scheme and out of the Share Capital Suspense 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.
In terms of provisions of Regulation 43A of the Securities and Exchange Board of India (Listing Obligations & Disclosure Requirements) Regulations, 2015, herein after referred to as "Listing Regulations" your Company has formulated a Dividend Distribution Policy. The Policy is given in Annexure I to this Report and is also accessible from your Company''s website www.hindalco.com.
OVERVIEW AND STATE OF THE COMPANY''S AFFAIRS:
The Standalone and Consolidated Financial Statements for the Financial Year ended 31st March, 2021 have been prepared in accordance with the Indian Accounting Standards (IND AS) as notified by the Ministry of Corporate Affairs.
Standalone full year highlights
Your Company registered a revenue of '' 42,701 crores for the fiscal year 2021 vs '' 40,242 crores in the previous year up 6% on account of higher global prices of aluminium and copper in FY21 versus FY20. EBITDA (Earnings before Interest, Tax, Depreciation and Amortisation) stood at '' 4,884 crores, up 11% compared to the last year, on account of higher profitability in Aluminium business supported by improved macros, cost optimization and a strong market recovery, partially offset by lower profitability in copper business impacted by lockdown due to COVID and lower TC/RC in FY21. Depreciation was flat Year on Year at '' 1708 crore in FY21 versus FY20. The Finance Cost was lower on Year by 13% at '' 1,469 crores in FY21 versus '' 1,679 crores in FY20. This reduction in finance cost was mainly due to overall reduction in the average cost of long-term loans on account of re-financing. The Profit before Tax (and Before Exceptional Items) stood at '' 1,567 crore, up by 54% compared to the previous year due to higher EBITDA. Net Profit for FY21 stood at '' 993 crores as compared to '' 620 crore up 60% Year on Year compared to the previous year.
Consolidated Full Year Highlights
Hindalco''s Consolidated Revenue stood at '' 1,31,985 crore for FY21 compared to '' 1,18,144 crore in the previous year up 12% on account of higher global prices of aluminium and copper in FY21 versus FY20. The Company recorded consolidated EBITDA (Earnings before Interest, Tax, Depreciation and Amortisation) of '' 18,896 crore, up by 22% due to favorable macro and lower input costs in FY21 versus FY20. Consolidated Profit before Tax (and Before Exceptional Items) was '' 8,397 crore in FY21, up by 35% compared to the previous year on account of higher EBITDA and lower interest costs. Net Profit after Tax in FY21, stood at '' 3,483 crores compared to '' 3,767 crores in the previous year down 8% Year on Year mainly on account of loss due to discontinued operations in FY21 due to loss booked on the divestiture of automotive assets in Aleris business acquired by Novelis during the year. For detailed analysis, refer to the Management Discussion and Analysis section of the Integrated Annual Report.
Highlights of the Company''s Subsidiaries:
1. UtkaL Alumina International Limited
Utkal Alumina revenues were '' 2,764 crore in FY21 compared to '' 2,653 crore in FY20 up by 4% because of higher transfer pricing compared to last year on account of higher average global alumina prices in FY21 versus FY20.
The EBITDA for FY21 stood at '' 1,371 crore higher by 38% compared to '' 992 crore in FY20. The Profit after Tax in FY21 was '' 605 crore versus '' 317 crore in FY20 up by 91% Year on Year on account of higher EBITDA in FY21. (Refer to the table below for comparison in FY21 versus FY20 key financial number)
Particulars |
FY2020-21 |
FY2019-20 |
% Change |
Revenue |
2,764 |
2,653 |
4% |
EBITDA |
1,371 |
992 |
38% |
PAT |
605 |
317 |
91% |
2. NoveLis Inc.
The Performance highlights of NoveLis Inc. are provided in detail for FY21 versus FY20 in the Management Discussion and Analysis Section of the Integrated Annual Report.
In India operations, the 500Kt Utkal''s Alumina refinery brownfield capacity expansion is on track with mechanical completion by Q1FY22-end and commercial production to begin in Q2FY22. This project is at a capital outlay of around '' 1,500 crore. This will further help strengthen the Company''s integration and boost the availability of best- in-class alumina and in a reduction of the overall cost of production going forward.
In the downstream expansion projects in India, the Company made a good progress, announcing its plans to set up a 34,000-tonne extrusion plant at Silvassa. The new plant will service the fast-growing market for extruded aluminium products in the western and southern regions. This is a '' 730-crore project with intention to build a larger value-added product portfolio over the next few years. The on-going downstream expansion projects will not only enhance the Company''s capabilities but also help the Company to become further delinked from the volatility of global aluminium prices and thus move towards a more sustainable business model.
On April 14, 2020, Novelis closed its acquisition of Aleris Corporation. Novelis'' acquisition of Aleris is expected to provide a strong pro-forma financial profile, many strategic benefits including securing an integrated manufacturing footprint in China, further portfolio diversification with the addition of aerospace and building and construction, as well as new technology and operational capabilities. Novelis is focused on the safe integration of Aleris'' continuing operations to drive several strategic benefits.
Novelis'' greenfield expansion projects of 200 Kt automotive finishing facility in Guthrie, Kentucky in the US and additional 100 Kt of Auto finishing line in China, were both commissioned and have started its commercial shipments in Q4FY21. Customer qualification continues to ramp up at both facilities to meet strong demand for lightweight, automotive aluminum sheet.
The rolling, casting and recycling capacity in Pinda, Brazil to meet growing customer demand is also expected to be commission by the end of FY22. In addition to this, Novelis investment to expand and upgrade recycling capacity at its Greensboro facility in the US is also expected to be completed by end of FY22.
During the year, the Company announced its capital allocation framework on a consolidated basis with a clear roadmap to deleveraging, profitable growth via organic expansions in India as well as in Novelis and distribution of shareholder returns.
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.
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 i nclude 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 specific energy consumption and carbon footprint etc. Specific 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 three Hindalco Innovation Centres (HIC), one HIC-Alumina at Belagavi working on R&D of bauxite ore, alumina refining and specialty alumina, hydrate products and their application in different end uses; as well as waste management; and one HIC-SemiFab located at Taloja, near Mumbai, working in the area of tribology, energy and environment management and aluminium fabricated products and new applications. Additionally, R&D Team at Birla Copper, Dahej, is focusing on maximisation of copper recovery as well recovery of various metal values, such as, Selenium, Tellurium, Nickel, Bismuth, etc., from the effluent generated in the plant and value added applications of the solid wastes generated, namely, copper slag and phospho-gypsum. 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. Parallelly, we also work with different R&D institutes of national and international reputes to develop technologies for our mutual benefits. The engagement has resulted into patent applications, which have been and will be assigned to your company on the grant of the patent. ABSTCPL''s forte of
having multidisciplinary teams of technical experts, scientists and engineers, enables your company to develop building competencies i n select areas, as a long term value to business. Both the HICs at Belagavi and Taloja as well as ABSTCPL are DSIR, GOI recognised R&D Centres.
CONSOLIDATED FINANCIAL STATEMENTS
The Consolidated Financial Statements for the year ended 31st March, 2021 have been prepared by your Company in accordance with the provisions of the Companies Act, 2013, ("the Act") read with the Companies (Accounts) Rules, 2014, applicable Accounting Standards and the provisions of "Listing Regulations" and forms part of the Integrated Annual Report.
EMPLOYEE STOCK OPTION SCHEMES ESOS - 2006
During the year ended 31st March 2021, the Company has allotted 65,652 fully paid-up equity share of '' 1/- each of the Company (Previous year 3,59,415) on exercise of options under ESOS 2006.
ESOS - 2013
During the year ended 31st March 2021, the Company has allotted 3,95,908 fully paid-up equity share of '' 1/- each of the Company (Previous year 3,33,027) on exercise of options under ESOS 2013.
ESOS - 2018
During the year, the Company has granted 582,240 stock options (Previous year 307,716) and 20,487 RSUs (Previous year 72,355) under ESOS 2018.
Hindalco Employee Welfare Trust has transfered 60,707 fully paid-up equity share of '' 1/- each of the Company during the year on exercise of Options under ESOS 2018.
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.
There is no material change in the Schemes and the aforementioned schemes are in compliance with SEBI ( Share Based Employee Benefits) Regulations, 2014.
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.
The entire report on Corporate Governance forms part of Integrated Annual Report.
MCA General circular No. 20/2020 dated 5th May 2020 and General Circular No. 02/2021 dated 13th January,2021 states that considering prevailing situation and owing to difficulties involved in dispatching of physical copy of financial statements (including Board''s report, Auditor''s report or other documents required to be attached therewith), such statements shall be sent only by email to the members and to all other persons so entitled. Therefore Company has decided neither to print Full Integrated Annual Report nor prepare Abridged Annual Report. You are kindly requested to take note of the same.
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 confirm 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,2021 and of the profit of your company for that period;
c) 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 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 financial controls and that such internal financial 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 II 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 Office 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 III to this Report.
DIRECTORS
Board constitution and changes
Mr. Askaran AgarwaLa (DIN: 00023684) wiLL retire from office by rotation at the ensuing AnnuaL GeneraL Meeting, and being eLigibLe, offers himseLf for reappointment.
Mr. Satish Pai (DIN:06646758) is re- appointed as the Managing Director for a term of 3 years w.e.f. 1st August 2021, subject to sharehoLder''s approvaL at the ensuing AnnuaL General Meeting.
Mr. Praveen Kumar Maheshwari (DIN:00174361) is reappointed as the WhoLe-time Director for a term of 1 Year w.e.f. 28th May, 2021, subject to sharehoLders approvaL at the ensuing Annual General Meeting. He is also the Chief Financial Officer of the Company.
Brief resume of the Directors being re-appointed form part of the Notice of the ensuing Annual General Meeting.
The Board recommends, re-appointment of Mr. Askaran AgarwaLa, Mr. Satish Pai and Mr. Praveen Kumar Maheshwari. Item seeking your approvaL is incLuded in the Notice convening the Annual General Meeting.
ALL the directors being appointed/reappointed have given required decLaration under Companies Act, 2013 and Listing Regulations.
Independent Directors
Independent Directors on your Company''s Board have submitted decLarations of independence to the effect that they meet the criteria of independence as provided in Section 149(6) of the Companies Act, 2013 and ReguLation 16(1)(b) of the Listing Regulations.
five years i.e., to hoLd office from the concLusion of the Fifty Eighth AnnuaL General Meeting heLd in 2017 tiLL the concLusion of the Sixty third AnnuaL GeneraL Meeting of the Company, to be heLd in the CaLendar year 2022.
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 Act 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. R. Nanabhoy & Co., Cost Accountants, Mumbai as Cost Auditors, to conduct the cost audit of your Company for the financiaL year ending 31st March, 2022, 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 ratification. AccordingLy, a resoLution seeking Member''s ratification 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, 2021. The Report of the SecretariaL Auditors is annexed herewith as Annexure VA to the Annual Report.
The SecretariaL Audit Report does not contain any quaLification, reservation or adverse remark.
As per Regulation 24A of the Listing Regulations, material unListed subsidiaries of a Listed entity incorporated in India is required to annex a SecretariaL Audit Report issued by a Company Secretary in practice. In compLiance with the above requirement, the SecretariaL Audit Report of UtkaL ALumina InternationaL Limited, a materiaL subsidiary of your Company, is given in Annexure VB to the AnnuaL Report. The SecretariaL Audit Report do not contain any quaLification, reservation or adverse remark.
ENVIRONMENT PROTECTION AND POLLUTION CONTROL
Your Company is committed to sustainabLe deveLopment. A detaiLed report of the Company''s initiatives and commitment to environment conservation is part of Integrated Annual Report.
ALL Independent Directors of your Company except Mr. Anant Maheshwari have registered their name in the data bank maintained with the Indian Institute of Corporate Affairs. Action is being taken to register the name of Mr. Anant Maheshwari.
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 IV to this Report.
Our Executive pay aims to strike the appropriate baLance between key components: (i) Fixed Cash compensation (Basic SaLary ALLowances) (ii) AnnuaL Incentive PLan (iii) Long-Term Incentives (iv) Perks and Benefits.
The AnnuaL Incentive pay-outs to Executive Directors are tied to reLevant financial and operationaL metrics achievement and their individual performance. The financiaL and operationaL metrics are annuaLLy aLigned with priorities/ focus areas for the business. AdditionaLLy, SustainabiLity Targets form part of performance metrics for Annual Incentive Pay for the Managing Director.
The remuneration of the Managing Director and the WhoLe time Director is in Line with the poLicy of the Company and trend prevaiLing in the Corporate sector in the country. The dividend recommended to the equity sharehoLders( 300% for FY 21) is aLso in Line with the performance and poLicy of the Company. The detaiLs of remuneration of the Managing and WhoLe Time Director with the median remuneration of empLoyees are provided in detaiL in Annexure III to this Report. Further the detaiLs of remuneration received from subsidiary company is also part of this report.
The Company shaLL recover the amount from the remuneration of Managing Director if required as per the reLevant provisions of the Companies Act, 2013.
Meetings of the Board
The Board of Directors of your Company met Six times during the year, detaiLs of which are given in the Corporate Governance Report forming part of the Integrated Annual Report.
Annual Evaluation
Pursuant to the provisions of the Companies Act,2013 and Listing Regulations, the Directors has carried annual performance evaLuation of Board, Independent Directors, Non Executive Directors, Executive Directors, Committee and Chairman of the Board.
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 have evaLuated Independent Directors, Non executive Directors, Executive Directors, Committee and Chairman of the Board. The resuLt of evaLuation was satisfactory and meets the requirements of the Company. Board fuLLy agreed and rated 100% on its functioning, skiLL sets and working atmosphere. Independent Directors scored weLL on expressing their views and in understanding the Company and its requirements. Non-Executive Directors scored weLL in understanding the Company and its requirements and keep themseLves current on the areas to be discussed. Executive Directors are action oriented and ensures timeLy impLementation of the Board decisions. Board is compLeteLy satisfied with the functioning of various Committees. Board has fuLL faith in the Chairman in Leading the Board effectiveLy and ensuring contribution from aLL its members.
The Audit Committee comprises of Mr. K.N. Bhandari, Independent Director, Mr. Vikas BaLia, Independent Director and Mr. Y.P. DandiwaLa, Independent Director.
Mr. Satish Pai : Managing Director and Mr. Praveen Kumar Maheshwari: Chief FinanciaL Officer and WhoLe-Time Director are the permanent invitees. Further details relating to the Audit Committee are provided in the Corporate Governance Report forming part of the Integrated Annual Report.
In terms of provisions of Section 203 of the Companies Act,2013, Mr. Satish Pai: Managing Director, Mr. Praveen Kumar Maheshwari : Chief FinanciaL Officer and WhoLe Time Director and Mr. AniL MaLik: Company Secretary are the Key Managerial Personnel of your Company.
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
M/s. Price Waterhouse & Co. Chartered Accountants LLP (Registration No. 304026E/E-300009), are the Statutory Auditors of the Company who are appointed for a period of
PARTICULARS OF LOANS, GUARANTEES AND INVESTMENTS
Details of Loans, Guarantee 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 of the Integrated Annual Report.
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 and any amended thereof 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 for the Financial year ending 31st March 2021 were Mr. Y.P. Dandiwala, Independent Director, Mr. A.K. Agarwala, Non Executive Director, Mr. Satish Pai: Managing Director and Mr. D. Bhattacharya: Non Executive Director. Dr. Pragnya Ram, Group Executive President & Group Head - CSR, Legacy Documentation & Archives 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. During the financial Year 2020-21 the Company has spent '' 40.50 Crores under Section 135 of the Companies Act, 2013 on CSR activities, which is more than 2% of average net profits of the Company for last three financial years.
The Annual Report on CSR activities is attached as Annexure VI to this Report.
RISK MANAGEMENT
Pursuant to the requirement of Listing Regulations, 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 financial year, your Company entered into related party transactions. There are no material transactions with any related party as defined under Section 188 of the Act read with Companies (Meetings of Board and its Powers) Rules, 2014 and SEBI (Listing Obligations and Disclosures Requirement) Regulations,2015. The related party transactions have been approved by the Audit Committee and Board of your Company as required under the Companies Act 2013 and SEBI (Listing Obligations and Disclosures Requirement) Regulations, 2015.
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 .
In terms of the provisions of the Companies Act, 2013 ("the Act") read with the Companies (Management and Administration) Rules, 2014, the Annual Return of your Company for the financial year ended 31st March, 2021 is available on the website of the Company.
BUSINESS RESPONSIBILITY REPORT
As per Listing Regulations, a separate section of Business Responsibi lity Report forms part of Integrated 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 defined by the Audit Committee.
The Internal Audit Department monitors and evaluates the efficacy 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. Significant audit observations and corrective actions thereon are presented to the Audit Committee of the Board.
Your directors confirm having laid down internal financial controls and that such internal financial controls are adequate and were operating effectively
SUBSIDIARY, JOINT VENTURES OR ASSOCIATE COMPANIES
The financial statements of your Company''s subsidiaries and related information have been placed on the website of your Company viz. www.hindalco.com.
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 financial 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.
⢠There were no material changes and commitments affecti ng the financial position of your Company between end of financial year and the date of report.
⢠Your Company has not issued any shares with differential voting.
⢠There was no revision in the financial statements.
⢠Your Company has not issued any sweat equity shares.
⢠Mr. Satish Pai is a director on the Board of Novelis Inc, wholly owned subsidiary. He is in receipt of annual fee of US$ 1,50,000 in the calendar year 2021 . Mr. Praveen Kumar Maheshwari: Whole Time Director and Chief Financial Officer has not received any commission/ Remuneration from your Company''s subsidiaries.
⢠There is no change in the nature of business.
⢠During the year under review, your Company has not accepted any fixed 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, 2021, there were no deposits which were unpaid or unclaimed and due for repayment.
⢠There are no significant and material orders passed by the regulators or courts or tribunals impacting the going concern status and company''s operations in future.
⢠There were no frauds reported by the Auditors u/s 143(12) of the Companies Act,2013.
⢠As per the requirement of the Sexual Harassment of Women at the Workplace (Prevention, Prohibition and Redressal) Act, 2013, your Company has complied with provisions relating to the constitution of Internal Complaint Committee under POSH.
⢠Directors of your Company hereby state and confirm that the Company has complied with all the applicable Secretarial Standards.
⢠The cost accounts and records as required to be maintained under Section 148(1) of the Act are duly made and maintained by your Company.
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
Satish Pai K.N. Bhandari
Managing Director Independent Director DIN:06646758 DIN: 00026078
Place: Mumbai Dated: 2nd July, 2021
Mar 31, 2018
Dear Shareholder,
The Directors have pleasure in presenting the 59th Annual Report and the audited standalone and consolidated financial statements of your company for the year ended 31st March, 2018.
FINANCIAL HIGHLIGHTS (Rs. Crore)
Standalone |
Consolidated |
|||
2017-18 |
2016-17 |
2017-18 |
2016-17 |
|
Revenue from Operations |
43,435 |
39,383 |
1,15,809 |
1,02,631 |
Other Income |
948 |
1,005 |
1,105 |
1,111 |
Earnings before Interest, Tax and Depreciation (EBITDA) |
6,072 |
5,819 |
15,025 |
13,558 |
Depreciation including impairment |
1,617 |
1,428 |
4,606 |
4,469 |
Finance Costs |
1,901 |
2,323 |
3,911 |
5,742 |
Profit before Exceptional Items and Tax |
2,554 |
2,068 |
6,508 |
3,348 |
Share of Equity Accounted Investments |
- |
- |
(125) |
(25) |
Profit before Exceptional Items and Tax |
2,554 |
2,068 |
6,383 |
3,323 |
Exceptional Items |
(325) |
85 |
1,774 |
(8) |
Profit before Tax |
2,229 |
2,153 |
8,157 |
3,315 |
Tax Expenses |
792 |
596 |
2,074 |
1,433 |
Profit/ (Loss) for the period |
1,437 |
1,557 |
6,083 |
1,882 |
Other Comprehensive Income (Loss) |
957 |
536 |
2,991 |
(18) |
Total Comprehensive Income |
2,394 |
2,093 |
9,074 |
1,864 |
Basic EPS |
6.45 |
7.56 |
27.3 |
9.22 |
Appropriations to Reserves
(Rs. Crore)
Appropriations |
2017-18 |
2016-17 |
Opening Balance in Retained Earnings and Other Comprehensive Income |
8,847 |
7,143 |
Total Comprehensive Income for the Current Year |
2,394 |
2,093 |
Dividends paid |
(291) |
(239) |
Transferred to Debenture Redemption Fund |
(150) |
(150) |
Closing Balance in Retained Earnings and Other Comprehensive Income |
10,800 |
8,847 |
Dividend:
For the year ended 31st March, 2018, the Board of Directors of your Company has recommended dividend of Rs.1.20 per equity share (Previous year Rs.1.10 per equity share) to equity shareholders.
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 pari passu with the existing shares and shall also be entitled to receive the aforesaid dividend.
In terms of provisions of Regulation 43A of the Securities and Exchange Board of India (Listing Obligations & Disclosure Requirements) Regulations, 2015, herein after referred to as âListing Regulationsâ your Company has formulated a Dividend Distribution Policy. The Policy is given in Annexure-I to the Full Annual Report and is also accessible from your Companyâs Website www.hindalco.com.
OVERVIEW AND STATE OF THE COMPANYâS AFFAIRS:
Standalone Full year highlights
Hindalco registered a revenue of Rs.43,435 crore for the fiscal year 2018 vs Rs.39,383 crore in the previous year. EBITDA (Earnings before Interest, Tax, Depreciation and Amortisation) stood at Rs.6,072 crore, up
4 percent compared to the previous year, on the back of stable operations with supporting macros despite increasing input costs. Depreciation was higher by 13 percent due to progressive capitalization and certain reclassification in FY18. The Finance Cost was down by 18 percent at Rs.1,901 crore on account of prepayment and reduction in pricing of the project loans. Profit before Tax (and Before Exceptional Items) stood at Rs.2,554 crore, up by 24 percent compared to the previous year. Net Profit for FY18 stood at Rs.1,437 crore in FY18 as compared to Rs.1,557 crore in the previous year.
Consolidated Full Year Highlights
Hindalcoâs consolidated Revenue stood at Rs.1,15,809 crore for FY18 compared to Rs.102,631 crore in the previous year, on the back of excellent operating performance of all the businesses and better realisations. The Company recorded highest ever consolidated PBITDA (Profit before Interest, Tax, Depreciation and Amortisation) of Rs.15,025 crore, up by 11 percent supported by stable operations and improving efficiencies across all businesses. Consolidated Profit before Tax (and Before Exceptional Items) almost doubled and stood at Rs.6,508 crore, up by 94 percent compared to the previous year on account of strong overall business performance and savings in interest outgo. Net Profit in FY18, trebled at Rs.6,083 crore up by 223% compared to the previous year.
For detailed analysis, refer to the Management Discussion and Analysis section of the Full and Abridged Annual Report.
Highlights of the Companyâs Subsidiaries:
(a) Utkal Alumina International Ltd.
Utkal Alumina revenues has grown to Rs.2,863 Crore in FY 18 compared to Rs.2,375 Crore in FY 17 up 21% as a result of excellent operating performance. The EBITDA for FY 18 stood at Rs.1187 Crore up 77% compared to Rs.672 Crore in FY 17. The Profit after tax in FY 18 was Rs.561 Crore v/s â (114) Crore in FY17.
(Rs. Crore)
Particulars |
FY18 |
FY17 |
% Growth |
Revenue |
2863.37 |
2374.81 |
21% |
EBITDA |
1186.55 |
672.02 |
77% |
PAT |
561.29 |
(114.18) |
(b) Novelis Inc.
Performance highlights of Novelis Inc. are provided in the Management Discussion and Analysis section of the Full and Abridged Annual Report.
Key Initiatives
The Company successfully commissioned the new Continuous Cast Rod Plant (CCR-3) in Copper in Dahej during the year. This will further enhance the copper rod capacity of its Dahej Plant. The Work on Utkalâs brown field capacity expansion by 500 Kt commenced during the year and is expected to be completed in 30 months with a total capital outlay of around Rs.1,300 crore, which will provide further strength to its integration and availability of best in class alumina to its smelters.
During the fiscal year 2018, Novelis completed JV to establish Ulsan Aluminium in South Korea, by selling approximately 50% its ownership to Kobe Steel for US$ 314 million which have helped to unlock the value. Novelis with its objective to invest in world class assets and technical capabilities to position itself to meet the increasing global demand for aluminium from the Automotive market, announced its plans to setup a 200 Kt automotive finishing facility in Guthrie, Kentucky, US which is expected to be commissioned in CY 2020. Novelis has agreed to acquire the operating facilities and manufacturing assets at its plant in Sierre, Switzerland, that has been historically leased.
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 Companyâs 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 specific energy consumption and carbon footprint etc. Specific 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 companyâs 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 Belagavi working on R&D of bauxite ore, alumina refining and specialty alumina, hydrate products; as well as waste management; and one HIC-SemiFab located at Taloja, near Mumbai, working in the area of tribology, energy and environment management and aluminium fabricated products and new applications. R&D Team at Birla Copper, Dahej, is focusing on maximisation of copper recovery as well recovery of various metal values, such as, Selenium, Tellurium, Nickel, Bismuth, etc., from the effluent generated in the plant. In addition, your company engages the Aditya Birla Groupâs corporate research and development centre, Aditya Birla Science and Technology Company Private Limited (âABSTCPLâ), 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 patent applications, which have been and will be assigned to your company on the grant of the patent. ABSTCPLâs forte of having multidisciplinary teams of technical experts, scientists and engineers, enables your company to develop building competencies in select areas, as a long term value to business. Both the HICs at Belagavi and Taloja as well as ABSTCPL are DSIR, GOI, recognised R&D Centres.
CONSOLIDATED FINANCIAL STATEMENTS:
The Consolidated Financial Statements for the year ended 31st March, 2018 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 Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015 âListing Regulationsâ and forms part of the Full Annual Report.
EMPLOYEE STOCK OPTION SCHEMES:
ESOS - 2006
During the year ended 31st March, 2018, the Company has allotted 1,33,438 fully paid-up equity share of Rs.1/- each of the Company (Previous year 4,43,476) on exercise of options under ESOS 2006.
ESOS - 2013:
During the year ended 31st March, 2018, the Company has allotted 15,75,374 fully paid-up equity share of Rs.1/- each of the Company (Previous year 9, 97,195) on exercise of options under ESOS 2013.
The details of Stock Options and Restricted Stock Units granted under the above mentioned Schemes are available on your Companyâs website viz. www.hindalco.com.
A certificate from the statutory auditor on the implementation of your Companyâs Employees Stock Option Schemes will be placed at the ensuing Annual General Meeting for inspection by the members.
There is no material change in the Schemes and the aforementioned schemes are in compliance with SEBI (Share Based Employee Benefits) Regulations, 2014.
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.
The entire report on Corporate Governance forms part of Full Annual Report.
ABRIDGED ANNUAL REPORT
In terms of the provision of Section 136(1) of the Companies Act, 2013, Rule 10 of Companies (Accounts of Companies) Rules, 2014 and Regulation 36 of the Listing Regulations, the Board of Directors has decided to circulate the Abridged Annual Report containing salient features of the Financial Statements and Directorsâ Report and other documents to the shareholders for the Financial Year 2017-18, under the relevant laws.
The Abridged Annual Report is being circulated to the members excluding the âAnnual Report on CSR Activitiesâ, âRemuneration Philosophy/ Policyâ, âSecretarial Audit Reportâ, âExtract of Annual Returnâ, âDividend Policyâ, âFull Report on Corporate Governance and Shareholdersâ Informationâ.
Members who desire to obtain the full version of the Annual Report may write to the Company Secretary at the registered office. Full version of the Annual Report is also available on the Companyâs website www.hindalco.com.
DIRECTORSâ RESPONSIBILITY STATEMENT
As stipulated in Section 134(3)(c) of the Companies Act, 2013 âthe Actâ, your Directors subscribe to the âDirectorsâ Responsibility Statementâ and confirm 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, 2018 and of the profit of your company for that period;
c) 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 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 financial controls and that such internal financial 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-II to the Full and Abridged Annual Report.
PARTICULARS OF EMPLOYEES:
In accordance with the provisions of Section 197(12) of the Companies Act, 2013 âthe Actâ, 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 Directorsâ 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 Office 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-III to the Full and Abridged Annual Report.
DIRECTORS:
Board constitution and changes:
Mr. Kumar Mangalam Birla (DIN: 00012813) will retire from office by rotation at the ensuing Annual General Meeting, and being eligible, offers himself for reappointment.
Mr. Kumar Mangalam Birla has given required declaration under Companies Act, 2013.
Brief resume of the director being reappointed form part of the notice of the ensuing Annual General Meeting.
Mr. Jagdish Khattar ( DIN: 00013496) has resigned as an Independent Director w.e.f 4th May 2018 due to his personal commitment.
Ms. Alka Bharucha (DIN:00114067) is appointed as an Independent Director on the Board of the Company w.e.f 11th July, 2018. Ms. Bharucha has given the required declarations under the Companies Act, 2013 and Listing Regulations.
The Board recommends the reappointment of Mr. Kumar Mangalam Birla and appointment of Ms. Alka Bharucha. Items seeking your approval is included in the Notice convening the Annual General Meeting.
Independent Directors Statement:
Independent Directors on your Companyâs Board have submitted declarations of independence to the effect that they meet the criteria of independence as provided in Section 149(6) of the Companies Act, 2013 and Regulation 16(1 )(b) of the Listing Regulations.
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-IV to the Full Annual Report.
Meetings of the Board:
The Board of Directors of your Company met five times during the year, details of which are given in the Corporate Governance Report forming part of the Full Annual Report.
Annual Evaluation:
Pursuant to the provisions of the Companies Act, 2013 and Listing Regulations, the Directors has carried annual performance evaluation of Board, Independent Directors, Non Executive Directors, Executive Directors, Committee and Chairman of the Board.
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.
The evaluation exercise has been carried out by the Board members on the basis of evaluation templates for Board, Independent Directors, Non Executive Directors, Executive Directors, Committees and Chairman of the Board. The template had various questions to be replied by the directors on aforesaid parameters. The Nomination and Remuneration Committee evaluated the performance on the basis of the response received from the Directors. Similarly, the Independent Directors evaluated the performance of non independent directors, Chairman and assessed the quality, quantity and flow of information between company management and Board.
Outcome of the evaluation exercise:
1. The Board as a whole performed satisfactorily.
2. Independent Directors are rated high in understanding the Companyâs business and expressing their view during the Board meetings.
3. The Non Executive Directors scored well in all aspects.
4. Directors rated Executive Directors as action oriented and good in implementing Board decisions.
5. Board members rated high to the Chairman in leading the Board effectively.
6. Board members had shown satisfaction in functioning of the Committees.
AUDIT COMMITTEE:
The Audit Committee comprises of Mr. M.M. Bhagat, Mr. K.N. Bhandari, Mr. Y.P. Dandiwala, Independent Directors of your Company. Mr. Satish Pai: Managing Director and Mr. Praveen Kumar Maheshwari: Chief Financial Officer and Whole-Time Director are the permanent invitees. Further details relating to the Audit Committee are provided in the Corporate Governance Report forming part of the Full Annual Report.
KEY MANAGERIAL PERSONNEL:
In terms of provisions of Section 203 of the Companies Act, 2013, Mr. Satish Pai: Managing Director, Mr. Praveen Kumar Maheshwari: Chief Financial Officer 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 Companyâs 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 Companyâs website viz. www.hindalco.com.
AUDITORS
Statutory Auditors
M/s. Price Waterhouse & Co Chartered Accountants LLP (Registration No. 304026E/E-300009), are the Statutory Auditors of the Company who are appointed for a period of five years i.e., to hold office from the conclusion of the Fifty Eighth Annual General Meeting held in 2017 till the conclusion of the Sixty third Annual General Meeting of the Company, to be held in the Calendar year 2022, subject to ratification, if required, of their appointment by the Members at every Annual General Meeting till the Sixty-second Annual General Meeting.
The requirement to place the matter relating to appointment of the Auditors for ratification by the members at every Annual General Meeting is done away with vide notification dated 7th May, 2018 issued by the Ministry of Corporate Affairs. Accordingly, no resolution is proposed for ratification of appointment of the Auditors, who were appointed in the Annual General Meeting held on 13th September, 2017.
The observation made in the Auditorâs 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 Act 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 financial year ending 31st March, 2019, 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 ratification. Accordingly, a resolution seeking Memberâs ratification 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,2018. The Report of the Secretarial Auditors is annexed herewith as Annexure-V to the Full Annual Report.
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 detailed report of the Companyâs initiatives and commitment to environment conservation is part of Sustainability & Business Responsibility Report forming part of the Full and Abridged Annual Report.
PARTICULARS OF LOANS, GUARANTEES AND INVESTMENTS:
Details of Loans, Guarantee 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 of the Full Annual Report.
CORPORATE SOCIAL RESPONSIBILITY:
In terms of the provisions of Section 135 of the Companies Act, 2013 (âthe Actâ) read with Companies (Corporate Social Responsibility Policy) Rules, 2014, the Board of Directors of your Company has constituted a Corporate Social Responsibility (âCSRâ) Committee which is chaired by Mrs. Rajashree Birla. The other Members of the Committee for the Financial year ending 31st March 2018 were Mr. Jagdish Khattar, Independent Director, Mr. A.K. Agarwala, Non Executive Director, Mr. Satish Pai: Managing Director and Mr. D. Bhattacharya: Non Executive Director. Dr. Pragnya Ram, Group Executive President, Corporate Communication & CSR is a permanent invitee to the Committee.
Mr. Jagdish Khattar: Independent Director and Member of CSR Committee has resigned from the Board w.e.f 4th May 2018. Mr. Y P. Dandiwala: Independent Director was inducted as a member of the CSR Committee in the meeting of the Board held on 16th May, 2018.
Your Company also has in place a CSR Policy and the same is available on your Companyâs 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.
During the financial Year 2017-18 the Company has spent Rs.31.09 Crore under Section 135 of the Companies Act, 2013 on CSR activities, which represent 2.33% of average net profits of the Company for last three financial years.
The Annual Report on CSR activities is attached as Annexure-VI to the Full Annual Report.
RISK MANAGEMENT
Pursuant to the requirement of Listing Regulations, 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 financial year, your Company entered into related party transactions which were on armâs length basis and in the ordinary course of business. There are no material transactions with any related party as defined under Section 188 of the Act read with Companies (Meetings of Board and its Powers) Rules, 2014 and Listing Regulations. 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 Companyâs website viz. www.hindalco.com.
EXTRACT OF ANNUAL RETURN:
In terms of the provisions of Section 92 (3) of the Companies Act, 2013 (âthe Actâ) read with the Companies (Management and Administration) Rules, 2014, an extract of the Annual Return of your Company for the financial year ended 31st March, 2018 is given in Annexure-VII to the Full Annual Report.
BUSINESS RESPONSIBILITY REPORT:
As per the Listing Regulations, a separate section of Business Responsibility Report forms part of the Full and Abridged Annual Report.
INTERNAL CONTROL SYSTEM AND THEIR ADEQUACY:
The Company has Internal Financial Control (IFC) framework commensurate with its size, scale and complexity of businesses. The framework has been designed to provide reasonable assurance with respect to reliable operational and financial information, complying with applicable laws, safeguarding of assets, prevention and detection of frauds & errors,executing transactions with proper authorization and ensuring compliance with company policies & procedures. The controls based on the prevailing business conditions and processes have been tested for operating effectiveness and no reportable material deficiencies in the design were observed.
The Internal Audit team develops an annual audit plan based on the risk profile of the businesses. The Internal Audit plan is approved by the Audit Committee, who also reviews compliance to the audit plan.
The Audit Committee has appointed Internal Auditors who periodically audit the adequacy and effectiveness of the internal controls laid down by the management and suggest improvements to strengthen the controls. Significant audit observations and corrective action(s) thereon are presented to the Audit Committee. The Audit Committee reviews the reports submitted by the Internal Auditors in each of its meeting, quarterly.
INTERNAL FINANCIAL CONTROL
Your directors confirm having laid down internal financial controls and that such internal financial controls are adequate and were operating effectively.
SUBSIDIARY, JOINT VENTURES OR ASSOCIATE COMPANIES:
The financial statements of your Companyâs 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 office of your Company. Any Member, who is interested in obtaining a copy of financial statements of your Companyâs subsidiaries, may write to the Company Secretary at the Registered Office 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 financial position of each of the subsidiaries, associates and Joint Venture is attached as Annexure-VIII to the Full and Abridged Annual 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 financial position of your Company between end of financial year and the date of report.
- Your Company has not issued any shares with differential voting.
- There was no revision in the financial statements.
- Your Company has not issued any sweat equity shares.
- Mr. Satish Pai is a director on the Board of Novelis Inc, wholly owned subsidiary. He is in receipt of annual fee of US$ 1,50,000 in the calendar year 2017. Mr. Praveen Kumar Maheshwari: Whole Time Director and Chief Financial Officer has not received any commission/remuneration from your Companyâs subsidiaries.
- There is no change in the nature of business.
- During the year under review, your Company has not accepted any fixed 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, 2018, there were no deposits which were unpaid or unclaimed and due for repayment.
- There are no significant and material orders passed by the regulators or courts or tribunals impacting the going concern status and companyâs operations in future.
- There were no frauds reported by the Auditors u/s 143(12) of the Companies Act, 2013.
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 Companyâs 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
Satish Pai M.M. Bhagat
Managing Director Independent Director
DIN:06646758 DIN:00006245
Mumbai
Dated : July 11, 2018
Mar 31, 2017
Dear Shareholder,
The Directors have pleasure in presenting the 58th Annual Report and the audited standalone and consolidated financial statements of your company for the year ended 31st March, 2017.
FINANCIAL HIGHLIGHTS
Rs. Crore
Standalone |
Consolidated |
|||
2016-17 |
2015-16 |
2016-17 |
2015-16 |
|
Revenue from Operations |
39,383 |
36,713 |
1,02,631 |
1,01,202 |
Other Income |
1,005 |
979 |
1,111 |
1,189 |
Profit Before Interest, Tax Depreciation and Amortisation |
5,819 |
4,325 |
13,558 |
10,004 |
(PBITDA) |
||||
Depreciation |
1,428 |
1,282 |
4,469 |
4,507 |
Finance Costs |
2,323 |
2,390 |
5,742 |
5,134 |
Profit before Exceptional Items and Tax |
2,068 |
653 |
3,348 |
362 |
Share of Equity Accounted Investments |
(25) |
172 |
||
Profit before Exceptional Items and Tax |
2,068 |
653 |
3,323 |
534 |
Exceptional Items |
85 |
- |
(8) |
(577) |
Profit before Tax |
2,153 |
653 |
3,315 |
(43) |
Tax Expenses |
596 |
99 |
1,433 |
498 |
Profit/ (Loss) for the period from Continuing Operations |
1,557 |
554 |
1,882 |
(541) |
Profit/ (Loss) from Discontinuing Operations |
0.5 |
(2.0) |
0.5 |
(161) |
Profit/(Loss) for the Year |
1,557 |
552 |
1,882 |
(702) |
Other Comprehensive Income (Loss) |
536 |
(1,373) |
(18) |
2,557 |
Total Comprehensive Income |
2,093 |
(821) |
1,864 |
1,855 |
Basic EPS - Rupees from Continuing Operations |
7.55 |
(0.63) |
9.22 |
(4.15) |
Appropriations to Reserves
(Rs. Crore)
Appropriations |
2016-17 |
2015-16 |
Opening Balance in Retained Earnings and Other Comprehensive Income |
7,143 |
8,322 |
Total Comprehensive Income for the Current Year |
2,093 |
(821) |
Realised Gain/(Loss) on Equity FVTOCI recyled in Equity |
- |
15 |
Dividends paid |
(239 ) |
(223) |
Transferred to Debenture Redemption Fund |
(150) |
(150) |
Closing Balance in Retained Earnings and Other Comprehensive Income |
8,847 |
7,143 |
Dividend:
For the year ended 31st March, 2017, the Board of Directors of your Company has recommended dividend of Rs.1.10 per equity share (Previous year Rs.1 per equity share) to equity shareholders.
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 pari passu with the existing shares and shall also be entitled to receive the aforesaid dividend.
In terms of the provisions of Regulation 43A of the Securities and Exchange Board of India (Listing Obligations & Disclosure Requirements) Regulations 2015, hereinafter referred to as âListing Regulationsâ your Company has formulated a Dividend Distribution Policy. The Policy is given in Annexure-I to the Full Annual Report and is also accessible from your Companyâs website: www.hindalco.com.
OVERVIEW AND STATE OF THE COMPANYâS AFFAIRS:
Standalone Full Year Highlights
Hindalco registered Revenues of Rs.39,383 crore for the fiscal year 2017. PBITDA (Profit before Interest, Tax, Depreciation and Amortisation) was Rs.5,819 Crore, up 35 percent compared to the previous year, supported by lower input cost, higher aluminium volumes and realization. Depreciation was up by 11 percent due to progressive capitalization. Interest expense was lower by 3 percent mainly on account of prepayment of loan. Net Profit for the fiscal year 2017 stood at Rs.1,557 crore, registering a growth of 182 percent versus previous year.
Consolidated Full Year Highlights
Hindalcoâs consolidated Revenue stood at Rs.102,631 Crore for the fiscal year 2017. It attained a record consolidated EBITDA (Earnings before Interest, Tax, Depreciation and Amortisation) at Rs.13,558 crore, up 36 percent as compared to the earlier year. The robust performance was supported by stable operations across businesses. For the fiscal year 2017, net profit stood at Rs.1,882 crore.
For detailed analysis, refer Management Discussion and Analysis.
Key Initiatives
The Company successfully raised USD 500 million through Qualified Institutional Placement (QIP) in March 2017. This is the largest non-bank QIP in the last two years. There was a strong participation from FIIs and long- only investors, generating demand in excess of USD 1.5 billion (3x subscription). The QIP was priced at zero discount to the previous dayâs closing share price.
In line with the purpose of the issue, the Company used the cash proceeds from QIP towards prepayment of Rs.4,505 crore of long term loan in April 2017 - till date the total prepayment stands at Rs.5,536 crore.
During the fiscal year 2017, Novelis refinanced its USD 2.5 billion Senior Notes and USD 1.8 billion Term Loan. As a result, annual cash interest savings of USD 79 million has been achieved along with an extended debt maturity profile for the senior notes.
Further, Novelis entered into a JV agreement with Kobe Steel in May 2017 to sell 50 per cent of ownership interest in Ulsan, South Korea facility for USD 315 million. This venture, named Ulsan Aluminium Limited, will provide synergies to both the high-quality partners.
During the year, Hindalco also divested its stake in Aditya Birla Minerals Limited, Australia.
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, centered around accountability is in place. We feel this is critical to enable us retain our competitive edge.
RESEARCH AND DEVELOPMENT
Your Companyâs 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 specific energy consumption and carbon footprint etc. Specific 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 companyâs 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 Belagavi 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 Groupâs corporate research and development centre, Aditya Birla Science and Technology Company Private Limited (âABSTCPLâ), 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. ABSTCPLâs forte of having multidisciplinary 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 field. A selective list:
Central Logistics
Hindalco Central Logistics Cell recognised with the Economic Times Award for Supply Chain Management & Logistics and the Express Logistics & Supply Chain Leadership award for excellence in manufacturing supply chain engineering and logistics.
Mahan Aluminium
National Energy Conservation Award presented by the Bureau of Energy Efficiency, Ministry of Power, Government of India.
Rashtra Vibhushan Gold Award presented by the Foundation for Accelerated Mass Development (FAME), for exemplary initiatives in the field of sustainable livelihood for socio-economic development of the community around the unit.
Global CSR Excellence & Leadership Award for initiatives in community development.
India CSR Award towards sustainable livelihood initiatives for the rural community around the unit.
IDA Award presented for exemplary work in the field of âPrimary & Adult Education.â
Aditya Aluminium
India CSR Award for initiatives under livelihood creation.
CII Eastern Region Award for Safety Health & Environment (SHE) with 3 Star Rating.
CII Eastern Region Productivity Award 2016 - First Prize for significant improvement in productivity.
Renukoot Aluminium Complex
BT-CSR Award presented by Bureaucracy Today and presented by Mr. Anant Geete, Union Minister, Ministry of Heavy Industries & Public Enterprises.
Hirakud Smelter & Power
Rashtra Vibhushan Gold Award 2016-17 for Excellence in Environment Protection presented by the Foundation for Accelerated Mass Development (FAME), New Delhi.
Environment Health & Safety (ESH) Award (2nd Runners Up) 2016 presented to Hindalco Hirakud Power by the CII,Odisha at the 12th State Level Competition on Best Practices in Environment, Safety and Health (ESH).
Muri Alumina
Greentech Gold Award for outstanding achievement in environment management in chemicals sector.
CII Eastern Region Award for Safety Health & Environment (SHE) with 3 Star Rating.
Taloja FRP
Silver Award presented by National Awards for Manufacturing Competitiveness (NAMC) 2016-17. Maharashtra State Energy Development Agency (MEDA) Energy Conservation Award for 2015-16.
Dahej Copper Complex
India CSR Award for continuous effort in covering a large number of beneficiaries year on year under the unitâs âEducation for Allâ initiative.
BT-CSR Excellence 2016 Award for promoting education, under Dahejâs âEducation for Allâ programme covering 69 adopted villages in Bharuch district and reaching out to 85 primary and secondary schools covering over 16,000 students.
FICCI CSR Award 2016 - Recognition for Commendable CSR Work Done by Birla Copper for Rural and Community Development.
Champion of the Champions Trophy in the âEnergy Verticalâ of GHKC & GreEnv Contest 2016-17.
Annual Excellence Award Certificate of Excellence 2015-16 presented by Container Corporation of India, for having achieved first position as Exporter at ICD Ankleshwer.
Belagavi Alumina
National Gold Award forManufacturing Competitiveness (NAMC) 2016 for its world class manufacturing process and efficient working methodologies.
Second prize for âSafe Boilersâ in Mega industries category, awarded by Department of Factories, Government of Karnataka.
Second prize for âBest Safe Industryâ in Mega industries category, awarded by Department of Factories, Government of Karnataka.
Alupuram Extrusions
CII - EXIM award for business excellence 2016 for displaying âStrong Commitment to Excelâ on the journey towards Business Excellence.
Gare Palma Coal Mines
Awarded various first and second prizes for Overall safety, Safety Management Plan, E&M, Ventilation, etc., and on Recovery during Zonal Safety and Rescue competitions, organised by the Director General of Mines Safety.
Jharkhand and Chhattisgarh Bauxite Mines
Amtipani Bauxite Mines awarded 4 Star Rating for sustainable development at the National Mining Conclave held at Raipur, presented by Ministry of Mines & Steel, Government of India.
Samri Mines awarded National Safety Award -1st Prize (Presidentâs award) for longest accident free period and Responsible Business Award -CSR (in organizational category).
Several first and second prizes awarded to various mines for Overall Safety performance, General Working, Engineering (Electrical & Mechanical) and housekeeping, Publicity & Propaganda, Environmental Pollution Control & Plantation, Mine Survey DGMS. First and second prizes were also awarded to various mines on Afforestation, Reclamation & Rehabilitation, Overall Performance etc., by the Indian Bureau of Mines.
West Coast Bauxite Mines
Dhangarwadi Mine won three prizes during the Mines Safety Week, including first prize for overall performance, systematic mines working, drilling, blasting & haul road and second prize for Engineering/ Maintenance. Prizes for mineral conservation, publicity & propaganda during Mines, Environment & Mineral Conservation Week programmes.
Quality Circle Awards
Teams from Hindalco units, Renukoot, Renusagar, Dahej, Hirakud, Taloja among others, earned highest level awards at the Regional and National Quality Circle Conventions, including Gold Awards and Excellence and Par Excellence awards.
CONSOLIDATED FINANCIAL STATEMENTS:
The Consolidated Financial Statements for the year ended 31st March, 2017 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 Listing Regulations and forms part of the full Annual Report.
EMPLOYEE STOCK OPTION SCHEMES:
ESOS - 2006
During the year ended 31st March, 2017, the Company has allotted 4,43,476 fully paid-up equity share of Rs.1/- each of the Company (Previous year 3,185) on exercise of options under ESOS 2006.
ESOS - 2013:
During the year ended 31st March, 2017, the Company has allotted 9,97,195 fully paid-up equity share of Rs.1/- each of the Company (Previous year 2,193) on exercise of options under ESOS 2013.
The details of Stock Options and Restricted Stock Units granted under the above mentioned Schemes are available on your Companyâs website viz. www. hindalco.com.
A certificate from the statutory auditor on the implementation of your Companyâs Employees Stock Option Schemes will be placed at the ensuing Annual General Meeting for inspection by the members.
There is no material change in the scheme and scheme is in compliance with SEBI (Share Based Employee Benefits) Regulations, 2014.
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.
The entire report on Corporate Governance forms part of full Annual Report.
ABRIDGED ANNUAL REPORT
In terms of the provision of Section 136(1) of the Companies Act, 2013, Rule 10 of Companies (Accounts of Companies) Rules, 2014 and Regulation 36 of the Listing Regulations, the Board of Directors has decided to circulate the Abridged Annual Report containing salient features of the balance sheet and statement of profit and loss and other documents to the shareholders for the Financial Year 2016-17, under the relevant laws.
The Abridged Annual Report is being circulated to the members excluding the âAnnual Report on CSR Activitiesâ, âRemuneration Philosophy/ Policyâ, âSecretarial Audit Reportâ, âExtract of Annual Returnâ, âDividend Policyâ âFull Report on Corporate Governance and Shareholdersâ Informationâ.
Members who desire to obtain the full version of the Annual Report may write to the Company Secretary at the registered office. Full version of the Annual Report is also available on the Companyâs website www.hindalco.com.
DIRECTORSâ RESPONSIBILITY STATEMENT
As stipulated in Section 134(3)(c) of the Companies Act, 2013 âthe Actâ, your Directors subscribe to the âDirectorsâ Responsibility Statementâ and confirm 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, 2017 and of the profit of your company for that period;
c) 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 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 financial controls and that such internal financial 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-II to the full and Abridged Annual Report.
PARTICULARS OF EMPLOYEES:
In accordance with the provisions of Section 197(12) of the Companies Act, 2013 âthe Actâ, 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 Directorsâ 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 Office 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-III to the full and Abridged Annual Report.
DIRECTORS:
Board constitution and changes:
Mr. A. K. Agarwala (DIN: 00023684) will retire from office by rotation at the ensuing Annual General Meeting, and being eligible, offers himself for re-appointment. Mr. A. K. Agarwala has given required declaration under Companies Act, 2013.
The Board recommends the reappointment of Mr. A. K. Agarwala. Item seeking your approval is included in the Notice convening the Annual General Meeting.
Brief resume of the director being re-appointed form part of the notice of the ensuing Annual General Meeting.
Independent Directors Statement:
Independent Directors on your Companyâs Board have submitted declarations of independence to the effect that they meet the criteria of independence as provided in Section 149(6) of the Companies Act, 2013 and Regulations 16(1)(b) of the Listing Regulations.
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-IV to the full Annual Report.
Meetings of the Board:
The Board of Directors of your Company met 6 times during the year details of which are given in the Corporate Governance Report forming part of the full Annual Report.
Annual Evaluation:
Pursuant to the provisions of the Companies Act,2013 and Listing Regulations, the Directors has carried annual performance evaluation of Board, Independent Directors, Non executive Directors, Executive Directors, Committee and Chairman of the Board.
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 have evaluated Independent Directors, Non executive Directors, Executive Directors, Committee, Board and Chairman. The result of evaluation was satisfactory and meets the requirements of the Company. Board fully agreed and rated 100% on its functioning, skill sets and working atmosphere. Independent Directors scored well on expressing their views and in understanding the Company and its requirements. Non-Executive Directors scored well in understanding the Company and its requirements and keep themselves current on the areas to be discussed. Executive Directors are action oriented and ensures timely implementation of the Board decisions. Board is completely satisfied with the functioning of various Committees. Board has full faith in the Chairman in leading the Board effectively and ensuring contribution from all its members.
AUDIT COMMITTEE:
The Audit Committee comprises of Mr. M.M. Bhagat, Mr. K.N. Bhandari, Mr. Y.P. Dandiwala, Independent Directors of your Company. Mr. Satish Pai: Managing Director and Mr. Praveen Kumar Maheshwari: Chief Financial Officer and Whole-Time Director are the permanent invitees. Further details relating to the Audit Committee are provided in the Corporate Governance Report forming part of the full Annual Report.
KEY MANAGERIAL PERSONNEL:
In terms of provisions of Section 203 of the Companies Act, 2013, Mr. Satish Pai: Managing Director, Mr. Praveen Kumar Maheshwari: Chief Financial Officer 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 Companyâs 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 is available.
The vigil mechanism is available on your Companyâs website viz. www.hindalco.com.
AUDITORS Statutory Auditors
M/s. Singhi & Co are the Statutory Auditors of the Company. Pursuant to the provisions of the Companies Act, 2013, M/s Singhi & Co were appointed as the auditors for a period of three years i.e. from the conclusion of the fifty-fifth Annual General Meeting until the conclusion of the fifty eighth Annual General Meeting of the Company to be held in the calendar year 2017. Pursuant to the provisions of the Companies Act, 2013 and the Companies (Audit and Auditors) Rules, 2014, the Board of Directors in the meeting held on 30th May, 2017, on the recommendation of the Audit Committee, appointed M/s. Price Waterhouse & Co. Chartered Accountants LLP (Registration No. 304026E/E-300009), as the Statutory Auditors of the Company in place of M/s Singhi & Co, the retiring Statutory Auditors, for a period of five years i.e., to hold office from the conclusion of this Annual General Meeting till the conclusion of the Sixty third Annual General Meeting of the Company, to be held in the year 2022, subject to ratification of their appointment by the Members if required at every Annual General Meeting till the Sixty-second Annual General Meeting.
Resolution seeking your approval is included in the Notice convening the Annual General Meeting.
The observation made in the Auditorâs Report are self explanatory and thereofore, 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 Act 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 financial year ending 31st March, 2018, 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 ratification. Accordingly, a resolution seeking Memberâs ratification 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, 2017. The Report of the Secretarial Auditors is annexed herewith as Annexure-V to the full Annual Report.
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 detailed report of the Companyâs initiatives and commitment to environment conservation is part of Sustainability & Business Responsibility Report forming part of the full and Abridged Annual Report.
PARTICULARS OF LOANS, GUARANTEES AND INVESTMENTS
Details of Loans, Guarantee 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 of the full Annual Report.
CORPORATE SOCIAL RESPONSIBILITY:
In terms of the provisions of Section 135 of the Companies Act, 2013 (âthe Actâ) read with Companies (Corporate Social Responsibility Policy) Rules, 2014, the Board of Directors of your Company has constituted a Corporate Social Responsibility (âCSRâ) Committee which is chaired by Mrs. Rajashree Birla. The other Members of the Committee are Mr. Jagdish Khattar, Independent Director, Mr. A.K. Agarwala, Non Executive Director, Mr. Satish Pai: Managing Director and Mr. D. Bhattacharya: Non Executive 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 Companyâs 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. During the financial Year 2016-17 the Company has spent Rs.28.36 Crores under Section 135 of the Companies Act, 2013 on CSR activities , which represent 2.70 % of average net profits of the Company for last three financial years.
The Annual Report on CSR activities is attached as Annexure-VI to the full Annual Report.
RISK MANAGEMENT
Pursuant to the requirement of Listing Regulations, 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 financial year, your Company entered into related party transactions which were on armâs length basis and in the ordinary course of business. There are no material transactions with any related party as defined under Section 188 of the Act read with Companies (Meetings of Board and its Powers) Rules, 2014 and Listing Regulations. 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 Companyâs website viz. www.hindalco.com.
EXTRACT OF ANNUAL RETURN:
In terms of the provisions of Section 92 (3) of the Companies Act, 2013 (âthe Actâ) read with the Companies (Management and Administration) Rules, 2014, an extract of the Annual Return of your Company for the financial year ended 31st March, 2017 is given in Annexure-VII to the full Annual Report.
BUSINESS RESPONSIBILITY REPORT
As per Listing Regulations, a separate section of Business Responsibility Report forms part of the full and Abridged 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 is defined by the Audit Committee.
The Internal Audit Department monitors and evaluates the efficacy 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. Significant audit observations and corrective actions thereon are presented to the Audit Committee of the Board.
INTERNAL FINANCIAL CONTROL
Your directors confirm having laid down internal financial controls and that such internal financial controls are adequate and were operating effectively
SUBSIDIARY, JOINT VENTURES OR ASSOCIATE COMPANIES:
The financial statements of your Companyâs 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 office of your Company. Any Member, who is interested in obtaining a copy of financial statements of your Companyâs subsidiaries, may write to the Company Secretary at the Registered Office 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 financial position of each of the subsidiaries, associates and Joint Venture is attached as Annexure-VIII to the full and Abridged Annual 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 financial position of your Company between end of financial year and the date of report.
- Your Company has not issued any shares with differential voting.
- There was no revision in the financial statements.
- Your Company has not issued any sweat equity shares.
- Mr. Satish Pai is a director on the Board of Novelis Inc, wholly owned subsidiary. He is in receipt of annual fee of US$ 150000 from Novelis Inc in the calendar year 2016. Mr. Praveen Kumar Maheshwari: Whole-Time Director and Chief Financial Officer has not received any commission/ remuneration from your Companyâs subsidiary Companies.
- There is no change in the nature of business.
- During the year under review, your Company has not accepted any fixed 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, 2017, there were no deposits which were unpaid or unclaimed and due for repayment.
- There were no significant and material orders passed by the regulators or courts or tribunals impacting the going concern status and companyâs operations in future.
- There were no frauds reported by the Auditors u/s 143(12) of the Companies Act, 2013.
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 Companyâs 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
Satish Pai M.M. Bhagat
Managing Director Independent Director
DIN:06646758 DIN:00006245
Mumbai
Dated : 30th May, 2017
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 ÂA.
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
Mar 31, 2011
Dear Shareholders,
The Board of Directors hereby presents the 52nd Annual Report, along
with the audited annual standalone and consolidated accounts of your
company for the year ended 31st March, 2011.
The year under review saw the economy recovering and with
macro-economic factors remaining largely supportive, your Company
strived to perform towards achieving a sustainable high-growth path. In
terms of asset sweating, efficiencies and higher sales of value-added
products, the year had been remarkable. However, steep cost inflation,
especially towards the end of the year and volume loss in some of the
Company's facilities, due to breakdowns, etc affected profit
performance to some extent.
1. Financial Performance summary
The financial performance of the company for the year ended March 31,
2011 is summarized below:
(Rs. Crore)
Standalone Consolidated
Particulars FY11 FY10 FY11 FY10
Net Sales and Other
Operating Revenues 23,859.2 19,522.1 72,077.9 60,707.9
Profit before Interest,
Depreciation and Tax 3,502.2 3,209.8 8,432.5 10,068.5
Interest 220.0 278.0 1,839.3 1,104.1
Profit before Tax 2,594.7 2,264.6 3,843.2 6,180.8
Tax Expenses 457.8 348.9 963.8 1,828.9
Profit before Minority
Interest and share in
Associates 2,136.9 1,915.6 2,879.4 4,351.9
Minority Interest - - 365.9 423.7
Share in (Profit)/
Loss of Associates - - 57.1 2.7
Net Profit 2,136.9 1,915.6 2,456.4 3,925.5
Balance brought forward
from Previous year 300.0 300.0 (377.1) (2,319.1)
Adjustment on Amalgamation,
Acquisition and
change in holding interest - - - (62.1)
Transfer from Debenture
Redemption Reserve - 87.5 - 87.5
BALANCE AVAILABLE FOR
APPROPRIATIONS 2,436.9 2,303.1 2,079.3 1,631.8
APPROPRIATIONS
Special Reserve 0.5 0.5
Proposed Dividend on
Equity Shares 287.2 258.3 287.7 259.9
Tax on Proposed
Dividend 46.6 42.9 46.8 43.5
Transfer to
General Reserve 1,753.2 1,701.9 1,752.8 1,705.0
Balance Carried to
Balance Sheet 350.0 300.0 (8.5) (377.1)
Total 2,436.9 2,303.1 2,079.3 1,631.8
2. Financial Performance
Standalone Results
Revenues for the year crossed USD 5 Bn Mark
For the year ended March 31, 2011, net sales at Rs. 23,859 crore grew
by 22%. Highest ever copper volumes, better product and geographic mix,
by-product credit and higher realisation led by higher commodity prices
enabled the company clock an impressive growth.
Input cost pressures, lower TcRc and one- timers associated with the
Hirakud power outage have been some of the constraints faced in
attaining even higher levels of performance.
Other Income at Rs. 317 crore was higher on account of better yields
and higher treasury corpus, post the return of capital by Novelis.
Interest was lower due to lower working capital borrowing coupled with
lower international interest rates.
EBITDA for FY11 stood at Rs. 3,502 crore as against Rs. 3,210 crore in
FY10, inclusive of a gain of over Rs. 349 crore, arising on account of
AS-30 transition. FY11 EBITDA was constrained by the one-timers
mentioned above.
Consolidated Results
Hindalco's consolidated revenue at Rs. 72,078 crore has been the
highest ever, a growth of 19% year-on-year. Strong volumes, improved
mix and higher commodity prices have been the growth drivers.
Profit before depreciation, interest and taxes stood at Rs. 8,433 crore
as against Rs. 10,069 crore in FY10, which is inclusive of Rs. 2,736
crore (USD 578 million) of unrealized gains on derivatives in FY10, as
against unrealised loss of Rs. 291 crore (USD 64 million) in FY11. The
underlying performance of the current year sets a new record,
reflecting the inherent strength of the Company's low cost business
model, operational excellence, superior product mix and a balanced and
de-risked portfolio.
Adjusted consolidated EBITDA rose by 25% (31% in Dollar terms) compared
to FY10:
Rs. Crore FY11 FY10
EBITDA 8,433 10,069
Less:
Unrealised Gain/(Loss)
on Derivatives-Novelis (291) 2,736
Transitional
adjustment on
adoption of AS-30-India 349
Adjusted EBITDA 8,724 6,983
Interest expenses increased from Rs.1,104 crore to Rs. 1,839 crore
mainly due to one- time debt issuance cost related to the refinancing
of USD 4.8 bn at Novelis in Dec- 10 and consequent higher interest in
Q4. The debt issuance cost was expensed in the year of occurrence in
Indian GAAP, unlike in US GAAP, where it is amortised over the life of
the debt.
3. Dividend
The Board of Directors of Hindalco has recommended a dividend of Rs.
1.50 per share i.e. 150% aggregating to Rs. 287.17 crore. Together with
corporate dividend tax of Rs. 46.59 crore, the total payout works out
to Rs. 333.76 crore.
4. Consolidated Financial Statements
The audited standalone and Consolidated financial statements of your
company, which form part of the annual report, have been prepared
pursuant to Clause 41 of the Listing Agreement entered into with the
Stock exchanges, in accordance with provisions of the Companies Act,
1956, the Accounting Standards AS-21 on Consolidated Financial
Statements read with Accounting Standard 23 on Accounting for
investments in Associates and AS-27 on Financial Reporting of Interest
in Joint Ventures.
Idea Cellular Limited (Idea), an associate of the Company, has not been
able to adopt its accounts for the year ended 31st March, 2011 due to
certain exceptional circumstances. As such, share of profit or loss in
Idea for the year ended 31st March, 2011 has not been incorporated in
the consolidated accounts of the Company. Share of profit of Idea
accounted for in consolidated accounts of the Company for the year
ended 31st March, 2010 was Rs. 66 crore. Accordingly, the numbers for
the current year are not comparable with those of the previous year.
5. Utilisation of Share issue proceeds
213,147,391 equity shares of Rs. 1/- each at a premium of Rs. 129.90
were issued through Qualified Institutions Placement on 1st December,
2009. Entire amount has been spent for various ongoing projects and
issue related expenses within 31st March, 2011.
6. Goodwill Impairment Reversal and Business Reconstruction Reserve
The Company had recorded goodwill on acquisition of Novelis in 2007-08.
Due to the deterioration in the global economic environment and the
resultant significant decrease in both the market capitalization of the
Company and the valuation of the Novelis' publicly traded 7.25% Senior
Notes during the 2008-09, an impairment loss of goodwill of Rs. 3,597
crore was ascertained in 2008-09. This amount was adjusted against
Business Reconstruction Reserve (BRR) account created as per a Scheme
approved by the Hon'ble Bombay High Court (the Court).
During the year ended March 31, 2011, the Company performed an analysis
to determine whether the specific external event of exceptional nature
is not expected to recur and whether the factors of exceptional nature
no longer exist. Such global economic crisis was exceptional in nature
which triggered impairment loss of goodwill. Consequent to the global
crisis, major economies across the globe made radical changes in their
regulatory environments as also introduced legislation, policy
initiatives and risk management procedures to prevent recurrence of
such events in the future. As such, the specific external event of
exceptional nature is not expected to recur.
During 2010-11, Novelis staged a record performance in terms of
revenues, profitability, free cash flow and liquidity and is now poised
for transformational growth. Its credit metrics improved significantly
enabling it to arrange for a debt refinancing to the tune of $4.8
billion out of which a return of capital of $1.7 billion has been made
leading to recapitalization of the company.
Consequent to above, the impairment loss of goodwill of Rs. 3,597.30
crore has been reversed in 2010-11. Since the impairment loss had been
adjusted against BRR in 2008-09 as per the Court approved Scheme, the
reversal of impairment loss of goodwill has also been adjusted against
BRR in 2010-11. Impact of this on Profit and Loss account for the year
2010-11 has been mentioned in table below:
Standalone-Higher/
(Lower) by Consolidated-Higher/
(Lower)by
2010-11 2009-10 2008-09 2010-11 2009-10 2008-09
Net Profit
(Rs. Crore) - - (66.98) 3,439.29 (304.39) (4,616.87)
Basic EPS (Rs.) - - (0.44) 17.97 (1.72) (30.67)
Diluted EPS (Rs.) - - (0.44) 17.96 (1.72) (30.67)
Pursuant to a court approved scheme of financial restructuring under
sections 391 to 394 of the Companies Act 1956 ("the Scheme"), Rs.
8,647.37 crore was transferred during 2008-09 to Business
Reconstruction Reserve (BRR) from Securities Premium Account for
adjustment of certain specified expenses. Accordingly, the following
amounts have been adjusted against the BRR:
(Rs. Crore)
Standalone Consolidated
2010-11 2009-10 2008-09 2010-11 2009-10 2008-09
Opening Balance 8,580.39 8,580.39 - 3,726.11 4,030.50 -
Add: Transfer
from Securities
Premium Accounts
per the Scheme - - 8,647.37 - - 8,647.37
Less:
Adjustments made:
(a) Impairment
loss/(reversal of - - - (3,597.30) - 3,597.30
impairment
loss) of goodwill
arising on
consolidation of
Novelis Inc. while
preparing
consolidated
accounts of
the group.
(b) Impairment of
fixed assets - - 66.80 - - 111.30
(c) Interest and
Finance Charges - - - 158.01 304.39 544.47
on loan taken by
A V Minerals
(Netherlands) B.V.,
a subsidiary
of the Company,
for acquition
of Novelis Inc.
by the Company.
(d) Costs in
connection with
exiting business - - - - - 363.62
(e) Certain costs
in connection
with the Scheme
Closing Balance - - 0.18 - - 0.18
8,580.39 8,580.39 8,580.39 7,165.40 3,726.11 4,030.50
7. 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 strategic direction and a more detailed
analysis on the performance of individual businesses and their outlook.
8. Finance
Your company took several proactive financing measures to ensure smooth
progress on these projects.
Utkal and Mahan Financing
The three projects, viz. Utkal Alumina [UAIL], Mahan Aluminium and
Aditya Aluminium, with a capital outlay of USD 5 billion are at an
advanced stage of execution. The equity for these projects has been
financed by internal accruals and QIP issuance of USD 600 million in
Nov '09.
During the year your company has achieved the financial closure of UAIL
and Mahan Aluminium through debt financing for Rs. 4,906 and Rs 7,875
Crore respectively.
Novelis Refinancing:
Novelis Inc., the Company's wholly-owned subsidiary and a global leader
in aluminium rolled products and beverage can recycling, has completed
refinancing transactions to recapitalize its Balance Sheet. The
refinancing consisted of the sale of $1.1 billion of 8.375% Senior
Notes due 2017, $1.4 billion of 8.75% Senior Notes due 2020
(collectively, the "New Senior Notes") and a new $1.5 billion secured
term loan credit facility.
The proceeds were used to refinance Novelis' prior secured term loan
credit facility, to fund its previously announced cash tender offers
for any and all of its $1.124 billion 7.25% Senior Notes due 2015 (the
"7.25% Notes") and its $185.0 million 11.50% Senior Notes due 2015 (the
"11.50% Notes") and to pay premiums, fees and expenses associated with
the refinancing. In addition, a portion of the proceeds were used to
fund a distribution of $1.7 billion as a return of capital to Novelis'
parent company, AV Metals, Inc. Canada, which in turn repatriated the
same as return of capital to its parent, AV Minerals (Netherlands)
B.V., a fully owned subsidiary of Hindalco. Novelis also replaced its
existing $800 million asset based loan ("ABL") credit facility with a
new $800 million ABL facility. The new ABL terms and conditions are
similar to the existing facility.
The new capital structure has strategic implications for Hindalco and
Novelis. Novelis' ability to optimize its balance sheet is a testament
to the management actions taken over the past two years to strengthen
its core business and financial position. The refinancing provides
Hindalco and Novelis with increased flexibility to address growth
opportunities in order to further strengthen their global footprint.
AV Minerals (Netherlands) B.V. has used this amount for repayment of
its outstanding debt and to return $650 million to Hindalco by way of
reduction of the nominal value of its shares in the current quarter. On
January 24, 2011, AV Minerals (Netherlands) B.V., a wholly- owned
subsidiary of the Company, has reduced its nominal value of shares from
Euro 1,000 per share to Euro 778.20 per share and has returned the
excess paid up capital after paying up dues on partly paid-up shares.
The extent of ownership interest of the Company in AV Minerals has not
been affected by the reduction in the paid up capital.
The net excess paid up capital amounting to Rs. 2,962.72 crore
(equivalent to Euro 477.58 million) was returned to the Company on
January 25, 2011.
9. Expansion Projects
Hindalco - India
Brownfield Expansion Projects
Hirakud Smelter Expansion: The Smelter expansion at Hirakud from 155
KTPA to 161 KTPA was completed in Q4 FY11. A further expansion from 161
KTPA to 213 KTPA, along with a 100 MW Captive Power Plant [CPP] will be
completed in early 2012.
The next phase of expansion of the Smelter from the proposed 213 KTPA
to 360 KTPA, with a corresponding increase in CPP capacity from 467.5
MW to 967.5 MW is under evaluation. The environmental clearance for
this is already in place.
Hirakud Flat Rolled Products [FRP] Project:
This project is underway for the transfer of all key equipment for FRP
production from Novelis plant at Rogerstone, UK to Hirakud. In
addition, orders have also been placed for related and balancing
equipment. This will enable the Company to produce a wide range of
superior engineering products, including can-body stock, for the local
and export markets. The project is slated for completion towards
end-2011. Around 2,000 people are working at the site on civil and
structural jobs.
Belgaum Special Alumina: The Specials Plant expansion from 189 KTPA to
301 KTPA, with a coal based co-generation power plant. Natural gas
adaptation for its rotary kilns is being evaluated.
The Company has embarked on an aspirational growth path towards which,
three new Aluminium Smelters and two new Alumina Refineries are being
set up in the states of Odisha, Madhya Pradesh and Jharkhand. With
these projects on stream, aluminium smelting capacity will touch around
1.7 mio-tonne and alumina refining capacity around 6 mio-tonne.
Of these greenfield projects, three projects, viz. Utkal Alumina
[UAIL], Mahan Aluminium and Aditya Aluminium, with a capital outlay of
USD 5 billion are at an advanced stage of execution. The equity for
these projects has been financed by internal accruals and QIP issuance
of USD 600 million in Nov '09. The Company has achieved the financial
closure of UAIL and Mahan Aluminium through debt financing. The process
of financial closure for the debt component of Aditya Smelter will be
launched soon.
These greenfield projects are located at remote places, without
adequate infrastructure and in an uncertain regulatory environment. The
Company is in the process of building necessary infrastructure to
support the execution of the project, followed by transition to regular
commercial operations.
While the critical long lead equipment for UAIL, Mahan and Aditya
Smelters have been tied up and committed, severe inflationary pressure
is being witnessed, triggered by increase in the commodity and fuel
prices, for the ongoing civil and other related activities.
An overview of the Greenfield Projects is as indicated below:
Project Description Location Commissio
-ning Financing
Utkal
Alumina 1.5 mio-tonne
Alumina Rayagada 2012 Financial Closure
[UAIL] Refinery with
integrated Odisha Completed with
Bauxite Mines* financing of
Rs. 4,906 crore
Mahan
Aluminium 359 KTPA
Aluminium Mahan, MP End 2011 Financial Closure
Smelter &
900 MW Completed with
CPP ** debt financing of
Rs. 7,875 crore
Aditya
Aluminium 359 KTPA
Aluminium Lapanga, Early 2013 Equity part already
Smelter &
900 MW Odisha tied up, debt
CPP*** financing to be
launched shortly
Aditya
Alumina Alumina
Refinery with Koraput, 2014
integrated
Bauxite Mines Odisha
Jharkhand
Aluminium Aluminium
Smelter Sonahatu, 2015
Jharkhand
* MoEF approval for 3 mio-tonne/annum
** MoEF approval for 325 KTPA and 750 MW CPP
*** MoEF approval for 260 KTPA and 600 MW CPP
Process or seeking approvals is in progress
Utkal Alumina International Ltd (UAIL):
The construction of the alumina refinery, along with a 90 MW captive
co-generation plant is in progress at UAIL, a 100% subsidiary of the
Company. The output from UAIL would be sufficient to feed alumina to
the Mahan and the Aditya Smelters. Contractors have mobilised more than
9,000 people at the site. The erection of major equipment like
boilers, evaporators and turbines has begun.
The project performance review of some of the contracts indicates
slippage in performance of certain contractors, mainly in the area of
civil work. In order to avoid further slippage, some of the
non-performing contractors have been suitably replaced with new
contractors, who have better performance track record.
This has resulted in an additional estimated cost of Rs. 600 crore, as
fresh contracts are at the current market price, with built-in bonuses
referenced to the project milestone.
Some of the delayed contracts have a cascading impact on the timely
execution of other contracts and have the potential to increase both
time and cost of the overall project. Internal accruals and free
cashflows are adequate to meet the probable overruns, which are being
estimated.
Despite these overruns, the project capital cost continues to be
favourably benchmarked with the capital cost of other comparable global
projects.
The operating cost of this project will continue to be in the lowest
cost quartile of the global cost of production and will continue to be
value accretive.
Mahan Aluminium Project: This 359 KTPA Aluminium Smelter, along with
900 MW CPP, is coming up in Bargwan, Madhya Pradesh.
Contractors have mobilised about 16,000 people at the site. Engineering
for the project is complete and major equipment for both the Smelter
and the CPP have started arriving at the site. Civil foundation,
fabrication and erection of structures have progressed substantially at
both the Smelter and the CPP.
As indicated earlier, severe inflationary pressure is being witnessed,
triggered by increases in commodity and fuel prices for the civil and
other related activities of the project.
The project cost and timelines of these contracts are being reviewed.
The coal requirement for the CPP will be primarily met from Mahan Coal
Block, being developed by Mahan Coal Limited (MCL), a joint venture
between the Company and Essar Power Limited.
As communicated earlier, Mahan Coal Block was included under the
category of 'No Go' area. An Empowered Group of Ministers has been set
up to resolve all environment and forest issues for coal mines under
"No Go" areas, meetings for which were held in February and April 2011,
with the next meeting expected shortly. The Company continues to be
optimistic of a favourable outcome in the matter.
The Company is in the process of finalising the arrangements for mining
to fast-track the development of the mines, once the final forest
clearance is received. As an interim measure, the Company has applied
to the Ministry of Coal for temporary supply of coal (tapering linkage)
to the Mahan CPP, until the Company's own mines commence operating at
full capacity.
Expansion Projects
Novelis - South America
Pinda is the largest aluminium rolling and recycling facility in South
America in terms of shipments and the only facility in South America
capable of producing can-body and end-stock. Pinda recycles primarily
used aluminium beverage cans and is engaged in tolling recycled metal
for its customers. In response to the growing demand for the company's
products in South America, a plan to invest nearly USD 300 million to
expand the aluminium rolling operations in Pinda was announced earlier.
This expansion will increase the plant's capacity by more than 50% to
approximately 600 Kt of aluminium sheet per year. The project is
expected to come on stream by late 2012.
Novelis - Asia
In May 2011, Novelis announced plans to invest approximately USD 400
million to
expand the aluminium rolling and recycling operations in South Korea,
in response to the growing demand in Asia and the Middle East. The
rolling expansion, which will include investments in both hot rolling
and cold rolling operations, will increase aluminium sheet capacity in
Asia to 1,000 Kt annually. As a response to the projected market growth
in the region, this move is designed to rapidly bring to market,
high-quality aluminium rolling capacity, aligned with the projected
needs of a growing customer base. The new capacity is expected to be
commissioned in financial year 2013. The expansion will increase
Novelis' aluminium sheet capacity in Asia by more than 50% and will
also include the construction of a state-of-the-art recycling centre
for used aluminium beverage cans and a casting operation.
10. Subsidiaries/ Joint Venture
Indal Exports Limited was dissolved on March 4, 2011. A V Aluminium in
Canada was merged with Novelis Inc.
Novelis Inc. (Wholly Owned Subsidiary of Hindalco)
Novelis is poised for Rapid Transformational Growth. It has posted a
net income of USD 116 million under US GAAP. The adjusted EBITDA at a
record level of USD 1.1 billion was up by 42%. Novelis reported a solid
Free Cash Flow of USD 310 million.
The record results at Novelis reflect a number of ongoing initiatives
to strengthen the business and prepare it for transformational growth.
The global realignment of the organization towards operating as a fully
integrated global company, optimizing the Company's footprint and
reducing its cost base by closing underperforming and non- core plants
and by investing in recycling initiatives fuelled its growth. The focus
is on premium products, which now comprise over 70 percent of Novelis'
product portfolio.
Other strategic initiatives like the expansion of the Company's Pinda
mill in Brazil and global debottlenecking projects designed to increase
capacity have been growth enablers as well.
Furthermore, refinancing and recapitalizing the business has positioned
the Company to significantly invest over the next few years to capture
strong market growth in its key product segments globally.
Novelis has operated its assets at or near capacity for the entire
year. The Company intends to use its strong operating cash flow to fund
$1.5 billion in capital expenditure over the next three years. The
previously announced rolling mill expansion in Brazil and the recently
announced expansion in Korea as well as strategic automotive expansion
in North America are key focus areas in the near term to capitalize on
future growth and solidify its position as the leading player in the
global FRP industry.
Shipments of aluminium rolled products totalled 2,969 Kt for FY11, an
increase of 10 percent compared to shipments of 2,708 Kt in the
previous year. This increase in shipments for the year was driven by
strong end-market conditions across all product segments globally,
particularly in can, automotive and electronics. Net sales for FY11
were $10.6 billion, an increase of 22 percent compared to the $8.7
billion reported for FY10.
Over the next year, Novelis expects continued strong demand in its key
product segments. As a result, capital expenditure for FY12 is
projected to be between $550 and $600 million. Much of this capital is
earmarked for strategic investments, which include Brazilian and Asian
rolling mill expansions, strategic automotive capacity increase in
North America and recycling initiatives across operating regions. The
Company plans to primarily use its strong operating cash flow to fund
this capital expenditure.
Aditya Birla Minerals Ltd [51% subsidiary of Hindalco]
Nifty mines recorded the highest copper production and also highest ore
mine processed to date. Production of copper was at an all time high at
59.6 Kt despite lower copper grade. Mount Gordon has received the
requisite approval for mining. Net profit for the year is AUD 57
Million against AUD 61 Million in FY10.
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
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), Consolidated Financial Statements
prepared by the Company include financial information of its
subsidiaries.
11. Employee Stock Option Scheme
The shareholders of the Company has approved an Employee Stock Option
Scheme ("ESOS 2006"), formulated by the Company, under which the
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 the Whole Time Directors of the Company. 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 Re. 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.
During the year, under ESOS 2006, 572,160 options have been granted as
Tranche III to its eligible employees as on 3rd September, 2010.
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 701,274 options were 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 cost includes Rs. 1.34 crore (Previous year Rs. 1.00 crore)
being the amortization of intrinsic value for the year ending 31st
March, 2011.
Disclosure pursuant to the provisions of the Securities and Exchange
Board of India (Employee Stock Option Scheme) Guidelines, 1999 is given
in Annexure à A.
12. 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.
13. 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.
14. Directors
In accordance with Article 146 of the Articles of Association of the
Company, Mr. M.M. Bhagat , Mr. C.M. Maniar and Mr. S.S.Kothari retire
from office by rotation, and being eligible, offer themselves for
reappointment.
During the year Mr. Ram Charan was appointed as an Additional Director
of the Company w.e.f 12th February, 2011 pursuant to Section 260 of the
Companies Act, 1956.
15. 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.
16. Group Structure
Pursuant to intimation from the promoters, the names of the promoters
and entities comprising "Group" are disclosed in the Annual Report for
the purposes of the SEBI (Substantial Acquistions of Shares and
Takeovers) Regulations, 1997.
17. Directors' Responsibility Statement
Your Directors affirm that the audited accounts containing financial
statements for the financial year 2010-11 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:
1) In the presentation of the Annual Accounts, applicable Accounting
Standards have been followed.
2) That the accounting policies are consistently applied and
reasonable, prudent judgment and estimates are made so as to give a
true and fair view of the state of affairs of the Company at the end of
the Financial Year.
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.
18. Awards & Recognitions
Several accolades have been conferred upon your Company, in recognition
of its contribution in diverse fields. A selective list:
- Renukoot Unit received the "NIPM Gold Award for Best HR Practices"
for the year 2010 by National Institute of Personal Management (NIPM).
- Renukoot Unit awarded the Greentech Gold Safety Award 2010 for
Occupational Health and Safety Management in the Mining & Metals
sector, by the Greentech Foundation, New Delhi.
- Renukoot Unit received the Greentech Environment Excellence Gold
Award-2010 in the Metals sector for its efforts towards Environment
Management by Greentech Foundation, New Delhi.
- Renukoot Unit recognised with the "Golden Peacock Award for Corporate
Social Responsibility" for the year 2010.
- Renukoot Unit was presented the Greentech HR Excellence Silver Award
for 2010 for excellence in Training.
- Renukoot Unit selected for "Best Exporter Award" for 2010 by the
Container Corporation of India for contributing to India's economic
progress through significant volume of exports.
- Renukoot Unit earned the National Energy Conservation Award (Second
Prize) 2010, in the Metals Sector, presented by the Ministry of Energy,
Government of India.
- Renukoot Unit received the Silver Certificate of "Indian
Manufacturing Excellence Award à 2010" by the Economic Times and Frost
& Sullivan
- Birla Copper received the Greentech Environment Excellence Gold
Award-2010 in the Mining & Metals sector for its efforts towards
Environment Management by Greentech Foundation, New Delhi.
- Birla Copper was awarded the Greentech Silver Safety Award 2010 for
Occupational Health and Safety Management in the Mining & Metals sector
by the Greentech Foundation, New Delhi.
- Renusagar Power Division received the Greentech Safety Gold Award
2011 in Power Sector for outstanding achievement in Safety Management
by Greentech Foundation, New Delhi.
- Renusagar Power Division received the Greentech Gold Award 2010 in
Thermal Power Sector for outstanding achievement in Environment
Management by Greentech Foundation, New Delhi.
- Renusagar Power Division received the "Commendation for Safety
Innovation Award 2010" by the Institution of Engineers (India).
- Renusagar Power Division received the "Special Commendation for the
Golden Peacock Environment Management Award 2010" by the Institute of
Directors, New Delhi.
- Hirakud Power Plant awarded Third Prize in the State level CII Orissa
Award for Best Practices in Environment, Safety & Health à 2010
- Hirakud Power was awarded the Greentech Environment Excellent Gold
Award - 2010 in the thermal power sector category.
- Hirakud Smelter earned a Certificate of Appreciation for commendable
efforts towards Energy Conservation, presented by CII, Kolkata.
- Muri Alumina Plant was selected for the National Award for Excellence
in Water Management 2010 - "Beyond the Fence" category, for the
indigenous work being done by the unit, outside the fence as a
Corporate Citizen and fulfilling its Corporate responsibilities.
- Taloja Rolling Plant received an award- cum-recognition from TATA
TOYO Radiators Limited for helping them in their Import Substitution
(High Impact Localisation- around 32 crore is their purchase per year)
of one of their key supplies.
Quality Circle Awards
- Gold Awards to four Hindalco Renukoot Quality Circle Teams, Kushal,
Vaibhav, Pragati, Nirantar, at the International Quality Circle
Competition (IQCC 2010) held at Hyderabad
- Silver & Bronze Awards to Hindalco Hirakud Power Quality Circle
Teams, Aryan & Power respectively at the International Convention on
Quality Concept Circle (ICQCC-2010) held at Hyderabad.
- Quality Circle teams from Renukoot, Hirakud and Birla Copper Dahej
Units excelled at the National QC Convention (NCQC 2010) winning Par
Excellence, Excellence, Distinguished and Runners Up Awards.
Individual
- Mr. D. Bhattacharya, Managing Director, Hindalco selected for the
prestigious Qimpro Gold Standard Business Award for 2010, given to a
leader who has successfully implemented world-class quality practices
in an organisation / institution.
- Global Corporate Excellence Award presented to Mr D. Bhattacharya,
Managing Director, Hindalco for his exceptional efforts towards growth
and promotion of non-ferrous metals industry in India. Presented by
Corporate Monitor in association with the Department of Metallurgical
Engineering and IT, Banaras Hindu University, Varanasi.
- Vishwakarma Rashtriya Puruskar awarded to four Renukoot Workers Ã
Messrs A K Jha, D.S. Bist, Ravindra Kumar, and P.S. Rana, presented by
the Ministry of Labour & Employment, Government of India.
- Prime Minister's Shram Awards 2010 to five Renukoot Workers : Mr
Bhanwar Singh awarded Shram Bhusan Award and Messrs Mahendra Nath
Gupta, Prem Narain awarded the Shram Veer Award while Messrs Hari Kant
Gupta, Lallan Prasad received the Shram Shree Award, presented by the
Ministry of Labour & Employment, Government of India.
- Prime Minister's Shram Award 2010 to Mr. Jayanti Patel from the
Phosphoric Acid plant of Birla Copper Dahej unit, who earned the Shram
Veer Award presented by the Labour Department, State Government of
Gujarat.
19. 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.
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.
In pursuance to Section 233-B of the Companies Act, 1956 your Directors
have appointed M/S Nanabhoy & Co. to conduct the cost audit of
Aluminium Business, Fertiliser Business, Captive Power Plant at
Renusagar and Co-Generation Plant at Dahej and Renukoot and M/S Mani &
Co. to conduct the cost audit of Aluminium Business at Alupuram,
Belgaum, Muri, Taloja, Belur, Hirakud, Mouda, Kollur and Captive Power
Plant at Hirakud and Muri for the year 2011- 2012 subject to the
approval of Central Government.
21. 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 Directors place on record their deep appreciation for the
exemplary contribution made by employees at all levels. Their dedicated
efforts and enthusiasm have been pivotal to your Company's growth.
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 the 30th Day of May,2011
Mar 31, 2010
The Directors are pleased to present the 51st Annual Report along with
the audited annual accounts for the year ended 31st March, 2010.
The severe downturn witnessed in the previous year was arrested and
macro economic factors showed signs of recovery. Several measures taken
by your Company started yielding results in the form of higher
production, lower cost and higher sale of value-added products. Your
Company also successfully placed QIP of USD 600 Million during the year
under review.
Financial Performance
Your Company s Consolidated Revenue crossed USD 12.8 Billion mark
during the year. The consolidated EBIDTA was at USD 2.1 Billion i.e.
Rs.10,069 Crore. Business Performance is amongst the best ever with
highest net profit.
Overall results of your Company clearly reflect derisked business
portfolio in terms of geographic and product mix.
Standalone Results
For the year ended 31 March 2010, net sales at Rs.19,536 crore were
higher by 7%. The highest ever metal volume, better product and
geographic mix, despite subdued commodity prices helped improve the
company s performance. The superior operational performance in terms of
highest ever metal production and substantial cost savings on improved
efficiencies were negated by adverse macro-economic factors, which were
pronounced in both the businesses.
In the Aluminium Business, lower Rupee-LME eroded profit by around
Rs.750 crore. Additionally, Rs.100 crore was lost on account of the
higher coal cost at Renusagar Power. Copper Business, which benefitted
from higher contracted TcRc (Treatment charges and Refining charges),
lost Rs.750 crore on lower by-product credit, in terms of sulphuric
acid realisation and lower fertiliser subsidy. Against this backdrop,
the performance of both the Businesses was satisfactory. Other income
at Rs.260 crore was lower by Rs.377 crore, on account of low treasury
corpus, post repayment of bridge loan in November 2008, which was taken
for Novelis acquisition and for higher project spending. Abundant
liquidity kept short-term rates low. This also affected yields on the
companyÃs investments which are mostly in liquid plans. It also
reduced the cost of working capital borrowing. As a result, the
interest and financing charges also reduced from Rs.337crore in FY09 to
Rs.278 crore in FY10.
Arising from the announcement of the Institute of Chartered Accountants
of India dated 29th March, 2008 on Accounting for Derivatives, the
Company has decided for early adoption of Accounting Standard (AS) 30
on Financial Instruments : Recognition and Measurement, in so far as it
relates to derivative accounting, from 1st April, 2009. Accordingly,
net loss arising on fair valuation of outstanding derivatives as on
01st April, 2009 amounting to Rs. 230.58 crore (net of deferred tax of
Rs. 118.73 crore) has been adjusted against General Reserves following
transitional provisions. Accounting for all derivatives from 1st April,
2009 have been done as prescribed under the AS. As a result, net gain /
(loss) of Rs. (236.12) crore and Rs. 167.75 crore & Rs. 246.09 crore
for the year ended 31st March, 2010 have been included under Sales and
Raw Materials Consumed & Other Expenses (in Manufacturing and Other
Expenses), respectively, with consequential impact on profit for the
year ended 31st March, 2010. The figures of the current year in
respect of above items are, therefore, not comparable with those of the
previous year.
Consolidated Results
Consolidated revenues were lower at Rs. 60,722 crore, mainly due to
lower aluminum prices and softness in the CompanyÃs end-markets in the
first half of the year, especially for Novelis.
Further, change in the status of Idea Cellular Ltd. from joint venture
to associate w.e.f from 1st January 2009 for the purpose of
consolidation, also resulted in proportionate revenue from Idea not
being included in the consolidated revenues.
Profit before depreciation, interest and taxes soared to a record level
of Rs.10,069 crore from Rs. 3,661crore in FY09.Consolidated result
include pre-tax adjustment for unrealised derivative gain/(Loss) of Rs.
2,736.4 crore in FY 10 and (Rs. 2,380.7) crore in FY 09 at Novelis.
Aluminium Business revenue fell by 11% to Rs.48,091 crore on the back
of lower LME and lower demand in first half of the year. Earning
before interest and tax turned around from a loss of Rs. 425 crore to a
profit of Rs. 5,998 crore. This reflects steady improvements in
operations across the board. Copper business revenue increased by 13%
to Rs.12,575 crore and EBIT trebled from Rs. 374 crore to Rs. 1,003
crore.
(Rs. in Crores)
Standalone Consolidated
Financial Results
for the year ended 31.03.2010 31.03.2009 31.03.2010 31.03.2009
Net Sales and Operating
Revenues 19,536.28 18,219.65 60,722.11 65,962.95
Profit before Tax 2,264.56 2,690.32 6,180.76 (604.92)
Provision for
Current Tax 374.20 478.11 554.30 872.53
Provision for Deferred Tax 87.90 121.40 1,377.59 (1,689.36)
Provision for Fringe
Benefit Tax 0.00 11.37 0.00 12.19
Tax adjustment for
earlier years (Net) (113.17) (150.83) (102.98) (149.11)
Profit before Minority
Interest 1,915.63 2,230.27 4,351.85 348.83
Minority Interest 0.00 0.00 423.70 (171.78)
Share in Profit / (Loss)
of Associates (Net) 0.00 0.00 2.68 36.72
Net Profit 1,915.63 2,230.27 3,925.47 483.89
Appropriations:
Debenture Redemption Reserve 0.00 5.00 0.00 5.00
Capital Reserve 0.00 0.00 0.00 1.50
Capital Redemption Reserve 0.00 0.41 0.00 0.41
Special Reserve 0.00 0.00 0.48 0.92
Dividend on Preference Shares 0.00 0.02 0.00 0.02
Dividend Tax on Preference
Shares 0.00 0.01 0.00 0.01
Proposed Dividend on Equity
Shares 258.32 229.58 259.91 231.16
Tax on Proposed Dividend 42.90 39.02 43.48 39.61
Transfer to General Reserve 1,701.91 1,956.23 1,704.96 1,958.55
Dividend
Your Directors have recommended a dividend of Rs.1.35 per share i.e.
@135% per equity share for the financial year ended March 31, 2010
amounting to Rs.258.32 crore.
Together with the Corporate Dividend Tax of Rs. 42.90 crore, the total
payout works out to Rs. 301.22 crore.
Growth plans underway in Aluminium
Your Company is aggressively pursuing various brownfield and greenfield
growth opportunities in Aluminium as described below:
Project Commissioning
Hirakud Smelter
155 KTPA to 161 KTPA Q2FY11
161 KTPA to 213 KTPA Q4FY12
Flat Rolled Products at Hirakud Q2FY12
Utkal Alumina Project Q2FY12
Mahan Aluminium Project Q2FY12
Aditya Aluminium Project Q3FY12
Aditya Refinery Project Q1FY14
Jharkhand Aluminium Project Q1FY14
Further to the above, the smelting capacity at Hirakud is intended to
be expanded from the proposed 213 KTPA to 360 KTPA with corresponding
increase in back-up captive power from proposed 467.5 MW to 967.5 MW.
The Company undertakes to appropriately finance the project.
To debottleneck and increase capacity, primarily in South America and
Asia, Novelis has increased its capital expenditure plan by
approximately USD 150 Million or 148 per cent for fiscal 2011 compared
to the previous year. A significant amount is aimed at expanding its
rolling operations in Brazil. This investment will increase capacity by
over 50 per cent and better support the increasing demand for flat
rolled products in the region. The expansion is expected to be
completed by late 2012.
The details of the projects are covered in greater detail as the part
of Management Discussion and Analysis section.
Finance
The Authorised Capital of the Company has increased from Rs. 200.00
crore to Rs. 215.00 crore by way of increase of 15,00,00,000 equity
shares of Re. 1 each pursuant to a resolution passed at the Annual
general meeting held on 18 September, 2009.
Upon allotment of 213,147,391 equity shares of Re 1 each at a premium
of Rs 129.90 through Qualified Institutions Placement (QIP) on
1st December, 2009, paid-up capital of the Company has increased by Rs.
21.31 crore. The total amount received against QIP is Rs. 2,790.10
crore. Out of this amount Rs. 396 crore has been spent for various
ongoing projects (including issue related expenses) till 31st March,
2010 and the balance amount has been invested temporarily in mutual
funds.
Consolidated Financial Statements
In accordance with Accounting Standards AS-21 on Consolidated Financial
Statements read with Accounting Standard 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.
Management Discussion and Analysis Report
The Management Discussion and Analysis Report forming part of
Directorsà 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 strategic direction and a more
detailed analysis on the performance of individual businesses and their
outlook.
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.
Directors Responsibility Statement
Your Directors affirm that the audited accounts containing financial
statements for the financial year 2009-10 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:
1) In the presentation of the Annual Accounts, applicable Accounting
Standards have been followed. However, the deviation from the
Accounting Standard has been caried out with reference to the Scheme of
arrangement, approved by the court for the purpose of preparing
Consolidated Financial Statements. Refer Notes on Accounts for details
of the same.
2) That the accounting policies are consistently applied and
reasonable, prudent judgment and estimates are made so as to give a
true and fair view of the state of affairs of the Company at the end of
the Financial Year.
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.
Subsidiaries/ Joint Venture
A wholly-owned subsidiary by the name Mauda Energy Limited has been
incorporated on 5th October 2009 for generation of power to be used
captively.
In terms of the facility agreement for foreign currency borrowing of
US$ 981.80 Million availed by A V Minerals (Netherlands) B.V., a wholly
owned subsidiary, the Company has entered into a deed of pledge of
registered shares in A V Minerals (Netherlands) B.V. in favour of HSBC
Bank USA, N.A. as pledgee.
Novelis
Shipments of aluminium rolled products totalled 2,708 kilotonne for
fiscal 2010, a decrease of two percent compared to shipments of 2,770
kilotonne in the previous year, driven by softer end-market conditions
in most of the regions during the first half of the year.
Net sales for fiscal 2010 were USD 8.7 Billion; a decrease of 15 per
cent compared to the USD 10.2 Billion reported in the same period a
year ago, a result of lower aluminium prices and softness in the
Company s end-markets in the first half of the year.
Adjusted EBITDA for the year was a record USD 754 Million, representing
a 55 per cent increase from adjusted EBITDA of USD 486 Million posted
for the same period a year ago. These record operating results were
primarily due to the Company s focus on cost reductions and
restructuring initiatives.
Aditya Birla Minerals
Aditya Birla Minerals Limited, the Australian subsidiary, reported
profit after tax of AUD 61.4 Million as against a loss of AUD 76.0
Million in the previous year. Sustained cost management resulted in
turnaround in financial performance. Lower production was mainly due
to loss of production of copper in concentrate at Mt. Gordon and
cathode production at Nifty oxide operations which were put under care
and maintenance as a management decision. The drop in overall
production was partly off-set by 13.8% increase in Nifty s production
of copper in concentrate.
FY10 FY09
Copper Production (MT) 57,093 70,11
EBIT (AUD 000) 93,259 (103,605)
PAT (AUD 000) 61,440 (76,019)
The performance of the subsidiaries is covered elsewhere in this Annual
Report.
Your Company has applied to the Central Government for grant of an
exemption to your Company under Section 212(8) of the Companies Act,
1956, from attaching a copy of the Balance Sheet, Profit and Loss
Account, Report of the Board of Directors and the Report of the
Auditors to all the Subsidiary Companies. Subject to receipt of the
approval, aforesaid documents are not being attached with the financial
statements of your Company. These documents can be requested by any
member, investor of the company / subsidiary company. Further, in line
with the Listing Agreement and in accordance with the Accounting
Standard 21 (AS-21), Consolidated Financial Statements prepared by the
Company include financial information of its subsidiaries.
Employee Stock Option Scheme
The shareholders of the Company has approved an Employee Stock Option
Scheme ( ESOS 2006 ), formulated by the Company, under which the
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 the Whole Time Directors of the Company. Each
option when exercised would be converted into one fully paid-up equity
share of Re. 1/- each of the Company. The ESOS 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
2,973,390 options to its eligible employees in two tranches.
Disclosure pursuant to the provisions of the Securities and Exchange
Board of India (Employee Stock Option Scheme) Guidelines, 1999 is given
in Annexure ÃA.
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.
Fixed Deposits
Your Company was accepting Fixed Deposits from the Employees.
Acceptance of such fixed deposits has been discontinued from FY
2009-10. The total outstanding deposits are Rs. 0.33 crore as at 31st
March, 2010.
Directors
In accordance with Article 146 of the Articles of Association of the
Company, Mr. Kumar Mangalam Birla, Mr. E.B. Desai and Mr. A.K.
Agarwala retire from office by rotation, and being eligible, offer
themselves for reappointment.
Awards & Recognitions
Several accolades have been conferred upon your Company, in recognition
of its contribution in diverse fields. A selective list:
1. Renukoot unit was awarded the Greentech Safety Gold Award 2009 for
Occupational Health and Safety Management and the Greentech Environment
Gold Award 2009 for environmental excellence, in the Mining and Metal
Sector, presented by Greentech Foundation, New Delhi.
2. Renukoot unit was awarded the prestigious ÃGolden Peacock National
Quality Award à 2010Ã.
3. Amity International Business School conferred on Renukoot unit the
ÃAmity Corporate Excellence Awardà for its notable initiatives in
Corporate Social Responsibility.
4. Institute of Engineers (India) awarded Renukoot unit with the
ÃSafety Innovation Award-2009Ã in the metals sector for its exemplary
initiatives in Occupational Health and Safety.
5. Renusagar Power Division was awarded the ÃGolden Peacock
Environment Management Award 2009Ã.
6. Renusagar Power Division received the ÃRajiv Gandhi National
Quality Award 2008,ÃÃ Commendation Certificate presented by the Bureau
of Indian Standard (BIS).
7. Renusagar Power Unit was awarded the Greentech Environment
Excellence Gold Award 2009, in Thermal Power Plant Category, by
Greentech Foundation, New Delhi.
8. CII has conferred the Energy Efficient Unit award to Renusagar
Power Division during the 10 National Awards for Excellence in Energy
Management-2009 .
9. Hirakud Smelter unit was awarded the National Energy Conservation
Award 2009, ranking first in the Aluminium Sector.
10. Hirakud Smelter unit awarded the Greentech Safety Silver Award
2009 for Occupational Health and Safety Management presented by
GreenTech Foundation, New Delhi.
11. Hirakud Power Unit was globally recognised as one of the top six
power plants for its environment friendly operations by the POWER
Magazine.
12. Hirakud Power Unit was awarded the Greentech Environment Gold
Award 2009 for best environment management and practices, and the
Greentech Safety Silver Award 2009, by Greentech Foundation, New Delhi.
13. Your Company s Mines earned awards in Environment, Safety, Mining
Practices during the Mines Safety Week and Mineral Conservation Week
programmes at regional levels.
14.Birla Copper Dahej was awarded the Greentech Environment Gold Award
for its exemplary environmental practices and performance and the
Greentech Safety Silver Award, presented by Greentech Foundation, New
Delhi.
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.
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.
Human Resource Development
Your Company continuously strives to foster a culture of high
performance. Your Management has infused a lot of rigor and intensity
in its people development processes and in honing skill sets. Its HR
processes are absolutely aligned to organizational goals. The
implementation of People Soft HRMS (Human Resource Management System),
the variable pay plan and job bands have been institutionalized.
Ongoing learning, refreshing HR systems in line with global benchmarks,
aligning rewards and recognition with performance, have enabled your
Company sustain its reputation of a meritocratic organization. The
Group s Corporate Human Resources function has played and continues to
play an integral role in your Company s Talent Management Processes.
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
Dated the 4th Day of June, 2010 Chairman
Disclaimer: This is 3rd Party content/feed, viewers are requested to use their discretion and conduct proper diligence before investing, GoodReturns does not take any liability on the genuineness and correctness of the information in this article