Hindalco Q2FY11 Presentation

8/3/2019 Hindalco Q2FY11 Presentation

1/38

Hindalco Industries Ltd

Q2 FY11November 2010


2/38

Industry Backdrop

Results Highlights

Aluminium: Business Conditions & performance

Review

Co er: Business Conditions & erformance Review

ro ec s n p a e


3/38

3


4/38

Robust growth in global metals consumption

though supported by re-stocking / base effect / stimuli

Aluminium Consumption Copper ConsumptionWorld,

18%,

37.4 37.8

41.9 41.6

RoW

17.5

17.917.0

17.9

19.318.5

8%

16%.

9%10.0

11.1 6.0 7.2

20%

China11%

12.6 17.5

5.1

7.3

18%

North America + Europe

5%

12.914.8 6.9

4.1

4

2008 2009 2010 Q1 2010 Q2 2010 Q3

Growth (2010 est)Source: Industry

2008 2009 2010 Q1 2010 Q2 2010 Q3


5/38

Indian Growth Momentum to Continue

966

Aluminium consumption (kt)Electrical & Electronics

Large scope formetal

consumption to

rise from current

910Building & Construction

levels

End user

segments have a

strong/positive

H1 FY10 H1 FY11

6%

Consumer Durable

. .

Power, Transport,

Construction,

Industrial etc

Rising per capita

opper consump on

296

307

utomo e ransport

Industrial Machinery

consumption ofin India

4%

H1FY10 H1FY11

Packaging

5H1 growth affected by temporary slowdown in electricaldemand, which is primarily dependent on Govt. allocation


6/38

6


7/38

Q2 FY 11: Highlights

7 Robust Performance amidst challenging conditions


8/38

Proactive Steps

HigherAluminium VAPSalesImprovedMix

HighestEverproductionofCCR

LowerCuPremium Efficiencies

Coal PriceSurge

Muri

improvement

inAluminium

EfficienciesimprovedCo er

ReducedInventory levelsto.

8

Higher EBIT despite adverse impact


9/38

Financial Performance

` Cr Q2 FY10 Q2 FY11 Change (%)Net Sales 4,915 5,860 19

PBT 434 556 28

PAT 344 434 26

` Cr H1 FY10 H1 FY11 Change (%)EPS (`) 2.02 2.27 12

Net Sales 8,812 11,038 25

PBITDA 1,500 1682 12

, ,

PAT 825 968 17

EPS (`) 4.85 5.06 4

9Q2 profit would have been significantly higher, but for Hirakudproduction loss and Kalwa VRS settlement


10/38

Aluminium: Business Conditions &

10


11/38

Al: External Drivers

Driver Current Assessment Impact

LME Support from global liquidity and cost pressures,but downside risks related to rewind of financing

deals

INR USD USD weakness and continued FII flows to Indiamay lead to rupee appreciation

Input

prices

Upward pressure related to coal and carbon costs

Demand in Outlook positive for most aluminium-consuming

India sectors

11


12/38

Aluminium Industry : Cost push to continue

10%

World average hot metal cost Composition

Alumina-

Others

38%13%

insisting on short-termcontracts- De coupling of

- Correlated withcommodity price cycle

7%

Labour cost- Hardening of

emerging marketcurrencies includin

32%

RMB

- Electricity price hikes in China- Power cuts in certain Chinese provinces leadingto cutbacks in production (~1.5 mt capacity)

12

Cost Push to continue Support for prices?

Source: Industry &company estimates


13/38

Strong Production performance despite Hirakudproduction loss

Alumina (kt)11%

Metal (kt)

123140

12% Growth in Output(H1 FY11 vs H1 FY10)

312

347

100 103

Alumina 10%

Metal -4%

FRP 3%

Hkud

Q2 FY10 Q2 FY11 Q2 FY10 Q2 FY11

Extrusions 3%Rkoot Rkoot

54,042

FRP (ton) Extrusions (ton)2%

Adverse impact

contained through

2%

, ,9,637 efficiency

improvement

Higher alumina &

13 Q2 FY10 Q2 FY11 Q2 FY10 Q2 FY11

wire rod production


14/38


15/38


16/38

Aluminium Business: Financial Performance

Q2 FY10 Q2 FY11 Change (%)(` cr)

Net Sales & OperatingRevenue 1,649 1,911 16

EBIT 259 424 64

Net Sales & Operating

(` cr)

Revenue, ,

EBIT 714 976 37

16


17/38

Copper: Business Conditions &

17


18/38

Copper: External Drivers

Driver Current Assessment Impact

TCRC Long term TCRC lower than last year

LME/INR LME being supported by liquidity

INR Appreciating rupee

Acid prices Recently on an improving trend

prices

firm

18

a eng ng mes


19/38

Custom Smelters : Low TCRC, Rising energy costs

Structural shortages likely tocontinue

(Mn Ton)

Rising energy costs

13.2 13.1

13.7

Mine Supply

Smelter Demand

12.312.2

12.4 12.5

12.8. .

Input

Vs HiFY10

Importedcoal >10

Furnace oil >20

2007 2008 2009 2010(E)

2011(P)

TCRC to continue to remain under pressureLNG >5

19

enc mar were s gn can yhigher than FY11 benchmark


20/38

Cu: Production Performance

Q2: Record cathode production and sharp jump in Own CCR production

94

a o e5%

43

wn41%

Q2 FY10 Q2 FY11

31

Q2 FY10 Q2 FY11

20

rong opera ona per ormance


21/38

Copper Business: Financial Performance

Net Sales & Operating

(` cr)

Revenue, ,

EBIT 217 129 (41)

H1 FY10 H1 FY11 Change (%)(` cr)

Revenue 5,748 7,265 26

EBIT 374 253 (32)

21


22/38

Mining : ABML Highlights

Nifty Sulfide Production (tons) Nifty EBIDTA (A$ mn)

11% 18%

29491

89.7

26488 .

FY10 H1 FY11 H1 FY10 H1 FY11 H1

22

Strong Performance


23/38


24/38

24


25/38

Utkal Alumina

Engineering Basic Engg-100 % Complete, Detailed Engg- 95% Completed, not on

StatutoryClearances

Obtained

Commitment Over 82%

Site Progress More than 7,000 people working at site.Major Contractors like L & T, Simplex, GDC mobilized fully at site.94% of Piling work completed. RCC, structural, fabrication anderection has been ramped up and is on track for timely completion.

25 Expected completion -Q2 FY12


26/38

Activity at Site: Utkal

Evaporation area: Erection of equipmentunder progress

Mud Washing: erection of DCWunder progress

BTG Packa e: ESP#1: Hooper erection under progress

26


27/38


28/38

Activity at Site: Mahan smelter

Pot Room Cathode sealingshop

GTC1 ID Fan1 ag ter &

crust bath silosupport structureerection

foundations & Stack

28


29/38

Activity at Site: Mahan CPP

Erection work in Boiler #2 Chimney #4 - Assembly of Slip form

Erection of Boiler#2 columns

Reinforcement & Shuttering work for TG#2Deck slab

29


30/38

Aditya Smelter

-

Statutoryapprovals

Major approvals received. Forest land stage I clearancereceived. Permission to start project site consolidation activities

. .

Commitment Around 66%. Major orders placed (along with Mahan)

Site Progress Area grading ,Piling undergoing. R & R under progress. Civilcontractor - HCC Team has mobilized well with hydraulic rigs

and civil work in permitted fronts is in full swing.

30 Expected Completion Q3 FY12


31/38

Activity at Site: Aditya Smelter and CPP

Pot Room Foundation 220 KV switch yard

Intake well with substation o er oun a on

31

Hi k d S l d P Pl E i


32/38

Hirakud Smelter and Power Plant Expansion

SmelterExpansion

Capacity increase from 161 to 213 ktpa thru addition of 80 Pots of 235 kA

ower anExpansion

apac y o ncrease o . y on o .

Schedule 30 pots to be commissioned by Dec2011 & balance 50 pots by Mar2012

Progress Power Plant1. DCPL has been engaged as the EPCM consultant, Engineering is

progressing well2. Major orders for the power plant already placed.Smelter1. Basic Engineering by GAMI- completed.2. Major orders like wagons, alumina handling placed. Other major orders

being finalized.3. SPL has been vacated to storage shed. New plant rectifier station willbe erected over here.

4. Site grading 80% and boundary wall 90% completed.

32

Smelter expansion from 155 to 161 KTPA under phased commissioning

P j t Bl F


33/38

Project Blue Fox

Scope Brownfield project Can Body Stock at Hirakud

Dismantlingand receipt ofe ui ments

Dismantling completed. All containers received at Vizag port -13000 MT.

Cold Mill Order placed on Achenbach.

Hot Mill.

progressing as per schedule.

Civil workxcava on an oun a on o u ng co umn n progress.

Site Leveling and Boundary wall work in progress.

33 Project Completion Q2 FY12

Jh kh d S lt


34/38

Jharkhand Smelter

Land Total land requirement of ~4000 acres for the project..

Water Water drawl clearance received for 55 MCM.

Environmental

clearance

Application to be submitted after sizeable quantity of land has

been acquired.

FeasibilityReports

DFR is ready.

34 Expected Completion FY14

Aditya Refinery


35/38

Aditya Refinery

Land Majority land acquired, Rest process on track

Water Water drawl agreement in place

M/s Simplex Infrastructure Ltd is awarded with the job forsupply & erection of water drawl arrangement. They have

Km.

Forest Terms of Reference (TOR) presentation date is awaited.

Constructionpower

Job has been completed. Line energized.

.

35 Expected Completion FY14


36/38

Towards Sustainable Leadership

Domestic operations Expansion Projects Novelis

User industries of aluminumhave a bullish outlook

Robust sector fundamentals

Greenfield projects expectedto be in global best quartilefor manufacturing costs

Improving product mix todrive margins and growth

Driver

Long on Alumina

Introduction of new futuristic

value added products (Al) New avenues for copper use

Infrastructure available forfurther scalability in the

future Brownfield capacity increase

advantage

Roger Stone

Convergence of EBITDAand Adjusted EBITDA

Leader in Al Recycling

Highlights

Leading market share in

VAP

Continued focus on

operational excellence for

Focus on timely delivery ofplanned projects

Maintain high quality of

execution

Financial turnaround with

continued operational

improvement

Leverage on high end

Sustainable rowth Achieve otential Stabilize and transform

o um num an opper

Low cost base and robust

de-risked business model

Low capex cost per ton withbest in class operatingcapacities

ec no ogy

Brownfield expansion

Pinda project, Brazil

Strategy

Price Leader Cost Leader Capability Leader

36

Seamless Global One Metal business


37/38

Forward Looking & Cautionary Statement

Certain statements in this report may be forward looking statements within

the meaning of applicable securities laws and regulations. Actual results could

.

make a difference to the companys operations include global and Indiandemand supply conditions, finished goods prices, feed stock availability and

, ,

changes in 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 companyassume no responsibility to publicly amend, modify or revise any forward

looking statement, on the basis of any subsequent development, information or

events, or otherwise.

37


38/38

an you

38

Documents

Hindalco Q2FY11 Presentation