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    INTRODUCTION

    Finance is an important integral part of modern economic life. Financing decision plays a

    vital role. It involves raising funds for the company. It is concerned with the designing of

    capital structure. The financial decision should be shaped in such a way it should support thecompanys capital structure. Capital structure should be examined from the viewpoint of its

    impact on the value of the firm. The firm should select the financing mix in such a way that

    it maximizes the shareholders wealth. The combination of debt and equity determines it. If

    the company opts for more debt, they may trigger off a high Interest burden, devour profits

    and depress earnings per share and, above all, endanger the very survival of the firm. On the

    other hand, a conservative policy may deprive the company of its advantage in terms of

    magnifying the rate of return to its equity owners as higher equity component results in low

    earnings per share. The finance manger should consider various factors while deciding the

    choice of debt and equity.

    Apart from risk return financial considerations, the financial manager also considers

    nonfinancial factors. When equity shareholders are more in numbers; they have access to

    control the company. But when debts Owings are more then equity, finance managers

    consideration is more on debt then equity.

    Financial crisis may arise in the firm due to two main reasons. They are

    Unexpected decline in operating profit.

    Requirement for increased funds. Non-payment of interest or principal amount to lenders at

    specified time will have to be recovered through liquidations in the company. At the same

    time the non use of debt prevents the firm from availing an opportunity to have the

    advantage on rate of return to its shareholders. The financial manger would always try to

    maximize the wealth of shareholders. Hence the credit of the financial manger lies on how he

    settle Disputes, overcome difficulties with help of optimum mix of debts and equity, which

    would satisfy both the shareholders and creditors. He has to make a risk return transaction

    between these two sources in such a way that it earns maximum benefits to the company.

    When the finance manger, is not able to provide benefits to the company he needs to redefine

    capital structure.

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    MEANING OF CAPITAL STRUCTURE:

    Every business enterprise, whether big, medium or small, needs capital to carry on its

    operations smoothly and to achieve its targets. However, the actual capital should be neithermore or less than the amount which is needed and gainfully employed. It is called capital

    structure of a business enterprise. Capital structure of a business enterprise is related to the

    long-term financial requirements of the business enterprise. It is determined by the long-term

    debt and equity capital used by the business enterprise. As a matter of fact, the capital

    structure of a business enterprise should be ideal, i.e., according to the requirement of the

    business enterprise.

    Capital structure is the mixture of sources of funds a firm uses (debt, preferred stock,

    common stock). The amount of debt that a firm uses to finance its assets is called leverage. A

    firm with a lot of debt in its capital structure was called to be highly levered.

    A firm with no debt is said to be unlevered. Capital structure can be viewed as the permanent

    financing the firm represented primarily by long-term debt, preferred stock, and common

    equity but excluding all short-term credit.

    DEFINITIONS

    Capital structure of a company refers to the composition of its capitalization and it includes

    all long term capital sources i.e., loans, reserves, shares and bonds. GERESTENBEG

    The Capital structure of business can be measured by the ratio of various kinds of permanent

    loan and equity capital to total capital. - SCHWARTY

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    FEATURES OF CAPITAL STRUCTURE

    1. Return

    The capital structure of the company should be advantageous subjects to other considerations;

    it should generate maximum returns to the shareholders without adding additional cost to

    them.

    2. Risk

    The use of excessive debt threatens the solvency of the company. Debt can be used the point

    where there is no significance risk, it should be avoided.

    3. Flexibility

    The capital structure should be flexible. It should be possible for the company to adapt its

    capital structure with a minimum cost and delay if warranted by a changed situation. It should

    also possible for the company to provide funds whenever needed to finance its profitable

    activities.

    4. Capacity

    The capital structure should be determined within the debt capacity of the company, and the

    capacity should not be exceeded. The capacity depends on the ability to generate future cash

    flows. They should have enough cash to pay the creditors fixed charges and principal sum.

    5. Control

    The capital structure should involve minimum risk of loss of control of the company. The

    owners of closely held companies are particularly concerned about dilution of control.

    For example, a company may give more importance to flexibility then control while another

    company may be more concerned about solvency than any other requirement; Furthermore

    the relative importance of the requirement may change with shifting conditions.

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    FORMS OF CAPICTAL STRUCTURE:

    There are two forms of capital: equity capital and debt capital. Each has its own benefits

    and drawbacks and a substantial part of wise corporate stewardship and management is

    attempting to find the perfect capital structure in terms of risk / reward payoff for

    shareholders.

    Each In Detail:

    EQUITY CAPITAL: This refers to money put up and owned by the shareholders

    (owners). Typically, equity capital consists of two types:

    1. Contributed capital, which is the money that was originally invested in the business in

    exchange for shares of stock or ownership and

    2. Retained Earnings, which represents profits from past years that have been kept by the

    company and used to strengthen the balance sheet or fund growth, acquisitions, or

    expansion.

    Many consider equity capital to be the most expensive type of capital a company can

    utilize because its "cost" is the return the firm must earn to attract investment. A

    speculative mining company that is looking for silver in a remote region of Africa may

    require a much higher return on equity to get investors to purchase the stock than a firm

    such as Procter & Gamble, which sells everything from toothpaste and shampoo to

    detergent and beauty products.

    DEBT CAPITAL: The debt capital in a company's capital structure refers to borrowed

    money that is at work in the business. The safest type is generally considered long-term

    bondsbecause the company has years, if not decades, to come up with the principal, while

    paying interest only in the meantime.

    Other types of debt capital can include short-term commercial paper utilized by giants

    such as Wal-Mart and General Electric that amount to billions of dollars in 24-hour loansfrom the capital markets to meet day-to-day working capital requirements such as payroll

    and utility bills. The cost of debt capital in the capital structure depends on the health of

    the company's balance sheet - a triple AAA rated firm is going to be able to borrow at

    extremely low rates versus a speculative company with tons of debt, which may have to

    pay 18% or more in exchange for debt capital.

    Other Forms of Capital: There are actually other forms of capital, such as Creditors

    where a company can sell goods before they have to pay the bill to the vendor that can

    drastically increase return on equity but don't cost the company anything. This was one of

    http://beginnersinvest.about.com/cs/bonds1/a/040401a.htmhttp://beginnersinvest.about.com/od/taxes1/a/payroll_tax.htmhttp://beginnersinvest.about.com/od/taxes1/a/payroll_tax.htmhttp://beginnersinvest.about.com/cs/bonds1/a/040401a.htm
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    the secrets to Sam Walton's success at Wal-Mart. He was often able to sell Tide detergent

    before having to pay the bill to Procter & Gamble, in effect, using PG's money to grow his

    retailer. In the case of an insurance company, the policyholder "float" represents money

    that doesn't belong to the firm but that it gets to use and earn an investment on until it has

    to pay it out for accidents or medical bills, in the case of an auto insurer. The cost of otherforms of capital in the capital structure varies greatly on a case-by-case basis and often

    comes down to the talent and discipline of managers.

    Debts Vs Equity Financing

    Financing a business through borrowing is cheaper than using equity. This is because-

    Lenders require a lower rate of return than ordinary shareholders. Debt financial securities

    present a lower risk than shares for the finance providers because they have prior claims on

    annual income and liquidation. In addition security is often provided and covenants imposed.

    A profitable business effectively pays less for debt capital than equity for another reason: the

    debt interest can be offset against pre-tax profits before the calculation of the corporation tax

    bill, thus reducing the tax paid. Issuing and transaction costs associated with raising and

    servicing debt are generally less than for ordinary shares. There are some valuable benefits

    from financing a firm with debt.

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    DETERMINANTS OF CAPITAL STRUCTURE:

    The following are the determinants or factors which determine the capital structure of a

    business enterprise:

    Cost of Fixed Assets

    The fixed capital of a business enterprise is invested in fixed assets. The fixed assets are not

    fixed in value; in fact, their value may record an increase or decrease in course of time. They

    are fixed in the sense that without them the business cannot be carried on. Further, they

    remain in business for a longer time. Hence, while making an assessment of the capital

    requirement the cost of fixed assets also be kept in mind.

    Size of the Business Enterprise:-The capital structure of a business enterprise is also

    influenced by the size of business enterprise. It may be small, medium or large. A large-sized

    business enterprise requires much more capital as compared to a small-sized business

    enterprise.

    Nature of the Business Organisation: - The capital structure of a business enterprise is also

    influenced by nature of business organisation. It may be manufacturing, financing, trading or

    public utility type.

    Retaining Control of the Business Enterprise:- The capital of the business enterprise is

    also influenced by the intention of the promoters of having effective control. This is also a

    very important factor in deciding the capital structure. For this purpose they raise a large

    amount of money by issuing debentures and preference shares which hardly enjoy any voting

    rights.

    Legal Requirements:-One has to comply with the provisions of the law in regard to the issue

    of different types of securities. For example, in India banking companies are not allowed by

    the Banking Companies Act to issue any type of securities except shares.

    Period of Finance: - Period of finance, i.e., short, medium or long term is also another factor

    which determines the capital structure of a business enterprise. For example, short-term

    finances are raised through borrowings as compared to long-term finance which is raised

    through issue of shares, stocks etc.

    The Purpose of Financing:-The purpose of financing should also be kept in mind in

    determining the capital structure of a business enterprise. The funds may be required either

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    for betterment expenditure or for some productive purposes. The betterment expenditure,

    being non-productive, may be incurred out of funds raised by issue of shares or from retained

    profits. On the contrary, funds for productive purposes may be raised through borrowings.

    Requirements of the Potential Investors:-The capital structure of a business enterprise is

    also affected by the requirement of the potential investors. Different classes of investors go

    for different types of securities. Investors who are interested in the stability and safety and

    regularity of income prefer debentures and preference shares. On the contrary, investors who

    prefer to take risk so as to have higher income and also to take part in the management prefer

    shares or stocks.

    Elasticity of Capital Structure:-The capital structure of a business enterprise should be

    quite elastic so as to meet the future requirements of the capital also. For this purpose the

    amount of authorized capital should be fixed at a higher level as compared to present needs.

    Money Market Conditions:-Money market conditions also influence the capital structure of

    a business enterprise. In case of boom period it is advisable to issue shares which can fetch

    higher premium due to large profits. On the contrary, during the depression period it is

    advisable to issue debentures on account of lower rate of interest.

    Miscellaneous:-(i) Liquidity, (ii) Simplicity, (iii) Mutual rights, (iv) Policy of the business

    enterprises, (v) Capital gearing, (vi) Age of business enterprises.

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    IMPORTANCE OF CAPITAL STRUCTURE

    Capital structure planning is very important to survive the business in long run. After

    simple watching the balance sheet of company, you see two sides of balance sheet. One side

    is liability side and other side is asset side. Liability side is the mixture of finance of company

    which company has collected from internal and external sources and it has been used or will

    be used for development of company.

    Liability side of balance sheet is made underperfect capital structure planning. Finance

    manager and other promoters decides which source of fund or funds should be selected

    aftermonitoring the factors affecting capital structures. So, capital structure planning

    makes strong balance sheet. The right capital structure planning also increases the power ofcompany to face the losses and changes in financial markets. Following points shows the

    importance of capital structure and its planning.

    1. To reduce the overall risk of company

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    When we make capital structure before actual getting money from money supplier, we can do

    many adjustments for reducing our overall risk. Suppose, we have made capital structure in

    which we add three sources of fund, one is equity share, and other is debenture and last is

    pref. shares. Because we know that we have to pay debt at its maturity at any cost and its

    interest at fixed rate. So, we try to get minimum debt in new business because in new

    business our rate of return will be less than rate of interest and for getting more loan means

    taking high risk of return more amount of interest even there is no profit.

    But, if our business will be succeeded, at that time, we can increase estimated amount of debt

    by just changing the value of debt in capital structure (written just for planning) in excel

    sheet. We can easily pay the interest because our ROI is very high. At that, Time Company

    can enjoy the trading on equity. But finance manager should also careful watch

    whether shareholders are more expected regarding dividend or not. Because high expectation

    will also against the development of our company.

    2. To do adjustment according to Business Environment

    Company also adjusts different sources expected amount according to business environment.

    Suppose in future, if government of India cuts off his relation with China, from where our

    company is getting fund, it will definitely tough for us to get more money from China. Butproper planning of capital structure of future sources will be helpful for us to enlarge our area

    for getting money. In finance, it is called manoeuvrability. It means to create mobility of

    sources of fund by including maximum alternatives in planned capital structure. Suppose, if

    RBI increases the interest rate, it means your cost for getting debt will be high, at that time,

    you can choose any other cheap source of fund.

    3. Idea generation of new source of fund

    Good planning of capital structure will make versatile to finance manager for getting money

    from new sources. If you have studied Wikipedias page ofventure capital or

    private sources, you would precisely understand that how finance managers of company are

    generating new and new idea for getting money from public at low risk. Promoters or

    managers do 10 minutes meeting with investors and motivate them by showing the special

    event which they have made in PPT.

    http://www.svtuition.org/2009/07/venture-capital-fund-and-simplified-it.htmlhttp://www.svtuition.org/2009/07/venture-capital-fund-and-simplified-it.html
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    THEORIES OF CAPITAL STRUCTURE

    1st Theory of Capital Structure

    Name of Theory = Net Income Theory of Capital Structure

    This theory gives the idea for increasing market value of firm and decreasing overall cost of

    capital. A firm can choose a degree of capital structure in which debt is more than equity

    share capital. It will be helpful to increase the market value of firm and decrease the value of

    overall cost of capital. Debt is cheap source of finance because its interest is deductible from

    net profit before taxes. After deduction of interest company has to pay less tax and thus, it

    will decrease the weighted average cost of capital.

    For example if you have equity debt mix is 50:50 but if you increase it as 20: 80, it will

    increase the market value of firm and its positive effect on the value of per share.

    High debt content mixture of equity debt mix ratio is also called financial leverage.

    Increasing of financial leverage will be helpful to for maximize the firm's value.

    2nd Theory of Capital Structure

    Name of Theory = Net Operating income Theory of Capital Structure

    Net operating income theory or approach does not accept the idea of increasing the financial

    leverage under NI approach. It means to change the capital structure does not affect overall

    cost of capital and market value of firm. At each and every level of capital structure, market

    value of firm will be same.

    3rd Theory of Capital Structure

    Name of Theory = Traditional Theory of Capital Structure

    This theory or approach of capital structure is mix of net income approach and net operating

    income approach of capital structure. It has three stages which you should understand:

    Ist Stage

    In the first stage which is also initial stage, company should increase debt contents in its

    equity debt mix for increasing the market value of firm.

    2nd Stage

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    In second stage, after increasing debt in equity debt mix, company gets the position of

    optimum capital structure, where weighted cost of capital is minimum and market value of

    firm is maximum. So, no need to further increase in debt in capital structure.

    3rd Stage

    Company can gets loss in its market value because increasing the amount of debt in capital

    structure after its optimum level will definitely increase the cost of debt and overall cost of

    capital.

    4th Theory of Capital Structure

    Name of theory = Modigliani and Miller

    MM theory or approach is fully opposite of traditional approach. This approach says that

    there is not any relationship between capital structure and cost of capital. There will not effect

    of increasing debt on cost of capital.

    Value of firm and cost of capital is fully affected from investor's expectations. Investors'

    expectations may be further affected by large numbers of other factors which have been

    ignored by traditional theorem of capital structure.

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    ABOUT HINDALCO INDUSTRY

    Hindalco Industries Limited, established in 1958, is the metals flagship company of the

    Aditya Birla Group. Hindalco is one of the leading producers of aluminium and copper.

    Our aluminium units across the globe encompass the entire gamut of operations, from

    bauxite mining, alumina refining and aluminium smelting to downstream rolling,

    extrusions, foils, along with captive power plants and coal mines.

    An Industry Leader In Aluminium And Copper

    An industry leader in aluminium and copper, Hindalco Industries Limited, the metals

    Flagship Company of the Aditya Birla Group is the world's largest aluminium rolling

    company and one of the biggest producers of primary aluminium in Asia. Its copper

    smelter is the worlds largest custom smelter at a single location. Established in 1958, we

    commissioned our aluminium facility at Renukoot in eastern Uttar Pradesh, India in 1962.

    Later acquisitions and mergers, with Indal, Birla Copper and the Nifty and Mt. Gordon

    copper mines in Australia, strengthened our position in value-added alumina, aluminium and

    copper products .The acquisition of Novelis Inc. in 2007 positioned us among the top fivealuminium majors worldwide and the largest vertically integrated aluminium company in

    India. Today we are a metals powerhouse with high-end rolling capabilities and a global

    footprint in 13 countries. Our consolidated turnover of USD 15.85 billion (Rs. 72,078 crore)

    places us in the Fortune 500 league.

    HINDALCO'S BUSINESSES

    CREATING SUPERIOR VALUE

    Hindalco is one of the leading producers of aluminium and copper. Our aluminium units

    across the globe encompass the entire gamut of operations, from bauxite mining, alumina

    refining and aluminium smelting to downstream rolling, extrusions, foils, along with

    captive power plants and coal mines.Our copper unit, Birla Copper, produces copper

    cathodes, continuous cast copper rods and other by-products, such as gold,

    silver and DAP fertilisers

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    Our units are ISO 9001:2000, ISO 14001:2004 and OHSAS 18001 certified. Several units

    have gone a step further with an integrated management system (IMS), combining ISO

    9001, ISO 14001 and OHSAS 18001 into one business excellence model. We have been

    accorded the Star Trading House status in India. Hindalco's aluminium metal is accepted

    for delivery under the High Grade Aluminium Contract on the London Metal Exchange

    (LME). Our copper quality standards are also internationally recognised and registered on

    the LME with Grade A accreditation.

    Aluminium

    Hindalco's major products include standard and specialty grade aluminas and hydrates,

    aluminium ingots, billets, wire rods, flat rolled products, extrusions and foil.

    The integrated facility at Renukoot houses an alumina refinery and an aluminium

    smelter, along with facilities for the production of semi-fabricated products, namely,

    redraw rods, flat rolled products and extrusions. The plant is backed by a co- generation

    power unit and a 742 MW captive power plant at Renusagar to ensure the continuous

    supply of power for smelter and other operations.

    A strong presence across the value chain and synergies between operations has given us a

    dominant share in the value-added products market. As a step towards expanding the market

    for value-added products and services, we have launched various brands in recent years

    Everlast roofing sheets, Freshwrapp kitchen foil and Freshpakk semi- rigid containers.

    Copper

    Birla Copper, Hindalcos copper unit, is located at Dahej in Gujarat, India. The unit has

    the unique distinction of being the largest single-location copper smelter in the world.

    The smelter uses state-of-the-art technology and has a capacity of 500,000 tpa. Birla Copper

    also produces precious metals, fertilisers and sulphuric and phosphoric acid. The unit has

    captive power plants for continuous power generation and a captive jetty to facilitate

    logistics and transportation.

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    Birla Copper upholds its longstanding reputation for quality copper cathodes and

    continuous cast copper rods by assuring its management processes meet the highest

    standards. It has acquired certifications such as ISO-9001:2000 (Quality Management

    Systems), ISO-14001:2004 (Environmental Management System) and OHSAS-

    18001:2007 (Occupational Health and Safety Management Systems).

    Mines

    Hindalco acquired two Australian copper mines, Nifty and Mt. Gordon, in 2003. The Birla

    Nifty copper mine consists of an underground mine, heap leach pads and a solvent

    extraction and electrowinning (SXEW) processing plant, which produces copper

    cathode.The Mt. Gordon copper operation consists of an underground mine and a copper

    concentrate plant. Until recently, the operation produced copper cathode through the ferric

    leach process.

    In 2004, a copper concentrator was commissioned to provide concentrate for use at

    Hindalco's operations in Dahej.

    Both Nifty and Mt. Gordon have a long-term life of mine off-take agreement with

    Hindalco for supply of copper concentrate to the copper smelter at Dahej.

    Cornerstones Of Growth

    Our well-crafted growth and integration hinges on the three cornerstones of cost

    competitiveness, quality and global reach. We are also committed to the triple bottom line

    accountability of economic, environment and social factors. Care for the community

    around our operating units is best exemplified by our deep-rooted social commitment.

    HINDALCO PROFILE

    Hindalco Industries Ltd

    http://hindalco.com/about_us/overview.htmhttp://hindalco.com/about_us/overview.htmhttp://hindalco.com/about_us/overview.htm
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    Type Public

    Traded as BSE:500440

    NSE:HINDALCO

    BSE SENSEX Constituent

    Industry Metals

    Founded 1958

    Headquarters Mumbai, Maharashtra,

    Area served Worldwide

    Key people Kumar Mangalam Birla (Chairman)

    Products Aluminum and copper products

    Revenue 720.77 billion (US$13.05 billion) (2011)

    Operating 56.82 billion (US$1.03 billion) (2011)

    Net income 28.79 billion (US$521.1 million) (2011)[3]

    Total assets 589.32 billion (US$10.67 billion) (2011)

    Employees 19,341 (2011)

    http://en.wikipedia.org/wiki/Types_of_business_entityhttp://en.wikipedia.org/wiki/Public_companyhttp://en.wikipedia.org/wiki/Ticker_symbolhttp://en.wikipedia.org/wiki/Bombay_Stock_Exchangehttp://en.wikipedia.org/wiki/National_Stock_Exchange_of_Indiahttp://en.wikipedia.org/wiki/BSE_SENSEXhttp://en.wikipedia.org/wiki/Non-ferrous_metalhttp://en.wikipedia.org/wiki/Mumbaihttp://en.wikipedia.org/wiki/Maharashtrahttp://en.wikipedia.org/wiki/Kumar_Mangalam_Birlahttp://en.wikipedia.org/wiki/Kumar_Mangalam_Birlahttp://en.wikipedia.org/wiki/Aluminumhttp://en.wikipedia.org/wiki/Copperhttp://en.wikipedia.org/wiki/United_States_dollarhttp://en.wikipedia.org/wiki/Earnings_before_interest_and_taxeshttp://en.wikipedia.org/wiki/United_States_dollarhttp://en.wikipedia.org/wiki/Net_incomehttp://en.wikipedia.org/wiki/United_States_dollarhttp://en.wikipedia.org/wiki/Hindalco#cite_note-rediff1-2http://en.wikipedia.org/wiki/Hindalco#cite_note-rediff1-2http://en.wikipedia.org/wiki/Hindalco#cite_note-rediff1-2http://en.wikipedia.org/wiki/Assethttp://en.wikipedia.org/wiki/United_States_dollarhttp://en.wikipedia.org/wiki/United_States_dollarhttp://en.wikipedia.org/wiki/Assethttp://en.wikipedia.org/wiki/Hindalco#cite_note-rediff1-2http://en.wikipedia.org/wiki/United_States_dollarhttp://en.wikipedia.org/wiki/Net_incomehttp://en.wikipedia.org/wiki/United_States_dollarhttp://en.wikipedia.org/wiki/Earnings_before_interest_and_taxeshttp://en.wikipedia.org/wiki/Earnings_before_interest_and_taxeshttp://en.wikipedia.org/wiki/United_States_dollarhttp://en.wikipedia.org/wiki/Copperhttp://en.wikipedia.org/wiki/Aluminumhttp://en.wikipedia.org/wiki/Kumar_Mangalam_Birlahttp://en.wikipedia.org/wiki/Kumar_Mangalam_Birlahttp://en.wikipedia.org/wiki/Indiahttp://en.wikipedia.org/wiki/Maharashtrahttp://en.wikipedia.org/wiki/Mumbaihttp://en.wikipedia.org/wiki/Non-ferrous_metalhttp://en.wikipedia.org/wiki/BSE_SENSEXhttp://en.wikipedia.org/wiki/National_Stock_Exchange_of_Indiahttp://en.wikipedia.org/wiki/National_Stock_Exchange_of_Indiahttp://en.wikipedia.org/wiki/Bombay_Stock_Exchangehttp://en.wikipedia.org/wiki/Bombay_Stock_Exchangehttp://en.wikipedia.org/wiki/Ticker_symbolhttp://en.wikipedia.org/wiki/Public_companyhttp://en.wikipedia.org/wiki/Types_of_business_entity
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    MISSION, VISSION &GOALS

    Hindalco Industries Ltd. (BSE: 500440, NSE: HINDALCO) is one of the world's

    largest aluminum manufacturing companies and is a subsidiary of the Aditya Birla

    Group. Its headquartered at Mumbai, Maharashtra, India.

    Vision

    To be a premium metals major, global in size and reach, excelling in everything we do,

    and creating value for its stakeholders

    Mission

    To relentlessly pursue the creation of superior shareholder value, by exceeding customer

    expectation profitably, unleashing employee potential, while being a responsible

    corporate citizen, adhering to our values

    GOALS OF HINDALCO INDUSTRIES LTD

    The development of new business opportunities. To increase the company's role in relations to social responsibility.

    To provide excellent customer service.

    http://en.wikipedia.org/wiki/Bombay_Stock_Exchangehttp://www.bseindia.com/scripsearch/scrips.aspx?myScrip=500440http://en.wikipedia.org/wiki/National_Stock_Exchange_of_Indiahttp://www.nseindia.com/marketinfo/companyinfo/companysearch.jsp?cons=HINDALCO&section=7http://en.wikipedia.org/wiki/Aditya_Birla_Grouphttp://en.wikipedia.org/wiki/Aditya_Birla_Grouphttp://en.wikipedia.org/wiki/Mumbai%2C_Maharashtrahttp://en.wikipedia.org/wiki/Mumbai%2C_Maharashtrahttp://en.wikipedia.org/wiki/Aditya_Birla_Grouphttp://en.wikipedia.org/wiki/Aditya_Birla_Grouphttp://www.nseindia.com/marketinfo/companyinfo/companysearch.jsp?cons=HINDALCO&section=7http://en.wikipedia.org/wiki/National_Stock_Exchange_of_Indiahttp://www.bseindia.com/scripsearch/scrips.aspx?myScrip=500440http://en.wikipedia.org/wiki/Bombay_Stock_Exchange
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    STRATEGIES ADOPTED

    Where strategy counts high alumina content, less than 2 per cent Boehmite content, a

    very low reactive silica content and negligible organic content. It has higher liquor

    purity and productivity, which is more cost efficient. Also, in India, large deposits

    of bauxite can be found in a single plateau, allowing for more efficient

    extraction. India also has abundant coal supplies, easy availability of labour and is

    located in close proximity to the fast-growing markets.

    Captive bauxite mines that provide the highest quality bauxite and a refinery located

    near the mine, state-of-the-art technology and economies of scale further enhance our

    cost advantage.

    Aluminium is a power intensive industry. One tonne of aluminium requires over

    15,000 Kwh of power. Power constitutes almost 40 per cent of the total cost of

    production. Low cost, uninterrupted power is absolutely vital for the successful

    aluminium operations.

    Our smelters fully backed by captive power plants located at the pitheads of the

    owned coal mines make us one of the lowest cost producers globally

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    DOWNSTREAM PRODUCTS

    We are the market driver for aluminium products in India, being the largest

    downstream producer. We leverage our strengths further when it comes to downstream

    strategy. The recent acquisition of downstream producer Novelis gives us a well-diversified

    geographical market base and enhances our stature in the area of downstream production.

    Novelis is the world leader in rolled aluminium products; thus, this acquisition extends our

    reach in the industry.

    Novelis also has long-standing relationships with leading customers, which Hindalco expects

    to grow. This combination of strong integrated and downstream production offers us multiple

    advantages.

    Copper

    We have one of the world's largest single-location custom smelters at our Dahej

    facility in Gujarat, India along with a power plant and nearby jetty.

    In our pursuit of vertical expansion, we extended our presence in copper production

    across national borders when we acquired the Nifty and the Mt. Gordon mines in

    Australia. These m i n e s secure partial supply of our concentrate requirement.

    The efficient handling of logistics and transportation in this business is paramount in

    keeping costs low, and that is why our ownership of the all-season jetty at Dahej is so

    financially advantageous. We are also mindful of opportunities related to the

    production of copper that can benefit the business.

    Gold and silver have an affinity to copper ore. We extract them, as well as trace

    amounts of platinum and palladium after copper refining. We ensure that the dispatch

    of these precious metals is conducted using special armoured vehicles that we

    contract on a long-term basis through agencies.

    We use the sulphuric acid employed in copper processing by converting it to

    phosphoric acid and then using that to produce the fertilisers di-ammonium phosphate

    and nitrogen phosphorus potassium compound.

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    We also import the rock phosphate required to

    produce phosphoric acid using our jetty, which is

    capable of handling more than four million tpa of

    cargo. The jetty is also used to import copper

    concentrate, ammonia and coal and to export

    copper products. One and two million tpa of

    commercial cargo can additionally be handled,

    depending on captive cargo requirements.

    Another strong growth catalyst is research and development.

    We maintain a steady focus on research, which has resulted in advances in thecompany's operations and commercial strategy as well as an increased focus on foreign

    trade.

    All told, we are well positioned for greater value creation.

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    STRENGTH

    Global brand image. Cost effective producer. Sound financial position. A high degree quality consciousness is the core competence of the company,

    ISO 9001 and ISO 14001 have added more prestige to the company.

    Integrated production facility at Renusagar power plant. Company has a well-established distribution network, covering a geographically

    wide and scattered market.

    A number of Brownfield & Greenfield projects. Industrial peace as, there has been no major strike in last 22 year. A well focused

    human resources development.

    Serve maximum customer satisfaction.WEAKNESS

    Present production capacity is not adequate to meet the rising high demand. Technology is not upgraded to mark as compare to global giants in

    aluminium industry.

    OPPORTUNITY

    R & D collabratation with universities and another research organization. Moreemphasis on downstream production of value added products.

    Recycling should be adopted as routine production. Raising more finance from marketing for more acquisition and merger

    for consolidating position in the global market.

    Aluminium, continuous to be strong with a growth in transportation sector16%, construction15%, passenger car 25%, two wheeler segments 14%

    respectively during FY07.

    THREATS

    Strong domestic and global competitors, such as TATA, POSCO, MITTLE,ESSAR .

    Innovative revolution in plastic and steel industry. Reduce in Exide duty. Fall in price of Al. In neighbor country.

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    COMPANY SOCIAL RESPONSIBILITY

    Winning smilestouching heartsLong before corporate social responsibility found a place in the corporate lexicon, it

    was already textured into the Group's value system. As early as the 1940s, the late Mr.

    G.D. Birla espoused the trusteeship concept of management investing a portion of the

    company's profits for the larger good of society. The late Mr. Aditya Birla went

    beyond chequebook philanthropy when he brought in the concept of 'sustainable

    livelihood'.

    For over 50 years, Hindalco has worked in the hinterlands of India to better the quality

    of life of the underprivileged sections of society.

    Today, we reach out to millions of people in the villages, of whom more than 60 per

    cent live below the poverty line. Their needs include: access to water, agriculture and

    sustainable livelihood, healthcare, and education. These four areas form the focus of

    our efforts.

    The company also works to bring about social reform through widow re-marriage and

    dowerless marriages. We work in partnership with government agencies and the

    beneficiaries to provide these necessities and encourage social reform.

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    Education

    Balwadis: Providing for the primary education of underprivileged children.

    Adult literacy: Providing formal and informal classes and active support to th

    government's mission to improve rural literacy levels.

    Merit scholarships / Schemes: Support female students for educational endeavours

    Educational support: Contributing uniforms, textbooks and classroom equipmen and

    undertaking school building construction and maintenance.

    Health facilities: Setting up well-equipped and professionally manned health centres at

    several locations.

    Regular health camps: Providing family planning, mother and child care and

    specialised camps for eye care and for cataract; coordinating regular pulse polio

    immunisation drives; and promoting the awareness, prevention and treatment of

    malaria, water-borne diseases, TB, HIV/AIDS, and others diseases.

    WOMEN'S EMPOWERMENT

    Self-Help Groups (SHG): These programmesinvolve over 11,000 women from rural communities

    around Hindalco units.

    SHG activities: Micro credit and micro finance schemes, entrepreneurship building,

    oil-processing units, tailoring centres, horticulture and nutrition gardens, diesel and

    hand pump repair, vermi compost production, mushroom cultivation, food processing,

    etc.

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    Awareness building: Health and sanitation, family planning, literacy drives and

    microfinance; facilitating government loans for small-scale enterprise and rural

    insurance schemes, etc.

    Social causes: Promoting dowerless marriages and widow re-marriages.

    AGRICULTURAL SUPPORT

    Irrigation schemes: Land brought under irrigation with

    better yield and multi-cropping methods.

    Watershed development: Hydel towers, drainage

    canals, wells, check-dams, pedal pumps and harvest

    tanks.

    Training: Field schools train local farmers in modern

    agricultural techniques for higher crop yield;

    introducing lac cultivation, post-harvest technology

    with safe grain storage through an integrated pest-

    management system, floriculture, horticulture and

    kitchen gardens; shifting from mono to multi cropping

    patterns and distribution of high-yield seeds.

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    CAPITAL STRUCTURE OF HINDALCO INDUSTRIES LTD

    Capital Structure (Hindalco Industries)

    Period Instrument Authorized

    Capital

    Issued

    Capital

    - P A I D U P -

    From To (Rs. cr) (Rs. cr) Shares

    (nos)

    Face

    Value

    Capital

    2011 2012 Equity Share 210 191.51 1915088557 1 191.51

    2010 2011 Equity Share 210 191.5 1914944163 1 191.49

    2009 2010 Equity Share 210 191.47 1914008691 1 191.4

    2008 2009 Equity Share 195 170.15 1700817056 1 170.08

    2007 2008 Equity Share 145 122.72 1227190692 1 122.72

    2006 2007 Equity Share 145 115.93 231521031 1 11.58

    2005 2006 Equity Share 145 115.93 231521031 0 5.792004 2005 Equity Share 145 92.78 92780847 10 92.78

    2003 2004 Equity Share 145 92.48 92481325 10 92.48

    2002 2003 Equity Share 145 92.48 92481325 10 92.48

    2001 2002 Equity Share 145 74.47 74466213 10 74.47

    2000 2001 Equity Share 145 74.47 74472020 10 74.47

    1999 2000 Equity Share 145 74.47 74472020 10 74.47

    1996 1999 Equity Share 145 74.47 74472020 10 74.47

    1995 1996 Equity Share 145 49.65 49650030 10 49.651994 1995 Equity Share 70 49.65 48012080 10 48.01

    1993 1994 Equity Share 70 45.48 43377514 10 43.38

    1992 1993 Equity Share 70 38.77 38773864 10 38.77

    1991 1992 Equity Share 45 38.77 38773864 10 38.77

    1990 1991 Equity Share 45 38.77 38773864 10 38.77

    1989 1990 Equity Share 45 17.85 17854700 10 17.85

    1988 1989 Equity Share 21 17.85 17848650 10 17.85

    19821988 Equity Share 15 13.39 13386488 10 13.39

    1972 1982 Equity Share 12 10.05 10039866 10 10.04

    1968 1969 Equity Share 10 8.04 8031893 10 8.03

    1967 1968 Equity Share 10 8.04 7670510 10 7.67

    1965 1966 Equity Share 10 6 5993950 10 5.99

    1964 1965 Equity Share 10 6 5993200 10 5.99

    1961 1963 Equity Share 10 6 5991500 10 5.99

    1960 1961 Equity Share 10 6 750000 10 0.75

    1959 1960 Equity Share 10 0.15 150000 10 0.15

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