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Strategic Management atHindalco

Submitted to: Mr. Hiren Patel

Prepared by: Group no.5

13. Pooja Jain

14. Soyeb Jindani

15. Divya Joshi


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INTRODUCTION

Hindalco Industries Limited, the metals flagship company of the

Aditya Birla Group, is an industry leader in aluminium and

copper under the chairman of Kumarmangalam Birla and

Managing Director Debu Bhattacharya.

Established in 1958, Hindalco commissioned its aluminium

facility at Renukoot in Eastern U.P. in 1962.

A metals powerhouse with a consolidated turnover ofRs.600,128 million (US$ 15 billion) on march 2008.


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ALUMINIUMKEY PRODUCTS/BRANDS:

HINDALCO INDUSTRIES LTD

INDAL(SUBSIDIARY OF

HINDALCO)

KEY PRODUCTS ARE:ALUMINA,ALUMINIUM,

FOIL AND PACKAGING,WHEELS,WIRE RODS, ROLLEDPRODUCTS, EXTRUSIONS


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ALUMINIUM

World's largest aluminium rolling company

One of the biggest producers of primary aluminium in Asia

One of the lowest-cost producers of aluminium in the world

Over 58 per cent of sales in value-added products.

Domestic market share of 42 per cent in primary aluminium, 63 per centin rolled products, 20 per cent in extrusions, 44 per cent in foils and 31 per

cent in wheels.

Fully integrated aluminium plant at Renukoot, UP

Aluminium wheels plant at Silvassa, in Dadra & Nagar Haveli

Foil plants at Silvassa and Kalwa. Foil unit of Indal at Kollur

ISO 9001:2000 and 14001 certified


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COPPER BIRLA COPPER(HINDALCO INDUSTRIES LTD.)

HINDALCO INDUSTRIES LTD.(ADITYA BIRLA MINERALSLTD.)

KEY PRODUCTS

SULPHURIC ACID,PHOSPHORIC ACID,GOLD(BIRLAGOLD),SILVER(BIRLA SILVER),POWER,COPPERCONCENTRATE


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COPPERIndia's leading copper producer

India's largest copper smelting and refining plant at Dahej, Gujarat,with two copper mines in Australia

Smelting and refining capacity 500,000 tpa, the largest single location smelter in

the world

Captive jetty (Dahej Harbtheir & Infrastructure Limited, a wholly ownedsubsidiary)

ISO 9001,14001 and OSHAS 18001 certifiedRegistered on London Metal

Exchange as Grade A Copper Brand

The Turnover of Birla copper for the year ended in March 2006 was of Rs 53,800

in Millions.


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Market capitalization of Rs. 202599 million as of 31 March 2008.

335,337 equity shareholders as of 31 March 2008.

134,723,182 outstanding GDRs as of 31 March 2008.

Dividend of 185 per cent ( i.e Rs. 1.85 per share) on the paid-up equityshare capital as of 31 March 2008.

EPS of Rs. 24.51, No. of employees 19,800.

Aditya Birla Minerals Limited (Hindalco subsidiary) first Indiancompany to be listed in Australia.

Export accounts for more than 30 percent of total sales.

Stock is publicly traded on the Bombay Stock Exchange, National stockexchange of India Ltd. And Luxembourg stock exchange .


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Sulphuric acid

1,470,000 tpa (Dahej)

Phosphoric acid

180,000 tpa (Dahej)

DAP and complexes

400,000 tpa (Dahej)

Gold

26 mt (Dahej)

Silver200 mt (Dahej)

Power

135 mw (Dahej)

Division Capacity and locationAlumina 700,000 tpa (Renukoot)

350,000 tpa ()180,000 tpa (Muri)

Aluminium 375,000 tpa (Renukoot)143,000 tpa (Hirakud)

Extrusions

33,000tpa (Renukoot)

13,000 tpa (Alupuram)Flat rolled products 100,000 tpa (Renukoot)

57,000 tpa (Belur)50,000 tpa (Taloja)30,000 tpa (Mouda)

Redraw rods 75,000 tpa (Renukoot)Foil and packing 30,000 tpa (Silvassa)

6,000 tpa (Kalwa)4,000 tpa (Kollur)

Wheels 300,000 pcs (Silvassa)Captive power 742 mw (Renusagar)

78 mw (Renukoot)368 mw (Hirakud)

Copper cathodes 500,000 tpa (Dahej)Continuous cast copper rods 120,000 tpa (Dahej)Sulphuric acid 1,470,000 tpa (Dahej)Phosphoric acid 180,000 tpa (Dahej)DAP and complexes 400,000 tpa (Dahej)Gold 26 mt (Dahej)Silver 200 mt (Dahej)Power 135 mw (Dahej)
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HERITAGE

The roots of the Aditya Birla Group date back to the 19th century in the picturesque

town of Pilani, set amidst the Rajasthan desert. It was here that Seth Shiv NarayanBirla started trading in cotton, laying the foundation for the House of Birlas.

India's arduous times of the 1850s, the Birla business expanded rapidly. In theearly part of the 20th century, Group's founding father, Ghanshyamdas Birla, setup industries in critical sectors such as textiles and fibre, aluminium, cement andchemicals.

The principles by which Ghanshyamdas Birla lived were soaked up by hisgrandson, Aditya Vikram Birla, Group's legendary leader.


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Mr. Aditya Birla dared to dream of setting up a global business empire at the age

of 24. He was the first to put Indian business on the world map.

In the vibrant and free market South East Asian countries, he ventured to set up

world-class production bases. He had foreseen the winds of change and staked thefuture of his business on a competitive, free market driven economy order.

He put Indian business on the globe, 22 years before economic liberalisation.

He set up 19 companies outside India, in Thailand, Malaysia, Indonesia, thePhilippines and Egypt.

Under his stewardship, his companies rose to be the world's largest producer ofviscose staple fibre, the largest refiner of palm oil, the third largest producer of

insulators and the sixth largest producer of carbon black.

Apart from being a producer of cement, grey cement and rayon grade pulp. TheGroup is also the largest producer of aluminium in the private sector, the lowestfirst cost producers in the world.


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The Group's revenues crossed Rs.8,000 crore globally, with assets of over Rs.9,000

crore, comprising of 55 benchmark quality plants, an employee strength of 75,000 and a

shareholder community of 600,000.

Most importantly, his companies earned respect and admiration of the people, as one ofIndia's finest business houses, and the first Indian International Group globally.

Through this outstanding record of enterprise, he helped create enormous wealth for the

nation, and respect for Indian entrepreneurship in South East Asia. In his time, his

success was unmatched by any other industrialist in India.

Under the leadership of Chairman, Mr. Kumar Mangalam Birla, the Group has

sustained and established a leadership position in its key businesses through continuous

value-creation.

Spearheaded by Grasim, Hindalco, Aditya Birla Nuvo, Indo Gulf Fertilisers and

companies in Thailand, Malaysia, Indonesia, the Philippines and Egypt, the Aditya Birla

Group is a leader in the products likeviscose staple fibre, aluminium, cement, copper,

carbon black, palm oil, insulators, garments, financial services, telecom, software and

BPO, the Group is today one of Asia's most diversified business groups.


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MILESTONES

1958- Incorporation of Hindalco Industries Limited.

1962- Commencement of production at Renukoot (Uttar Pradesh) withan initial capacity of 20,000 mtpa of aluminium metal and 40,000mtpa of alumina.

2000- Acquisition of controlling stake in Indian Aluminium CompanyLimited (Indal) with 74.6 per cent equity holding.

2003- Hindalco acquires Nifty Copper Mine in March 2003 throughAditya Birla Minerals Ltd. (ABML, formerly Birla Minerals ResourcesPty. Ltd.).

ABML acquires the Mount Gordon copper mines in November 2003.

Equity stake in Indal increased to 96.5 per cent through an open offer.


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2006

Hindalco announces 10:1 stock split. Each share with face value of Rs.10 per share split into 10 shares of Re 1 each.

Hindalco completes largest Rights issue in the history of Indian capitalmarkets with total size of Rs. 22,266 million.

Equity offering and subsequent listing of Aditya Birla Minerals Ltd. onAustralian Stock Exchange.

Signed an MoU with the Government of Madhya Pradesh for agreenfield aluminium smelter in the Siddhi district of the state.

2007

Successful acquisition of Novelis, making Hindalco the largest inaluminium rolling and among the global top five metals majors, with a

presence in 11 countries outside India.

Acquisition of Alcan's 45 per cent equity stake in the Utkal Aluminaproject, thereby making Hindalco the 100 per cent project owner.


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ACCOLADES

2008

Greentech Safety Gold Award 2008 for outstanding achievement in safetymanagement in coal based potheyr eector.

Hindalco Hirakud Systems ranked runners up at the state level IT Competition2008 organised by CII in association with the department of informationaltechnology, Government of Orissa.

Hirakud smelter was awarded the state level safety award for Best OccupationalHealthcare 2006 presented in February 2008 at Bhubaneswar.

2007

The Golden Peacock Award 2007 by the World Environment Foundation for its

remarkable achievements in occupational health & safety.

Renukoot was selected for the Rajiv Gandhi National Quality Award 2007 SilverTrophy, presented by the Bureau of Indian Standards, in the large scalemanufacturing (metallurgy) category.


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Hindalco won the prestigious D.L. Shah National Award for Economics of Qualitygiven by quality council of India. Chief manufacturing officer, Mr. R. P. Shah and Mr.Arun Kumar received the award from the President of India, H.E. Dr. A.P.J. AbdulKalam on 9 February 2007 at New Delhi.

2006

The IT department of Hindalco received prestigious IT certificates BS15000 (ITservices), ISO 9001 (Software development) and BS7799 (Information security).

2005

Mr. Debu Bhattacharya, Managing Director was conferred with "Asian business leaderaward for the Asia corporate citizen of the year" by CNBC. The award was conferred inrecognition of Hindalco's outstanding contribution to arts, education, the environmentand community development.

2000Alumina refinery is named as the 'Best Safety Performing Plant' in the world by theInternational Aluminium Institute.

Safety Performance Benchmarking 'Joint Best Smelter' by International AluminiumInstitute.

Annual Report - Best in Asia Winners by CFO Asia.


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VISION

To be a premium metals major, global in size and reach, with apassion for excellence.

MISSION

To relentlessly pursue the creation of superior shareholdervalue by exceeding customer expectations profitably,unleashing employee potential and being a responsiblecorporate citizen adhering to our values.


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VALUES

Integrity Honesty in every action.

Commitment Deliver on the promisePassion Missionary zeal arising out of an emotionalengagement with work.

Seamlessness Thinking and working together across

functional silos, hierarchy levels, businesses andgeographies.

Speed Responding to stakeholders with a sense

of urgency.


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SWOT ANALYSIS

STRENGTHS:

Strong brand recognition

Internet sales

Growing international presence

Superior research and development department

Strong financial returnsStrong sense of culture in the working environment

Successful experience being competitive

Effective Leadership

Cost leadershipPrestigious Client Base

Customer Loyalty

Technological excellence.

Good corporate image.


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WEAKNESSES:

Complexity of operation

OPPORTUNITIES:

Rapid integration with global economy

Growing e-commerces business.

THREATS:

Entry of global playersTake over possibilitiesPolitical threatsThe impact of foreign currency fluctuation andinterest rates.

Loss of sales to substitutes


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STRATEGIES ADOPTED BYHINDALCO

What is Hindalco's strategy to counter theincreasing competition in the marketplace?

Mr. Bhattacharya, M.D. of Hindalco answeredthat .

CORPORATE STRATEGIES


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CORPORATE STRATEGIES-COOPERATION

Joint venture:

o Hindalco in a joint venture with Almex USA Inc.

Hindalco 1 nov 2006 entered into a joint venturepartnership with Almex USA Inc., for themanufacture of high strength aluminium alloysfor applications in the aerospace, sporting goods

and surface transport industries.


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Hindalco has 70 per cent equity participation,with Almex holding the balance 30 per cent inthe JV.

The joint venture envisages a capital outlay ofRs.155 crore at a production level of 46,000tonnes.

Hindalco is India's leading non ferrous metals

company, with a turnover of over Rs.11,396.50crore and net income of Rs.1,655.60 crore inthe financial year 2005-06.


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Acquisitions strategies:

(1)Hindalco acquires Indal.

(2)Birla Copper acquires the Nifty Copper Minesin Australia:September 23Hindalco

Industries, an Aditya Birla Group company,has made its second acquisition in Australia byentering into a sale-purchase agreement (SPA)for acquisition of mining assets of MountGordon copper mines in Australia. Theacquisition is for a gross consideration ofAustralian $21 million and is expected to becompleted on October 31, 2003. The group hasstated that it is exploring further acquisitions

as well.


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(3)Indal merged with Hindalco: the Aditya Birlagroup flagship, 24 august 04 announced amerger with itself of all the businesses ofIndian Aluminium Company (Indal), The face

value of Indal shares will be reduced from Rs10 per share to Rs 2. Hindalco has a 97 percent stake in Indal and will continue tomaintain it in demerged Indal. The mergerwill help Indal take up larger projects. It willhelp the Birla group save sales tax for inter-company transactions and realise the optimaluse of depreciation from large investments


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MICHAEL PORTER MODEL


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Barriers to entry

1) Economies of scale

2) Capital intensive

3) Higher gestation period

4) Government policies


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Bargaining power of suppliers:-Thebargaining power of suppliers is low for fully

integrated aluminium smelters (upstream) asthey have their own mines for key rawmaterial like bauxite. Examples here could be

Nalco and Hindalco

Bargaining Power of Customers:-Being

a commodity, customers enjoy relatively highbargaining power as prices are determined ondemand and supply.


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Competition is primarily on quality and price, as

being a commodity, differentiation is difficult.However, the recent spate of consolidation hasreduced the competitive pressure in theindustry. Further, increasing value addition to

aluminium products has helped somecompanies protect themselves from the highvolatility witnessed in the industry.

Competition:


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Threat of substitutes

On one side, the usage of aluminium is risingcontinuously in the automobile andconstruction sector but steel still remains amain substitute because of its relatively lower

cost. aluminums usage in the power sectordue to its higher conductivity. However, withproperties like higher strength-to-weight ratio,durability, higher corrosion-resistance andrelatively lower cost, aluminium is able to holdits own. Thus the usage of aluminium is likelyto increase over a long term period


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Any Queries ???

Thank You !

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