This presentation provides an overview of Hindalco Industries' financial and operational performance in fiscal year 2012. Some key points:
- Hindalco achieved strong financial results despite severe cost pressures from rising coal, fuel, and input costs. Its portfolio strategy helped as upstream aluminum business faced margin squeeze.
- Major projects like the Utkal alumina refinery, Mahan smelter and CPP, Aditya smelter and CPP, and Hirakud FRP plant are in advanced construction stages.
- Hindalco strengthened its financing through a large NCD offering and preferential warrant allotment to its promoter.
- The aluminum and copper businesses delivered improved production efficiencies and volumes compared
4. FY12: Highlights
Strong performance despite severe cost pressures
Portfolio strategy depicted its benefits as upstream
business witnessed margin squeeze
Aluminium – Record production efficiency gains
production,
Copper – Strong all-round performance
Financing strengthened…
Largest NCD offering in the recent times (Rs 3,000 Crore)
Long Tenor, Attractive pricing
Preferential warrant allotment to promoter (~ Rs 2,160 Crore)
p ( ,
4 Projects - In advanced stages
9. FY12: A Challenging Year
Year started on an optimistic note with strong LME pricing amidst strong
investor appetite
During the year LME rally fizzled out as global macro economic concerns re-
emerged
Cost push however continued especially energy push due to geo-political
continued, geo political
concerns & India specific coal issues
Physical demand continued to remain strong even as inventory overhang
continued…
Of late, slowdown in China has clouded the demand outlook
9
10. Al. LME: Softened again
2700 2,663 World aluminium market had a
LME Al ($/t)
2600 750+kt surplus in Q1, 2012
p
2500
2400
Consumption growth only 3.3%
2300
in Q1 vs. 9.6% in 2011
2200 Macro-risks holding back LME
2,047
2100
when 25-30% of global capacity
2000
has cost above ruling LME
abo e
1900
1800 Global inventory at 12.7 mn
tonne (102 days); return on
n-11
ul-11
t-11
b-12
r-11
y-11
g-11
p-11
v-11
c-11
n-12
r-12
r-12
Jun
Feb
May
Aug
Oct
Nov
Dec
Apr
Mar
Apr
Sep
Jan
Ju
warehousing deals positive at
Cost curve supports current present
LME level
10
11. Al: Cost pressures way ahead of LME
Relative Increase (FY12 over FY11)
>40%
40%
30%
>30%
>25%
~20%
8%
Rupee LME Coal Caustic Crude FO
derivatives
11
13. Key External Drivers
Aluminium LME ($/t) Other Drivers
2,500 (vis-à-vis year-ago period)
Q4 FY12 FY12
2,317
2,257
Coal
C l
2,177
FO and carbon costs
Q
Q4 F11 Q
Q4 FY12 FY11 FY12
Exchange Rate (`/$ ) Copper TCRC
50.28 Sulphuric Acid
47.92 realization
45.56
Significant Cost p
g f pressure
45.27
continues
Q4 FY11 Q4 FY12 FY11 FY12 13
14. Al: Mitigating cost pressures
Higher production through asset sweating and continuous improvement in
efficiencies
ffi i i
Domestic sales up 5% to 489 kt
Overall metal sales up 6% to 568 kt
8% increase in special alumina /hydrate sale, even as standard alumina sale
declined on higher captive use
Strong operational performance helped us tide over the rough external
environment
14
20. Cu: Performance Drivers
Output was affected by inferior But performance lifted through
concentrate grade & planned various initiatives …
shutdown …
More VAP: Higher proportion of CCR
Cathode output (kt) production
FY11 336 Optimization of the marketing mix
Greater value from selenium and
‘waste-to-wealth’ initiatives
FY12 330
Increased usage of external scrap
150 200 250 300 350
Improved recovery and efficiencies
20
28. Summary….
India-specific cost p
p pressures continue – especially
p y
relating to coal
Operational excellence helped us tide over these
challenging times
Robust business model delivering results
28