1. Financial Analysis of Hindalco Industries Limited (Including Acquisition of Novelis Inc.)Group 8, Section B Ajeet Singh (PGP13067) Ankit joshi (PGP13070) Gurpreet Singh (PGP13089) Nikhil Kejriwal (PGP13099) Sahil Dhingra (PGP13112) Samarjyoti Das (PGP13113) Rakesh Sukumar (PGP13134)

2. Turnover of USD 14 billion, employs nearly 19500employees Chairman Kumar Mangalam Birla, himself a Chartered Accountant by qualification. 3. Vision To be a premium metals major, global in size and reach, excelling in everything we do, and creating value for its stakeholders The strategic acquisition of Novelis, Inc. was done keeping in view the overall vision of the conglomerate.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.Values Integrity - Honesty in every action. Commitment - On the foundation of integrity, doing whatever it takes to deliver, as promise Passion - Missionary zeal arising out of an emotional engagement with work. Seamlessness - Thinking and working together across functional silos, hierarchy levels, businesses and geographies. Speed - Responding to stakeholders with a sense of urgency 4. Novelis is a globally positioned organization,operating in 11 countries with approximately 12,500 employees. In 2005, the company reported net sales of US $8.4 billion and net profit of US $90 million. In 2006 (till Q3) reported net sales of US $7.4 billion and net loss of US $170 million Market leader in aluminium rolled products 5. Made Hindalco the largest Aluminium Rolling Company in the world 19% share in downstream rolled aluminium products Strategic acquisition started in Jan 2007. Rolling sheets for most car manufacturers and bottle cans Acquisition was an all-cash transaction Novelis shareholders received $44.3 per outstanding share of common stock Novelis - $6 bn enterprise value, US $2.4 bn debt All debt was transferred to Hindalco The transaction done through wholly owned subsidiary of Hindalco, AV Metals Inc. 6. Gross profit Margin = (Revenue-COGS) /Revenue= Gross Profit / Revenue Operating Profit Margin = Operating Income / Sales Revenue= EBIT / Sales revenue Pre-tax Margin = Income before tax / Sales Revenue Net profit Margin = Net income / Sales Revenue 7. Return on assetsReturn on equityROA = Net Income Total AssetsROE =How profitable a companys assets are in generating revenueNet Income Shareholders equity 8. Ratioformula20092010201120122013Return on Net 0.0054 0.0606 Assets Income/Tota l Assets0.02830.03350.0251Return on Net 0.0220 0.1869 Equity Income/Shar eholder Equity0.07860.10100.0816Return on assets increased in 2010 but then remained nearly constant. Return on Equity continuously decreased throughout the period. 9. Ratioformula20092010201120122013Gross Profit MarginGross profit/Revenue0.08740.13240.09860.30660.3213Operating Profit MarginOperating Income/Reven ue-0.0090.10170.05330.06610.0481Pretax Profit MarginIncome Before Tax/Revenue-0.0090.10170.05330.05370.0487Net Profit MarginNet Income/Reven ue0.00530.07160.03400.04200.0377Increase in Gross Profit Margin and Operating Profit Margin 10. Ratios Inventory turnoverFormula COGS/Average Inventory2007-03 2008-032009-03 2010-03 2011-03 2012-03 2013-032.456.115.325.124.13.955.1Days Of Inventory on 365/Inventory Hand(DOH or DIO) Turnover148.98 71.5759.7468.5671.2789.0592.48Revenue(Credit Sales)/Average Receivables turnover Receivables13.5414.529.89.199.9110.099.45Days of Outstanding 365/Receivables Sales(DOS) turnover26.9625.1437.2439.7236.8336.1738.626.1265.55.724.665.2759.6860.8366.3563.8378.2769.337.0336.1541.9244.2746.9561.8Purchases(Credit purchases)/Average Payables Turnover trade payable 4.28 365/Payables Days Payables(DPO) Turnover 85.3 Cash Conversion Cycle DOH + DSO DPO 90.64 11. COGS doubled from 2.45 in FY 2007 to 5.1 withacquisition of Novelis. Days of inventory on hand has come down drastically from 148.98 to 92.48, which is a healthy sign for the company Also, the inventory levels were high in 2007-08 due to the effect of the acquisition 12. Short term Current Ratio = Current AssetsCurrent Liabilities Quick/ Acid test Ratio= Current Assets InventoryCurrent Liabilities 2004 2005 Current RatioQuick Ratio2006 2007 2008 2009 20102011201220132.51.782.021.971.251.191.291.291.631.690.680.470.60.590.490.550.490.490.560.69 13. Debt-equity ratioD/E ratio = Total debtTotal equity Financial LeverageFinancial Leverage = Average total assets Average total equity Debt-asset ratioD/A ratio = Total debt/Total asset20092010201120122013debt/asset0.4391350.3344350.319150.3661380.411374debt/equity1.7857021.0307920.8864221.1043061.3375053.4808952.9075792.901153.139474financial leverageNA 14. Debt-Equity Ratio 2 1.8 1.6 1.4 1.2 1 Ratio0.8 0.60.4 0.20 200320042005200620072008200920102011201220132014