Hindalco Industries Ltd. A Sustainable Business Model Transforming towards a Resilient, Reliable and Responsible future Motilal Oswal Annual Investor Conference 2019 20 th August, 2019 Presented by : Satish Pai, Managing Director
Hindalco’s - 3 R of Sustainable Business Model RESILIENCE RELIABILITY RESPONSIBILITY Operations Environment Sustainability Resource Security Steady operational performance in Environmental Stewardship Fully integrated aluminium business India Climate Change model providing support in low Novelis’ continued focus on optimizing commodity cycle manufacturing operations and product Long term supply contracts with People mix to maximize its capacity in miners assures uninterrupted supply Occupational safety & Health favorable market conditions of copper concentrate Community Stakeholder Engagement Balanced Product Portfolio Social Initiatives (CSR) Supplier Engagement (LME v/s Non LME linked) Customer Centricity ~70% EBITDA (Rs. 16,627 crore) of the Employee Stewardship total business in non-LME Linked in FY19 Product Stewardship Focus on downstream & VAP Strong Balance Sheet Recycled metal Consolidated Net Debt to EBITDA at 2.69x as on 30th June 2019 Hindalco Industries Limited 2 EXCELLENCE BY DESIGN 2
Our Resilience Hindalco Industries Limited 3 EXCELLENCE BY DESIGN
Resource Security (Coal & Bauxite) COAL ALUMINA (Input : Bauxite) Coal Procurement Options Integrated Alumina Self sufficient in Alumina (the intermediate product for Aluminium Linkage coal smelting) with capacity of 3.0 MT to feed its 1.3 MT Aluminium Capacities Long term coal linkage contract with Coal India; typically for 5 years Access to excellent quality bauxite with a most economical cost of Alumina from Utkal Alumina (Hindalco’s wholly owned subsidiary) Utkal Expansion by 500 Kt on track & to be commissioned by FY21 Captive mines Acquired 4 coal blocks in 2015 located in close proximity to most of the smelters All its Alumina refineries located in close proximity to the bauxite mines is an added advantage Open Market Purchase Excellent Logistics - Bauxite is transported through a long distance conveyer belt – considered as an engineering marvel Via e-auction route MTPA – Million Tonnes Per Annum Hindalco Industries Limited 4 EXCELLENCE BY DESIGN
Diversified & Balanced Portfolio Leading Global Industry Player Hindalco Industries Ltd Aluminium* Copper* Aluminium Flat Rolled Products (FRP) Alumina 2.9 Mt Copper Cathode 347 Kt #1 Rolled Products Supplier Worldwide Global Presence Shipments 3.3 Mt Primary Metal 1.3 Mt Copper Rods 245 Kt VAP (excluding Global leader in Aluminium recycling Focused on premium segments 321 Kt DAP 303 Kt Wire Rods) Key Highlights (FY2018-19) Consolidated Revenue Consolidated EBITDA ~36,000 employees Global operations across USD 18.7 billion USD 2.4 billion across the world 10 countries * FY19 production volumes Represents Non-LME Linked (conversions) business Hindalco Industries Limited 5 EXCELLENCE BY DESIGN
Diversified & Balanced Portfolio …………. Contd FY19 – Consolidated Revenue split (%) FY19 – Consolidated EBITDA split (%) Rs. 130,520 crore Rs. 16,627 crore 5% 18% 31% 17% 65% 55% 9% Aluminium Copper Novelis Aluminium Copper Novelis Other Income Non-LME Linked (conversions) business contributed ~70% to EBITDA in FY19 and ~79% in Q1 FY20 Hindalco Industries Limited 6 EXCELLENCE BY DESIGN
A Strong Balance Sheet Consolidated Return on Capital Employed – Consolidated Net Debt / EBITDA (x) Pre-Tax (%) 10.8 6.30 6.30 9.7 8.3 3.74 6.0 5.1 2.82 2.48 7 FY15 FY16 FY17 FY18 FY19 FY15 FY16 FY17 FY18 FY19 Prepaid more than Rs. 10 billion of Long term loans in last 3 years Hindalco Industries Limited 7 EXCELLENCE BY DESIGN
Our Reliability Hindalco Industries Limited 8 EXCELLENCE BY DESIGN
India Aluminium : Manufacturing Excellence Stable Production across all locations in Alumina & Aluminium Alumina Capacity Utkal 2.9 2.9 2.7 Production in 1,500 Kt Alumina 2.3 Utkal (in Mt) 1.6 Mahan Capacity 360 Kt FY15 FY16 FY17 FY18 FY19 Aluminium Aluminium Metal 1.3 1.3 1.3 Production (in Mt) 1.1 0.8 Capacity Aditya 360 Kt Aluminium Implemented 3 large greenfield projects in the past few years FY15 FY16 FY17 FY18 FY19 Hindalco Industries Limited 9 EXCELLENCE BY DESIGN
Copper India: Manufacturing Excellence One of the Largest Single Location Copper Smelters in Asia Copper Cathode 410 388 386 Production (in Kt) 376 347 FY15 FY16 FY17 FY18 FY19 Of above, Copper 245 Continuous Cast Rod CCR Capacity 365 Kt 166 (CCR) production (in 158 151 150 Kt) FY15 FY16 FY17 FY18 FY19 Commissioned the new CCR#3 facility at Dahej with a capacity of ~240 Kt in Q4 FY18 Cathode production was highest ever in FY19 Hindalco Industries Limited 10 EXCELLENCE BY DESIGN
Novelis : Manufacturing Excellence o Completed more than 1 decade post acquisition • One of the most successful acquisitions among Indian conglomerates 3.3 Mt $1.4 bn 9 $12.3 bn 23 o Headline statistics in Roller in Recycler Shipments Number of Presence Revenues Adjusted Manufacturing in Countries EBITDA Locations o Competitive advantages/differentiators • Global footprint, customer partnerships, quality & service, closed loop recycling, first mover advantage in Auto All above figures are for FY19 Hindalco Industries Limited 11 EXCELLENCE BY DESIGN
Hindalco’s Supplier Risk Assessment, Mitigation Procurement Analytics Procurement Process Management Supplier Capability Spend Market Process Performance Performance Development Analytics Analysis Management Management Analytics & Training Risk mitigation New ways of doing business Co-developed and presented Second Revision IS Moving beyond supplier-customer relations for raw 8502 - Petroleum Coke Specification material security Development of alternative sourcing strategy by Ban on PET Coke in 2018 had a direct impact on forging partnership with adjacent industries availability of CP Coke for Hindalco Worked with Global and Indian PET Coke Steel manufacturers to ensure Coal Tar availability manufacturers for updating BiS standard as applicable for non-fuel applications to our suppliers Hindalco Industries Limited 12 EXCELLENCE BY DESIGN
Hindalco’s Approach to Customer Centricity In January 2019, Hindalco launched an innovative, lightweight and cost-efficient aluminium bulker makes travel efficient and sustainable for its customers. • The first bulker customised Aditya Birla Group company – Ultratech • Replaced steel making it 50% lighter than steel bulker • For UltraTech, benefits will be : • Saving up to 13,000 litres of fuel p.a. • A lifespan that is three times higher then steel bulker • Carrying additional 2 tonnes of cement in every trip • Scrap value at 70% Hindalco Industries Limited 13 EXCELLENCE BY DESIGN
Product Stewardship : Focus on Aluminium Downstream in India Plans to sell ~60-70% products to end customers Currently ~76% products sold as commodity COAL MINING SLABS SL COILS / SHE SHEET POWER ALU LUMINIUM WIRE RO ROD BAUXITE TE MI MINING ALU LUMINA REFI FINING SME MELTI TING BAYE YER PROCESS ELEC ECTROLYSIS BILLETS EXTRUSION EXT Planning to get into end of life scrap processing towards its recycling initiatives in India Hindalco Industries Limited 14 EXCELLENCE BY DESIGN
Novelis - Strategic Capacity Expansion Plans New expansion projects are underway in all 3 projects : 200kt greenfield automotive finishing lines in the U.S. to begin customer qualification late FY20 100kt automotive finishing expansion in China commissioning in FY21 100kt rolling and 60kt recycling expansion in Brazil commissioning in FY22 Organic expansions progressing well and on budget Recycled contents in FY19 reached 61% Expansion of automotive finishing lines at Changzhou, China Expansion of automotive finishing lines at Guthrie, Kentucky, US Hindalco Industries Limited 15 EXCELLENCE BY DESIGN
Our Responsibility Hindalco Industries Limited 16 EXCELLENCE BY DESIGN
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