Hindalco Industries Limited · NSE:HINDALCO
Hindalco Industries — Investor Presentation (September 2013)
36 slides from Hindalco Industries's investor presentation, September 2013
Slide 1: Hindalco Industries Limited Investor Presentation
Hindalco Industries Limited Investor Presentation September 2013
Slide 2: Hindalco Industries Ltd: A brief snapshot
Hindalco Industries Ltd: A brief snapshot Sales: $15 bn EBITDA:$1.6 bn * India India Australia Novelis North Novelis Novelis Novelis South Aluminum Copper Copper America Europe Asia America ~3/5th of the assets outside India ~3/4th of the Sales outside India Al upstream Copper downstream Copper Upst
Slide 3: The Company is at an inflexion point
The Company is at an inflexion point Novelis: Resilient Self sufficient domestic with strong liquidity Improving global performance economic environment Expansion projects: Robust capital Minimal structure execution risk The pieces are coming together 3
Slide 4: Section I: Resilient domestic performance
Section I: Resilient domestic performance 4
Slide 5: Higher realizations amidst a challenging domestic environment
Higher realizations amidst a challenging domestic environment Major decline in industrial production in recent months Escalating costs with limited movement in LME prices 25% INR FY09 = 100 20% 19.6% >50% >60% >50% >50% 15% 14.9% 180 160 10% 10.9% 11.4% 9.5% 140 120 5% 100 0% 80 -2.8% 60 -5% -2.2% 4
Slide 6: Aluminium India - VAPs and low smelter costs provide key edge
Aluminium India - VAPs and low smelter costs provide key edge Hindalco Aluminium smelters are in the best quartile VAPs account for significant portion of production (25th percentile) on cost Product split Regional split: Primarily for domestic markets $/t Majority Chinese smelters 10% VAPs Exports
Slide 7: Copper: Reduces volatility for domestic operations
Copper: Reduces volatility for domestic operations Multiple value driver model, reducing volatility further Cu Anodes Cu Conc. 350 ktpa Cu Cathodes Copper Business Contribution Smelter Refinery (0.5 mtpa) (0.5 mtpa) 7% 14% 21% TCRC Premium Sulphuric Acid Anode 12% (1.67 mtpa) Slime Duty differential
Slide 8: Sustainability……A Key Thrust Area
Sustainability…… ……A Key Thrust Area 8
Slide 9: A Caring Corporate Citizen
A Caring Corporate Citizen Vision “To actively contribute to the social and economic development of the communities in which we operate. In so doing, build a better, sustainable way of life for the weaker sections of society and raise the country's Human Development Index” Focus Areas Education Heal
Slide 10: Ongoing initiatives for sustainable growth
Ongoing initiatives for sustainable growth Tracking and monitoring sustainability metrics as well as carbon footprint First CDM project (Hirakud) registered with UN in Jan’10 Sharp focus on energy efficiencies Water recycling / treatment plants across locations Continuous upgradation of en
Slide 11: Section II: Novelis: Self sustaining story
Section II: Novelis: Self sustaining story 11
Slide 12: Novelis' Competitive Advantage
Novelis’ Competitive Advantage High end products focus Expansion projects near completion Continues to build on its strong Major recycling expansions market position in FRP progressing well (most in Majority of product portfolio commissioning phase) 1 comprised of premium products 6 Strong L
Slide 13: Well placed to benefit from strong FRP growth
Well placed to benefit from strong FRP growth Strong FRP growth worldwide (2012-2017 (kT) Well diversified strategy 900 26,400 Converter business 700 3,600 600 300 300 20,000 LME pass through Offset hedging Geographic spread ~40% revenue emerging ~60% revenue – Developed markets markets 2012 China A
Slide 14: Section III: Key Projects: Minimal execution risk
Section III: Key Projects: Minimal execution risk 14
Slide 15: Expansion projects in strategic locations
Expansion projects in strategic locations Cash cost advantage Key highlights 2,600 2,400 Mahan Aluminium 2,200 Cash cost/tonne Access to high quality bauxite & Mahan Coal Block 2,000 1,800 reserves 1,600 1,400 Mahan Aluminium Abundant coal 1,200 reserves with 1,000 3% 26% 41% 53% 63% 75% 86% 94%
Slide 16: Projects update: Summary
Projects update: Summary Mahan aluminium, Madhya Pradesh Aditya aluminium, Orissa Utkal alumina, Orissa Nature Smelter Smelter Refinery 359 ktpa smelter 359 ktpa smelter Scope 1,500 ktpa 900MW power plant 900MW power plant Q1 FY14: First metal tapped Construction in advanced stag
Slide 17: Utkal: CPP and refinery operational
Utkal: CPP and refinery operational Plant & Reservoir Captive Power Plant Refinery Project update Mines Project-execution risks are over; went on stream in Q1FY14 Entire debt refinanced; saving of c.INR150cr p.a. Refinancing executed in extremely tough market conditions, even after RBI measure
Slide 18: Mahan: Trial Production on; Ramping Up
Mahan: Trial Production on; Ramping Up Mahan Pot Line Production Facility Cast House-Furnace Charging Project update Conveyor Belt Project-execution risks are over First metal has been tapped in Q1 FY14 Gradually being ramped up 18
Slide 19: Aditya Aluminium: Strong progress
Aditya Aluminium: Strong progress Cast House - Melting Cum Aditya Pot Line Anode Assembly Holding Furnace Project update Captive Power Plant Project execution risks are over 220KV line charged, intake water line and fuel oil system commissioned Construction progressing in full stream, > 11,000
Slide 20: Post project expansion: Hindalco remains long on Alumina
Post project expansion: Hindalco remains long on Alumina Hindalco capacity (kt) Alumina prices are likely to grow going forward Pre expansion (FY13) 500 450 400 328 326 333 319 Refinery 1,500 300 200 100 Smelter 560 0 2012 2013 2014 2015 2020 Post expansion (FY16) Key drivers affecting Alumina price
Slide 21: Novelis global strategic investments: Near commissioning stage
Novelis global strategic investments: Near commissioning stage Recycling ~400kt To be completed by mid CY14 Germany Rolling ~350kt Commissioned in Finishing ~240kt USA Korea July 2013, Commissioned in China Largely completes July 2013 Finishing ~120kt US$400m rolling & recycling in Asia To be comple
Slide 22: Section IV: Robust capital structure
Section IV: Robust capital structure 22
Slide 23: Debt profile: Project debt is significantly back-ended
Debt profile: Project debt is significantly back-ended Projects-related debt and Novelis debt account for significant portion of consolidated leverage position Projects debt** Significant current investments 3,795 Repayment schedule Standalone Net debt (31 Mar’13) 2,840 250 US$ m 4,085 1,072 64 122
Slide 24: Section V: Global economy… Green shoots?
Section V: Global economy… Green shoots? 24
Slide 25: Improving global economic environment
Improving global economic environment Global economic recovery continues Strong growth expected in global end markets (2013 vs. 2012) Quarterly GDP (y-o-y growth) 7.6 7.9 7.5 North America Europe China Global 5.4 Aerospace 4.7 4.4 2.5 1.2 0.1 0 Automotive (0.3) -0.7 US EU-27 China India Q2CY12 Q3CY1
Slide 26: High premiums supported by tightened market conditions
High premiums supported by tightened market conditions Regional premiums are strong despite recent correction (US$/t) 300 US Mid-West Japan Europe (Rotterdam Primary Al) 250 250 231 200 186 150 100 Jan-12 May-12 Sep-12 Jan-13 May-13 Sep-13 Aluminum premiums have increased over time, driven by a co
Slide 27: Structural shift towards Aluminium to drive growth
Structural shift towards Aluminium to drive growth Key decision factors for choice of metal consumption Ability to Manufacturing Long-term CAGR (CY12-17) Key criteria Weight Cost Heat Exchange recycle compatibility Automotive Aluminium – ~25% Steel – – – H.S. Steel – – Composites – – – – Magnesium
Slide 28: Key developments in Asia
Key developments in Asia Significant number of high-cost smelters: At current LME prices, majority have been shut down as High capex and competing uses of they are operationally not viable energy in the region Net capacity additions relatively low; Exports primarily targeted towards Middle E
Slide 29: China ….Surplus capacities…
China ….Surplus capacities… Industrial growth has picked up in recent months Domestic consumption of aluminum to remain strong % growth (y-o-y) Primary aluminium consumption (mt) 18% 4.5% 8.0% 27.3 23.1% 16% 14.9% 15.1% 9.0% 25.7 14% 4.0% 23.3 13.3% 12.8% 12% 21.0 21.5% 29.9% 10.3% 10.4% 19.2 10% 8%
Slide 30: Strong consumption outlook for aluminium
Strong consumption outlook for aluminium Sustained robust demand for Aluminium over the next few years, led by China Projected primary aluminium consumption by region (in MT) 2012 Actual 2013 Forecast Rest of World 49.6 2014E 10% Rest of World Russia 1% 2% India Latin America 6% 3% 5% Russia 2012
Slide 31: ME players to focus on domestic and Africa markets
ME players to focus on domestic and Africa markets Integrated players enjoy significant competitive advantage Increased domestic consumption of aluminium to reduce exports Asian Mid-east Global Aluminium Aluminium Aluminium Processing Primary aluminium consumption (kt) Players Players Players Majors
Slide 32: India: Relatively under penetrated market for aluminium
India: Relatively under penetrated market for aluminium Hindalco well positioned to capture rising consumption trends in India 45 World average 8 kg Primary aluminium consumption (mt) . Per capita aluminium cons. (kg) Germany, 38.2 40 35 2.6 30 Italy, 26.2 Japan, 27.6 25 2.2 2.1 US, 22.3 20 1.8 1.9
Slide 33: Conclusion
Conclusion y ITYA BIRLA
Slide 34: Hindalco's strategy has delivered so far
Hindalco’s strategy has delivered so far Consolidated Sales (US$m) 13,366 10,002 10,120 CAGR 33% 1,371 2,020 594 FY 02 FY 04 FY 06 FY 08 FY 10 FY 13 Consolidated EBITDA (US$m) 1,475 1,106 1,164 CAGR 20% 474 326 200 FY 02 FY 04 FY 06 FY 08 FY 10 FY 13 Continues to record strong financial performance
Slide 35: Towards Sustainable Leadership
Towards Sustainable Leadership Business model Growth plans of parts fit into a virtuous whole Strong Sharp accent Aggressive conversion on value growth in businesses to addition and Aluminium – cushion cost one of our vulnerability leadership in chosen to economic each of the metals downturns busine
Slide 36: Disclaimer
Disclaimer This presentation may not be copied, published, distributed or transmitted. The information in this presentation is being provided by Hindalco Industries Limited (the “Company”). Any reference in this presentation to “Hindalco Industries Limited” shall mean, collectively, the Company and
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