Hindalco Industries Ltd

Investor Presentation
Q2 FY11
November 2010
Industry Backdrop

Results Highlights

Aluminium: Business Conditions & performance

Review

Copper:
pp Business Conditions & p
performance Review

Projects – An Update
 Industry Backdrop

3
Robust growth in global metals consumption …

… though supported by re-stocking / base effect / stimuli

Aluminium Consumption Copper Consumption

World
(Mn ton,
ton annualized) (Mn ton,
ton annualized)
18% 8%
17.5 19.3
41.9 41.6 18.5
17.9 17.9
37.4 37.8 17.0
34 3
34.3
RoW
o
11.1 6.0
16% 9% 7.2
10.0

12.6 17.5 China

5.1
20% 11%
7.3

14.8 North America + Europe 6.9

12.9
18% 5% 4.1

2008 2009 2010 Q1 2010 Q2 2010 Q3 2008 2009 2010 Q1 2010 Q2 2010 Q3

4 Growth (2010 est)

Source: Industry
Indian Growth Momentum to Continue

Aluminium consumption (kt)

Electrical & Electronics
966

y Large scope for

Building & Construction 910 metal
consumption to
rise from current
levels
H1 FY10 H1 FY11
Consumer Durable
y End user
6%
segments have a
strong/positive
A t
Automobile
bil & Transport
T t outlook – i.e.
ie
C
Copper consumption
ti (kt)
Power, Transport,
307 Construction,
Industrial etc

Industrial Machinery y Rising per capita

296
consumption of
in India

H1FY10 H1FY11
Packaging
4%

H1 growth affected by temporary slowdown in electrical

demand, which is primarily dependent on Govt. allocation 5
 Result Highlights

6
Q2 FY 11: Highlights

7
Robust Performance amidst challenging conditions
Proactive Steps

Higher Aluminium VAP Sales  Highest Ever production 

Improved Mix of CCR
¾Hirakud Smelter outage
Smelter outage

Highest Ever Production at 
Ever Production at
¾ Lower Cu Premium Efficiencies   
i
improvement
Muri in Aluminium
¾Coal  Price Surge

Reduced Inventory  levels to  Efficiencies improved

increase the metal sales

increase the metal sales. ¾ Kalwa VRS pp
Copper  

Higher EBIT despite adverse impact

8
Financial Performance

` Cr Q2 FY10 Q2 FY11 Change (%)

Net Sales 4,915 5,860 19
PBITDA 666 780 17
PBT 434 556 28
PAT 344 434 26
EPS (`) 2.02 2.27 12
` Cr H1 FY10 H1 FY11 Change (%)
Net Sales 8,812 11,038 25
PBITDA 1,500 1682 12
PBT 1 034
1,034 1 229
1,229 19
PAT 825 968 17
EPS (`) 4.85 5.06 4

Q2 profit would have been significantly higher, but for Hirakud

9
production loss and Kalwa VRS settlement
 Aluminium: Business Conditions &
Performance Review

10
Al: External Drivers

Driver Current Assessment Impact

LME • Support from global liquidity and cost pressures,

but downside risks related to rewind of financing
deals
INR USD • USD weakness and continued FII flows to India
may lead to rupee appreciation

Input • Upward pressure related to coal and carbon costs

prices
Demand in • Outlook p
positive for most aluminium-consuming
g
India sectors

11
Aluminium Industry : Cost push to continue

World average hot metal cost Composition

Others
10% Alumina
Carbon cost - Resource companies
- Correlated with insisting on short-term
commodity price cycle 13% contracts
38% - De coupling of
alumina & aluminium
Labour cost
- Hardening of 7%
emerging market
currencies, including
RMB

32%
Power
- Electricity price hikes in China
- Power cuts in certain Chinese provinces leading
to cutbacks in production (~1.5 mt capacity)
Cost Push to continue – Support for prices?
12 Source: Industry &
company estimates
 Strong Production performance despite Hirakud
production loss

Alumina (kt) 11%

Metal (kt) 12% Growth in Output
140 (H1 FY11 vs H1 FY10)
123
H’kud
347 H’kud Alumina 10%
Metal -4%
312 100 103 FRP 3%
R’koot R’koot
Extrusions 3%
Q2 FY10 Q2 FY11 Q2 FY10 Q2 FY11

FRP (ton) 2%
Extrusions (ton) Adverse impact
2%
contained through
54,042
,
53 150
53,150 9 815
9,815
9,637 •efficiency
improvement
•Higher alumina &
wire rod production
13 Q2 FY10 Q2 FY11 Q2 FY10 Q2 FY11
Steps taken to minimise impact of Hirakud
production loss
Increased third-party sale of Improved sales mix
specials and standard
138 kt
128 kt Primary-Exp
100.0 84 kt
90.0
80 0
80.0 48% 49%
54 kt Primary-
70.0 34.2 Dom ▼6%
60.0
50.0
40.0
33.5 VAP
44% 50%
▲6%
30.0
20.0
10.0
0.0

Q2 FY10 Q2 FY11 Q2 FY10 Q2 FY11

Specials Standard Sacrificed volumes mainly in Primary

Exports

14
Q2 FY 11: Strong Aluminium numbers

15
Aluminium Business: Financial Performance

Q2 FY10 Q2 FY11 Change (%)

(` cr)

Net Sales & Operating

1,649 1,911 16
Revenue

EBIT 259 424 64

H1 FY10 H1 FY11 Change (%)

(` cr)

Net Sales & Operating

3 067
3,067 3 778
3,778 23
Revenue

EBIT 714 976 37

16
 Copper: Business Conditions &
Performance Review

17
Copper: External Drivers

Driver Current Assessment Impact

TCRC • Long term TCRC lower than last year

LME/INR • LME being supported by liquidity

INR •Appreciating rupee

Acid prices • Recently on an improving trend

Energy • Correlated with commodity cycle; likely to be

prices firm

Ch ll
Challenging
i titimes
18
Custom Smelters : Low TCRC, Rising energy costs

… Structural shortages likely to

… Rising energy costs
continue
((Mn Ton))
Mine Supply
Smelter Demand 13.7

13.2 13.1
13 0
13.0 13.0 % change H1FY11
12.8
Input
Vs HiFY10
12.4 12.5
12.3 12.2 Imported
>10
coal

Furnace oil >20

Propane >25
2007 2008 2009 2010 2011
(E) (P)
LNG >5
•TCRC to continue to remain under pressure
•FY
FY 10 bench mark TCRC were significantly
higher than FY11 benchmark
19
Cu: Production Performance

Q2: Record cathode production and sharp jump in Own CCR production

C th d (kt)
Cathode O
Own CCR(kt)
5% 41%

94 43

90
31

Q2 FY10 Q2 FY11 Q2 FY10 Q2 FY11

St
Strong operational
ti l performance
f
20
Copper Business: Financial Performance

Q2 FY10 Q2 FY11 Change (%)

(` cr)

Net Sales & Operating

3 268
3,268 3 951
3,951 21
Revenue

EBIT 217 129 (41)

H1 FY10 H1 FY11 Change (%)

(` cr)

Net Sales & Operating

5,748 7,265 26
Revenue
EBIT 374 253 (32)

21
Mining : ABML Highlights

Nifty Sulfide Production (tons) Nifty EBIDTA (A$ mn)

29491
11% 18%
89.7

26488 75 7
75.7

FY10 H1 FY11 H1 FY10 H1 FY11 H1

Strong Performance
22
Copper business – Strategic initiatives paying off III
Key focus areas Drivers

9 Cost effective brown field expansion

1 Capital Efficiency
Leadership in domestic
2 market offering better
realisation
9 Strategic advantage through technology
9 Asset sweating
9 Service level differentiation
9 Quality edge

9 Jetty /port infrastructure to overcome locational disadvantage

3 Supply Chain
Reengineering
9 Sourcing Mix optimisation
9 Regional redistribution points

4 Global
Gl b l Cost
C t 9 Global Scale
Competitiveness 9 Top Quartile Cost Curve

5 Value Chain 9 By-Products value extraction

Enhancement 9 Value added downstreaming g

9 A cost effective “Upstreaming” strategy

6 Long Term feedstock
ƒ Mining acquisition
securitisation
ƒ Strategic alliances/partnership

Transforming the copper business into a globally competitive smelting value chain

23
 Projects – An Update

24
Utkal Alumina

Engineering Basic Engg-100 % Complete, Detailed Engg- 95% Completed, not on

critical path

Statutory Obtained
Clearances
Commitment Over 82%

g
Site Progress More than 7,000 ppeople
p working g at site.
Major Contractors like L & T, Simplex, GDC mobilized fully at site.
94% of Piling work completed. RCC, structural, fabrication and
erection has been ramped up and is on track for timely completion.
Power Plant Erection of BTG units under progress

25 Expected completion -Q2 FY12

Activity at Site: Utkal

Evaporation area: Erection of equipment Mud Washing: erection of DCW

under progress under progress

BTG Package:
g ESP#1: Hooper
p erection under progress
p g BTG Package: Boiler#1: Insulator erection

26
Mahan Aluminium

Engineering Basic Engineering - 94% Complete, Detailed Engineering-60% Complete

Statutory All Major approvals in place.

pp
approvals
Orders Orders for all major, long delivery equipment placed.

Commitment Around 83%

Around 12,000 people at site. Major Contractors like L & T, BHEL, Rohan
builders etc are working.
Concretingg & structural work p
progressing
g g in line with the first p
pot start up
p
schedule.
Site Progress
Power Plant Power plant Fabrication and erection in line with the start up of the power
plant. Foundation for 5 boiler units, 4 ESP units, 2 power house units
completed Work on other units in full swing.
completed. swing Work on all chimneys in full
swing. Two chimney completed- 125 m height. Erection of engineering
structure for boilers in progress.

27 Expected Completion – Q2 FY12

Activity at Site: Mahan smelter

Pot Room Cathode sealing

shop

GTC1 ID Fan
GTC1 BBag filt
filter &
foundations & Stack
crust bath silo
support structure
erection

28
Activity at Site: Mahan CPP

Erection work in Boiler #2 Chimney #4 - Assembly of Slip form

Erection of Boiler Reinforcement & Shuttering work for TG#2

#2 columns Deck slab

29
Aditya Smelter

Engineering Detailed Engg-

Engg 68% Complete

Statutory Major approvals received. Forest land stage I clearance

approvals received. Permission to start project site consolidation activities
received Stage II clearance awaited
received. awaited.

Commitment Around 66%. Major orders placed (along with Mahan)

Site Progress Area grading ,Piling undergoing. R & R under progress. Civil
contractor - HCC Team has mobilized well with hydraulic rigs
and civil work in permitted fronts is in full swing.

30 Expected Completion – Q3 FY12

Activity at Site: Aditya Smelter and CPP

Pot Room Foundation 220 KV switch yard

Intake well with substation Boiler foundation

31
Hirakud Smelter and Power Plant Expansion

Smelter Capacity increase from 161 to 213 ktpa thru’ addition of 80 Pots of 235 kA
Expansion

Power Pl
P Plantt C
Capacity
it tto increase
i tto 467.5
467 5 MW by
b Addition
Additi off 100 MW
MW.
Expansion
Schedule 30 pots to be commissioned by Dec’2011 & balance 50 pots by Mar’2012
Technology GAMI Design
Progress Power Plant
1. DCPL has been engaged as the EPCM consultant, Engineering is
progressing well
2. Major orders for the power plant already placed.
Smelter
1. Basic Engineering by GAMI- completed.
2. Major orders like wagons, alumina handling placed. Other major orders
being finalized.
3. SPL has been vacated to storage shed. New plant rectifier station will
be erected over here.
4. Site grading 80% and boundary wall 90% completed.

Smelter expansion from 155 to 161 KTPA under phased commissioning

32
Project Blue Fox

Scope Brownfield project – Can Body Stock at Hirakud

Dismantling
Dismantling completed. All containers received at Vizag port -
and receipt of
13000 MT.
q p
equipments

Cold Mill Order placed on Achenbach.

Order placed on ABB for refurbishment of Main Motors

Motors. Work
Hot Mill
progressing as per schedule.

Excavation
E ti andd ffoundation
d ti off building
b ildi column
l iin progress.
Civil work
Site Leveling and Boundary wall work in progress.

33 Project Completion – Q2 FY12

Jharkhand Smelter

Land Total land requirement of ~4000 acres for the project.

Both private as well as Govt land acquisition started
started.

Water Water drawl clearance received for 55 MCM.

Environmental Application to be submitted after sizeable quantity of land has

clearance been acquired.

Feasibility DFR is ready.

Reports

34 Expected Completion –FY14

Aditya Refinery

Land Majority land acquired, Rest process on track

Water Water drawl agreement in place

M/s Simplex Infrastructure Ltd is awarded with the job for
supply & erection of water drawl arrangement. They have
completed the ground survey work for route alignment for 15
Km.
Forest Terms of Reference (TOR) presentation date is awaited.
clearance
Construction Job has been completed. Line energized.
power
Railway Railway siding clearance obtained.
obtained

35 Expected Completion – FY14

 Towards Sustainable Leadership
Domestic operations
„ User industries of aluminum
have a bullish outlook
„ Robust sector fundamentals
„ Long on Alumina
Introduction of new futuristic
Driver „
value added products (Al)
„ New avenues for copper use
„ Leading market share in
VAP
„ Continued focus on
Highlight’s operational excellence for
b th Aluminum
both Al i and d Copper
C „
„ Low cost base and robust
de-risked business model
Sustainable growth
Strategy
Price Leader
Seamless Global “One Metal” business
Expansion Projects
„ Greenfield projects expected
to be in global best quartile
for manufacturing costs
„ Infrastructure available for
further scalability in the
future
„ Brownfield capacity increase
advantage
„ Focus on timely delivery of
planned projects
„ Maintain high quality of
execution
Low capex cost per ton with
best in class operating
capacities
Achieve potential
Cost Leader
Novelis
„ Improving product mix to
drive margins and growth
„ Successful relocation of
Roger Stone
„ Convergence of EBITDA
and Adjusted EBITDA
„ Leader in Al Recycling
„ Financial turnaround with
continued operational
improvement
„ Leverage on high end
t h l
technology
„ Brownfield expansion –
Pinda project, Brazil
Stabilize and transform
Capability Leader
36
Forward Looking & Cautionary Statement

Certain statements in this report may be “forward looking statements” within

the meaning of applicable securities laws and regulations. Actual results could
differ materially from those expressed or implied.
implied Important factors that could
make a difference to the company’s operations include global and Indian
demand supply conditions, finished goods prices, feed stock availability and
prices, cyclical demand and pricing in the company
company’ss principal markets,
changes in Government regulations, tax regimes, economic developments
within India and the countries within which the company conducts business
and other ffactors such as litigation
g and labour negotiations.
g The companyp y
assume no responsibility to publicly amend, modify or revise any forward
looking statement, on the basis of any subsequent development, information or
events, or otherwise.

37
 Th k you
Thank

38