Chapter – 3 Finance Department

HINDALCO INDUSTRIES LIMITED

3.1 Trading and P&L Account

Profit & Loss Account of

MARCH 21 MARCH 20
Hindalco Industries (in Rs. Cr.)
12 Months 12 Months
INCOME
Revenue from Operations
42,307.00 39,830.00
(Gross)
Less : Excise/Service Tax/Other
0.00 0.00
Levies
Revenue from Operations (Net) 42,307.00 39,830.00
Total Operating Revenues 42,701.00 40,242.00
Other Income 650.00 739.00
Total Revenue 43,351.00 40,981.00
EXPENSES
Cost of Materials Consumed 32,992.00 29,617.00
Operating and Direct Expenses 0.00 0.00
Changes in Inventories of
-1,821.00 0.00
FG,WIP and Stock-In Trade
Employee Benefit Expences 1,844.00 1,922.00
Finance Costs 1,469.00 1,679.00
Depreciation and Amortisation
1,708.00 1,708.00
Expenses
Other Expenses 4,362.00 4,745.00
Total Expenses 41,785.00 39,965.00
Profit/Loss Before Exceptional,
1,566.00 1,016.00
Extraordinary Items and Tax
Exceptional Items -7.00 -64.00
Profit/Loss Before Tax 1,559.00 952.00
Tax Expenses-Continued
Operations
Current Tax 283.00 137.00
Less : MAT Credit Entitlement 0.00 0.00
Deferred Tax 283.00 195.00
Tax for Earlier Years 0.00 0.00
Total Tax Expenses 566.00 332.00
Profit/Loss After Tax and Before
993.00 620.00
Extraordinary Items
Profit/Loss From Continuing
993.00 620.00
Operations
Profit/Loss For The Period 993.00 620.00
3.2 Balance Sheet

Balance Sheet Of Hindalco

MARCH 21 MARCH 20
Industries (In Rs. Cr.)
  12 Months 12 Months
Equities And Liabilities
Shareholder's Funds
Equity Share Capital 222.00 222.00
Total Share Capital 222.00 222.00
Reserves And Surplus 49,842.00 45,272.00
Total Reserves And Surplus 49,842.00 45,272.00
Total Shareholders Funds 50,064.00 45,494.00
Non-Current Liabilities
Long Term Borrowings 15,174.00 15,660.00
Deferred Tax Liabilities [Net] 1,966.00 1,975.00
Other Long Term Liabilities 1,245.00 1,018.00
Long Term Provisions 421.00 497.00
Total Non-Current Liabilities 18,806.00 19,150.00
Current Liabilities
Short Term Borrowings 4,290.00 7,384.00
Trade Payables 8,800.00 3,990.00
Other Current Liabilities 5,156.00 3,112.00
Short Term Provisions 831.00 928.00
Total Current Liabilities 19,077.00 15,414.00
Total Capital And Liabilities 87,947.00 80,058.00
Assets
Non-Current Assets
Tangible Assets 32,061.00 33,045.00
Intangible Assets 321.00 314.00
Capital Work-In-Progress 1,587.00 1,209.00
Other Assets 8.00 9.00
Fixed Assets 34,099.00 34,650.00
Non-Current Investments 24,373.00 19,800.00
Deferred Tax Assets [Net] 0.00 0.00
Long Term Loans And
11.00 14.00
Advances
Other Non-Current Assets 1,256.00 1,253.00
Total Non-Current Assets 59,739.00 55,717.00
Current Assets
Current Investments 7,358.00 4,839.00
Inventories 15,989.00 11,225.00
Trade Receivables 1,602.00 2,093.00
Cash And Cash Equivalents 1,019.00 3,280.00
Short Term Loans And
49.00 55.00
Advances
Other Current Assets 2,191.00 2,849.00
Total Current Assets 28,208.00 24,341.00
Total Assets 87,947.00 80,058.00
3.3 Ratios and their Interpretation

KEY FINANCIAL RATIOS

OF HINDALCO MAR 21 MAR 20
INDUSTRIES (in Rs. Cr.)
PER SHARE RATIOS
Basic EPS (Rs.) 4.46 2.79
Diluted EPS (Rs.) 4.46 2.79
Cash EPS (Rs.) 12.17 10.49
Book Value
225.51 204.93
[ExclRevalReserve]/Share (Rs.)
Book Value
225.51 204.93
[InclRevalReserve]/Share (Rs.)
Dividend / Share(Rs.) 3.00 1.00
Revenue from Operations/Share
192.35 181.27
(Rs.)
PBDIT/Share (Rs.) 21.36 19.83
PBIT/Share (Rs.) 13.67 12.14
PBT/Share (Rs.) 7.02 4.29
Net Profit/Share (Rs.) 4.47 2.79
PROFITABILITY RATIOS
PBDIT Margin (%) 11.10 10.94
PBIT Margin (%) 7.10 6.69
PBT Margin (%) 3.65 2.36
Net Profit Margin (%) 2.32 1.54
Return on Networth / Equity (%) 1.98 1.36
Return on Capital Employed (%) 4.40 4.16
Return on Assets (%) 1.12 0.77
Total Debt/Equity (X) 0.39 0.51
Asset Turnover Ratio (%) 48.55 50.26
LIQUIDITY RATIOS
Current Ratio (X) 1.48 1.58
Quick Ratio (X) 0.64 0.85
Inventory Turnover Ratio (X) 2.67 3.59
Dividend Payout Ratio (NP) (%) 22.35 43.06
Dividend Payout Ratio (CP) (%) 8.21 11.46
Earnings Retention Ratio (%) 77.65 56.94
Cash Earnings Retention Ratio
91.79 88.54
(%)
VALUATION RATIOS
Enterprise Value (Cr.) 91,005.70 40,998.30
EV/Net Operating Revenue (X) 2.13 1.02
EV/EBITDA (X) 19.19 9.31
MarketCap/Net Operating
1.70 0.53
Revenue (X)
Retention Ratios (%) 77.64 56.93
Price/BV (X) 1.45 0.47
Price/Net Operating Revenue 1.70 0.53
Earnings Yield 0.01 0.03

3.4 Financial Statement Analysis

Revenue for Hindalco’s aluminium business was 21,749 crore Rs. in FY 2019-20, from
23,775 crore Rs. in FY 2018- 19, down 9%. EBITDA was at 3,729 crore Rs. Versus
5,096 crore Rs. a year earlier, lower by 27% due to lower realization partially offset by
lower input costs and better efficiencies. The EBITDA margins were at 17.1% in FY
2019-20, one of the best in the industry.

Copper Business (including DHIL) revenue for FY 2019-20 was at 18,533 crore Rs. (vs. `
22,198 crore Rs. in FY 2018-19), due to lower realizations and volumes. EBITDA fell
24% at 1,276 crore Rs. (vs. 1,683 crore Rs. in FY 2018-19) on account of lower volumes
and by-product realizations in FY 2019-20 during the year.

The Consolidated Financial Statements for the year ended 31st March, 2020 have been
prepared by your Company in accordance with the provisions of the Companies Act,
2013, (‘‘the Act’’) read with the Companies (Accounts) Rules, 2014, applicable
Accounting Standards and the provisions of Listing Regulations and forms part of the
Annual Report.

3.5 Accounting Procedure

1. Basis of Preparation

The separate financial statements of Hindalco Industries Limited ("the Company")

comply in all material aspects with Indian Accounting Standards ("Ind-AS") as
prescribed under section 133 of the Companies Act, 2013 ("the Act"), as notified under
the Companies (Indian Accounting Standards) Rules, 2015 (including subsequent
amendments) and other accounting principles generally accepted in India. The financial
statements for the year ended 31st March 2019 have been approved by the Board of
Directors of the Company in their meeting held on 16th May, 2019.

2. Significant Accounting Policies

A. Investment in Subsidiaries and joint ventures

The investments in subsidiaries and joint ventures are carried in the financial statements
at historical cost except when the investment, or a portion thereof, is classified as held for
sale, in which case it is accounted for as Non-current assets held for sale and discontinued
operations. When the Company is committed to a sale plan involving disposal of an
investment, or a portion of an investment, in any subsidiary or joint venture, the
investment or the portion of the investment that will be disposed of is classified as held
for sale when the criteria described above are met. Any retained portion of an investment
in a subsidiary or a joint venture that has not been classified as held for sale continues to
be accounted for at historical cost.
B. Investment in Associates

The investments in associates are carried in these financial statements at fair Value
through Other Comprehensive Income (OCI) except when the investment, or a portion
thereof, is classified as held for sale, in which case it is presented as Non-current assets
held for sale and discontinued operations. When the Company is committed to a sale plan
involving disposal of an investment, or a portion of an investment in an associate the
investment or the portion of the investment that will be disposed of is classified as held
for sale when the criteria described above are met. Any retained portion of an investment
in an associate that has not been classified as held for sale continues to be accounted for
at fair value through OCI. Any difference between the carrying amount of the associate
and the fair value of retained investment and proceeds from disposal is recognised in
profit or loss.

C. Investment in joint operation

A joint operation is a joint arrangement whereby the parties that have joint control of the
arrangement have rights to the assets, and obligations for the liabilities, relating to the
arrangement. Joint control is the contractually agreed sharing of control of an
arrangement, which exists only when decisions about the relevant activities require
unanimous consent of the parties sharing control.

D. Investment property

Investment properties held to earn rentals or for capital appreciation or both are stated in
the balance sheet at cost, less any subsequent accumulated depreciation and subsequent
accumulated impairment losses. Depreciation is charged on a straight line basis over their
estimated useful lives. Any gain or loss on disposal of investment property is determined
as the difference between net disposal proceeds and the carrying amount of the property
and is recognized in the statement of profit and loss. Transfer to, or from, investment
property is done at the carrying amount of the property.

E. Mineral reserves, resources and rights (together mining rights)

which can be reasonably valued, are recognised in the assessment of fair values on
acquisition. Exploitable mineral rights are amortised using the unit of production basis
over the commercially recoverable reserves. Mineral resources are included in
amortisation calculations where there is a high degree of confidence that they will be
extracted in an economic manner. Commercially recoverable reserves are proved and
probable reserves. Changes in the commercial recoverable reserves affecting unit of
production calculations are dealt with prospectively over the revised remaining reserves.

F. Financial assets at Fair Value through Profit and Loss (FVTPL)

Financial assets that do not meet the criteria of classifying as amortised cost or fair value
through other comprehensive income described above, or that meet the criteria but the
entity has chosen to designate as at FVTPL at initial recognition, are measured at FVTPL.
Investments in equity instruments are classified as at FVTPL, unless the Company
designates an investment that is not held for trading at FVTOCI at initial recognition.
Financial assets at FVTPL are subsequently measured at fair value, with any gains or
losses arising on remeasurement recognised in the statement of profit and loss. Dividend
income on investments in equity instruments at FVTPL is recognised in the statement of
profit and loss in investment income when the Company''s right to receive the dividends
is established, it is probable that the economic benefits associated with the dividend will
flow to the entity; and the amount of the dividend can be measured reliably.

G. Accounting for government grants

Government grants are recognized when there is reasonable assurance that we will
comply with the conditions attached to them and that the grants will be received.
Government grants are recognised in the statement of profit and loss on a systematic
basis over the periods in which the Company recognises as expenses the related costs for
which the grants are intended to compensate. Government grants whose primary
condition is that the Company should purchase, construct or otherwise acquire non-
current assets are recognized in the balance sheet by setting up the grant as deferred
income and its amortization is recognized in ''Other Income''. Other government grants
(grants related to income) are recognized as income over the periods necessary to match
them with the costs for which they are intended to compensate, on a systematic basis.
Government grants that are receivable as compensation for expenses or losses already
incurred or for the purpose of providing immediate financial support with no future
related costs are recognized in the statement of profit and loss in the period in which they
become receivable.

3.6 CSR and the expense

 Introduction:

Our CSR policy has been framed in conformity with the stipulations specified by the

Ministry of Corporate Affairs, Companies Act, 2013 and subsequent amendments from

time to time to date. It is mandatory for all of our Group Companies to adhere to this

policy.

Our vision is –

“To actively contribute to the social and economic development of the communities in

which we operate. In so doing, in sync with the United Nations Sustainable

Development Goals build a better, sustainable way of life for the weaker sections of

society and raise the country’s human development index.” (Mrs. Rajashree Birla,

Chairperson, Aditya Birla Centre for Community Initiatives and Rural Development).

 Scope

Planning and conceptualisation, formulation, collaboration, implementation,

monitoring, evaluation, documentation, and reporting constitutes its key planks.

Guiding Principles
Implementation process: Identification of projects

In Education, our endeavour is to spark the desire for learning and knowledge at

every stage through • Formal schools • Balwadies • Quality elementary education •

Aditya Bal Vidya Mandirs • Girl child education • Non formal education.

In Healthcare our goal is to render quality health care facilities to people living in the

villages and elsewhere through • our hospitals. • Primary health care centres • Mother

and Childcare projects • Immunization programmes with a thrust on polio eradication

• Programmes to address malnutrition. • Anganwadi • Adolescent health • Health care

for visually impaired, and differently abled • Preventive health care through awareness

programmes • Non communicable diseases • Safe drinking water • Sanitation &

hygiene.

In Sustainable Livelihood our programmes aim at providing livelihood in a locally

appropriate and environmentally sustainable manner through • Formation of Self Help

Groups for women empowerment • Skill Enhancement and Vocational training •

Partnership with Industrial Training Institutes • Agriculture development and better

farmer focus • Animal Husbandry • Soil and Water conservation • Watershed

development. • Agro Forestry • Renewable sources of energy.

In Infrastructure Development we endeavour to set up essential services that form

the foundation of sustainable development through • Basic infrastructure facilities •

Housing facilities.

To bring about Social Change, we advocate and support • Dowry less marriage •

Widow Remarriage • Awareness programmes on anti-social issues • De-addiction

campaigns and programmes • Espousing basic moral values. • Gender equality.

Budgets

A specific budget is allocated for CSR activities. The budget is project driven.

The Budget provision towards CSR initiatives shall be at least 2% (two percent) of the

average net profit of the Company (PBT) made during the 3 immediately preceding

financial years calculated in terms of Section 198 of the Companies Act 2013.

 Budgets

A specific budget is allocated for CSR activities. The budget is project driven.

The Budget provision towards CSR initiatives shall be at least 2% (two percent) of the

average net profit of the Company (PBT) made during the 3 immediately preceding

financial years calculated in terms of Section 198 of the Companies Act 2013.

CSR Reporting

The Board of Directors takes into account the recommendations of the CSR

Committee. The CSR Policy is approved by the Board, and it is posted on the

Company’s website.

Furthermore, the annual CSR report shall form a part of Board’s Report. It will include

the impact assessment study. All CSR projects with an outlay of Rs.1 crore or more

will be assessed for impact. These projects have to span a year of work before the

impact study is taken.

3.7 A Listed Company

The equity shares of Hindalco are listed on the Bombay Stock Exchange, where it is a
constituent of the BSE SENSEX index, and the National Stock Exchange of India, where
it is a constituent of the S&P CNX Nifty. Its Global depository receipts are listed on the
Luxembourg Stock Exchange.

As on 30 June 2013, the promoters Aditya Birla Group held around 32% equity shares in
Hindalco. Over 408,000 individual shareholders hold approx. 9% of its shares.

KEY DATES

Year Ending Month Mar

AGM Date (Month) Aug
Book Closure Date (Month) Aug

LISTING INFORMATION

Face Value Of Equity Shares 1

Market Lot Of Equity Shares 1
BSE Code 500440
NSE Code HINDALCO
BSE Group A

PART OF THE FOLLOWING INDICES

Sensex No
Nifty Yes
BSE-100 Yes
BSE-200 Yes
S&P CNX 500 Yes
CNX Midcap No
CNX FMCG No