PROJECT REPORT

ON
ANALYSIS OF FINANCIAL CAPITAL STRUCTURE

By

By

Abhigyan Singh

Under the Guidance of

Mr. Vimal Raheja

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 PREFACE
Education becomes more meaningful when its theoretical aspects are combined with
practical experience this provide an opportunity to the student to improve their
understanding of the studies.

Summer training is an integral part of our academic curriculum. During the

training t, students get an opportunity to understand the practical aspects of various
functional domain in an organization. This builds a better understanding of practical
challenges that bone phase during his performance of task.

This project is the outcome of summer training that I have undergone

at,”HINDALCO INDUSTRY LMITED” and the topic suggested to me by my company
guide is “ANALYSIS OF CAPITAL STRUCTURE, ECONOMICAND MARKET VALUE
ADDED BY HINDALCO INDUSTRY LIMITED”. The project emphasizes on the
financial aspects of the company. I have tried to my best to make a good project report
which would be further used for any reference work. However no one can claim perfection
in it’s entirely. So I apologize for the discrepancy, if any, crept in.

Preparation of project requires perseverance, initiatives,proper

guidance and direction. So it’s mandatory to take aids of various departments.

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CONTENT
NO. Categories Page
No.
1 Preface 2
3 Introduction of Aditya Birla Group 5-6
3 Introduction Of Chairman 7
4 Introduction On Managing Director 8
5 About The Company 9-10
6 Board Of Directors List 11
7 Company Leadership Teams 12
8 Business Outlooks 13
9 Products 14-17
10 Competitor Of Hindalco 18-19
11 Competitor Share 20
12 Significance Of The Study 21-22
13 Introduction Of Financial Management 23-32
14 Capital Structure Of Hindalco Industry Limited 33
15 Income Statement 34
16 Profit And Loss 35-36
17 Balance Sheet 37-38
18 Cash Flow Statement 39-41
19 Calculation Of Ratio 42-51
20 Economic Value Added 52-53
21 Market value added 54-55
22 SWOT Analysis Of Hindalco 56-58
23 Conclusion 59
24 Bibliography 60

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 ADITYA BIRLA GROUP
Aditya birla group, with the turnover of over US $ 40 billion and 136,000 employees, is among top three leading
business houses in India. The Group has been ranked Number 4 in the global ‘Top Companies for Leaders’
survey and ranked Number 1 in Asia Pacific for 2011. ‘Top Companies for Leaders’ is the most comprehensive
study of organizational leadership in the world conducted by Aon Hewitt, Fortune Magazine, and RBL (a
strategic HR and Leadership Advisory firm).The Adyta birla group is India’s first truly MNC whose over 30%
of revenues flow from its operations across the world

“ADITYA VIKRAM BIRLA”

The group is transactional conglomerate with 72 state-of-the-art manufacturing units and sectorial span, in India,
Thailand, Indonesia, Malaysia, Philippines, Egypt, Canada, Australia, China. (36 countries) Over 66 units in
India as well as abroad (in Thailand, Indonesia, Malaysia, Philippines, Egypt, Canada, Australia, China) and
international trading operations spanning several countries included Singapore, Dubai, Russia, Vietnam,
Myanmar, and China make it India’s first truly multinational conglomerate.

• HISTORY
The Hindustan Aluminum Corporation Limited was established in 1958 by the Aditya Birla Group.In 1962
The company began production in Renukoot in Uttar Pradesh making 20 thousand matric tons per year of
aluminium metal and 40 thousand metric tons per year of alumina. In 1989 the company was restructured and
Renamed Hindalco.

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The Aditya Birla group enjoys a front runner position:

Globally:-
A metals powerhouse among the world’s most cost efficient Aluminium and copper producers. Hindalco –
Novelis from its fold in fortune 500 company. It is the largest Aluminium rolling company

• It ranks as No.1 in viscose staple fiber

• The largest single location palm oil producer
• The third largest producer of insulators
• The third largest producer of carbon black
• The eleventh largest producer of cement and the largest in single geography
• The largest single location copper smelter
• Among the world’s top 15 BPO’s and among India’s top three
• Among the best energy efficient fertilizer plants
• The largest Indian MNC with manufacturing operations in the USA

IN ASIA:-
• The largest integrated aluminum producer
• Among the best energy-efficient fertilizer plants in Asia

IN INDIA:-
• A premier branded garment player
• The second largest chore – alkali sector
• Among the top five mobile communication company
• Among the top three supermarket chains in the retail market
• Second largest player of viscous filament yarn
• Second largest private sector insurance company and a leading assists management company
• Among the top 6 BPO companies
GROUP VISION

“To be the premium metals major, global in size and reach, with a passion for excellence”

GROUP MISSION

“To relentlessly pursue the creation of superior shareholder value by exceeding customer expectations
profitability, unleashing employee potential and being a responsible corporate citizen adhering to our values.”

GROUP VALUES

“Integrity, Commitment, Passion, Seamlessness, Speed”

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 THE CHAIRMAN’S LETTER TO SHAREHOLDERS GLOBAL
ECONOMY

Kumar Mangalam Birla (Chairman of the Aditya Birla Group)

The forces of change engulfing the world are creating a whole new set of exciting possibilities and unbelievable
opportunities. Many that didn’t even exist yesterday. We are uniquely privileged that we are not passive recipients of
changing circumstances but can actively shape our destiny. And this tomorrow is for us to discover and build. Across
businesses, we are at the cusp of a transformational growth cycle. As a business house, we have always made
investment decisions based on long-term fundamental drivers like market opportunity, demography, technology, etc.
Our strong leadership position across key businesses has come on the back of bold but calibrated long-term bets.
Given the inherent strengths of your Company, we are again at a moment where we are uniquely positioned to invest
for long-term growth and explore new paradigms. An exciting journey beckons.

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 HINDALCO INDUSTRIES LTD.
• INTRODUCTION:-
An industry leader in aluminums and copper An industry leader in aluminums and copper, Hidalgo Industries
Limited, the metals flagship company of the Adyta Birla Group is the world's largest aluminums rolling
company and one of the biggest producers of primary aluminums in Asia. The visionary — late Mr. G.D. Birla
set up India's first integrated aluminums facility at Renukoot, in the eastern fringe of Uttar Pradesh, India. It was
backed by a captive thermal power plant at Renusagar in 1967. Hindalco attained its leadership position in the
aluminums industry under the dynamic leadership of the late Mr. Aditya Vikram Birla — a formidable force in
the Indian industry. In 1958, The Company was Incorporated on 15th December, at Mumbai to manufacture
alumina, aluminium and aluminium fabricated items. The Company was formed by the house of Birlas in
collaboration with the Kaiser Organisation of U.S.A.

Manufacturing Location:- The Kollur foil plant ( Andhra Pradesh). In 2008, consequent to the acquisition of
Indal by Hindalco. Other locations are:- Belur(west Bengal), Dahej, Hirakud(Orissa), Belgaum,
Silvassa(orissa), Taloja(maharashtra), Alupuram(kerala), Renukoot(u.p) , Muri(Jharkhand). And it was through
the vision and guidance of Mr. Kumar Mangalam Birla, the Group Chairman that the business segments of
aluminium and copper are consolidated to make Hindalco the nonferrous metals powerhouse it is today. Later
acquisitions and mergers, with Indal, Birla Copper and the Nifty and Mt. Gordon copper mines in Australia,
strengthened our position in valueadded alumina, aluminium and copper products. The acquisition of Novelis
Inc. in 2007 positioned us among the top five aluminium majors worldwide and the largest vertically integrated
aluminium company in India. Today we are a metals powerhouse with high-end rolling capabilities and a global
footprint in 13 countries. Our consolidated turnover of USD 15.85 billion (Rs. 72,078 crore) places us in the
Fortune 500 league.

• Nearly 1,000 aluminium panels make up the outer shell of 'Spaceship Earth', the world's
• most famous geodesic dome, at the Walt Disney World's Epcot Centre, Florida.
• Operations in 5 continents, reaching customers in more than 50 countries.
• One of the world’s leading low cost producers of aluminium.
• One of the world’s leading largest custom copper smelters at a single location.
• Birla Copper is the only manufacturer of the 19 mm diameter copper rod in India. This rod is used for
groove conductors and profiles.

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 OUR VISION , MISSION AND VALUES
Our Vision
“To strengthen our position as a premium Aluminum company, sustaining Domestic

Leadership and Global Competitiveness through Innovation, Quality and Value Added

Growth”

Our Mission
“To pursue the creation of value for our Customers, Shareholders, Employees and society At large”

Our Values

Missionary zeal arising out of an

On the foundation of integrity, doing
Honesty in every action emotional engagement with work
what it takes to deliver, as promised

Thinking and working together across functional silos, Responding to stakeholders with a sense of urgency
hierarchy levels, businesses and geographies

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 Board of Directors

Mr. Kumar Mangalam Birla Non-Executive Chairman

Mrs. Rajashree Birla Non-Executive Director
Mr. Satish Pai Managing Director Mr. Praveen Kumar Maheshwari Whole time Director & CFO
Mr. Askaran Agarwala Non-Executive Director RMC SRC CSRC RMC FC
Mr. Kailash Nath Bhandari Independent Director AC SRC NRC RMC
Mr. Yazdi Piroj Dandiwala Independent Director
Dr. Vikas Balia Independent Director
Ms. Alka Marezban Bharucha Independent Director
Mr. Sudhir Mital Independent Director
Mr. Anant Maheshwari Independent Director

Company Leadership Teams

Mr. Satish Pai

Managing director, Hindalco industries
Mr. B. Arunkumar Head – Aluminium Downstream Strategic Projects
Mr. Rajesh Kumar Gupta Head-Mining & Minerals
Mr. V.R. Shankar Head – Legal
Mr. Nilesh Koul Head – Downstream Aluminium Business
Mr. N. Nagesh Head – Renukoot Cluster
Mr. Kailash Pandey Head – Sambalpur Cluster
Mr. Praveen Kumar Maheshwari Chief Financial Officer
Mr. Sanjay R. Agarwal Head – Strategic Procurement
Mr. Mazharullah Beig, Unit Head – Utkal Alumina International Limited
Mr. Bibhu Mishra Head – Manufacturing Centre for Excellence
Mr. Saurabh Khedekar Head – Chemicals Business
Mr. Anil Malik Company Secretary
Mr. Rohit Pathak CEO, Copper Business
Mr. Aniruddha Kulkarni Chief Strategy Officer
Mr. Anil Mathew Head – Policy Advocacy and Chief Risk Officer
Mr. Samik Basu Chief Human Resources Officer

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 BUSINESS OUTLOOKS
This Company has successfully demonstrated benefit of integrated approach with low cost upstream operations
and significant abilities and reach in downstream business. The robustness of Novelis’ de-risked business model
by virtue of its geographic spread – strong presence in emerging markets, product portfolio – with a strong
proportion of recession proof and yet high potential beverage cans in the product mix and focused approach to
leverage the status of preferred vendor to global auto majors have withstood these uncertain times. Hindalco’s
aggressive expansion programme has made a significant headway, despite tough ground conditions at its project
locations

Greenfield Projects:-- Greenfield Projects have made significant progress during the year despite tough
ground conditions at the project locations.

Utkal Alumina International Ltd (Uail):- The construction of the alumina refinery, along with a 90
MW captive co-generation plant is in progress at UAIL, a 100% subsidiary of the Company. The output from
UAIL would be sufficient to feed alumina to the Mahan and the Aditya Smelters.

Mahan Aluminium Project:-This 359 KTPA Aluminium Smelter, along with 900 MW CPP, is coming
up in Bargwan, Madhya Pradesh. The project is on the verge of commissioning. Mahan Aluminium project and
Utkal Alumina project are now close to the stage of commissioning. These projects will re-define Hindalco’s
aluminium business since all these projects will have a world beating cost structure. The Group of Ministers
constituted by the Government of India to consider environmental and developmental issues related to coal
mining etc, has reported to have recommended granting of forest clearance by the Ministry of Environment
&Forest [MoEF] for Mahan Coal block on certain conditions

The Aditya Aluminium And Refinery Project:-A 359 ktpa, Aluminium smelter along with a 900
MW captive power plant, identical to the Mahan Project, is coming up in Odisha. The project is slated for
completion in 2013. A coal block has been allotted for this project jointly with Mahanadi Coal Fields Limited
and Neyveli Lignite Corporation Limited. Alumina Refinery along with a cogen plant, is also coming up.

The Jharkhand Aluminium Project:- Aluminium smelter along with a captive power plant is coming
up in Sonahatu, Jharkhand. The land acquisition process has already begun. For this project the Tubed coal
mine has been allotted to the project jointly with Tata power.

Brownfield Projects:- There were important developments in India w.r.t. your Company’s strategic goal of
higher VAP proportion.

The Hirakud FRP project has made a significant progress. This project, which involved relocation of some
equipments from a closed facility of Novelis, will be the first and the only facility that will have the capability
to produce canbody stock in India. This facility will take Hindalco’s FRP play on a higher plateau in terms of
capability and profitability in the coming years

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Products

1. Building sheets
2. Ingots
3. Fin stock
4. Closure stock
5. Hot rolled plates
6. Cable wraps stock
7. Cold rolled coils

COMPETITORS

NATIONAL ALUMINIUM COMPANY LIMITED (NALCO)

Incorporated in 1981 as a public sector enterprise government of india , NALCO is Asia’s largest

integrated aluminium , encompassing boxite , alumina , refining , aluminium smelting and

casting, power generation , rail and port operations .Commissioned during 1985-87,NALCO has

emerged to be a star performer in production and export of aluminium, and more significantly ,

in propelling in self-sustained growth.

MADRAS ALUMINIUM COMPANY LTD(MALCO)

MALCO is a part of Vedanta resources, a London listed metals and mining major with

aluminium with copper and zinc in operations in U.K, india and Australia. MALCO is a primary

aluminium producer in south india with operations emcompasses mining , refining, smelting and

power generation, MALCO is surging ahead to achieve global recognition in aluminium

production.

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 Maan Aluminum
The company is one of the pioneers in the Aluminium extrusion industry in India; its plant in central India was
one of the first to be commissioned in the year 1989. In the year 2009, the company was rebranded as Maan
Aluminium Ltd.; the new entity now includes trading and manufacturing operations, having industry experience
and knowledge of over 32 years.

The company had a humble beginning in manufacturing Aluminium extrusions, in a record time of eleven months
commenced commercial operations, and today has the distinction of being one of the nation's largest
manufacturers and exporters of Aluminium extruded products from central India.

Today, Maan Aluminium Ltd. is a preferred choice by many companies worldwide. The company is exporting its
products globally, and is accredited with One Star export house status.

Competition
Name Last Market Sales Net Total
Price Cap. Turnover Profit Assets
(Rs. cr.)

Hindalco 214.95 48,268.51 42,798.04 1,436.49 69,742.64

NALCO 55.75 10,400.82 9,618.31 1,342.41 10,549.80

Maan 92.05 62.23 447.08 6.42 75.12

Aluminium

What is Capital Structure?

Capital Structure refers to the amount of debt and/or equity employed by a firm to fund its operations and
finance its assets. The structure is typically expressed as a debt-to-equity or debt-to-capital ratio.

Debt and equity capital are used to fund a business’ operations, capital expenditures, acquisitions, and other
investments. There are tradeoffs firms have to make when they decide whether to raise debt or equity and
managers will balance the two try and find the optimal capital structure.

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Pros And Cons Of Equity:-

• No interest payments
• No mandatory fixed payments (dividends are discretionary)
• No maturity dates (no capital repayment)
• Has ownership and control over the business
• Has voting rights (typically)
• Has a high implied cost of capital
• Expects a high rate of return (dividends and capital appreciation)
• Has last claim on the firm’s assets in the event of liquidation
• Provides maximum operational flexibility

Pros And Cons Of Debt:-

• Has interest payments (typically)

• Has a fixed repayment schedule
• Has first claim on the firm’s assets in the event of liquidation
• Requires covenants and financial performance metrics that must be met
• Contains restrictions on operational flexibility
• Has a lower cost than equity
• Expects a lower rate of return than equity

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Consolidated Statement of Cash Flows

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Balance Sheet Standalone Statement

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Profit and Loss Standalone Statement

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SWOT ANALYSIS OF HINDALCO

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THANK YOU

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