Hindalco Industries Ltd., the flagship company of the Aditya Birla Group, today announced its consolidated and standalone audited financial results for the year ended 31 March 2008.

FY 2008 Performance
Standalone Results
The total revenue for the year at Rs. 19,201 crores reflects a growth of 5% over that of the last year, despite lower realization on account of stronger Rupee. Rupee appreciation, coupled with higher cost due to inflationary pressures, resulted in the fall in EBITDA by 11%.These results need to be viewed in the perspective of a very challenging environment in which they were achieved when virtually all macro-economic factors turned adverse. Rupee appreciation, duty cut, TcRc fall and unrelenting inputs cost push squeezed margins at both ends.

The pronounced strengthening of the Indian Rupee vis-à-vis the US dollar adversely impacted both domestic and export realisations in quarter-on-quarter and year-on-year periods. LME was very volatile and started strengthening towards the end of the year; however the average cash LME for the year was marginally lower than previous year. Significant higher production from our brownfield expansions of both copper and aluminium businesses drove increasing sales volumes in quarter-on-quarter in all four quarters of FY08.

A lower TcRc and lower duty differential severely affected the copper business. Regardless, business managed to maintain margins on the back of a very strong performance in the fourth quarter. Higher volumes, better plant efficiencies across the board, enhanced by-product/market mix were the drivers.

Aluminium business reported revenues of Rs. 7,145 crores against Rs. 7,344 crores in the previous year, while PBIT dropped by 17% from Rs. 2,929 crores to Rs. 2,423 crores. Copper revenue grew by 10% from Rs. 10,978 crores to Rs. 12,066 crores, while PBIT saw a marginal drop of 3% from Rs. 517 crores to Rs. 503 crores. Hindalco continues to be the market leader in both Aluminium and copper.

Adjustment for earlier year (net) under tax expenses represents write back of provision for tax resulting from change in estimation of tax liability on progress in tax assessments.

Consolidated Results

The total revenue for the year at Rs.60,013 crores and PBIT at Rs. 4,835 crores were up by 211% and 22% respectively over last year.

Aluminium business revenue was Rs. 47,054 crores and PBIT was Rs. 3,214 crores, while the copper revenue was Rs. 12,340 crores with a PBIT of Rs. 931 crores.

The consolidated results for the year include the performance of Novelis for the period May 16, 2007 (date of acquisition) to March 31, 2008.

Novelis

The current phase of consolidation and growth has a gestating impact on consolidated profitability.

Post the acquisition of Novelis effective May 15, 2007, Hindalco is now a global player with a strong presence in five continents and with a product portfolio which is a natural hedge against the volatility of aluminium prices. Novelis has reported a net profit of USD 28 million (under US GAAP) for the period May 16, 2007 to March 31, 2008 vis-à-vis a loss of USD 265 million (under US GAAP) in FY2007. The reported results for the post-acquisition period were favourably impacted by certain income and expense items, aggregating to a net USD 21 million on a pre-tax basis, associated with fair value adjustments recorded at the date of acquisition.

The improved results came on the back of strong operational focus and increase in capacities in fast growing markets of Asia and South America. Total shipments increased from 3113 kt to 3150 kt. Novelis countered inflation and challenging market conditions in certain geographies with portfolio optimisation, price increases, working capital improvements and reduction in corporate costs. The Company’s exposure to contracts with metal price ceilings reduced during the year. The benefits can be seen in increased revenues and stronger cash flows.

The integration activities are proceeding smoothly and the acquisition is expected to significantly enhance shareholder value.

Dividend
The Directors have recommended a dividend of Rs 1.85 per share (Last year Rs 1.70 per share). This will be paid in line with the applicable regulations. The total outgo including tax on dividend would be Rs.265.5 crores (Last year: Rs. 202.2 crore).

Take out of Bridge Loan

The Directors have approved a comprehensive financing plan for take out of the existing bridge financing for acquisition of Novelis. This take out financing will be in place by November 10, 2008. The financing plan envisages the following

Rights Issue

The Directors have approved the issue of equity shares for an amount not exceeding Rs. 5000 crores to existing shareholders on rights basis. The share ratio for the rights issue will be 1:3, i.e., one right of Re. 1 each for every three equity shares of Re. 1 each held by the shareholder as on the Record Date to be announced later.

The price per share for the rights issue would be decided by the Board and announced at a later date.

Other Sources

The balance of the bridge loan will be repaid by sourcing domestic/international debt financing and liquidation of treasury.

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