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20032003ALCANALCAN
WEDSWEDS
PECHINEYPECHINEY
WHAT’S IN THE PAST IS THE WHAT’S IN THE PAST IS THE PROLOGUE……PROLOGUE……
THE PROBLEM CHILDTHE PROBLEM CHILD
NOVELISNOVELIS
HINDALCO+NOVELISHINDALCO+NOVELIS
What’s the big deal?What’s the big deal?
THE INHERITANCE OF LOSS THE INHERITANCE OF LOSS
Novelis inherited huge debtNovelis inherited huge debt Financial lossesFinancial losses High debt equity ratio of 7.23:1High debt equity ratio of 7.23:1 Chaos in financial reportingChaos in financial reporting Loss of credibilityLoss of credibility Constant restructuringConstant restructuring Search for CEOSearch for CEO
HINDALCO…HINDALCO…
Two strategic businesses-Al, CuTwo strategic businesses-Al, Cu Asia's largest integrated primary Asia's largest integrated primary
producer of aluminum producer of aluminum Among the most cost-efficient Among the most cost-efficient
producers globally producers globally Hindalco has operated at the Hindalco has operated at the
lower end of the value chain lower end of the value chain
““Novelis is a global Novelis is a global leader with presence leader with presence in four continents. It is in four continents. It is very rare to be able to very rare to be able to acquire a global leader acquire a global leader in any industry.”in any industry.”
WHY NOVELIS?WHY NOVELIS?
Entry into new markets.Entry into new markets. 40% of Al consumed is in the form of 40% of Al consumed is in the form of
rolled products.rolled products. Will become 5th largest Al company in Will become 5th largest Al company in
the world.the world. Entry into list of Fortune 500 Co.Entry into list of Fortune 500 Co. Access to high technologyAccess to high technology Move up to the high end of the value Move up to the high end of the value
chainchain Access to new customer baseAccess to new customer base
Access to new set of customers…Access to new set of customers…
Coca-colaCoca-cola BudweiserBudweiser FordFord GMGM AudiAudi BMWBMW
THE BIG DEALTHE BIG DEAL
Divided into 2 parts- Divided into 2 parts- 1)100% of Novelis 1)100% of Novelis
equity @44.93$ per equity @44.93$ per share which add up share which add up to $3.6bto $3.6b
2)$2.4b debt on 2)$2.4b debt on Novelis balance sheetNovelis balance sheet
Confidential biddingConfidential bidding
Funding Funding
while $2.4 billion will be raised on the balance while $2.4 billion will be raised on the balance sheet of Novelissheet of Novelis
Hindalco will raise a debt of $2.8 billion.Hindalco will raise a debt of $2.8 billion. $450 million from its cash reserves $450 million from its cash reserves while Essel Mining, another A V Birla group while Essel Mining, another A V Birla group
company, will chip in with $300 million from its company, will chip in with $300 million from its reserves.reserves.
The group has tied up with ABN Amro Bank, The group has tied up with ABN Amro Bank, Bank of America and UBS for the Asian leg of Bank of America and UBS for the Asian leg of the transaction, while the non-recourse debt the transaction, while the non-recourse debt raised on Novelis' books will be funded raised on Novelis' books will be funded through ABN Amro and UBS.through ABN Amro and UBS.
Gains for Novelis….Gains for Novelis….
Good value for share holdersGood value for share holders
Increase in credibility.Increase in credibility.
Reduction in debt equity ratio.Reduction in debt equity ratio.
Value Addition….Value Addition….
SizeSize
ScaleScale
Cutting edge technologyCutting edge technology
Explosive combinationExplosive combination
THE COMPETITIVE ADVANTAGETHE COMPETITIVE ADVANTAGE
Market Share.Market Share.
Expanding it’s wings.Expanding it’s wings.
Perfect Synergy.Perfect Synergy.
The Fusion Technology.The Fusion Technology.
Forward Integration.Forward Integration.
Comparative analysisComparative analysis
NovelisNovelis
2005 2005 actuals actuals
NovelisNovelis
2007 2007 Corus AlCorus Al
2005 2005 actualsactuals
AssetsAssets 5,4765,476 NANA 1,327.841,327.84
SalesSales 8,3638,363 NANA 1,831.81,831.8
PBTPBT 197197 100100 55.0455.04
Market Market CapCap
3,6003,600 3,6003,600 980980
Market Market Cap/PBTCap/PBT
18.2718.27 3636 17.8117.81
THE STORY THAT NUMBERS TELL……THE STORY THAT NUMBERS TELL……
JAN-JAN-SEPT SEPT 20062006
JAN-JAN-SEPT SEPT 20052005
FY2005FY2005 FY2004FY2004 FY2003FY2003
Net Net salessales
7,37777,3777 6,3376,337 8,3638,363 7,7557,755 6,2216,221
OperatiOperating ng expensexpenseses
7,2247,224 5,9385,938 7,9627,962 7,1457,145 5,7375,737
EBITDAEBITDA 153153 399399 401401 610610 484484
InteresInterestt
149149 148148 194194 4848 3333
Net Net IncomeIncome
-170-170 3232 9090 5555 157157
THE WORLD OF NOVELIS…..THE WORLD OF NOVELIS…..
N.AMERIN.AMERICACA
EUROPEEUROPE ASIAASIA S.AMERIS.AMERICACA
ASSETSASSETS 1,4871,487 2,39122,3912 1,0211,021 814814
NET NET SALESSALES
2,8412,841 2,6882,688 1,2351,235 626626
REGIONAL REGIONAL INCOMEINCOME
6464 208208 7070 122122
DESCRIPTIDESCRIPTION OF ON OF ASSETSASSETS
10 PLANTS10 PLANTS
2 2 RECYCLING RECYCLING FACILITIESFACILITIES
14 PLANTS14 PLANTS
1 1 RECYCLING RECYCLING FACILITYFACILITY
3 PLANTS3 PLANTS 2 PLANTS2 PLANTS
2 SMELTERS2 SMELTERS
1 REFINERY1 REFINERY
2 BAUXITE 2 BAUXITE MINEMINE
NOW,IT’S TIME FOR SOME NOW,IT’S TIME FOR SOME CRYSTAL BALL GAZING…..CRYSTAL BALL GAZING…..
FUTURE PERFECT-POST 2010FUTURE PERFECT-POST 2010
Expiry of can contractsExpiry of can contracts Business integrationBusiness integration Sourcing of raw material from Sourcing of raw material from
Hindalco at low costHindalco at low cost Geographical proximity to Malaysian Geographical proximity to Malaysian
production facility of Novelis.production facility of Novelis. Expiry of Hindalco’s supply contracts.Expiry of Hindalco’s supply contracts.
THANK YOUTHANK YOU