INVESTOR PRESENTATION Q3 FY14 Performance and Financial Review February 13, 2014
Contents Highlights and Financial Performance Aluminium Business Copper Business Projects 2
HIGHLIGHTS AND FINANCIAL PERFORMANCE 3
Global Macro: Uncertainty Continues US: Growth picking up; unemployment rate easing Emerging markets: Growth still soft 3.7 US GDP Growth (%, QoQ, SAAR) 2.8 2.5 4.1 3.2 1.2 1.1 0.1 2012 Q1 2012 Q2 2012 Q3 2012 Q4 2013 Q1 2013 Q2 2013 Q3 2013 Q4 8.3 US Unemployment (%) 6.6 US recovery Momentum? Chinese growth? India recovery? 4
FY10 Q1 FY10 Q2 FY10 Q3 FY10 Q4 FY11 Q1 FY11 Q2 FY11 Q3 FY11 Q4 FY12 Q1 FY12 Q2 FY12 Q3 FY12 Q4 FY13 Q1 FY13 Q2 FY13 Q3 FY13 Q4 FY14 Q1 FY14 Q2 FY14 Q3 2010 Q1 2010 Q2 2010 Q3 2010 Q4 2011 Q1 2011 Q2 2011 Q3 2011 Q4 2012 Q1 2012 Q2 2012 Q3 2012 Q4 2013 Q1 2013 Q2 2013 Q3 2013 Q4 Aluminium: Weakness persists Aluminium LME ($/t) China overtakes RoW in production 2600 2400 2200 2000 1800 1600 1400 1200 1000 7000 6500 6000 5500 5000 4500 4000 3500 3000 World Ex-China China Primary Al Production (kt) Higher Chinese production has neutralized the effect of capacity idling elsewhere New 4-yr low for LME in the last quarter; World inventory at 90 days 5
Demand Robust, Outlook Bullish 55 50 45 40 35 30 Aluminium Consumption World China 11% 6% 10.0 5.0 Al Projected demand growth (CAGR 2013-17 ) 8.1% 6% 25 20 15 Demand remained robust & outlook is bullish on the back of strong consumer led demand expectations 2012 2013 2012 2013 Strong Premia despite announcement of changes in LME warehousing rules are reflective of scarcity in the physical markets 0.0 China World 6
Financial Highlights: Q3 FY14 (Vs. Q2 FY14) Net Sales 15% EBITDA 17% PAT 6% Lower other income and Higher effective tax rate affected financial performance despite a robust operational performance 7
HIGHLIGHTS EBIDTA TREND EBITDA (` Crore) 478 540 629 Q1FY14 Q2FY14 Q3FY14 Sequential rise despite severe headwinds 8
HIGHLIGHTS Robust Portfolio helped us deliver in these challenging times For Q3 FY 14 Aluminium EBIT at Rs 170 Cr Copper EBIT at Rs 300 Cr delivered highest ever quarterly EBIT.. 9 9
HIGHLIGHTS Projects on course... Mahan & Utkal ramp up progressing as per plan In Q3 FY14 Mahan produced 18 KT Metal Utkal produced 87 KT Alumina Aditya first metal tapped in January 2014 Mahan debt refinanced Annual interest savings of Rs 100 Cr. With this refinancing all project debt has been refinanced with total annual interest cost savings in 3 projects ~ 340 Cr 10 10
Financial Performance: ` Cr Net Sales Q3 FY14 Q3 FY13 Change %, YoY Q2 FY 14 Change %QOQ 9M FY14 9M FY13 Change (%, YoY) 7273 6,872 5.8 6305 15.4 19416 19063 1.9 EBITDA 629 582 8.1 540 16.6 1,648 1560 5.6 Other Income 204 318 (35.8) 280 (27) 912 752 21.3 PBITDA 834 900 (7.4) 820 1.7 2560 2312 10.7 PBT 469 543 (13) 440 6.5 1483 1502 (1.3) PAT 334 434 (23) 357 (6.5) 1165 1217 (4.3) EPS (`) 1.62 2.26 (28.6) 1.85 (12.5) 5.91 6.36 (7.0) 11
Segmental Performance Q3 FY 14 Aluminium Greenfield Copper SALES 34% 66% EBIT 36% 64% C.E 19% 67% 14% 12
ALUMINIUM BUSINESS 13
Al: External Environment LME was at 18-quarter low, but rupee depreciation mitigated some impact 2,002 Q3 FY13 LME ($/t) 1,781 1,767 Q2 FY14 Q3 FY14 54.14 Q3 FY13 62.25 INRUSD Q2 FY14 62.05 Q3 FY14 LME ($/t) Value Drivers Trend Exch. Rate (`/$) Ingot Premium Rising Key Input Prices YOY trend & Impact 14
Al: Production Performance (Kt) Q3 FY14 Q3 FY13 Change (%) Alumina 342 326 4.8 Metal 158 139 13.5 FRP 59.7 56.9 5.1 Extrusions 9.5 8.3 14.3 Metal output includes 18.1 kt trial production at Mahan (7.4 kt in the previous quarter) Alumina output corresponds to standalone Hindalco and does not include production at Utkal (87 kt in Q3 FY14) 15
Al: Financial Performance Q3 Performance Net Sales (` Crore) 9M Performance Net Sales (` Cr) 2,215 2,343 2,471 9M FY13 6383 Q3 FY13 Q2 FY14 Q3 FY14 9M FY14 7025 EBIT (` Crore) 206 166 170 Q3 FY13 Q2 FY14 Q3 FY14 9M FY13 9M FY14 585 EBIT (` Cr) 646 16
NOVELIS : Q3 FY14 HIGHLIGHTS Shipments Up 11% YoY to 721 Kilo tonnes, Up 1% Sequentially Despite Seasonally Low Quarter Adjusted EBITDA Up 10% YoY to $203 Million Free Cash Flow Before Capex of $96 Million, Up $212 Million YoY Net Income of $13 Million; Excluding Certain Items, Net Income $23 Million Excellent Operational Performance 17
Novelis: Shipments and Sales Sales (Billions) Third Party Shipments (Kt) Consolidated Shipments & Sales Shipments by Region $3.5 $3.0 $2.5 $2.0 2.3 647 2.4 721 800 650 500 250 200 150 100 10% 17% 10% 10% $1.5 350 50 $1.0 Q3FY13 Q3FY14 200 0 South America Asia Europe North America Sales Shipments Q3FY13 Q3FY14 Highest Q3 Shipments Since FY 2008 18
Auto and Recycling: Key Growth Stories for Novelis Auto Share of Novelis Portfolio 6% FY13 > 25% FY20 North America FRP Auto Demand 80% 70% 60% 50% 40% 30% Average Recycled Content in Novelis Products 33% 39% 43% 50% 80% FY10 FY12 FY13 FY15 FY20 Targets 100 North America Aluminum Auto FRP Demand Estimates (Kt) Approaching 1.5M Tons 1425 2013 2014 2015 2016 2017 2018 2019 2020 Industry s First Independently Certified 90% Recycled Content Can Body Sheet 19
COPPER BUSINESS 20
Cu: Sharp drop in Co-Product Realization Q3 FY14 vs. Q2 FY14 Q3 FY14 vs. Q3 FY13 Impact (YoY) TCRC Slightly higher Slightly higher LME ($/t) Flat Sharply lower Exch. Rate (`/$) Acid Price DAP Realization Flat Slightly higher Flat Favourable Significantly lower Weaker 21
Cu: Production Performance Cathode (kt) 89 DAP (kt) 67 84 65 77 61 Q3 FY13 Q2 FY14 Q3 FY 14 Q3 FY13 Q2 FY14 Q3 FY14 Post shutdown Improved Operating efficiency Achieving better feed rate, plant uptime and operating efficiencies 22
Cu: Financial Performance Q3 Performance Net Sales (` Crore) 4,661 3,974 4,817 Q3 FY13 Q2 FY14 Q3 FY14 9M Performance 9M FY13 9M FY14 Net Sales (` Cr) 12699 12427 EBIT (` Crore) 238 225 300 Q3 FY13 Q2 FY14 Q3 FY14 9M FY13 9M FY14 509 EBIT (` Cr) 22% 620 23
PROJECTS 24
PROJECTS : ON STREAM Utkal Refinery Aditya Smelter Hirakud FRP Mahan CPP 25
Aditya: First Metal tapped. First Metal: 18 th January 2014 26
Mahan: Scaling up CPP View Metal Production (kt) 18.1 7.4 Green anode line Q2 FY14 Q3 FY14 *YTD 27.6 kt 27
Utkal: Gaining momentum Refinery Overview Alumina Production (kt) 87 Alumina Conveyor 41 Q2 FY14 Q3 FY14 28
Summing Up FY14 has turned out to be a watershed year for us when the projects have gone on stream Business environment will continue to be tough, with added uncertainty on coal blocks TCRC cycle turning in favour of Copper business; but coproduct realizations pose challenges Bottom line will come under strain in the coming quarters on higher depreciation and interest Progressing strongly as Challenging times continue 29
Thank you 30
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. 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 s principal markets, changes in Government regulations, tax regimes, economic developments within India and the countries within which the company conducts business and other factors such as litigation and labour negotiations. The company 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. 31