https://docs.google.com/viewer?a=v&q=cache:cw85oUthMXYJ:www.hindalco.com/in vestors/downloads/HALC%2520-%2520CLSA%2520Conference%2520%2520May2001.ppt+hindalco+indal+aquisition.

ppt&hl=en&gl=in&pid=bl&srcid=ADGE ESipU5fJNwyWFfFjrjpsnZ98o_Axcmc9bmhuIwSEuNZa97yUtBo3ftveCsL3ZReqU G2XrxSIvsg1Q2IQoP9AWQKHuv_tWf-kfjcg0gCBs2J6DurrfQr_kl8u0etm1_OEpNGRUWf&sig=AHIEtbQ27cHyodH8ImuYnw7kMzKJ5Yst 6A Synergy value is created from economies of integrating a target and acquiring a company; the amount by which the value of the combined firm exceeds the sum value of the two individual firms

"the two companies are exchanging best practices across various functions," a senior hindalco official said "the benefits of synergy realisation efforts with indal are gaining momentum and will contribute towards enhanced realisation and strengthened margins." clear indication of the emerging synergy between hindalco and indal, the former has said that alumina tolling volumes with indal have doubled to 18,735 tonnes in the first half of the current financial year.

Hindalco Industries Ltd. is the leading player in the aluminum industry, and is one of the lowest cost producers of primary aluminum in the world. It is the largest integrated producer in the country with captive bauxite mines, power units, and high value added output comprising semi- fabricated aluminum products and down stream production facilities.

An industry leader in aluminium and copper An industry leader in aluminium and copper, Hindalco Industries Limited, the metals flagship company of the Aditya Birla Group is the world's largest aluminium

rolling company and one of the biggest producers of primary aluminium in Asia. Its copper smelter is the worlds largest custom smelter at a single location. Established in 1958, we commissioned our aluminium facility at Renukoot in eastern Uttar Pradesh, India in 1962. Later acquisitions and mergers, with Indal, Birla Copper and the Nifty and Mt. Gordon copper mines in Australia, strengthened our position in value-added 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 12 countries. Our consolidated turnover of USD 13 billion (60,000 crore) places us in the Fortune 500 league. Hindalco's businesses Creating superior value Hindalco is one of the leading producers of aluminium and copper. Our aluminium units across the globe encompass the entire gamut of operations, from bauxite mining, alumina refining and aluminium smelting to downstream rolling, extrusions, foils, along with captive power plants and coal mines. Our copper unit, Birla Copper, produces copper cathodes, continuous cast copper rods and other by-products, such as gold, silver and DAP fertilisers. Our units are ISO 9001:2000, ISO 14001:2004 and OHSAS 18001 certified. Several units have gone a step further with an integrated management system (IMS), combining ISO 9001, ISO 14001 and OHSAS 18001 into one business excellence model. We have been accorded the Star Trading House status in India. Hindalco's aluminium metal is accepted for delivery under the High Grade Aluminium Contract on the London Metal Exchange (LME). Our copper quality standards are also internationally recognised and registered on the LME with Grade A accreditation. Aluminium Hindalco's major products include standard and speciality grade aluminas and hydrates, aluminium ingots, billets, wire rods, flat rolled products, extrusions and foil. The integrated facility at Renukoot houses an alumina refinery and an aluminium smelter, along with facilities for the production of semi-fabricated products,

namely, redraw rods, flat rolled products and extrusions. The plant is backed by a co-generation power unit and a 742 MW captive power plant at Renusagar to ensure the continuous supply of power for smelter and other operations. A strong presence across the value chain and synergies between operations has given us a dominant share in the value-added products market. As a step towards expanding the market for value-added products and services, we have launched various brands in recent years Everlast roofing sheets, Freshwrapp kitchen foil and Freshpakk semi-rigid containers. I am proud to say that we are at the top along with the best of them. We enjoy a strong business structure which in turn bestows upon us an advantageous cost structure. Here I want to emphasise the fact that Hindalco ranks in the top quartile on this critical parameter of a low-cost structure. Besides, India possesses huge and high-quality bauxite deposits which China, for example, lacks. We leverage this advantage very effectively and our aluminium is, therefore, of a very high quality besides being LME-registered. This enables us to compete strongly in the international market. 10:24 PM With regard to technology, what is important is to have relevant technology which will not only ensure world-class quality but also a beneficial cost structure. Our people also possess all the relevant skill-sets. In fact, the Aditya Birla group possesses the best skill-sets across all its businesses, thereby making it a truly world-class conglomerate. At Hindalco, three mantras are rigorously followed to produce global quality products, enjoy a high degree of cost-competitiveness and possess a global reach. The last assumes tremendous importance in these days of intense competition. We have been continuously building up our capabilities to expand from the domestic to the international market so that our fortunes are not tied down to the destiny of one single country and market. We have been successful in this strategy so far and I am confident this will fetch us rich rewards in the future as well. The Major Players The Indian aluminium industry is dominated by four or five companies that constitute the majority of India's aluminium production. Following are the major players in the Indian aluminium industry:

Hindustan Aluminium Company (HINDALCO) National Aluminium Company (NALCO) Bharat Aluminium Company (BALCO) MALCO INDAL HINDALCO: Hindalco is the biggest player in the aluminium industry in India with around 39% of market share. An Aditya Birla Group flagship company, Hindalco has its aluminium plant at Renukoot in Uttar Pradesh. It has various aluminium products with a market share of 42% in primary aluminium, 20% in extrusions 63% in rolled products, 31% in wheels and 44% in foils. Sterlite Industries: The aluminium business of Sterlite Industries Limited comprises of two Indian aluminium giants BALCO and MALCO. While BALCO is a partially integrated, MALCO is a fully integrated producer of aluminium. Sterlite has got a market share of around 32%. NALCO: It is also one of the leading aluminium producers in India. Government of India has a stake of 87.15% in this company. Its aluminium refinery is located at Damanjodi. It also has a smelter located at Angul, Orissa. Currently, NALCO is concentrating on a capex programme to increase its production from 345,000 tonnes to 460,000 tonnes. ALCAN lcan is the Canadian aluminium manufacturer, which is over 100 years old. Today, the company is one of the leaders in the worlds aluminium industry, producing bauxites, alumina and aluminium. It is one of the three largest manufacturers of structural and packaging materials. Its production volume for primary aluminium in 2006 was 3.4 mln m.t. The company has 68,000 employees, including joint ventures. Alcan operates in 61 countries.. In Russia, Alcan sells aluminium packaging materials, including products for the tobacco and cosmetics industries. It has representative offices in Moscow and Leningrad regions. At present, Alcans shareholders are studying a takeover proposal from the Australian-based Rio Tinto. If the deal is approved, the new company will become the absolute leader in terms of volume.

INDAL

Established in 1938. Market leader in the upstream range of standard and specialty alumina products in India Indals performance in the industry traditionally has been proportional to the demand growth in consumer durable, packaging and construction industries. Indal is a net importer of aluminium for its downstream operations. The company gets aluminium (for its downstream operations) from outside vendors under contract manufacturing or by importing AQUISTION STORY SLIDE The selling of Alcans stake in Indal at Rs.190 to Hindalco came as more of a surprise since the same stake had been acquired by Alcan at Rs.200 per share in March 1998 as a counter offer to Sterlite Industries hostile bid. In the Aluminum industry, the takeover of Indal by Hindalco on 23rd March 2000 has taken the corporate sector by surprise Indal could have merged with Hindalco earlier, but due to an agreement with Indal's former promoter Alcan, the special grade alumina business was transferred while retaining the Indal entity. A merger would benefit Indal because of Hindalco's strong balance sheet.

HINDALCO Industries offer to acquire a 20 per cent equity stake in Indian Aluminium Company (Indal) at a price of Rs. 190 is attractive for the shareholders of the latter. This offer comes almost two years after Sterlite's unsuccessful hostile bid for Indal. In that hostile bid, Alcan Aluminium, Canada, the promoter of Indal, which held a 34.62 per cent equity stake in Indal, enhanced its equity stake to 54.62 per cent at Rs. 200 per share. For all the shareholders who failed to tender their equity in that open offer made in June 1998, this offer represents another good exit opportunity. Although the offer price is Rs. 10 lower than the June 1998 offer, the prices of Indal have never touched Rs. 190 during this period. Even the average of the weekly high and

low of closing prices for the shares of Indal for the 26 week period ending March 22, 2000 is only Rs. 107. For the shareholders of Indal, an exit from the stock makes sense for two reasons: One, Alcan Aluminium, Canada hardly made any significant capital investments in Indal in the two years after the June 1998 open offer. Except for shedding all the non-core investments in subsidiaries and assets and shifting potlines from Belgaum to Hirakud, little progress was made by them on the capital investment front. For over two years, Alcan Aluminium kept mulling over the possibility of expansion of aluminium smelter capacities and setting up of a captive power plant facilities at Hirakud. In the absence of these investments, the scope for near-term appreciation in stock price (after the offer period) is limited. It is likely that the stock, which trades in the Rs. 140-160 range, may slip back to the price levels preceding the open offer. Two, although Hindalco has indicated that Indal will remain a separate entity, a merger with Hindalco at a latter date cannot be ruled out. According to the offer document, ``The acquirer does not have any plan to dispose off or otherwise encumber any assets of Indal in the two years from the date of closure of the offer except in the ordinary course of business or as permissible under SEBI (SAST) Regulations.'' If the merger is put through, the swap ratio may be loaded in favour of the shareholders of Hindalco. Except for Alcan Aluminium deriving a good consideration by selling its 54.62 per cent equity stake in Indal, the deal has clearly been structured in favour of Hindalco. First, through this offer, Hindalco is expected to gain access to the entire downstream capacity of Indal comprising of 90,000 tonnes of rolled products, 6,000 tonnes of foil and 8,000 tonnes of extruded products. Since Indal was the largest player in the downstream segment, its product profile is expected to complement the existing capacities of Hindalco. In the long run, this acquisition is expected to confer tremendous pricing power to Hindalco. The combination of assured metal capacity and a decent growth rate of 6 per cent in downstream segments in future is expected to strengthen the operational profile of Hindalco. Second, this acquisition has also set the stage for Hindalco exercising control over nearly 43,000 tonnes of primary metal capacity at Hirakud/Alupuram and around 25,000 tonnes of recycled metal at Taloja of Indal. Finally, the access to nearly 3,72,000 tonnes of hydrate and alumina (both standard metallurgical and special) of Indal is a further inducement in this deal. As

an icing on the cake, through this deal, Hindalco is also gaining an indirect equity stake in Utkal Alumina International, the joint venture alumina project floated by Norsk Hydro, Norway, Alcan Aluminium and Indal. Indal currently holds a 20 per cent equity stake in Utkal Alumina. In this backdrop, the shareholders of Indal will be better off tendering to the open offer rather than staying invested for long-run benefits. This open offer opened on May 26 and the tendering deadline is June 24. The manager to the offer is DSP Merrill Lynch. MEASURES TO BE ADOPTED Steering committee formed for Hindalco-Indal synergy Sunil Mukhopadhyay Calcutta, June 27: The AV Birla group has formed a six-member steering committee which would work towards leveraging the collective competitive strength of both Hindalco and Indal, according to Indal's new chief executive officer, Shailendra Kumar Tamotia. The steering committee will co-ordinate the activities of the two companies, the boards of which do not meet frequently. Headed by the chairman of the AV Birla group, Kumar Mangalam Birla, the other members of the steering committee are SK Tamotia, Hindalco's president and whole-time director and Indal's vice-chairman A Agarwala, Indal's managing director for operations NK Choudhary, RK Kasliwal and Indal's youngest board member and president for corporate human resources of the group, Santrupt Mishra. "Hindalco and Indal complement each other. Indal is the leading player in alumina and downstream aluminium products, while Hindalco is unmatchable in metals and enjoys a strong position in alumina and downstream facilities," Tamotia said. Hindalco, which accounts for over 40 per cent of the country's total aluminium production capacity, has a 450,000 tonne per annum (tpa) capacity alumina refinery, a 242,000 tpa aluminium smelter coupled with facilities for the production of semi-fabricated products (133,7000 tpa). It also owns bauxite mines near its plants at Renukut in Uttar Pradesh. It also has the 575mw Renusagar power plant and a 37mw co-generation unit at

Renukut. Indal, on the other hand, has three aluminium smelting units at Alupuram in Kerala, Belgaum in Karnataka and Hirakud in Orissa. It owns two sheet rolling mills at Belur in West Bengal and Taloja in Maharashtra, a foil plant at Kalwa in Maharashtra, alumina refining units at Muri in Bihar and Belgaum, and bauxite mines at Lohardaga in Bihar and Durgmadwadi in Maharashtra. "We aim to leverage their collective competitive strength that stems from such a convergence," he added. He believes that these are achievable through co-coordinating various functions and tasks, homogenising systems and procedures, integrating logistics, cost optimisation, product rationalisation and marketing and manufacturing strategies. As this was a priority area, various task forces were to be constituted to ensure quick integration of processes and systems, Tamotia said. "This structural arrangement gives us the benefit of a merger without the cumbersome baggage that a merger entails," said Mishra. According to Choudhary, Indal will have new opportunities for growth and expansion from this arrangement. tolling process involves converting surplus alumina to aluminium. under this, surplus alumina is given to outside companies to convert it to aluminium after paying conversion charges. in july, the kolkata-based indal's tolling volumes had increased by 40 per cent over that of previous year, to 28,000 tonnes of alumina. as the tolling ratio is about two, it implies that with 28,000 tonnes alumina, indal will be given around 14,000 tonnes of aluminium metal. under its arrangement with hindalco, indal will pay rs 50,000 per tonne of alumina. both companies will benefit from this arrangement. while indal does not need to pay sales tax on the metal it gets, hindalco gets the opportunity to utilise its assets more optimally. under the synergy exercise, scrap from hindalco's foil operations is being recycled at indal's taloja plant Exchange of expertise between companies is an integral part of the culture of the Aditya Birla group. MIS reports and Parta system is being implemented at Indal.( Mr. R K Kasliwal has grown with the company to

become its Executive President (Finance and Commerce) and Chief Financial Officer)

A precursor to merger One critical issue is that promoter holding in Hindalco is only around 21.2%. A merger at this stage with Indal would lower the promoters` stake further. Also with Indal`s key financial ratios lower than that of Hindalco, a merger would pull down Hindalco`s numbers. On the other hand, Indal has also embarked on a series of initiatives, post acquisition by the Birlas, to exit from almost all non-core activities to improve its financials. To save capex, Indal is also transferring smelting pots from its closed Belgaum smelter to Hirakud. Weak player on peer group comparison: Indal, a mid-cap stock, with presence in Alumina and Downstream products like rolled sheets, foils and extrusion is a weak player. Indal s operating margins are 19% as against 50% of Hindalco/Nalco. Although Indal has more than 60 per cent contribution from value added products, its operating margins are low due to the following fundamental weaknesses : q Indal plants size is less than modern economic size capacity. Also the operations are scattered over six locations. q Dependence on outsourcing of metal - Indal outsource over 50 per cent of its primary metal requirement. q High labour strength and history of labour problems. q Power problems, due to dependence on the State Electricity Board at its smelter in Kerala.

q Indal s margins in downstream rolled products were impacted till recently due to severe competition from the existing players and particularly from Hindalco.

Indal Indal is vertically integrated through all stages of the aluminium business - from bauxite mining, alumina refining, power generation, aluminium smelting to semifabricated products of sheet, foil and extrusions as well as aluminium scrap recycling. Hindalco gobbles Indal; Sterlite left wanting The logical culmination of the Sterlite ALCAN tussle over control of Indian Aluminium (Indal) has been reached. In an all cash deal, Hindalco Limited has purchased a 54.6% stake in Indal from ALCAN. Post this acquisition, Hindalco has also stated that it would be making an open offer for an additional 20% stake in Indal. The acquisition of the 74.6% stake is likely to cost Rs 10 bn. Hindalco (FY99 Sales Rs 17,670 m), an Aditya Birla Group Company, is the largest (Installed capacity 242,000 MTPA) and the lowest cost producer of aluminum in the country. Indian Aluminium Company (INDAL) is India's largest fabricated aluminium producer. Indal, along with its associates, is the largest producer of sheets and extrusions and the second largest producer of foils in India.

* exisiting capacities in tonnes per annum Indal and Hindalco make good partners. While Indal is alumina surplus and focussed on downstream products, Hindalcos output consists mainly of aluminium. Also, Hindalco outsources a part of its alumina requirements even as Indal, which is alumina surplus, enters into third party agreements to convert its alumina into

metal. The synergies are apparent. The integrated company would be fully integrated from the point of manufacturing of alumina to value added products like foils. Then there is a 20% stake in Utkal Alumina (capacity of 2.5 million tonnes) that is owned by Indal. By virtue of this, Hindalco will get a chance to participate in a venture, which has ALCAN and Norsk Hydro as the other partners. In a commodity-based business (where usually there is intense competition) like aluminium, prices are market determined and therefore manufacturers have to control costs in order to get a grip over their profit margins. However, with very large volumes that will give it a dominating position in the market, the company would be able to influence prices to its benefit. Therefore, both the factors of synergy and pricing power are likely to benefit the two companies. With this acquisition the company also puts at rest, at least for the time being, Sterlite Industries quest to become a dominating player in the market. The only concern from this acquisition pertains to the funding Rs 10 bn in cash. Hindalco already has committed capex of Rs 18 bn and coupled with the long-term debt that is in excess of Rs 5 bn, the company may be hard pressed for funds. Although it may seem to be a hurdle, the companys cash and investments (Rs 11 bn as in FY99) are themselves enough to fund the investment. Infact the company has gone on record to state that it does not see a rise in the debt equity ratio. Also, Hindalco is actively seeking to list its shares on the NYSE, and once that is done the company may be able to raise further funds by issuing ADRs. Market View: Analysts have recommended Hindalco as a 'BUY' mainly on account of the international and domestic price recovery in aluminum. Moreover, they favor the company's ability to produce aluminum at rates ($941 per ton), that are amongst the lowest in the world HINDALCO TO ISSUE 20 LAKH SECURITIES TO INDAL SHAREHOLDERS Aditya Birla flagship firm Hindalco Industries on Friday said it has alloted 20.33 lakh securities to the shareholders of Indian Aluminium Company Ltd (Indal).

The committee of directors at its meeting on May 3, approved the issue of 376 equity shares and 20,32,734 preference shares to the shareholders of Indal, Hindalco Industries said in a filing to the Bombay Stock Exchange. The merger of Hindalco with Indal was made effective on March 25 and on April 3, Hindalco Industries had said that the scheme of amalgamation between Indal and Hindalco has been approved by the Bombay and Kolkata High Courts. Earlier on July 31, 2007, the board of directors had approved Indal's merger with Hindalco. The board had also approved the issuance of one preference share of Rs 2 each of Hindalco against one share of same value held by Indal shareholders. Shares of Hindalco were trading at Rs 177.25, down 1.56 per cent on the BSE in afternoon trade.

HINDALCO ENDS INDAL BUY OFFER Hindalco Industries, which had made a voluntary offer for the purchase of equity shares of Indian Aluminium Company at a price of Rs 120 per share to the shareholders of Indal, will terminate the offer on October 30, 2004. Hindalco had earlier kept the offer open till February 5, 2005. The decision follows the approval of a proposal by the board of Hindalco and Indal to demerge all the businesses and undertakings of Indal, other than the aluminium foils division of Indal at Kollur Andhra Pradesh, into Hindalco. According to the proposal the shareholders of Indal will be entitled to get one share of Hindalco for every seven share of Indal, while the face value of every Indal share will be reduced to Rs 2 per share. Hindalco currently holds around 97 % in Indal. After the demerger of Indal's business Hindalco will continue to hold 97 % in the demerged entity, which will consist of only the foils business. The Hindalco board has further informed the BSE that in the event the market price of one equity share of Hindalco on the date of allotment under the scheme is lower than the price which would have been paid under the offer for seven shares of Indal, that is Rs 840, then "each shareholder of Indal to whom shares of Hindalco have been allotted shall have the option to

tender the shares of Indal held by them in Hindalco, at a price equal to the difference between the price which would have been obtained by the shareholder if the number of Indal shares held by them were tendered at the offer price and the market price of the relevant number of shares of Hindalco as on the date of allotment," Hindalco has told the BSE.