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‡ Hindalco Industries Limited is structured into
two strategic businesses aluminium and copper
with a then annual revenue of US $14 billion
and a market capitalization in excess of US $ 23
billion.

‡ Novelis- the world leader in aluminium rolling

(producing 19% of the world's flat-rolled
aluminium products) and is also the world
leader in the recycling of used aluminium
beverage cans.
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‡ In 2007, Indian aluminium giant Hindalco

acquired Atlanta based company Novelis
Inc, a world leader in aluminium rolling
and flat-rolled aluminium products.
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‡ To become the biggest rolled aluminium products
maker and 5th largest integrated aluminium
manufacturer in the world

‡ To have access to higher-end products and

superior technology

‡ To have low-cost alumina and aluminium

production facilities combined with high-end
aluminium rolled product capabilities due to
vertical integration
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‡ To be insulated from the fluctuation of LME aluminium prices.

‡ To double Hindalco's turnover in one fell swoop, it catapults the

Group right to the threshold of the Fortune 500 group of
companies.

‡ To benefit from the increasing Global and Domestic Demand for

aluminums

‡ Post-acquisition, over 50 % of the group's business could come

from operations outside India, which is currently at 30 %, marks
its increased internationalisation

‡ To increase foothold in the very concentrated industry

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‡ The Enterprise Value of Novelis was $6 billion - $3.6

billion and $2.4 billion debt

‡ To buy the $3.6 billion worth of Novelis¶s equity,

Hindalco borrowed almost $2.85 billion and the
remaining was funded by the group companies and
its cash reserves

‡ Novelis shareholders received US$44.93 in cash

for each outstanding common share, roughly 15
per cent premium to the market price.
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‡ Hindalco would refinance the $2.4-billion debt on

Novelis¶s balance sheet, though they will be repaid
with Novelis¶s cash flows.

‡ Two special purpose vehicles were set up for the

purpose. The first, AV Metals, based in Canada,
raised the recourse finance and actually acquired
Novelis. The other handled the non-recourse finance.

‡ Hindalco's treasury contributed $450 million, while

SL Iron Ore Mining, another group company,
contributed $300 million as debt.
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‡ In 2008, with the debt market tightening,

Hindalco had to dilute its equity through a 1:3
rights issue to raise a little over $ 1 billion.

‡ The balance of about $ 2 billion of the bridge

loan would have to be repaid by sourcing
domestic or international debt financing and
liquidation of treasury.
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‡ Further, high interest costs, which rose by over

490% loan increased from Rs 3.13 billion in
FY07 to Rs 18.49 billion in FY08.

‡ Finally Hindalco¶s earning per share in FY08

dropped to Rs.15.76, from Rs. 26.73 in FY07, a
fall of 41%