VISVESVARAYA TECHNOLOGICAL UNIVERSITY, BELAGAVI

In partial fulfilment of the requirements for the award of the degree of

MASTER OF BUSINESS ADMINISTRATION

“A PROJECT REPORT AT

ADITYA BIRLA HINDALCO GROUP - BELAGAVI UNIT.”

Submitted By
Mr. MAHESH G VELPUL
USN: 2VX22BA045

2023-24

DECLARATION
I, Mr. Mahesh G Velpul hereby declare that, the project concerning to “Hindalco
industries LTD. Belagavi” is prepared by me under guidance of “S.M Porapur”
Assistant professor of MBA department in visvesvarayya technological university
Belagavi and external assistance by Mr. Naga Upendra of Hindalco industries LTD.
Belagavi.

I also declare that this project work is towards the partial fulfilment of the university
regulation for the award of degree of Master of Business Administration by Visvesvarayya
Technological University, Belagavi.

I have undergone a summer project for a period of 45 days. I further declare that this project
is based on the original study undertaken by me and has not been submitted for the award of
any Degree/Diploma from any University/Institution.

Place: Belagavi Mahesh G

Velpul
Date: USN:
2VX22BA045
 ACKNOWLEDGEMENT

I take this opportunity with pride and immense pleasure to thank Dr. Prahlad Rathod
Chairperson, department of management studies, Visvesvarayya Technological University
Belagavi. Who gave me an opportunity to undergo research study.

I am very much thankful to Dr. S. M. Porapur, Assistant professor for the extensive help he
rendered to carry out this study and for his guidance and valuable suggestions for the
preparation of the project work.

I am very thankful to my reporting manager, CA Naga Upendra for giving me this

wonderful opportunity and last but not the least for allowing me my Internship in one of The
Best industries that is Hindalco Group. That experience will be critical in the formative years
of my career and has increased my expertise into that side of business.

I am also thankful to HR Manager Aruna Tungal for accepting me in this organization and
giving me such opportunity. Your mentorship and encouragement proved crucial in securing
a successful internship.

At last not least gratitude goes to our parents and all of our friends who directly or indirectly
helped us to complete this project. I would like to thank Simran Nalband, Anjali Chauhan
and Neeraj Lahoti for being such senior buoys in mentoring me throughout my internship I
have learned a lot from you and owe an enormous gratitude to your wisdom. I cannot forget
my interns, Megha Kunchi and Poorvi Hattaraki who made this experience enriching and
memorable.

MAHESH G VELPUL

EXECUTIVE SUMMARY
The intension of the internship project is to undertake how organization operates. To
understand how we put theoretical concepts into practical. The project was undertaken at
Hindalco industries, Belagavi as a part of MBA course.

The in–plant training of one–month duration gives me ample opportunity to collect data,
information and observe the working condition in the unit, as well as interact with the ground
level workers & managerial person.

This will also help us to sharpen the managerial skill acquired during training. This has been
a great learning experience at “Hindalco Industries Belagavi” The main purpose of this is to
help the students to get clear picture of the working condition in the organization, how they
operate and how things to be planned in order to achieve mission and vision.
 TABLE OF CONTENTS

SL. NO CONTENTS PAGE NO

01 DECLARATION
02 ACKNOWLEDGEMENT
03 EXECUTIVE SUMMERY

04 CHAPTER 1 :- INTRODUCTION 02
05 1.2:- INDUSTRY PROFILE AND 04
COMPANY PROFILE.
06 1.3:- VISION, MISSION AND QUALITY 07
POLICY.
07 1.4:- PRODUCTS/ SERVICES PRPOFILE 11
AREAS OF OPERATION.

08 CHAPTER 2:- BAYERS PROCESS

19
09 2.1:- OVERVIEW OF BAYERS PROCESS

11 CHAPTER 3:- FINANCIAL RATIOS 23

12 3.1:- INTRODUCTION TO FINANCIAL
RATIOS & GRAPHICAL
REPRESENTATION AND ANALYSIS

13 CHAPTER 4:- LITRATURE REVIEW

35

14 CHAPTER 5:- REFERENCE

37
 Hindalco industries LTD. Belagavi.

CHAPTER 1

Department of Management Studies VTU, MBA Belagavi. 1

 Hindalco industries LTD. Belagavi.

INTRODUCTION:-

About the Aditya Birla Group:-

The Aditya Birla Group's beginnings may be traced back to the nineteenth century, when it
was founded in the scenic town of Pilani in the Rajasthan desert. Seth Shiv Narayan Birla
established the House of Birla’s by beginning cotton business at this location.
During India's difficult times in the 1850s, the Birla business flourished rapidly.
In the early part of the 20 th century, out groups founding a father, Ghanshyam Das Birla, set
up industries in critical sectors such as textiles and fibre, aluminium, cement and chemicals.
Ghanshyam Das Birla found no contradiction in pursing business goals with the dedication of
a saint, emerging as one of the foremost industrialists of pre-independence India. His
grandson, Aditya Vikram Birla, the Group's legendary leader, soaked up the principles by
which he lived.
A formidable force in Indian industry, Mr. Aditya Birla dared to dream of setting up a global
business empire at the age of 24. He was the first to put Indian business on the world map, as
far back as 1969, long before globalization became a buzzword in India. He had a foreseen
the winds of change and staked the future of his business on a competitive, free market driven
economy order. He set up 20 companies outside India, in Thailand, Laos, China, Canada,
Australia, USA, U.K, Germany, Brazil, Hungary, Italy, France, Luxembourg, Switzerland,
Korea, Malaysia, Indonesia, the Philippines and Egypt. His companies earned respect and
admiration of the people, as one of India's finest business houses, and the first Indian
international Group globally.

Department of Management Studies VTU, MBA Belagavi. 2

 Hindalco industries LTD. Belagavi.

TABLE OF ADITYA BIRLA GROUPS

Key Product
Grasim Viscose, Staple, Fiber, Cement, sponge Iron, Textile, Rayon
Grade
Ultra-Tech Cement Cement
Shree Dig Vijay Cement Cement
Company Ltd.
Hindalco Power, Aluminum and Copper
Birla Mineral Resources Australian Copper Mines
Pvt. Ltd.
Indian Aluminum Co. Ltd. Aluminum Fuel
Indian Rayon Garment, Viscose File Mantuan, Carbon Black, Textile.
Bihar Caustic & Chemical Caustic Soda
Birla NGK Insulators Insulators
PSI Data System Information and Technology
Trans Work BPO
Indo Work Fertilizer
Birla Global Finance Financial Services
Easel Mining Iron Mining, Noble Ferro Alloys, Nitrogen Gas and Wind
Power Generation

Department of Management Studies VTU, MBA Belagavi. 3

 Hindalco industries LTD. Belagavi.

1.2 Industry profile and company profile:-

Brief overview of hindalco:-

Fig 1:- An image of Hindalco

INDAL, the pioneer in Indian Aluminium Industry, was incorporated as a private limited
company on 17 December 1938 and in 1945 it became a public limited company with one
sheet mill at Belur, Howrah. Since then, Indal's history has been linked with that of
Aluminium Industry.
INDAL is now a member of Aditya Birla Group, which bought over the ownership from
ALCAN Group of Canada early in 1999. The Aditya Birla Group holds more than 97%
equity in the company. As India's second largest business house with a group turnover of
over Rs. 200 Billion, The Aditya Birla Group is a premier conglomerate of leading
companies under the Chairmanship of Kumar Mangalam Birla son of Aditva Vikram Birla.
As a member of Aditya Birla Group INDAL gains synergistic advantage through Hindalco's
strong metal base. Today known as HINDALCO. Hindalco the Pioneer in Indian Aluminium
Industry, was incorporated as a limited company on 17 th December 1938 and in 1945 it
became a public limited company with one sheet mill at Belur, Howrah. Since then Indal’s
history has been linked with that of aluminium industry.

Department of Management Studies VTU, MBA Belagavi. 4

 Hindalco industries LTD. Belagavi.

Established in 1958, Hindalco commissioned its aluminium facility at Renukot in Eastern

U.P. in 1962. Later acquisitions and mergers, with Indal, Birla Copper and the Nifty and Mt.
Gordon copper mines in Australia, strengthened the company's position in value-added
alumina, aluminium and copper products, with vertical integration.
In 2007, the acquisition of novelise Inc. a world leader in aluminium rolling and can
recycling marked a significant milestone in the history of the aluminium industry in India.
With novelise under its fold Hindalco ranks among the global top five aluminium majors, as
an integrated producer with low-cost alumina and aluminium facilities combined with high-
end rolling capabilities and a global footprint in 12 countries outside India. It’s combined
turnover of US$ 14 billion, which places the organization in the Fortune 500 league.
Hindustan Aluminium Company (Hindalco) has been synonymous with quality aluminium in
India being one of the largest public limited company. It has received the state safety
environment consecutively since 1994. Indal is now a member of Aditya Birla Group, which
brought over merged with Hindalco in 7th March 2005. It is vertically integrated through all
stages of the business-form bauxite, mining, alumina refining, power generation, and
sheltering to semi-fabricated products of sheets foil and extrusions as well as aluminium
scrap recycling. Hindalco's plants, mines and offices are spread across ten states in India.
Hindalco holds a leading market position in India for specially alumna chemicals and value-
added production of aluminium sheet foil and extrusion.
Hindalco is a member of Aditya Birla Group, which holds 96% equity in company. As it is
India's second largest business house with a group turnover of over Rs.200 Billion. Aditya
Birla Group is a premier conglomerate of leading companies including Grasim, Hindalco,
Indian Rayan, indo gulf. Group's key business includes aluminium, cement copper, petrol,
fertilizer, viscose staple fibre, textile power, telecommunication and financial services.
The company’s integrated complex at Renukot, houses an alumina refinery, aluminium
smelter and facilities for production of semi-fabricated products, power is sourced from
Renusagar Power Plant, located at distance of about 45km from Renukot.

HINDALCO UNITS:-
The Hindalco unit comprises of two smelters, one located at Hirakud, Orissa with a captive
power plant and coal mines and the other at Alupuram, kerala. Two sheet plants at Belur,
West-Bengal, Taloja, Maharashtra and an extrusion unit at Alupuram, Kerala. The company’s
two DSIR recognized R&D centres are located at Belgaum and Taloja.
Department of Management Studies VTU, MBA Belagavi. 5
 Hindalco industries LTD. Belagavi.

HINDALCO INDUSTRIES LIMITED, BELGAUM

The Belgaum unit of Hindalco, located in the southern Indian state of Karnataka, houses an

alumina plant, a world-class research centre for alumina, and a carbon paste and block plant.
The alumina plant started operating in 1969 with an initial capacity of 75,000 t pa of alumina
hydrate. It currently produces around 370,000 t pa. Since the 1990s the plant has become
predominantly an export-oriented unit of metallurgical alumina, while producing several
grades of special alumina’s and hydrates for non-metallurgical applications, like refractories,
ceramics, polishing, fire retardant plastics, alum, zeolite, etc.

Over the years, the plant has expanded its capacity of speciality products to around 138,000
TPA, with approximately 120 different grades, serving more than 600 customers across 35
countries. In addition to providing technical support to the alumina plants of the Aditya Birla
Group on the Bayer process and special products, the research centre has been carrying out
projects for international clients.

The Belgaum unit has earned recognition in the form of national awards in the areas of
energy conservation, R&D excellence, environment, and safety. It also has the Star Trading
House status. The 1182-acre plant has a large colony for its 752-strong workforce, with a
well-equipped occupational health centre, club / community centre for sports and recreational
activities, and an upper primary school. The unit has adopted seven nearby villages and the

Department of Management Studies VTU, MBA Belagavi. 6

 Hindalco industries LTD. Belagavi.

CSR initiatives cover different areas like education, women’s empowerment, sustainable
livelihood, health and infrastructural development.
1.3 Vision, mission and quality policy : -

Vision:
To be a premium metals major, global in size and reach, excelling in everything we do, and
creating value for its stakeholders.

Mission:
To relentlessly pursue the creation of superior shareholder value, by exceeding customer
expectation profitably, unleashing employee potential, while being a responsible corporate
citizen, adhering to our values.

Department of Management Studies VTU, MBA Belagavi. 7

 Hindalco industries LTD. Belagavi.

VALUES:

Speed- Responding shareholders with a

sense of urgency.

Passion- Missionary zeal arising out of an emotional engagement with work.

Integrity- Honesty in every action.

Department of Management Studies VTU, MBA Belagavi. 8

 Hindalco industries LTD. Belagavi.

Seamlessness- Thinking and working together across functional silos, hierarchy levels,
business and geographies.

Commitment- On the foundation of integrity, doing what it takes to deliver, as promised.

Department of Management Studies VTU, MBA Belagavi. 9

 Hindalco industries LTD. Belagavi.

Quality policy:
Quality lies in continuous improvement and in redesigning systems, processes and practices
to satisfy customer needs and expectations. It extends to manufacturing, maximizing
operational efficiency, capacity utilization and productivity.
The unit is no longer restricted to competing against just Indian Organization. In the effort t
become globally competitive, the unit has chosen Total Quality which is proving to be an
excellent tool in managing the change.

At Hindalco Quality is pursued through 5 pillar of total quality management.

 Customer Orientation
 Continuous Improvement
 Management By Facts
 Process Facts And Improvement
 Involvement Of Everyone (Employees, Customers and Suppliers)

The objectives of the quality policy of the Hindalco's Hirakud Complex are:
 To meet the expectations of customers, and improve response time.
 To ensure reliable and consistent customer service.
 To provide value for money and to be internationally competitive.
 To educate, motivate and involve employees in the fulfilment of the quality goals.
 To choose and associate with suppliers to ensure high quality of inputs; through
proactive integration with them, to secure their participation in our quality
improvement process.
 To formulate quality goals for all functions and to foster teamwork.

Department of Management Studies VTU, MBA Belagavi. 10

 Hindalco industries LTD. Belagavi.

1.4 PRODUCTS/ SERVICES PRPOFILE AREAS OF OPERATION:-

Products profile:

Hindalco is India's aluminium and copper market leader. The company's aluminium divisions
around the country cover the entire spectrum of operations, from bauxite mining to alumina
refining and aluminium smelting to downstream rolling, extrusions, foils, and alloy wheels,
as well as captive power plants and coal mines. Birla Copper produces copper cathodes,
continuous cast copper rods, and other by-products such as gold, silver, and DAP fertilizer.

Aluminium
Hindalco is the world's largest aluminium rolling firm, as well as one of Asia's top producers
of basic aluminium. Hindalco is a market leader in India for specialty alumina, raw
aluminium, and downstream goods.
Standard and specialty grade alumina’s and hydrates, aluminium ingots, billets, wire rods, flat
rolled products, extrusions, foil, and alloy wheels are some of Hindalco's main products.

Copper
One of the largest single location bespoke copper smelters in the world is run by Hindalco’s
copper division, Birla copper, three copper smelters, three refineries, two rod plants, a captive
oxygen plant, a phosphoric acid plant, a di-ammonium phosphate plant, a precious metal
recovery plant, a captive jetty, and other utilities are all housed in the custom copper smelters.
One of the main producers of copper rods with a 19.6 mm diameter used in railway
electrification in hindalco.

SPECIAL PRODUCTS
Alumina can be broadly divided into two types - metallurgical & non-metallurgical grade.
Metallurgical grade alumina is used for the production of aluminium while speciality grade
hydrate & alumina is used for various other applications like fission - filler compound, alum,
glass etc.
Scope: special production department is to produce special alumina from metallurgical
grade(s) and special hydrate. About 65% of total production goes to domestic market and
35% goes to export market.
Department of Management Studies VTU, MBA Belagavi. 11
 Hindalco industries LTD. Belagavi.

For production of speciality grade hydrate following are the unit operation used:
 Washing
 Drying
 Grinding - Micro fining, Ball milling, Attrition etc.
 Calcination
There are about 110 grades of products in speciality materials. Hindalco is the main market
leader in India and has presence in global market.

Department of Management Studies VTU, MBA Belagavi. 12

 Hindalco industries LTD. Belagavi.

AREAS OF OPERATION:

Hindalco has a workforce of over 40,000 people from a variety of nationalities. It operates
from 47 facilities in ten nations. In India, the Renukoot plant was the first to be set up in
1962. The initial operations included alumina refining and aluminium smelting, along with
facilities for the production of semi-fabricated products. Along with the operation of rolling
mills and extrusions, the operations fully comprehend the production of aluminium and
aluminium alloys.
The other Hindalco facilities in India are situated in Muri, Alupuram, Belgaum, Hirakud,
Kollur, Taloja, Belur, Kalwa, and Alibag. The aluminium refineries are situated in Belgaum,
Muri, Renukoot, and Utkal. Hindalco runs Research and Development (R&D) centres in
Belgaum and Taloja, with their raw material resources mainly concentrated on this area.
The aluminium refineries are situated in Belgaum, Muri, Renukoot, and Utkal. The majority
of the alumina generated by these plants is used for internal requirements, while speciality
hydrates and speciality aluminas are sold to other parties. The R&D team's scientific
advancements resulted in the creation of the speciality hydrates and aluminas. The plants
located at Renukoot, Belgaum, and Hirakud in Odisha are the locations of Hindalco
aluminium smelting activities. Together, these factories generate about 1.3 million tonnes of
primary aluminium annually.
With approximately 13,000 employees in India, the largest aluminium operations in the
country are located in Renukoot and Hirakud. Additionally, Novelis Inc., a Hindalco
subsidiary, runs 33 operating branches in Altham, Georgia and employs 12,500 people.
Novelis is both the biggest sale and producer of rolled aluminium sheets in the world. It has
interests in Alupuram, Kollur, and Taloja. Hindalco runs a unique operational process for
generating copper and aluminium.
Hindalco is considered the global metals company including the best sustainability lives at
the very heart of Hindalco's operations as a global metals company involving comprehensive
sustainability lies at the very heart of Hindalco’s operations as a global metals company
including copper and aluminium value chains. The sustainability depth of Hindalco's
operations involve generating all working across the copper and aluminium value chains. The
sustainability depth of Hindalco's operations include all aspects, from mining to recycling,
safe work practices, offsite emergency planning, safe work practices, comprehensive
industrial waste disposal, recycling, safe work practices, comprehensive industrial waste
Department of Management Studies VTU, MBA Belagavi. 13
 Hindalco industries LTD. Belagavi.

disposal, and recycling. Safe work practices, and responsibility towards communities and
employees. The sustainability initiatives are designed to achieve the best possible positive
environmental effects while having the greatest positive socioeconomic effects during the
time frame and the company’s financial performance. The R&D activities are entirely
conducted on this area.

Department of Management Studies VTU, MBA Belagavi. 14

 Hindalco industries LTD. Belagavi.

AWARDS AND RECOGNITION:

2008

 Greentech Safety Gold Award 2008 for outstanding achievement in Safety Management in
Coal-based Power sector.

 Hindalco Hirakud Systems ranked Runners-Up at the state-level IT Competition 2008

organised by CII in association with the Department of Information Technology, Government
of Odisha.

 Hirakud Smelter was awarded the state-level Safety Award for Best Occupational Healthcare
2006 — presented in February 2008 at Bhubaneswar.

 Talabira Coal Mines won First Prize in working face and maintenance of Dozer and Pay
loader, and Second Prize in dust suppression at the Annual Coal Mines Safety Fortnight 2008
organised by Directorate of Mines Safety, Bhubaneswar and Chaibasa region.

2009

 Hindalco Renusagar's Power division bagged the Golden Peacock Environment Management
Award during the Global Convention on Climate Security held at Palampur, Himachal
Pradesh from 12-14 June 2009. Dr Madhav Mehra, President, World Council for Corporate
Governance honoured Renusagar's power division with the award in the services category.

2010-11

 State export excellence award.

2011

 Hindalco – CII – EXIM Bank Business Excellence Award 2011 for its "strong commitment
to excel on the journey towards business excellence".

 Birla Copper (a division of Hindalco) –IMC Ramakrishna Bajaj Quality Award

Commendation Certificate.

 Hindalco Renusagar – Green tech Safety Gold Award 2011 in the Power sector for
outstanding achievement in safety management by Green tech Foundation, New Delhi.

2014-15

 Green tech Gold award in metals and mining category, New Delhi.

Department of Management Studies VTU, MBA Belagavi. 15

 Hindalco industries LTD. Belagavi.

2016

 Gold award for best practices maintained at Belagavi occupational health centre.

2016

 National award for manufacturing competitiveness – NAMC Gold.

2016

 State safety award, Unnatha Suraksha Puraskar by National safety council of

Karnataka.

2021

 National award for manufacturing competitiveness – NAMC Gold.

2022

 Ranked as World's Most Sustainable Aluminium Company, third time in a row, by the S&P
Dow Jones Sustainability Indices. Hindalco's total score in 2022 was 83 percentage points, up
from 73 in 2021.

 Mahan CPP wins 'Excellent Energy Efficient Unit' in National Award for Excellence in
Energy Management by CII.

 Renukoot receives CII – Excellent Energy Efficiency Unit Award 2022.

 Hindalco-Almex Aerospace Limited received Best Safety Professional Award under Safe
India Plus Award for aiming to achieve Zero Accidents in the workplace.

 Aditya and Mahan bag Gold at the India Green Manufacturing Challenge Award.

 Samri Bauxite Mines wins Tata Steel Award for Sustainable Mining 2021-22.

 Samri Mines wins Silver in India Green Manufacturing Challenge Award.

 Hindalco named as one of 'India's Best Employers among Nation Builders' by The Great
Place to Work® Institute.

 The International Aluminium Institute (IAI), the only body representing the global primary
aluminium industry, appoints Mr. Satish Pai as its new Chairman.

 "Silver Shield" for Excellence in Integrated Reporting awarded by The Institute of Chartered
Accountants of India (ICAI).

Department of Management Studies VTU, MBA Belagavi. 16

 Hindalco industries LTD. Belagavi.

2023
 Hindalco is the Most Sustainable Aluminium Company in the world 4th year in a row as per S&P’s
DJSI ranking.

 Hindalco named among ‘India’s Best Employers among Nation Builders’ for the second year in a row
by Great Place to Work Institute.

 Hindalco wins Energy Transition Change maker Award at COP28 held in Dubai.

 Hindalco Renukoot wins 1st prize in National Energy Conservation Award 2023.

 Hindalco Renukoot receives India Manufacturing Excellence Awards 2023.

2024
 Hindalco is in Top 10 of the ‘Great Place to Work’ list in Health and Wellness for 2024
 Hindalco recognised among India’s Best Workplaces™ in Manufacturing 2024 in Top 50

Department of Management Studies VTU, MBA Belagavi. 17

 Hindalco industries LTD. Belagavi.

CHAPTER 2

Department of Management Studies VTU, MBA Belagavi. 18

 Hindalco industries LTD. Belagavi.

Bayer’s Process: -

The Bayer process is the principal method for refining bauxite to produce alumina
(aluminium oxide). Named after the Austrian chemist Karl Bayer, who invented it in 1888.
2.1:- Overview of the Bayer’s process:-
1) Bauxite and mining preparation:

Extraction: Bauxite is extracted from open-pit or

strip mines.
Crushing and Grinding: The bauxite ore is
mechanically crushed and ground into fine particles
to increase the surface area for the extraction
process.

2) Digestion:
Mixing with Sodium Hydroxide (NaOH):
The ground bauxite is mixed with a hot
concentrated solution of sodium hydroxide
(caustic soda).
Pressure and Temperature: The mixture is
subjected to high pressure and temperature in
digesters (autoclaves). This process dissolves
the alumina contained in the bauxite, forming
soluble sodium aluminate.
Chemical Reaction: The chemical reaction in the digestion stage is:

Al2O3⋅nH2O+2NaOH→2NaAlO2+ (n+1) H2O.

3) Clarification:
Separation of Residue: The resulting slurry from
the digestion process is allowed to settle in
clarification tanks, separating the insoluble residues
(red mud) from the sodium aluminate solution.
Filtration: The red mud is removed through
filtration and washed to recover any remaining
sodium aluminate. This red mud is typically stored
in tailings ponds or used in other industrial
processes.

Department of Management Studies VTU, MBA Belagavi. 19

 Hindalco industries LTD. Belagavi.

4) Precipitation:
 Cooling and Seeding: The clarified
sodium aluminate solution is cooled and
seeded with aluminium hydroxide crystals.
 Formation of Alumina Tri hydrate: The
seed crystals promote the precipitation of
aluminium hydroxide (gibbsite), which
settles out of the solution:

NaAlO2+2H2O→Al (OH)3+NaOH

5) Calcination:
 Drying and Heating: The aluminum
hydroxide precipitate is filtered, washed,
and then heated in rotary kilns or fluidized
bed calciners at temperatures around 1000-
1100°C.
 Conversion to Alumina: The heating
process drives off water, converting
aluminum hydroxide to anhydrous alumina
(aluminum oxide):
2Al(OH)3→Al2O3+3H2O

6) Production of Aluminum:
Electrolysis (Hall-Herold Process): The
purified alumina is then used as the
feedstock for the Hall-Herold process,
where it is dissolved in molten cryolite
and subjected to electrolysis to produce
metallic aluminum.

Department of Management Studies VTU, MBA Belagavi. 20

 Hindalco industries LTD. Belagavi.

Key Points:-
 Efficiency: The Bayer process is highly efficient, capable of extracting a high
percentage of alumina from bauxite.
 Environmental Impact: The disposal of red mud and energy consumption are
significant environmental concerns. Research is ongoing to find more sustainable
methods of managing red mud and improving energy efficiency.

Department of Management Studies VTU, MBA Belagavi. 21

 Hindalco industries LTD. Belagavi.

CHAPTER 3

Department of Management Studies VTU, MBA Belagavi. 22

 Hindalco industries LTD. Belagavi.

FINANTIAL RATIOS:
3.1: - Introduction to the financial ratios:

Financial ratios play a pivotal role in evaluating a company's financial well-being and
operational efficiency. These essential tools offer valuable insights into critical areas
such as profitability, liquidity, efficiency, and solvency, providing a comprehensive
overview of a business's financial health. Understanding key financial ratios is crucial as
they reveal vital information about a company's performance, helping stakeholders make
informed decisions. By delving into the significance, meanings, and implications of these
formulas, individuals can gain a deeper understanding of the company's financial
position and prospects. Whether you are an investor, a manager, or simply interested in
financial analysis, mastering financial ratios is essential for making sound financial
judgments and ensuring long-term success.

1. Current ratio: -
Understanding the current ratio is crucial for evaluating a company's financial
health as it represents the ability to cover short-term liabilities with current assets.
It is calculated by dividing current assets by current liabilities, with a ratio above
one indicating a firm's potential to meet its short-term obligations. Engaging with
this metric helps stakeholders, including investors, creditors, and management,
gain insights into a company's liquidity position and solvency. By tracking the
current ratio over time, individuals can assess trends and make informed
decisions regarding financial stability and risk management.

Current ratio = Current assets

Current liabilities

The current ratio is an important financial metric because it measures a company's ability
to pay off its short-term liabilities with its short-term assets. This ratio provides insight
into the liquidity and financial health of a company. Here are some specific reasons why
the current ratio is important:

 Liquidity Assessment: The current ratio helps stakeholders assess whether a

company has enough assets to cover its short-term obligations. A higher ratio

Department of Management Studies VTU, MBA Belagavi. 23

 Hindalco industries LTD. Belagavi.

indicates a stronger liquidity position, suggesting that the company can

comfortably meet its short-term debts.

 Financial Health Indicator: It serves as a quick check on the financial health of

a company. Investors and creditors often use this ratio to evaluate the risk of
investing in or lending to a company.

 Operational Efficiency: By comparing the current assets and current liabilities,

the current ratio can indicate how efficiently a company is managing its working
capital. A very high current ratio may suggest that the company is not using its
current assets efficiently, whereas a very low ratio may indicate potential
liquidity problems.

 Creditworthiness: Creditors and lenders consider the current ratio when deciding
whether to extend credit or loans to a business. A strong current ratio can improve
a company's chances of securing financing on favorable terms.

 Comparison and Benchmarking: The current ratio allows for comparison

between companies within the same industry. It helps investors and analysts
benchmark a company's liquidity position relative to its peers.

 Early Warning Signal: Significant changes in the current ratio over time can
signal underlying issues in the business, such as cash flow problems or changes in
the company's ability to manage its liabilities.

Interpreting the Current Ratio:

Current Ratio > 1: Indicates that the company has more current assets than current
liabilities, suggesting good liquidity.

Current Ratio < 1: Indicates that the company may have difficulty meeting its short-
term obligations, which could be a red flag for investors and creditors.

Ideal Range: Typically, a current ratio between 1.5 and 2 is considered healthy,
although this can vary by industry.

Department of Management Studies VTU, MBA Belagavi. 24

 Hindalco industries LTD. Belagavi.

Current ratio
2.5

1.5

0.5

0
2019 2020 2021 2022 2023

Hindalco Chalco Nalco Vedanta

Interpretation:-
 The current ratio of hindalco has shown some variability over the years but has
generally remained above 1.
 Chalco’s current ratio has been consistently below 1 from 2019-2023.
 Nalco has maintained high current ratio above 1.
 Vedanta’s current ratio has been fluctuating, with the decrease in 2023.

Suggestions for Hindalco:-

 Should aim to stabilize its current ratio.
 Explore strategies to optimize liquidity management.
 Monitor working capital closely.
 Efficient inventory and receivables management.

Department of Management Studies VTU, MBA Belagavi. 25

 Hindalco industries LTD. Belagavi.

2. Quick ratio:-
The quick ratio, also known as the acid-test ratio, is an important financial metric used
to assess a company's short-term liquidity. It is a more stringent measure than the
current ratio because it excludes inventory from current assets. The formula for the
quick ratio is:

Quick Ratio = Current Assets − Inventory

Current Liabilities

Here are several reasons why the quick ratio is important:

Assessing Liquidity: The quick ratio provides a snapshot of a company's ability to

meet its short-term obligations without relying on the sale of inventory. This is
particularly important because inventory can take time to sell and might not be easily
converted to cash in times of need.

 Financial Health: A higher quick ratio indicates better financial health and a
greater ability to cover short-term liabilities. It reassures investors and
creditors that the company can handle unexpected financial challenges.

 Creditworthiness: Lenders and suppliers often look at the quick ratio to

evaluate the risk of extending credit or providing goods and services on
account. A healthy quick ratio suggests lower risk and can result in more
favorable credit terms.

 Operational Efficiency: Since the quick ratio excludes inventory, it can

provide insights into a company’s operational efficiency and effectiveness in
managing receivables and other current assets.

 Early Warning Signal: A declining quick ratio can serve as an early warning
signal of potential liquidity issues. It allows management to take corrective
actions before the situation worsens, such as improving cash collection
processes or cutting down unnecessary expenses.

 Comparative Analysis: Investors and analysts use the quick ratio to compare
the liquidity position of companies within the same industry. It helps in
making informed investment decisions by identifying firms that are better
positioned to handle short-term financial obligations.

Ove
rall, the quick ratio is a crucial tool for stakeholders to evaluate a company's short-
term financial stability and operational efficiency, providing a clear indication of its
ability to meet immediate financial commitments without depending on inventory
sales.

Department of Management Studies VTU, MBA Belagavi. 26

 Hindalco industries LTD. Belagavi.

Quick ratio
1.8
1.6
1.4
1.2
1
0.8
0.6
0.4
0.2
0
2019 2020 2021 2022 2023

Hindalco Chalco Nalco Vedanta

Interpretation:
 Hindalco’s quick ratio fluctuated, peaking in 2020 at 1.179, indicating varying
liquidity but generally remaining below 1.
 Chalco’s quick ratio improved slightly over the years, reaching 0.61 in 2023, but still
indicates weak liquidity.
 Nalco has Maintained strong liquidity overall, with the quick ratio consistently above
1, peaking at 1.56 in 2022.
 Vedanta showed a slight improvement until 2022, but experienced a sharp decline in
2023 to 0.52, indicating reduced liquidity.

Suggestion for hindalco:

 Implement measures to reduce dependency on short-term assets.

Department of Management Studies VTU, MBA Belagavi. 27

 Hindalco industries LTD. Belagavi.

3. Asset turnover ratio:-

The asset turnover ratio is an important financial metric that measures how efficiently
a company uses its assets to generate revenue. It is calculated by dividing a company's
net sales by its average total assets:

Asset Turnover Ratio = Net Sales

Average Total Assets

Here are several reasons why the asset turnover ratio is important:

 Efficiency Measurement: The asset turnover ratio indicates how

effectively a company is utilizing its assets to produce sales. A higher ratio
suggests that the company is using its assets more efficiently to generate
revenue.

 Performance Indicator: This ratio provides insights into the operational

performance of a company. It helps investors and management assess
whether the company's asset base is being used optimally to support sales
growth.

 Comparative Analysis: The asset turnover ratio allows for comparison

between companies within the same industry. It helps identify which
companies are more efficient in using their assets to generate sales, thus
aiding in benchmarking and competitive analysis.

 Investment Decisions: Investors use the asset turnover ratio to make

informed decisions. A higher ratio can be a sign of a well-managed
company with a high return on investment in its assets, making it an
attractive investment opportunity.

 Profitability Insight: While the ratio itself does not measure profitability
directly, it provides a context for understanding how asset efficiency
impacts overall profitability. Efficient asset use often correlates with better
profit margins and return on assets (ROA).

 Strategic Planning: For management, the asset turnover ratio is a valuable

tool in strategic planning and resource allocation. It highlights areas where
asset utilization can be improved and helps in making decisions about
capital investments, asset disposals, or process improvements.

Department of Management Studies VTU, MBA Belagavi. 28

 Hindalco industries LTD. Belagavi.

 Trend Analysis: Tracking the asset turnover ratio over time helps in
identifying trends in asset utilization. A declining ratio might signal
inefficiencies or overinvestment in assets, while an increasing ratio can
indicate improved efficiency and growth potential.

 Sector-Specific Insights: Different industries have varying benchmarks

for the asset turnover ratio. For example, retail companies typically have
higher asset turnover ratios compared to capital-intensive industries like
manufacturing. Understanding these differences is crucial for sector-
specific financial analysis.

Asset turnover ratio

1.60
1.40
1.20
1.00
0.80
0.60
0.40
0.20
0.00
2019 2020 2021 2022 2023

Hindalco Chalco Nalco Vedanta

Interpretation:
 Hindalco’s Asset turnover ratio between 0.7 and 1.0, generating around Rs 0.7 to Rs 1
of sales for every Rs 1 of assets
 Chalco’s higher asset turnover ratio than Hindalco, ranging between 0.9 and 1.4.
 Nalco’s Asset turnover ratio similar to Hindalco in 2019 and 2020, then increases to
around 0.8 in 2023, suggesting a ratio between Rs 0.7 and 0.8.
Department of Management Studies VTU, MBA Belagavi. 29
 Hindalco industries LTD. Belagavi.

 Vedanta's significant increase in 2022 and 2023, reaching around 0.6 and 0.7.

Suggestion for Hindalco:

 Focus on growth and maximize the utilization of assets.
 Maintaining inventory levels.

Department of Management Studies VTU, MBA Belagavi. 30

 Hindalco industries LTD. Belagavi.

4. Debt to equity ratio:

The debt to equity ratio is an important financial metric that measures the relative
proportion of a company's debt to its shareholders' equity. It is calculated as follows:

Debt to Equity Ratio = Total Liabilities

Shareholder’s Equity

Here are several reasons why the debt to equity ratio is important:

 Assessing Financial Leverage: The debt to equity ratio indicates the extent to
which a company is using debt to finance its operations. A higher ratio suggests
higher financial leverage, which can increase the potential return on equity but
also raises the risk.

 Risk Evaluation: Investors and creditors use the debt to equity ratio to assess the
risk associated with a company's capital structure. A high ratio implies that a
company has taken on significant debt, which may increase the risk of financial
distress or bankruptcy, especially if cash flows become insufficient to meet debt
obligations.

 Cost of Capital: The ratio affects a company's cost of capital. Higher leverage
can lead to higher interest expenses, impacting net income. Additionally,
companies with high debt levels might face higher borrowing costs due to
perceived risk by lenders.

 Investment Decisions: Investors consider the debt to equity ratio when making
investment decisions. Companies with a moderate ratio are often seen as balanced
and stable, while those with extremely high or low ratios may warrant further
investigation into their risk and growth potential.

 Comparative Analysis: The ratio allows for comparison across companies and
industries. Different industries have varying norms for acceptable debt to equity
ratios, and comparing a company’s ratio to industry averages can provide insights
into its financial strategy and stability.

 Financial Health Indicator: The debt to equity ratio is a key indicator of a

company’s financial health. A manageable ratio suggests that the company has a
good balance between debt and equity, which can be critical for long-term
sustainability and growth.

 Strategic Planning: Management uses the debt to equity ratio to make strategic
decisions about financing. For example, a company with a low ratio might decide
to take on more debt to finance growth opportunities, while a company with a high
ratio might focus on reducing debt to improve financial stability.

Department of Management Studies VTU, MBA Belagavi. 31

 Hindalco industries LTD. Belagavi.

 Regulatory and Compliance Considerations: In some cases, regulatory bodies

and covenants in loan agreements set specific limits on acceptable debt to equity
ratios. Companies must manage their ratios to remain in compliance with such
regulations and agreements.

Overall, the debt to equity ratio is a crucial metric for understanding a company’s
financial leverage, risk profile, and overall financial health. It helps stakeholders make
informed decisions regarding investment, lending, and management strategies.

Debt to equity ratio

1.4
1.2
1
0.8
0.6
0.4
0.2
0
2019 2020 2021 2022 2023

Hindalco Chalco Nalco Vedanta

Interpretation:
 In hindalco the ratio decreased from 2019 to 2023, suggesting a reduction in debt
relative to equity.
 in Chalco there was a notable increase in the ratio in 2023,
 Nalco's debt-to-equity ratio is consistently at 0.
 Vedanta's debt-to-equity ratio has fluctuated over the years and exceeded 1 in 2023.

Suggestion for Hindalco:

 Decreasing debt-to-equity ratio to improve financial stability.
 Optimization of debt equity ratio.
 Diversification.

Department of Management Studies VTU, MBA Belagavi. 32

 Hindalco industries LTD. Belagavi.

5. Return on equity ratio:

Return on equity (ROE) is an important financial metric because it provides insight
into how effectively a company is utilizing shareholder equity to generate profit.

Here's why it's important:

 Indicator of Profitability: ROE measures the profitability of a company by

comparing its net income to shareholders' equity. It shows how much profit a
company is generating with the money shareholders have invested.

 Efficiency: A high ROE indicates that a company is efficient at using its equity
to generate profits. It suggests that the company's management is effectively
deploying the shareholders' funds to generate earnings.

 Comparison: ROE allows for comparisons between companies within the same
industry or sector. It helps investors assess which companies are generating higher
returns on equity compared to their peers, indicating better management or
business models.

 Investment Decision Making: Investors often use ROE as part of their decision-
making process when evaluating whether to invest in a company's stock. A
consistently high ROE may signal a strong investment opportunity, while a
declining ROE could indicate underlying issues.

 Financial Health: ROE provides insights into a company's financial health and
stability. A consistently high ROE over time can indicate that a company has a
competitive advantage, strong financial management, and sustainable growth
prospects.

 Strategic Planning: For company management, ROE is a key metric for strategic
planning and performance evaluation. It helps identify areas where the company
can improve efficiency and profitability, guiding decision-making regarding
capital allocation and operational improvements.

 Risk Assessment: ROE also helps assess the risk associated with investing in a
particular company. A low or negative ROE may indicate financial distress, poor
management, or inefficient use of resources, which could pose risks for investors.

Overall, ROE is a fundamental metric used by investors, analysts, and company

management to gauge profitability, efficiency, and financial health, making it a
crucial aspect of financial analysis and decision-making.

Department of Management Studies VTU, MBA Belagavi. 33

 Hindalco industries LTD. Belagavi.

Return-on-equity ratio
35.00%

30.00%

25.00%

20.00%

15.00%

10.00%

5.00%

0.00%
2019 2020 2021 2022 2023

Hindalco Chalco Nalco Vedanta

Interpretations:
1. Hindalco: Experienced fluctuating ROE, with a notable increase in 2022, suggesting
potential improvements in profitability and efficiency.
2. Chalco: ROE remained relatively low but showed a significant improvement in 2021,
indicating possible enhancements in profitability and utilization of equity.
3. Nalco: Initially high ROE in 2019, followed by fluctuations, suggesting varying
levels of profitability and efficiency over the years.

Department of Management Studies VTU, MBA Belagavi. 34

 Hindalco industries LTD. Belagavi.

4. Vedanta: Consistently increasing ROE, indicating improving profitability and

efficient utilization of equity over the years.

Suggestion for hindalco:-

 It might be beneficial to analyse the factors contributing to this improvement and
consider strategies to sustain or further enhance profitability and efficiency.

Department of Management Studies VTU, MBA Belagavi. 35

 Hindalco industries LTD. Belagavi.

CHAPTER 4

Department of Management Studies VTU, MBA Belagavi. 36

 Hindalco industries LTD. Belagavi.

LITRATURE REVIEW

1. A Comparison of Financial Performance of Selected Aluminium Companies in India

(Umangi Thakkar Assistant Professor, Asia Pacific Institute of Commerce, Gujarat
University) The study on the financial performance of Hindalco Industries Limited and
National Aluminium Company Limited (NALCO) in India highlights the importance of
financial analysis for manufacturing enterprises in the current economic environment. By
examining key financial ratios and conducting ANOVA testing, the research aims to uncover
insights into the operational efficiency, profitability, and overall financial health of these
aluminum companies. The findings are expected to benefit a range of stakeholders, including
investors, industry analysts, and policymakers, by providing a comprehensive understanding
of the financial dynamics shaping the Indian aluminum sector. The central objective is to
contribute to the existing body of knowledge and enhance the understanding of factors
influencing financial success within this industry.

2. A STUDY ON THE MERGER AND ACQUISITION OF SELECTED ALUMINIUM

COMPANIES IN INDIA (Lekha Nair Teaching Assistant Ahmedabad University).
Merger and acquisition, as strategic decisions, involve consolidating multiple business
entities into a single entity for reasons like diversification, growth, and market expansion. In
recent years, India has experienced a significant increase in mergers and acquisitions due to
heightened competition, globalization, and economic reforms. While these activities are
believed to enhance profitability, production growth, and cost reduction, a study focusing on
the impact of mergers and acquisitions on the profitability of Indian aluminum companies
revealed that, except for Hindalco Industries Ltd and Indal Aluminium Corporation Ltd, most
cases did not show a significant impact on profitability. This suggests that the effects of
mergers and acquisitions on profitability are company-specific and may not always lead to
immediate financial gains, emphasizing the long-term nature of these processes.

Department of Management Studies VTU, MBA Belagavi. 37

 Hindalco industries LTD. Belagavi.

CHAPTER 5

Department of Management Studies VTU, MBA Belagavi. 38

 Hindalco industries LTD. Belagavi.

REFERENCES:

1. https://www.glskalp.in/index.php/GLSKALP/article/view/18
2. https://www.journalppw.com/index.php/jpsp/article/view/3737
3. https://www.researchgate.net/profile/KomalRaval2/publication/
361808849_GAP_iNTERDISCIPLINARITIES_A_Global_Journal_of_Interdisciplinary_
Studies_A_STUDY_ON_MERGER_AND_ACQUISITION_OF_SELECTED_ALUMIN
IUM_COMPANIES_OF_INDIA/links/62c66e168f4dd63324aedddf/
GAPiNTERDISCIPLINARITIES-A-Global-Journal-of-Interdisciplinary-Studies-
ASTUDY-ON-MERGER-AND-ACQUISITION-OF-SELECTED-
ALUMINIUMCOMPANIES-OF-INDIA.pdf
4. https://www.indianjournals.com/ijor.aspx?
target=ijor:sjm&volume=3&issue=4&article=006
5. https://www.hindalco.com/upload/pdf/hindalco-annual-report-2019-20.pdf
6. https://www.hindalco.com/Press-Releases/hindalco-Q2FY21-results
7. https://www.hindalco.com/Press-Releases/hindalco-reports-consolidated-fourthquarter-
and-full-year-fy22-results
8. https://www.hindalco.com/upload/pdf/hindalco-annual-report-2022-23.pdf
9. https://www.bajajbroking.in/blog/hindalco-industries-overview

Department of Management Studies VTU, MBA Belagavi. 39