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MANAGEMENT’S DISCUSSION AND ANALYSISMANAGEMENT DISCUSSION AND ANALYSISAditya Birla Nuvo LimitedMANAGEMENT DISCUSSION AND ANALYSISAt the consolidated level, total debt increasedfrom ` 7,763 Crore to ` 9,328 Crore largely dueto rise in borrowings at the standalone level aswell as in the books of Idea Cellular 1 . Standalonegross debt increased from ` 3,287 Crore to` 4,457 Crore. Standalone net debt increasedfrom ` 3,142 Crore to ` 3,750 Crore largely onaccount of higher working capital requirementsdue to rise in raw material prices in the CarbonBlack business and slower recovery ofoutstanding subsidy in the Agri business. In theIT-ITeS subsidiary, debt has increased mainly dueto currency translation; at constant currency basisdebt has reduced. NBFC borrowings grew in linewith growth in its lending book.Deferred tax liabilities have increased primarily inthe Telecom business.Net fixed assets have increased largely on accountof capital expenditure in the Manufacturing,Fashion & Lifestyle and Telecom businesses.Goodwill has increased mainly due to currencytranslation effect in the IT- ITeS business andacquisition of balance shareholding in the ITeSsubsidiary.Long term investments increased mainly due tosponsor commitment of ` 29 Crore towardsAditya Birla Private Equity Funds.Net working capital at ` 4,704 Crore is higherdue to increased working capital requirements inthe Carbon Black and Agri businesses, asexplained earlier and on account of growth inlending book of NBFC business.Aditya Birla Nuvo, as a conglomerate, is progressingwell on the growth path to tap sector opportunities.To meet its growth capital requirements, theCompany has issued 16.5 million warrants in May2012 to Promoters / Promoter Group on apreferential basis after being approved by theshareholders at the EoGM held on 25 th April 2012.Of the total equity infusion of ` 1,500 Crore, asum of ` 375 Crore has been received as 25%application money in May 2012. Post theconversion of these warrants, paid up capital ofthe Company will increase from ` 113.5 Crore to` 130 Crore and promoters’ holding will increasefrom current 51.05% to 57.25%.This equity infusion will not only strengthen thefinancial position of the Company but also providecushion for capturing the next level of growth.The business-wise performance and outlook follows.Financial Services (Aditya Birla FinancialServices)India has one of the highest household savingsrate in the world, even though it has come off itspeak due to high inflation. Household savings inIndia as a percentage of GDP was around 33%during 2011-12 compared to 22% a decade ago. Itis expected to be further rising. A recent study ofGlobal Financial Literacy points out that though thecountry has one of the highest savings rate amongits global peers, the households may not be awareof many options to invest in. A large proportion offinancial savings is being deployed in bank deposits,which offers a huge potential market size for nonbank financial services and products. Moreover,growing share of working population, burgeoningmiddle class segment and rising per capita incomelevels indicate strong long term growth potential ofthe Indian financial services sector.Besides being equipped with a nation-widedistribution network, a large customer base, atalented human resource pool, proven trackrecord of product innovation, customer centricapproach and superior investment performance,Aditya Birla Financial Services (“ABFS”) has astrong parent brand. This will enable Aditya BirlaFinancial Services to capitalise on the long termgrowth opportunities offered by the Indianfinancial services sector.Currently, the Indian financial services sector iswitnessing growth challenges due to regulatorychanges and unfavourable investment climate. Thefinancial year 2011-12 saw shrinkage across mostof the fee and agency based businesses. Onlylending business has grown. In such a market,Aditya Birla Financial Services has strengthenedits market positioning across the businessverticals.Aditya Birla Financial Services is today a largenon bank player. Having funds under managementof about ` 86,750 Crore (USD 17.5 billion), ABFSranks among top 5 fund managers in Indiaexcluding banks and Life Insurance Corporationof India (“LIC”). It has a strong presence acrossseven business verticals viz., Life Insurance, AssetManagement, NBFC, Private Equity, Broking,Wealth Management and General InsuranceAdvisory. Anchored by ~17,000 employees andtrusted by ~5.5 million customers, ABFS has anation-wide reach through over 1,775 branchesand about 200,000 agents / channel partners.Note 1 : Being a JV, Idea has been consolidated at ~25.3% as per AS2718 Annual Report 2011-2012
Aditya Birla Nuvo LimitedMANAGEMENT DISCUSSION AND ANALYSIS(` Crore)Aditya Birla Financial Services 2011-12 2010-11RevenueBirla Sun Life Insurance 5,691 5,534Birla Sun Life Asset Management 315 366Aditya Birla Finance 348 196Aditya Birla Money 88 114Aditya Birla Money Mart 60 74Aditya Birla Insurance Brokers 32 21Aditya Birla Capital Advisors 21 18Others / Elimination (5) (9)Total Revenue 6,550 6,313EBITDA 661 544Earnings before tax 600 472Net Profit before exceptional items 539 413Exceptional Gain / (Loss) 1 - (104)Net Profit 539 309MANAGEMENT DISCUSSION AND ANALYSISNote 1 : Aditya Birla Money Ltd. and Aditya Birla Money Mart Ltd., subsidiaries of ABNL, had borne one time exceptional loss of ` 104 Crore in 2010-11Aditya Birla Financial Services has launched anonline money management platform - Aditya BirlaMoney MyUniverse. This unique brand agnosticplatform enables customers to aggregate theirvarious financial relationships in a highly secureenvironment and provides customised andcompletely automated advice on moneymanagement, based on the financial position andrisk profile of the customer. The platform alsoenables users for expense tracking, settingbudgets, getting alerts, investment transactions,tax filing and registering for bill payment.Aditya Birla Money MyUniverse was voted“Product of the year, 2012” for innovation infinancial services, in a survey of over 30,000people conducted by Nielsen.While ABFS registered a moderate growth inrevenue, it posted a strong growth in theprofitability. The combined revenue of ABFS grewyear on year from ` 6,313 Crore to ` 6,550 Crore(about USD 1.3 billion). Its earnings before taxsurged by 27% from ` 472 Crore to ` 600 Crore.Net profit at ` 539 Crore registered a stronggrowth over previous year.ABFS is the largest contributor to ABNL’sconsolidated earnings before tax – It contributed45% during 2011-12.Life Insurance (Birla Sun Life InsuranceCompany Limited)Industry OverviewThe Indian Life insurance industry ranks amongtop 10 life insurance markets in the world andamong the top 5 in Asia. It currently comprises23 private life insurers and one public sector lifeinsurer – LIC. The Indian Life Insurance industrycovers a large part of Indian population throughthe distribution network of more than 11,500branches and over 2.6 million advisors, in additionto the bancassurance and other third partydistribution channels. The industry garnered newbusiness premium 2 of ` 67,770 Crore (aboutUSD 13.6 billion) during 2011-12. LIC contributedto 65% of industry’s new business while privatelife insurers contributed remaining 35% [Source:IRDA, www.irda.gov.in]. Top 7 out of 23 privateplayers contributed to about 71% of the privatesector’s new business. The top 7 private lifeinsurers and LIC combined together accountedfor 90% of industry’s new business.Following the issue of new ULIP (Unit LinkedInsurance Plan) guidelines by InsuranceRegulatory and Development Authority (“IRDA”)in September 2010, new business premiumgrowth remained affected in 2011-12 too. DuringNote 2 : Weighted new business premium = 100% of regular first year premium + 10% of single premiumAnnual Report 2011-2012 19
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Aditya Birla Nuvo LimitedSOCIAL REP
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Aditya Birla Nuvo LimitedENVIRONMEN
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FINANCIAL STATEMENTS
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Aditya Birla Nuvo LimitedSTATEMENT
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ADITYA BIRLA NUVO, ITS SUBSIDIARIES
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