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Aditya Birla Nuvo LimitedMANAGEMENT DISCUSSION AND ANALYSISAditya Birla Minacs : Employees (Nos.)13,56412,10715,261March 2008 March 2009 March 2010Operating EBITDA grew by 16% to ` 201 Crore.Operating EBITDA margin remained flat absorbingcosts incurred on ramp up for new contracts andopening up of two new sites. Aditya Birla Minacsposted a net profit of ` 70 Crore vis-a-vis ` 74Crore attained in the previous year. During lastyear, profit was higher to the extent ofemployment incentive arrears of ` 25 Crore.Moreover, a one-time cost of ` 21 Crore wasincurred in 2011-12 on closure of one site in NorthAmerica to achieve cost rationalisation. Thebusiness is generating steady cash profit to fundits capital expenditure and working capitalrequirements.Aditya Birla Nuvo acquired balance 11.72% holdingin the ITeS subsidiary. After the merger of IT andITeS subsidiaries, ABNL and its subsidiary, holds99.85% in the merged entity.OutlookWhile the global economic outlook seems to remainchallenging, outsourcing contracts are expected togrow at a steady rate. In fact, mid-sized companiesthat have been slow adopters of outsourcing arealso expected to enter the market due to costpressure and need to access technology and bestpractices. However, with the clients demandingmore than cost benefits out of the outsourcingcontracts, sustaining margin would be challengingfor the outsourcing solutions providers.Aditya Birla Minacs will endeavour to sustain itssales momentum and optimise operating coststo enhance its margin.Manufacturing Businesses19,615 19,733March 2011March 2012Aditya Birla Nuvo has a strong market positioningacross its manufacturing businesses. All themanufacturing businesses of ABNL holdleadership position in their respective sectors interms of capacity as well as profitability.Aditya Birla Nuvo is:• The second largest manufacturer of CarbonBlack in India (Aditya Birla Group is the largestmanufacturer in the world in terms of capacityat 2 million tons per annum)• The second largest producer and the largestexporter of Viscose Filament Yarn in India• The eighth largest urea manufacturer andamong the top two best energy efficient ureaplants in India• The largest Linen Yarn and Linen Fabricmanufacturer in India• India's largest and world's fourth largestmanufacturer of InsulatorsThese businesses have an outstanding trackrecord of consistent generation of strong cashflows and return on capital employed. Cash flowsgenerated by these businesses have historicallyprovided cushion to the balance sheet of AdityaBirla Nuvo for funding the growth capitalrequirements of other businesses. At the sametime, ABNL continued to invest in the capacityexpansion of these businesses to tap sectorgrowth opportunities.2007-08Manufacturing businessesCapital Employed (` Crore)27%23%20%2,252 2,386 2,2552008-092009-10ROACE (%)26%2,7312010-113,32720%2011-12Combined together, manufacturing businessesregistered a 33% growth in revenue during2011-12 to reach USD 1.25 billion. They haveposted an EBITDA of ` 752 Crore vis-a-vis ` 776Crore earned in the previous year.Agri-business (Indo-Gulf Fertilisers)Industry OverviewThe financial year 2011-12 has been a mixed yearfor Indian Agriculture, with an excellent kharifand an average Rabi. Urea sales volume grewfrom 28.2 million tons in 2010-11 to 29.5 milliontons in 2011-12. Urea imports continued to surgeMANAGEMENT DISCUSSION AND ANALYSISAnnual Report 2011-2012 31