2007-08 - Aditya Birla Nuvo, Ltd

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MANAGEMENT’S DISCUSSION AND ANALYSISPerformance ReviewAditya Birla Insulators Limited, a wholly owned subsidiary, was merged into your Company w.e.f.1 st April, 2007.Insulators business continues to do well with rising demand fuelled by growth in the power sector. On alike- to-like basis, revenues from insulators business grew by 65% to Rs. 398.7 Crores during the year againstRs. 241.2 Crores achieved last year, driven by the improved yield under the new productivity norms. In theprevious year, volumes were impacted by a strike in one of its manufacturing units at Halol. The Operatingprofit of the business, on a like-to-like basis, more than doubled to Rs. 136.3 Crores during the year fromRs. 54.3 Crores last year. Focus on high rating insulators fetched better realisation. The business achievedROACE of 58%, which is the highest amongst all the businesses.Aditya Birla Insulators continues to retain its leadership position in India with the fourth largest capacityworldwide. The capacity of the Halol unit was expanded by 3,000 MTPA through de-bottlenecking.The business is planning to expand capacity at its Rishra unit by 12,000 MTPA in two phases besides forayingin polymer insulators.Business OutlookThe outlook for the Insulators business is positive with huge investments lined up in the transmission andthe distribution segment. The business aims to further expand its capacity to capitalise on the vibrant demandin the power infrastructure sector. Focus on high value products, yield enhancement and reducing rejectionswould further strengthen the financial performance.RAYONRs. Crores2007-08 2006-07 Change (%)Capacity (MTPA) 16,400 16,400 —VFY Production (MT) 17,000 17,669 –4%VFY Sales Volumes (MT) 17,923 17,039 5%VFY Realisation (Rs./Kg) 173.3 168.4 3%ECU Realisation (Rs./MT) 19,999 20,491 –2%Net Turnover 475.2 441.5 8%- VFY 310.6 287.0 8%- Chlor-alkali 164.6 154.5 7%Operating Profit 124.4 119.7 4%PBIT 91.5 88.7 3%Capital Employed 453.7 450.5 1%ROACE (%) 20% 21% —Performance ReviewThe VFY business of your Company, which is second largest producer in India, showed satisfactory performanceamidst a challenging business environment. VFY sales volumes were higher at 17,923 tons as against 17,039in the last year, while domestic demand remained stagnant across the industry. Export sales volumes rose by(24)
MANAGEMENT’S DISCUSSION AND ANALYSIS51% to 4,495 MT. Your Company became the largest VFY exporter in India for the third consecutive year withmore than 50% share in VFY exports from India. VFY realisation was higher at Rs. 173.3 per kg againstRs. 168.4 per kg in the previous year. Higher volumes and improved realisation pushed up the net turnover ofthe VFY segment by 8% to Rs. 310.6 Crores from Rs. 287 Crores.Chlor-alkali segment has posted a better performance with revenues growing by 7% to Rs. 164.6 Croresdespite lower ECU realisation, given the poor chlorine prices.Operating profit of the Rayon business was up at Rs. 124.4 Crores as against Rs. 119.7 Crores in the previousyear, despite sharp rise in input material and fuel prices. The 18 MW captive power plant, set up last year, ledto savings in power costs. ROACE, however, was marginally lower at 20%.Business OutlookThe long-term outlook of VFY business is moderate, as demand is expected to grow at a modest rate. Takingthis reality into account, the business has chalked out strategic plans towards sustaining volumes in thedomestic market and improving realisation through focusing on premium exports. The business has alsoembarked on increasing share of value added yarns. Simultaneously, the thrust is on technologicalupgradations to improve the intrinsic yarn quality. These efforts will help us to provide superior customervalue and to fetch a premium on our products to combat the rise in input material and fuel prices.The long-term outlook for the chlor-alkali segment remains moderate, though realisations may be impactedin the short term. To counter this, your Company is optimising asset utilisation, reducing power costs andfurther expanding caustic soda capacity by 25 MTPD.TEXTILESRs. Crores2007-08 2006-07 Change (%)Net TurnoverLinen Segment 168.3 174.1 –3%Wool Segment 407.5 351.3 16%Continued Operations(Linen and Wool) 575.8 525.4 10%Synthetic Yarn 19.1 99.6 –81%Net Turnover 594.9 625.0 –5%Operating Profit 67.9 67.4 1%PBIT 48.7 52.1 –7%Capital Employed 359.3 311.2 15%ROACE (%) 15% 19% —Performance ReviewThe competitiveness of Indian Textile Industry was eroded due to steep appreciation in Indian Rupee duringthe year. Cheaper imports also posed greater challenges to the domestic manufacturers. Shutdown waseffected by various spinners and weavers in India.Above factors apart from reduction in peak custom duty from 12.5% to 10% last year had impacted operationsacross the industry. Removal of Special Additional Duty (SAD) on importer trader intensified the competitionfurther. Prices of certain input materials were also on upward trend.(25)
Page 2 and 3: Mr. G. D. Birla and Mr. Aditya Birl
Page 4 and 5: THE CHAIRMAN’S LETTER TO SHAREHOL
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Page 9 and 10: ADITYA BIRLA NUVO LIMITEDBOARD OF D
Page 11 and 12: FINANCIAL HIGHLIGHTS - STANDALONERs
Page 13 and 14: MANAGEMENT’S DISCUSSION AND ANALY
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Page 33 and 34: CORPORATE GOVERNANCE REPORTGovernan
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Page 49 and 50: SHAREHOLDER INFORMATION6c. Domestic
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AUDITORS’ REPORT TO THE MEMBERSAn
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AUDITORS’ REPORT TO THE MEMBERS(x
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PROFIT & LOSS ACCOUNT FOR THE YEAR
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SCHEDULESSCHEDULE 2RESERVES & SURPL
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SCHEDULESRs. CroresAs atAs atFace V
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SCHEDULESSCHEDULE 7INVENTORIESAs at
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SCHEDULESRs. CroresYear EndedYear E
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SCHEDULESSCHEDULE 19SIGNIFICANT ACC
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SEGMENT DISCLOSURES FOR THE YEAR EN
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CASH FLOW STATEMENT FOR THE YEAR EN
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AUDITORS’ REPORT ON THE CONSOLIDA
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CONSOLIDATED PROFIT & LOSS ACCOUNT
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SCHEDULES FORMING PART OF CONSOLIDA
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SEGMENT DISCLOSURES FOR THE YEAR EN
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CONSOLIDATED CASH FLOW STATEMENT AS
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ANNEXURE ‘1’ OF STATEMENT PURSU
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STATEMENT PURSUANT TO SECTION 212(8
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ANNEXURE ‘A’ OF STATEMENT U/S 2
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ANNEXURE ‘A’ OF STATEMENT U/S 2
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ADITYA BIRLA NUVO LIMITEDRegistered
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2007-08 - Aditya Birla Nuvo, Ltd

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