2007-08 - Aditya Birla Nuvo, Ltd

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MANAGEMENT’S DISCUSSION AND ANALYSISSTANDALONE CASH FLOW ANALYSISRs. Crores2007-08SOURCES OF CASHCash Flow from Operations (Net of Tax) 578.4Sale/Redemption/(Purchase) of Investments (Net) 212.3Dividend Received 4.2Proceeds from Sale of Rajshree Syntex Unit 5.1Proceeds from Issue of Share Capital 1.7Proceeds from Issue of Share Warrants (Net of Conversion) 377.4Share Premium Received (Net) 339.7TOTAL 1,518.8USES OF CASHNet Capital Expenditure 224.8Investments in Joint Ventures and Subsidiaries 504.6Increase/(Decrease) in Working Capital 299.7Increase/(Decrease) in Corporate Deposits 89.7Repayment of Borrowings (Net) 157.8Net Interest Paid 169.8Increase/(Decrease) in Cash and Cash Equivalents 72.4TOTAL 1,518.8Sources of CashOperating Cash FlowCash Flow from operating activities stood at Rs. 578.4 Crores. VFY, Carbon Black and insulators businessesremained significant contributors to the operating cash flows. Garments, fertiliser and textiles businesses alsocontributed to the operating cash flows.Proceeds from Borrowings/Repayment of BorrowingsYour Company raised long term loans of Rs. 250.3 Crores for capital expenditure requirement and generalcorporate purposes. Further, a sum of Rs. 25 Crores was raised as Term Loan under Technology UpgradationFund (TUF) Scheme of the Government of India. Deferred Sales Tax loans have increased by Rs. 5.7 Crores netof repayment.IDEA specific borrowings of Rs. 293.3 Crores have been repaid during the year, out of the rights issue proceeds.An FCNRB loan of Rs. 9.1 Crores has been repaid as well. A sum of Rs. 9.6 Crores has been repaid towards TUFSloans.Uses of CashNet Capital ExpenditureAt Rayon Division, a sum of Rs. 21.3 Crores was incurred towards modernisation.At Textiles Division, capex of Rs. 22.8 Crores was incurred during the year for expansion of flax spinningcapacity by 6,388 spindles and linen fabrics capacity by 31 looms.At Garments Division, capex of Rs. 69.6 Crores was incurred for expanding retail space through opening up ofexclusive brand outlets.At Carbon Black Division, out of total capex of Rs. 136.4 Crores incurred on capacity expansion by 60,000 MT,which was completed in July 2007, a sum of Rs. 39.7 Crores was incurred during the year.(28)
MANAGEMENT’S DISCUSSION AND ANALYSISAt Fertilisers Division, capex of Rs. 8.3 Crores was incurred during the year for de-bottlenecking of the ammoniaplant.At Insulators Division, a sum of Rs. 5.4 Crores was spent for capacity expansion through de-bottlenecking by3,000 MT during the year.Balance capital expenditure was incurred towards modernisation and maintenance of plants at variousdivisions.Investments in Joint Ventures and Subsidiaries (Net)Investment in Equity Shares comprised Rs. 446.2 Crores in Birla Sun Life Insurance Company Ltd.Other major investments include equity infusion in Birla Global Finance Company Limited to the tune ofRs. 30 Crores.Increase in Working CapitalWorking Capital increased by Rs. 299.7 Crores.Inventories are higher by Rs. 258.5 Crores largely due to higher raw material inventory in Carbon Blackbusiness and finished goods inventory in garments business.Debtors and other receivables are up by Rs. 143.7 Crores, due to higher receivables in garments, carbonblack, and fertiliser business.The merger of insulators manufacturing subsidiary also led to higher inventory and debtors.Creditors and other Liabilities increased by Rs. 102.5 Crores.Risk ManagementAditya Birla Nuvo’s Risk Management framework establishes risk management processes at each business,helping in identifying, assessing and mitigating risks that could materially impact our performance in achievingour stated objectives. The components of the risk management are different for different businesses, and aredefined by the Company’s business model and strategies, organisational structure, culture, risk appetite anddedicated resources.Aditya Birla Nuvo’s structured Risk Management (RM) process provides confidence to the stakeholders thatthe Company’s risks are known and well managed. The risk management framework ensures compliancewith the requirements of amended Clause 49 of listing agreement.Since Aditya Birla Nuvo is diversified conglomerate, the risk events are identified, assessed, mitigated andmonitored for each business separately. Our risk management approach comprises three key components:(1) Risk Identification: External and internal risk events, that must be managed, are identified in the contextof each business’ strategy and specific business objectives. These risk events are assessed by seniormanagers of the business on defined criteria and prioritised for development of risk mitigation plans.Broadly risks are classified into Strategic, Operations, Financial and Knowledge risks, which are furtherdrilled down to market structure, process, systems, legal, governance and people culture.(2) Risk Mitigation: This step comprises developing of a mitigation plan for the risks identified and to betreated on priority.(3) Risk Monitoring and Assurance: Key risks are managed through a structure that cascades across thecorporate and businesses. At the corporate level, the Risk Management Committee headed by theManaging Director and comprising of the business heads, is responsible for the risk management processand reviewing the implementation and effectiveness of mitigation plans. The Board of Directors of theCompany review the process after it is vetted by the Audit Committee.Apart from business risks, the Company is exposed to risks on account of interest rate, foreign exchange,commodity pricing and regulatory changes, which are being effectively monitored and mitigated.(29)
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
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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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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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