DIRECTORS
TO THE SHAREHOLDERS
Dear Shareholders,
Your Directors are pleased to present the 51st Annual Report along with the auditedannual accounts for the year ended 31st March, 2010.
The severe downturn witnessed in the previous year was arrested and macro economicfactors showed signs of recovery. Several measures taken by your Company started yieldingresults in the form of higher production, lower cost and higher sale of value-addedproducts. Your Company also successfully placed QIP of USD 600 Million during the yearunder review.
Financial Performance
Your Company’s Consolidated Revenue crossed USD 12.8 Billion mark during the year.The consolidated EBIDTA was at USD 2.1 Billion i.e. Rs.10,069 Crore. Business Performanceis amongst the best ever with highest net profit.
Overall results of your Company clearly reflect derisked business portfolio in terms ofgeographic and product mix.
Standalone Results
For the year ended 31 March 2010, net sales at Rs.19,536 crore were higher by 7%. Thehighest ever metal volume, better product and geographic mix, despite subdued commodityprices helped improve the company’s performance. The superior operational performancein terms of highest ever metal production and substantial cost savings on improvedefficiencies were negated by adverse macro-economic factors, which were pronounced in boththe businesses.
In the Aluminium Business, lower Rupee-LME eroded profit by around Rs.750 crore.Additionally, Rs.100 crore was lost on account of the higher coal cost at Renusagar Power.Copper Business, which benefitted from higher contracted TcRc (Treatment charges andRefining charges), lost Rs.750 crore on lower by-product credit, in terms of sulphuricacid realisation and lower fertiliser subsidy. Against this backdrop, the performance ofboth the Businesses was satisfactory. Other income at Rs.260 crore was lower by Rs.377crore, on account of low treasury corpus, post repayment of bridge loan in November 2008,which was taken for Novelis acquisition and for higher project spending. Abundantliquidity kept short-term rates low. This also affected yields on the company’sinvestments which are mostly in liquid plans. It also reduced the cost of working capitalborrowing. As a result, the interest and financing charges also reduced from Rs.337crorein FY09 to Rs.278 crore in FY10.
Arising from the announcement of the Institute of Chartered Accountants of India dated29th March, 2008 on Accounting for Derivatives, the Company has decided for early adoptionof Accounting Standard (AS) 30 on Financial Instruments : Recognition and Measurement, inso far as it relates to derivative accounting, from 1st April, 2009. Accordingly, net lossarising on fair valuation of outstanding derivatives as on 01st April, 2009 amounting toRs. 230.58 crore (net of deferred tax of Rs. 118.73 crore) has been adjusted againstGeneral Reserves following transitional provisions. Accounting for all derivatives from1st April, 2009 have been done as prescribed under the AS. As a result, net gain / (loss)of Rs. (236.12) crore and Rs. 167.75 crore & Rs. 246.09 crore for the year ended 31stMarch, 2010 have been included under Sales and Raw Materials Consumed & Other Expenses(in Manufacturing and Other Expenses), respectively, with consequential impact on profitfor the year ended 31st March, 2010. The figures of the current year in respect of aboveitems are, therefore, not comparable with those of the previous year.
Consolidated Results
Consolidated revenues were lower at Rs. 60,722 crore, mainly due to lower aluminumprices and softness in the Company’s end-markets in the first half of the year,especially for Novelis.
Further, change in the status of Idea Cellular Ltd. from joint venture to associatew.e.f from 1st January 2009 for the purpose of consolidation, also resulted inproportionate revenue from Idea not being included in the consolidated revenues.
Profit before depreciation, interest and taxes soared to a record level of Rs.10,069crore from Rs. 3,661crore in FY09.Consolidated result include pre-tax adjustment forunrealised derivative gain/(Loss) of Rs. 2,736.4 crore in FY 10 and (Rs. 2,380.7) crore inFY 09 at Novelis.
Aluminium Business revenue fell by 11% to Rs.48,091 crore on the back of lower LME andlower demand in first half of the year. Earning before interest and tax turned around froma loss of Rs. 425 crore to a profit of Rs. 5,998 crore. This reflects steady improvementsin operations across the board. Copper business revenue increased by 13% to Rs.12,575crore and EBIT trebled from Rs. 374 crore to Rs. 1,003 crore.
| Standalone | Consolidated |
| Financial Results for the year ended | 31.03.2010 | 31.03.2009 | 31.03.2010 | 31.03.2009 |
| Net Sales and Operating Revenues | 19,536.28 | 18,219.65 | 60,722.11 | 65,962.95 |
| Profit before Tax | 2,264.56 | 2,690.32 | 6,180.76 | (604.92) |
| Provision for Current Tax | 374.20 | 478.11 | 554.30 | 872.53 |
| Provision for Deferred Tax | 87.90 | 121.40 | 1,377.59 | (1,689.36) |
| Provision for Fringe Benefit Tax | 0.00 | 11.37 | 0.00 | 12.19 |
| Tax adjustment for earlier years (Net) | (113.17) | (150.83) | (102.98) | (149.11) |
| Profit before Minority Interest | 1,915.63 | 2,230.27 | 4,351.85 | 348.83 |
| Minority Interest | 0.00 | 0.00 | 423.70 | (171.78) |
| Share in Profit / (Loss) of Associates (Net) | 0.00 | 0.00 | 2.68 | 36.72 |
| Net Profit | 1,915.63 | 2,230.27 | 3,925.47 | 483.89 |
| Appropriations: | | | | |
| Debenture Redemption Reserve | 0.00 | 5.00 | 0.00 | 5.00 |
| Capital Reserve | 0.00 | 0.00 | 0.00 | 1.50 |
| Capital Redemption Reserve | 0.00 | 0.41 | 0.00 | 0.41 |
| Special Reserve | 0.00 | 0.00 | 0.48 | 0.92 |
| Dividend on Preference Shares | 0.00 | 0.02 | 0.00 | 0.02 |
| Dividend Tax on Preference Shares | 0.00 | 0.01 | 0.00 | 0.01 |
| Proposed Dividend on Equity Shares | 258.32 | 229.58 | 259.91 | 231.16 |
| Tax on Proposed Dividend | 42.90 | 39.02 | 43.48 | 39.61 |
| Transfer to General Reserve | 1,701.91 | 1,956.23 | 1,704.96 | 1,958.55 |
Dividend
Your Directors have recommended a dividend of Rs.1.35 per share i.e. @135% per equityshare for the financial year ended March 31, 2010 amounting to Rs.258.32 crore.
Together with the Corporate Dividend Tax of Rs. 42.90 crore, the total payout works outto Rs. 301.22 crore.
Growth plans underway in Aluminium
Your Company is aggressively pursuing various brownfield and greenfield growthopportunities in
Aluminium as described below:
| Project | Commissioning |
| Hirakud Smelter | |
| 155 KTPA to 161 KTPA | Q2FY11 |
| 161 KTPA to 213 KTPA | Q4FY12 |
| Flat Rolled Products at Hirakud | Q2FY12 |
| Utkal Alumina Project | Q2FY12 |
| Mahan Aluminium Project | Q2FY12 |
| Aditya Aluminium Project | Q3FY12 |
| Aditya Refinery Project | Q1FY14 |
| Jharkhand Aluminium Project | Q1FY14 |
Further to the above, the smelting capacity at Hirakud is intended to be expanded fromthe proposed 213 KTPA to 360 KTPA with corresponding increase in back-up captive powerfrom proposed 467.5 MW to 967.5 MW. The Company undertakes to appropriately finance theproject.
To debottleneck and increase capacity, primarily in South America and Asia, Novelis hasincreased its capital expenditure plan by approximately USD 150 Million or 148 per centfor fiscal 2011 compared to the previous year. A significant amount is aimed at expandingits rolling operations in Brazil. This investment will increase capacity by over 50 percent and better support the increasing demand for flat rolled products in the region. Theexpansion is expected to be completed by late 2012.
The details of the projects are covered in greater detail as the part of ManagementDiscussion and Analysis section.
Finance
The Authorised Capital of the Company has increased from Rs. 200.00 crore to Rs. 215.00crore by way of increase of 15,00,00,000 equity shares of Re. 1 each pursuant to aresolution passed at the Annual general meeting held on 18 September, 2009.
Upon allotment of 213,147,391 equity shares of Re 1 each at a premium of Rs 129.90through Qualified Institutions Placement (QIP) on 1st December, 2009, paid-up capital ofthe Company has increased by Rs. 21.31 crore. The total amount received against QIP is Rs.2,790.10 crore. Out of this amount Rs. 396 crore has been spent for various ongoingprojects (including issue related expenses) till 31st March, 2010 and the balance amounthas been invested temporarily in mutual funds.
Consolidated Financial Statements
In accordance with Accounting Standards AS-21 on Consolidated Financial Statements readwith Accounting Standard 23 on Accounting for investments in Associates and AS-27 onFinancial Reporting of Interest in Joint Ventures, the audited Consolidated FinancialStatements are provided in the Annual Report.
Management Discussion and Analysis Report
The Management Discussion and Analysis Report forming part of Directors’ Reportfor the year under review, as stipulated under Clause 49 of the Listing Agreement with theStock Exchange(s), forms part of Annual Report. The report provides strategic directionand a more detailed analysis on the performance of individual businesses and theiroutlook.
Corporate Governance
Your Directors reaffirm their commitment to the corporate governance standards asprescribed by The Securities and Exchange Board of India (SEBI). A separate section onCorporate Governance together with a certificate from the Auditors of the Companyregarding full compliance of conditions of Corporate Governance as stipulated under Clause49 of the Listing Agreement with the Stock Exchange(s) forms part of Annual Report.
Directors’ Responsibility Statement
Your Directors affirm that the audited accounts containing financial statements for thefinancial year 2009-10 are in full conformity with the requirements of the Companies Act,1956. They believe that the financial statements reflect fairly, the form and substance oftransactions carried out during the year and reasonably present the Company’sfinancial condition and results of operations. These statements were audited by thestatutory auditors of the Company, M/s. Singhi & Co., Chartered Accountants.
Your Directors further confirm that:
1) In the presentation of the Annual Accounts, applicable Accounting Standards havebeen followed. However, the deviation from the Accounting Standard has been caried outwith reference to the Scheme of arrangement, approved by the court for the purpose ofpreparing Consolidated Financial Statements. Refer Notes on Accounts for details of thesame.
2) That the accounting policies are consistently applied and reasonable, prudentjudgment and estimates are made so as to give a true and fair view of the state of affairsof the Company at the end of the Financial Year.
3) The Directors have taken proper and sufficient care for the maintenance of adequateaccounting records in accordance with the provisions of the Act for safeguarding theassets of the Company and for preventing and detecting fraud and other irregularities.
4) The Directors have prepared the Annual Accounts on a going-concern basis.
Your Company’s Internal Auditors have conducted periodic audits to providereasonable assurance that established policies and procedures have been followed.
Subsidiaries/ Joint Venture
A wholly-owned subsidiary by the name Mauda Energy Limited has been incorporated on 5thOctober 2009 for generation of power to be used captively.
In terms of the facility agreement for foreign currency borrowing of US$ 981.80 Millionavailed by A V Minerals (Netherlands) B.V., a wholly owned subsidiary, the Company hasentered into a deed of pledge of registered shares in A V Minerals (Netherlands) B.V. infavour of HSBC Bank USA, N.A. as pledgee.
Novelis
Shipments of aluminium rolled products totalled 2,708 kilotonne for fiscal 2010, adecrease of two percent compared to shipments of 2,770 kilotonne in the previous year,driven by softer end-market conditions in most of the regions during the first half of theyear.
Net sales for fiscal 2010 were USD 8.7 Billion; a decrease of 15 per cent compared tothe USD 10.2 Billion reported in the same period a year ago, a result of lower aluminiumprices and softness in the Company’s end-markets in the first half of the year.
Adjusted EBITDA for the year was a record USD 754 Million, representing a 55 per centincrease from adjusted EBITDA of USD 486 Million posted for the same period a year ago.These record operating results were primarily due to the Company’s focus on costreductions and restructuring initiatives.
Aditya Birla Minerals
Aditya Birla Minerals Limited, the Australian subsidiary, reported profit after tax ofAUD 61.4 Million as against a loss of AUD 76.0 Million in the previous year. Sustainedcost management resulted in turnaround in financial performance. Lower production wasmainly due to loss of production of copper in concentrate at Mt. Gordon and cathodeproduction at Nifty oxide operations which were put under care and maintenance as amanagement decision. The drop in overall production was partly off-set by 13.8% increasein Nifty’s production of copper in concentrate.
| FY10 | FY09 |
| Copper Production (MT) | 57,093 | 70,111 |
| EBIT (AUD ‘000) | 93,259 | (103,605) |
| PAT (AUD ‘000) | 61,440 | (76,019) |
The performance of the subsidiaries is covered elsewhere in this Annual Report.
Your Company has applied to the Central Government for grant of an exemption to yourCompany under Section 212(8) of the Companies Act, 1956, from attaching a copy of theBalance Sheet, Profit and Loss Account, Report of the Board of Directors and the Report ofthe Auditors to all the Subsidiary Companies. Subject to receipt of the approval,aforesaid documents are not being attached with the financial statements of your Company.These documents can be requested by any member, investor of the company / subsidiarycompany. Further, in line with the Listing Agreement and in accordance with the AccountingStandard 21 (AS-21), Consolidated Financial Statements prepared by the Company includefinancial information of its subsidiaries.
Employee Stock Option Scheme
The shareholders of the Company has approved an Employee Stock Option Scheme("ESOS 2006"), formulated by the Company, under which the Company may issue3,475,000 options to its permanent employees in the management cadre, in one or moretranches, whether working in India or out of India, including the Whole Time Directors ofthe Company. Each option when exercised would be converted into one fully paid-up equityshare of Re. 1/- each of the Company. The ESOS 2006 is administered by the CompensationCommittee of the Board of Directors of the Company ("the Committee"). Under theESOS 2006, the Committee has granted 2,973,390 options to its eligible employees in twotranches. Disclosure pursuant to the provisions of the Securities and Exchange Board ofIndia (Employee Stock Option Scheme) Guidelines, 1999 is given in Annexure –A.
Particulars as per Section 217 of the Companies Act, 1956
The information relating to the conservation of Energy, Technology Absorption andForeign Exchange Earnings and Outgo required under Section 217 (1)(e) of the CompaniesAct, 1956, is set out in a separate statement attached to this report (Annexure B).
In accordance with the provisions of sections 217 (2A), read with the Companies(Particulars of Employees) Rules, 1975, the names and other particulars of employees areto be set out in the directors’ report, as an addendum thereto. However, as per theprovisions of Section 219 (1) (b)(iv) of the Companies Act, 1956, the report and accounts,as therein set out, are being sent to all members of the company excluding the aforesaidinformation about employees. Any member, who is interested in obtaining such particularsabout employees, may write to the Company Secretary at the Registered Office of thecompany.
Fixed Deposits
Your Company was accepting Fixed Deposits from the Employees. Acceptance of such fixeddeposits has been discontinued from FY 2009-10. The total outstanding deposits are Rs.0.33 crore as at 31st March, 2010.
Directors
In accordance with Article 146 of the Articles of Association of the Company, Mr. KumarMangalam Birla, Mr. E.B. Desai and Mr. A.K. Agarwala retire from office by rotation, andbeing eligible, offer themselves for reappointment.
Awards & Recognitions
Several accolades have been conferred upon your Company, in recognition of itscontribution in diverse fields. A selective list:
1. Renukoot unit was awarded the Greentech Safety Gold Award 2009 for OccupationalHealth and Safety Management and the Greentech Environment Gold Award 2009 forenvironmental excellence, in the Mining and Metal Sector, presented by GreentechFoundation, New Delhi.
2. Renukoot unit was awarded the prestigious "Golden Peacock National QualityAward – 2010".
3. Amity International Business School conferred on Renukoot unit the "AmityCorporate Excellence Award" for its notable initiatives in Corporate SocialResponsibility.
4. Institute of Engineers (India) awarded Renukoot unit with the "SafetyInnovation Award-2009" in the metals sector for its exemplary initiatives inOccupational Health and Safety.
5. Renusagar Power Division was awarded the "Golden Peacock Environment ManagementAward 2009".
6. Renusagar Power Division received the "Rajiv Gandhi National Quality Award2008,’’ Commendation Certificate presented by the Bureau of Indian Standard(BIS).
7. Renusagar Power Unit was awarded the "Greentech Environment Excellence GoldAward 2009," in Thermal Power Plant Category, by Greentech Foundation, New Delhi.
8. CII has conferred the "Energy Efficient Unit" award to Renusagar PowerDivision during the "10th National Awards for Excellence in EnergyManagement-2009".
9. Hirakud Smelter unit was awarded the National Energy Conservation Award 2009,ranking first in the Aluminium Sector.
10. Hirakud Smelter unit awarded the Greentech Safety Silver Award 2009 forOccupational Health and Safety Management presented by GreenTech Foundation, New Delhi.
11. Hirakud Power Unit was globally recognised as one of the top six power plants forits environment friendly operations by the POWER Magazine.
12. Hirakud Power Unit was awarded the Greentech Environment Gold Award 2009 for bestenvironment management and practices, and the Greentech Safety Silver Award 2009, byGreentech Foundation, New Delhi.
13. Your Company’s Mines earned awards in Environment, Safety, Mining Practicesduring the Mines Safety Week and Mineral Conservation Week programmes at regional levels.
14. Birla Copper Dahej was awarded the Greentech Environment Gold Award for itsexemplary environmental practices and performance and the Greentech Safety Silver Award,presented by Greentech Foundation, New Delhi.
Environment Protection and Pollution Control
Your Company is committed to sustainable development. Your Company is a signatory tothe Global Compact and subscribes to the principle of triple-bottom line accountability.
A separate chapter in this report deals at length with your Company’s initiativesand commitment to environment conservation.
Auditors
The observations made in the Auditors’ Report are self-explanatory and do not callfor any further comments under Section 217 (3) of the Companies Act, 1956.
M/s. Singhi & Company, Chartered Accountants and Auditors of the Company, retire,and being eligible, offer themselves for appointment.
Human Resource Development
Your Company continuously strives to foster a culture of high performance. YourManagement has infused a lot of rigor and intensity in its people development processesand in honing skill sets. Its HR processes are absolutely aligned to organizational goals.The implementation of People Soft HRMS (Human Resource Management System), the variablepay plan and job bands have been institutionalized.
Ongoing learning, refreshing HR systems in line with global benchmarks, aligningrewards and recognition with performance, have enabled your Company sustain its reputationof a meritocratic organization. The Group’s Corporate Human Resources function hasplayed and continues to play an integral role in your Company’s Talent ManagementProcesses.
Appreciation
Your Directors place on record their sincere appreciation for the assistance andguidance provided by the Honorable Ministers, Secretaries and other officials of theMinistry of Mines, Ministry of Coal, the Ministry of Chemicals and Fertilizers and variousState Governments. Your Directors thank the Financial Institutions and Banks associatedwith your Company for their support as well.
Your Company’s employees are instrumental in your Company scaling new heights,year after year. Their commitment and contribution is deeply acknowledged.
Your involvement as Shareholders is greatly valued. Your Directors look forward to yourcontinuing support.
| For and on behalf of the Board |
| Mumbai | |
| Dated the 4th Day of June, 2010 | Chairman |
ANNEXURE ‘A’ TO THE DIRECTORS’ REPORT
Disclosure pursuant to the provisions of the Securities and Exchange Board of India(Employee Stock Option Scheme) Guidelines, 1999
| Nature of Disclosure | Particulars |
| a) Options Granted | 2,973,390 |
| b) The pricing Formula | Tranche I |
| The exercise price was determined by averaging the daily closing price of the Company's equity shares during 7 days immediately preceding the date of grant and discounting it by 30%. (Exercise price- Rs. 98.30 per option). |
| Tranche -II |
| The exercise price was the closing market price, prior to the date of grant. (Exercise price - Rs. 150.10 per option). |
| c) Options vested/Exercisable as at 31st March 2010 | 958,270 |
| d) Options Exercised during the year | 44,244 |
| e) The total number of shares arising as a result of exercise of options | 44,244 |
| f) Options Lapsed | Nil |
| g) Variation in terms of options | Nil |
| h) Money realised on exercise of options | Rs. 4,349,185 |
| i) Total number of options in force | 2,028,555 |
| j) Employee-wise details of options granted: | |
| i) Senior Managerial Personnel: | Mr. D. Bhattacharya - 9,70,100 |
| ii) Any other employee who received a grant in any one year of option amounting to 5% or more of options granted during that year | Nil |
| iii) Identified employees who were granted option during any one year, equal to or exceeding 1% of the issued capital (excluding outstanding warrants and conversions) of the company at the time of grant | Nil |
| k) Diluted Earnings per share | NA |
| l) Difference between the employee compensation cost computed using intrinsic value of the stock options, and the employee compensation cost that shall have been recognised, if the fair value of the options was used. | Rs. 1.84 crore |
| The impact of this difference on profits and on EPS of the company | The effect of adopting the fair value on the net income and earnings per share for 2009-10 is as presented below | |
| Particulars | Rs. In Crore |
| Particulars | 2009-10 |
| Net Profit as Reported | 1,915.63 |
| Less: Dividend on Preference Shares (including Tax) | 0.00 |
| Net Profit attributable to Equity Shareholders | 1,915.63 |
| Add: Compensation cost under ESOS as per intrinsic value included in the Net Profit | 1.00 |
| Less: Compensation cost under ESOS as per fair value | -2.84 |
| Proforma Net Profit | 1,913.79 |
| Less: Tax adjustment for earlier years | -113.17 |
| Proforma Net Profit before Tax adjustment for earlier years | 1,800.62 |
| Weighted average number of Basic Equity Shares outstanding | 1,770,939,077 |
| Weighted average number of Diluted Equity Shares outstanding | 1,771,286,354 |
| Face value of Equity Shares (in Re.) | 1 |
| Reported Earning per Share (EPS): | |
| Basic EPS (in Rs.) | 10.82 |
| Diluted EPS (in Rs.) | 10.81 |
| Basic EPS before Tax adjustment for earlier years (in Rs.) | 10.18 |
| Diluted EPS before Tax adjustment for earlier years (in | 10.18 |
| Proforma Earning per Share (EPS): | |
| Basic EPS (in Rs.) | 10.81 |
| Diluted EPS (in Rs.) | 10.80 |
| Basic EPS before Tax adjustment for earlier years (in Rs.) | .) 10.17 |
| Diluted EPS before Tax adjustment for earlier years (in | 10.17 |
| m) i) Weighted-average exercise prices and weighted average fair values of options whose exercise price equals the market price of the stock | Options granted under Tranche II | |
| Weighted average exercise price (Rs.) | 150.10 |
| Weighted average fair value (Rs.): | 57.11 |
| ii) Weighted-average exercise prices and weighted average fair values of options whose exercise price is less than the market price of the stock | Options granted under Tranche -I | |
| Weighted average exercise price (Rs.) | 98.30 |
| iii) Weighted-average exercise prices and weighted average fair values of options whose exercise price exceeds the market price of the stock | Weighted average fair value (Rs.): | 65.78 |
| n) A description of method and significant assumptions used during the year to estimate the fair values of options, including the following weighted average information: | | |
| i) Risk free Interest rate (%) | 8 | |
| ii) Expected life (No. of Years) | 5 | |
| iii) Expected volatility (%) | Tranche I 34% | |
| Tranche -II 37% | |
| iv) Dividend yield (%) | 170 | |
| v) The price of the underlying shares in the market at the time of option grant | Tranche I Rs. 138.95 | |
| Tranche -II Rs. 150.10 | |
ANNEXURE ‘B’ TO THE DIRECTORS’ REPORT
[Statement of particulars under the Companies (Disclosure of particulars in the Reportof the Board of Directors) Rules, 1988]
A. CONSERVATION OF ENERGY
Energy plays a key role in achieving the goals of sustainable development. Increasingaccess to energy and enhanced energy efficiency is important for our development. Our ownpolicy of appreciating the importance of Energy Conservation for sustainable developmentis by way of promotion of energy efficiency. In an unending endeavor & strongcommitment to improve the Energy efficiency and capacity utilization, we are continuouslyworking towards reduction in cost of production. The Company has a well-defined EnergyPolicy, which is meticulously adhered to across all the establishments of the company inthe country. Every unit of your Company has trained professionals to implement thispolicy. The Company has a well-defined Energy Management Organization structure, with aBottom Up & Top Down approach. It acts as a catalyst towards its continuous journeyfor excellence in energy conservation. Involvement of all employees right from workmenlevel to the top executive is ensured through walk through & detailed energy audits,quality circles, WCM committees and suggestion scheme. To inculcate awareness on theimportance of Energy conservation, Your Company as corporate entity, focuses not only onemployees of company but also the society.
The Company has a dedicated & well established Energy Cell having prime objectiveof minimizing energy consumption, putting consistent efforts for optimizing operatingprocess parameters and modernizing / upgrading technology for increasing energy efficiencythroughout the organization. Employees are encouraged to give suggestions and get involvedin Energy Conservation initiatives & suggestions with significant merit are suitablyrewarded under the well established reward & recognition system.
Company’s efforts in Energy Conservation have been consistently recognized overthe years by the competent authorities. Hirakud unit of your Company’s Aluminiumbusiness have been recently awarded the "Top Rank Award" in the "NationalAwards for Energy Conservation" instituted by the Ministry of Power, Government ofIndia for the year 2009.
a. ENERGY CONSERVATION MEASURES TAKEN GENERAL MEASURES
i. Optimization of colony power voltage to save power.
ii. Rationalization of luminary’s wattage.
iii. Modification in lighting circuit for ON/OFF control of lights.
iv. Interlocking of Cooling Towers fan motor through temperature switch.
v. Conversion of connection from delta to star for under loaded motors.
vi. Installation of capacitor banks to improve power factor.
vii. Installation of small PLC logo in office AC system to avoid idle running.
viii. Motor HP rationalization.
ix. Installation of transparent sheets in roof to utilize the natural light.
x. Interlocking of auxiliary equipments with main equipment.
xi. Regular monitoring and cleaning of waste heat recovery system.
xii. Regular walkthrough audit of Steam and compressed air lines to avoid the losses.
xiii. Regular monitoring and benchmarking of Energy Intensive equipment.
xiv. Optimization of transformer loading.
xv. Optimization of AC unit running time as well as temp setting.
xvi. Energy audit from external agencies.
xvii. Installation of efficient luminaries.
xviii.Optimum utilization of Energy through process redesigning as well as employmentof equipment that offers improved energy efficiency.
xix. Installation of door limit switches in MCC rooms.
1. ALUMINA PLANT:
i. Installation of VFD for PD Overflow re-circulation pump # 1.
ii. Energy efficient double digestion technology in place of high temperature Digestiontechnology.
iii. Installation of DSM screen to increase output of Ball mill # 4 & 8 thusreducing the specific power consumption.
iv. Installation of energy efficient falling film evaporation unit # 4.
v. Introduction of additive in acid cleaning of liquor heaters to improve heat transferco-efficient.
vi. Provision of additional chemical cleaning facilities for parallel cleaning ofslurry heaters of digestion I & II units.
vii. Upgradation of Liquor-A & T-6 mud washers underflow pipelines together withreplacement of Motors and incorporation of VFD.
viii. Installation of temperature switches in cooling towers to optimize the fanrunning hours.
ix. Modified the impeller of ISC cold well pump and use lower HP hot well pump to meetout the reduced flow requirement during winter.
x. Re-routing of DS tank slurry transfer line to eliminate the use of transfer pump.
xi. Modification in lighting circuits of different areas to optimize the lighting loadand ON time.
2. SMELTER:
i. Optimization of DSS fan flow to reduce specific power consumption.
ii. Installation of VFD operated screw compressor.
iii. Installation of Harmonic filter at Rectifier station #2.
iv. Welding of Anode bus bar and riser bus bar bolted joints for reduction in DCvoltage drops.
v. Modification in discharge circuits of air slides fans to optimize of running numberof fans.
vi. Optimization of lifting height of primary air lifts of Pot line # 9 to 11 DSS tosave power.
vii. Optimization of compressed air header pressure of point feeder & DSS line tosave power.
viii. Modification in suction line of reciprocating compressors to increase itsefficiency.
ix. Installation of VFD for ventilation fans of Pot line # 7 to 11.
x. Minimizing the load of the equipment by modifying the control philosophy in PLC inPot line 9 to 11 Air lift blower.
xi. Better utilization of Induction furnace to save power.
xii. Modification in ducting system of Paste Plant Bag houses to optimize the loading.
xiii. Reduced pot voltage through process optimization to reduce specific energyconsumption of smelter.
xiv. Modification in water circuit of AC System of Rectifier Plant # 2 control room tostop the running of water pump.
xv. Commissioning of one 90 MVA high energy efficient transformer in place of old lowefficiency transformer.
xvi. Better utilization of 132 KV standby higher efficient Rectifier for feeding theload of Pot line # 3.
xvii. Switching off cooling fan of Pot line # 1 Rectifier Unit as and when required.
xviii. Reduction in yoke to carbon drops of anode.
3. FABRICATION PLANT:
i. Revamping of one Properzi Furnace to improve its efficiency.
ii. Installation of off delay timer in hydraulic pump motors of blue cut Star CTL andCaster Unit to avoid the idle running.
iii. Interlocking of LNP motor to avoid idle running.
iv. Reduction in running time of cooling fan motors of Extrusion Press # 3, 5 & 6.
v. Automatic switching off of 90 TR AC compressor unit based on temperature.
vi. Optimization of Homogenizing of AA 3003 DDQ cycles to save energy.
vii. Optimization of Annealing practices to reduce power consumption.
viii. Installation of VFDs in Casting Plant, Extrusion Press and Rolling Mill Coolantfilter.
ix. Reduction in number cold rolling passes through modification in AA 3105 coils.
x. Elimination of one stress relieving cycle by process modification in AA 5052 rolledcoils.
xi. Clubbing of process to increase the productivity of furnaces.
xii. Optimization of partial annealing cycles to reduce the cycle time.
xiii. Conversion of H32 temper into H22 temper to save energy.
xiv. Re – insulation of Pre heater of Furnace # 2 & 3.
4. POWER PLANTS / CO-GENERATIONS:
i. Installation of VFD in FD Fans of Boiler # 3 of Co-Generation unit and AC Unit # 2.
ii. Reduction in Boiler # 3 Feed pump rotor stage to reduce auxiliary power consumptionof Co- Generation unit.
iii. Fuel substitution from HSD to FO in Boilers to reduce cost of Co-Generation Unitand Captive Power Plant.
iv. Trimming of CW pump impeller of TG # 4, 6 & 7 to save auxiliary power atCaptive Power Plant.
v. Installation of additional APH baskets in Spare Boiler of Captive Power plant toincrease its efficiency.
vi. Operation of single FD Fan instead of two in 9 Boilers of Captive Power Plant toreduce auxiliary power.
vii. Modification in LDAD system for ash slurry discharging at lower elevation resultedstoppage of 350 kW Pump.
viii. Increase in chilled water temperature of administrative building air conditionerof Captive Power Plant to reduce power consumption.
ix. Modification Raw water header of CHP area & ESP area to eliminate pump running.
x. Conversion of connection from delta to star in coal feeder motors of Captive Power.
xi. Stage removal of recovery water pump impeller at Bichhari.
xii. Installation of SS liner in Boiler # 4 bunker at Captive Power Plant to avoid coalflow interruption.
xiii. Installation of Fluid Coupling in Boiler feed Pump-A of Unit # 1.
5. FOIL DIVISION:
i. Optimization of the frequency of VFD at Fume Exhaust fan at Mill M50.
ii. Modified and rerouted the power cable to shut off the 4 nos. of HT transformers tosave its no load losses.
iii. Optimization of annealing practices to reduce power.
6. COPPER DIVISION:
i. Replacement of SA and PU fans of HT motor by LT Motor.
ii. Installation of variable frequency drive for Boiler-1,3 & 4 and PAP.
iii. Installation of MV Drive in PA fan HT motor in Boiler no. 3.
iv. VFD installation in combined cooling tower fan in Smelter-1.
v. Installation of HT capacitor bank to improve the power factor.
vi. Replacement of conventional light with CFL.
b. ADDITIONAL INVESTMENT AND PROPOSALS BEING IMPLEMENTED
1. ALUMINA PLANT:
i. Installation of VAM unit utilizing waste heat stream of Calciner fluxo cooler.
ii. Up-gradation of ISC cooling tower.
iii. Installation of energy efficient pumps in place of Old inefficient pumps and VFDsin 13 B Evaporators.
iv. Installation of additional heater in Evaporation # 1 to increase availability foreffective cooling cleaning.
v. Installation of VFD for Evaporation Unit # 3 feed pump, PT feed area slurry disposalpump & PD overflow re-circulation pump # 2.
vi. Installation of voltage regulating transformer in lighting circuit.
vii. Installation of level control switches in sump pits to avoid idle running sumppumps.
viii. Installation of door limit switches in lighting circuit of control rooms.
ix. Bokela modification on drum filter no.- 2.
x. Revamping of IBSH with addition of 5th Set.
xi. Installation of VFDs in Primary, secondary Air fans, Rotary vane feeder, Air SlideFan, compressor and Cooling tower.
2. SMELTER:
i. Arrangement of water showers at the roof of cooling chamber of Billet Casting.
ii. Replacement of Baking Furnace ID Fan with energy efficient fan.
iii. Modification in insulation of Metal transfer Cruce to reduce the heat loss.
iv. Improvement in Coefficient of Performance of Air Conditioners.
v. Installation of temperature sensor in Induction furnace.
vi. Replacements of chain drive system of conveyor # 21 of Rodding shop with gravityroller conveyor.
vii. Installation of thermostatic controller to optimize the running of cooling Towerfans.
viii. Installations of MV drive in DSS main Fan.
ix. Capacity enhancement of bath crushing plant.
x. Redesign of ID Fan impeller of Pot line # 7.
xi. Redesign of Bag houses of Pot line # 5 & 6.
xii. Provide pressure regulator in tapping air to reduce the compressed airconsumption.
xiii. Modification in pulley ratio of alumina transfer system ID fan at TT -2.
xiv. Introduction of stepped cathode technology for reducing energy consumption insmelter.
xv. Replacement of reciprocating compressors by centrifugal compressors and inefficientRectiformers & transformers.
xvi. Reduction in DC voltage drop in Cathode bar and Anode by using cast iron pouringand Yoke to carbon drop respectively.
3. FABRICATION PLANT:
i. Introduction of longer carbon chain additive to take higher reduction therebyreduction in number of cold rolling passes.
ii. Optimization of Homogenizing cycles to reduce energy consumption at Hot Mill.
iii. Installation of VFD in reciprocating compressor.
iv. Installation of photo switches to control the on time of Street lights.
v. Installation of small PLCs (Logo) to control the running of Office ACs.
vi. Replacement of 24 nos inefficient motors with efficient motors of Hot Mill andAnnealing Furnaces.
vii. Re – insulation of Annealing furnaces.
viii. To install VFDs in Soaking Pit # 4 and Rolling Mill auxiliary.
ix. To install re – generative burners in Remelting Furnace.
x. To replace inefficient AC with more efficient Air Conditioner.
xi. Replacement of convectional lighting with CFL.
4. POWER PLANTS / CO-GENERATION UNITS:
i. Modification in heat recovery system of Boiler # 1 & 3 of Co-Generation Unit toimprove its efficiency.
ii. Removal of feed pump rotor stage of Boiler # 4 of Co-Generation unit to reduceauxiliary power consumption.
iii. Installation of VFD in FD Fans of Boiler # 3.
iv. Modification of Boiler Feed pumps to reduce auxiliary power consumption.
v. Heat recovery from Boiler # 3 flue gas.
vi. Installation of additional APH Basket in Boiler 5 to 8 & spare Boiler toimprove Boiler efficiency.
vii. Up-gradation of Motor capacity of Boiler # 4 PA Fan at Co-Generation Unit to makesystem run on one Fan.
viii. Installation of coal dust extraction system to reduce the coal dust losses atCo-Generation Unit.
ix. Installation of additional APH baskets in Boiler # 5 to 8 of Captive Power plant toincrease its efficiency.
x. Installation of additional economizer coil in Spare Boiler to increase itsefficiency.
xi. Resizing of Boiler Feed pump impeller of TG # 1, 2 & 8 at Captive Power Plantto reduce the auxiliary power consumption.
xii. Installation of VFD in CEP of TG # 3 to 5 to reduce auxiliary power consumption atCaptive Power Plant.
xiii. Installation of refrigerated air drier in series with existing heatless typeinstrument air driers in unit # 9 & 10 at Captive Power Plant.
xiv. Installation of VFD in two numbers of PA fan of one of the boilers in Unit 3 andcooling Tower # 2 & 3.
5. FOIL DIVISION:
i. Installation of one new pump in pump house for water supply system of the plant.
ii. To provide the infrastructure required for wheeling of power by installing andcommissioning the CT, PT and ABT metering system of 0.2 class of accuracy.
iii. Installation of VFD s in Rolling Mill, Coater & Laminator.
iv. Replacement of old plant & street Lighting with Energy efficient lightingsystem.
6. COPPER DIVISION:
i. To install variable frequency drives in more Energy intensive equipments.
ii. Replacement of conventional light with CFL in the plant.
iii. Installation of Capacitor Bank for power factor improvement.
c. IMPACT OF MEASURES IN (a) AND (b) ABOVE
The various Energy Conservation Measures undertaken by your Company have yieldedencouraging results in most production centers. Efforts continue to further optimizeenergy productivity through ongoing and planned measures.
d. TOTAL ENERGY CONSUMPTION AND ENERGY CONSUMPTION PER TON OF PRODUCTION
(As per Form "A" below)
FORM A
| A. Power & Fuel Consumption | 2009-10 | 2008-09 |
| 1 Electricity | | |
| a) Purchased from SEB’s | | |
| Units (KWH in thousands) | 278,214 | 261,155 |
| Total Amount (Rs. in crores) (excluding Minimum Demand Charges ) | 122 | 110 |
| Rate/Unit (Rs.) | 4.39 | 4.20 |
| b) Own Generation | | |
| i) Through Steam Turbine/Generator | | |
| Units (KWH in thousands) | 9,722,615 | 9,221,098 |
| Cost/Unit (Rs.) (Coal & Fuel only) | 1.26 | 1.25 |
| ii) Through Diesel Generator | | |
| Units (KWH in thousands) | 1,354 | 1,496 |
| Cost/Unit (Rs.) | 12.50 | 14.13 |
| 3 Adjusted out of Banked Energy | | |
| Units (KWH in thousands) | 31,295 | 36,631 |
| 2 Steam Coal (for Generation of Steam) | | |
| Quantity (Tonnes) | 9,730,854 | 9,176,204 |
| Total Amount (Rs. in crores) | 1,337 | 1,244 |
| Average Rate (Rs.) | 1,374 | 1,356 |
| 3 Furnace Oil (Fuel Oil,L.D.Oil,HSD Oil) | | |
| Quantity (KL) | 210,481 | 207,136 |
| Total Amount (Rs. in crores) | 470 | 517 |
| Average Rate (Rs.) | 22,310 | 24,953 |
| 4 Steam (Purchased) | | |
| Quantity (Tonnes) | 243,341 | 237,117 |
| Total Amount (Rs. in crores) | 5 | 5 |
| Average Rate (Rs.) | 207 | 204 |
| B. Consumption per Unit of Production (per MT) | | | |
| Unit | 2009-10 | 2008-09 |
| 1 Aluminium Metal (including Alumina) | | | |
| Electricity | kwh | 15,871 | 15,870 |
| Furnace Oil | Litres | 223 | 228 |
| Steam Coal | MT | 1.528 | 1.477 |
| 2 Redraw Rods (including Alloy Rods) | | | |
| Electricity | kwh | 56 | 59 |
| Furnace Oil | Litres | 22 | 26 |
| 3 Fabricated Products (Rolled & Extrusion) | | | |
| Electricity | kwh | 1,063 | 1,053 |
| Furnace Oil | Litres | 57 | 50 |
| 4 Aluminium Foil | | | |
| Electricity | kwh | 1,368 | 1,029 |
| 5 Aluminium Wheel | | | |
| Electricity | kwh | – | 90 |
| 6 Copper Cathodes | | | |
| Electricity | kwh | 1,504 | 1573 |
| Furnace Oil | Litres | 19 | 24 |
| Propane | Kg | 0.01 | 3 |
| Naptha | Kg | 7 | 34 |
| RLNG | SCM | 69 | 43 |
| 7 Copper Rods | | | |
| Electricity | kwh | 62 | 54 |
| Propane | Kg | – | 1 |
| RLNG | SCM | 48 | 43 |
| 8 Di Ammonium Phopate (DAP/NPK) | | | |
| Electricity | kwh | 175 | 187 |
| Furnace Oil | Litres | 2 | 6 |
Operation at Wheel Plant, Silvassa discontinued.
ANNEXURE ‘B’ TO DIRECTORS’ REPORT
TECHNOLOGY ABSORPTION
Efforts made in Technology Absorptions Form "B"
RESEARCH & DEVELOPMENT (R&D)
FORM B
A. ALUMINIUM BUSINESS
1. Specific Areas in which R&D has been carried out
• Development of High Grade Lithographic Sheet, High Pressure Gas Cylinderapplication, Composite Panel Stock material, Foil Stock Coils and Finstock.
• Development of indigenous hydrophilic coating for Fin-stock.
• Optimization of packing methods across foil business.
• Argon gas was used to see effect of materials in cast structures in order toavoid homogenizing process from production cycle.
• Casting practice was modified to suit production of High Strength - Low Costaluminium specially for defence, ordinance and auto sector product segment.
• Study on recovery of precious metals from Red Mud was undertaken.
• Process development for the reduction of silica content from high-silica bauxiteores.
• Process development for the production of special grade alumina for catalystapplication, Special refractory and ceramic grades.
• Process trials for with anti-scaling additives, coating for chimney, calcinerexit duct and related high corrosion prone areas was carried out to improve processefficiency and elongation of service life.
• Efforts were made to create value from waste generated from plant operations andutilizing it in production chain to minimize cost of inputs for metal production.
• Material development work using special liner to improve slidability of aluminapowder on each
pots feedbox.
• Welding of cast iron grade valve bodies, pressure vessel of extrusion press wasexamined and tested for its soundness and health subsequent to repair.
• Vendor development and capability study was undertaken for procurement ofTension Leveler Rolls with indigenous source.
• Roll failure analysis study was undertaken in collaboration with external stressanalysis service providers ANSYS, Roll Designers and Manufacturers.
• Heat balance studies on Baking furnace to reduce oil consumption.
• New Gauging system alongwith MG slitter with new Technology for better processcontrol.
2. Benefits derived as a result of the above R&D
• Continued leadership in all product segments.
• Reduction in operational, energy and resource cost with focus on improvingefficiency.
• Increased net running time / availability of production equipment.
• Exploratory identification of potential new businesses and improved customersatisfaction.
• Reduced dependency on imports.
3. Future plan of action
• Exploring new aluminium markets and increasing penetration.
• Continue to identify non-value adding / processes and work for its replacementwith value adding processes.
• Capturing new product specification and looking for its feasibility of itsproduction in existing facility like foil for pharmaceutical application, high strengthlow cost aluminium, specialty aluminas and aluminium products.
• Development of anodes for improved electrical and mechanical properties.
• Development of lubricants and oil testing methods for casting operations.
• Roll bending and roll coolant system improvement for customer delight.
B. COPPER BUSINESS
1. Specific areas in which R&D has been carried out
• Improvement in uptime of Cu-1 WHB in smelter to reduce accretion formation andmodification of slide gate dampers in Cu-1 converter.
• Installation and commissioning of new hammering & rapping system in Cu-1Smelter and burner in AF launders of Cu-3 Smelter.
• Reduction in anode weight variation in Cu-3 plant.
• Recovery of Tellurium as Copper Telluride in Refinery.
2. Benefits derived as a result of the above R&D
• New product development.
• Improved plant operation performance, heat recovery, Operational reliability andanode quality.
• Reduction in Converter Blowtime.
• Better life of the water cooled launder and cost saving.
3. Future Plan of action
• Expansion of PMR plant.
• Production of Copper Telluride.
• Development of mineralogical model of Cu-1 Smelter with capability to predictthe FSF performance with different blend.
Expenditure on R & D
| | (Rs. In Crores) |
| 2009-10 | 2008-09 |
| a) Capital | 2.35 | 0.86 |
| b) Recurring | 5.45 | 7.73 |
| c) Total (a+b) | 7.80 | 8.59 |
| d) Total R & D Expenditure as % of Total Turnover | 0.04% | 0.04% |
Technology Absorption, Adaptation and Innovation
i) Efforts in Brief:
• Imported technologies have been fully absorbed and the plant operations arestabilized.
ii) Benefits derived:
• Improvement in plant production capacities.
• Reduction in overall energy consumption.
• Improvement in product quality and reduction in cost.
• New product development.
• Advancement of basic skill and knowledge.
• Reduction in specific consumption of power/utilities.
• Increased Plant availability/capacity.
• Excellent Environment performance.
iii) Details of technology imported in the past 5 years:
| Technology Imported for | Year of Import | Has technology been fully absorbed | If not fully absorbed, areas where this has not taken place, reason thereof and future plan of action |
| ALUMINIUM | | | |
| Clad Sheet manufacturing | 2006-07 | Yes | NA |
| Improvement in quality and productivity of brazing sheet | 2007-08 | Yes | NA |
| High Pressure Double Digestion technology | 2007-08 | Yes | NA |
| COPPER | | | |
| Cryogenic air separation for Oxygen IV | 2005-06 | Yes | NA |
| Cryogenic air separation for Oxygen V | 2006-07 | Yes | NA |
| Molecular Recognition Technology for Bismuth Recovery | 2008-09 | Yes | NA |
| Continuous Cast Rod Plant-II from SouthWire, USA | 2009-10 | Yes | NA |
C. FOREIGN EXCHANGE EARNINGS & OUTGO
a) Activities related to Exports
Exports during the year were Rs. 5,267.58 Crores.
b) Total Foreign Exchange used and earned
Foreign exchange used Rs. 12,213.67 Crores.
Foreign exchange earned Rs. 5,278.64 Crores.