Hindalco's acquisition of Novelis in 2007 for around $6 billion has been one of the largest acquisitions in the industry. Hindalco, which had entered into an agreement in February 2007 for acquiring Novelis, completed the acquisition in May the same year, making the combined entity the world's largest rolled-aluminium producer. Clearly, it added significant scale and size to Hindalco's operations that were largely focussed on India.
The acquisition intended towards forward integration has since then been accruing positives despite challeng-ing business environment. Novelis has cushioned downside in earnings during the crisis as Hindalco felt the heat of downturn in the base metal (aluminium and copper) prices. Per tonne aluminium prices on the LME (London Metal exchange) that were at $3,000 plus levels in FY08 have slumped to sub $2,000 a tonne levels. The price of copper, too, has been quite volatile and from more than $8,000 a tonne levels in 2008, trades at less than $7,000 a tonne levels now. In the backdrop, while on standalone basis Hindalco has seen its revenues grow at 6.63 per cent CAGR (compounded annual growth rate) during FY08-13, the company's PBIDT (profit before interest depreciation and tax) has contracted at four per cent CAGR while profits have fallen by almost 10 per cent CAGR during the FY08-13 period. However, helped by Novelis' contribution on a consolidated level, the company has managed to see its operating profits in the positive terrain growing 3.86 per cent CAGR with profits growing 6.65 per cent FY08-13.
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