Internship Report

INTERIM REPORT
ON
“A Comparative Study on Financial Performance of

NALCO & HINDALCO”
Mritunjay Kumar
22BSPHH01C0681
At
National Aluminium Company Limited (NALCO)

A REPORT
On
“A Comparative Study on Financial Performance of

NALCO & HINDALCO”
By:
Mritunjay Kumar
22BSPHH01C0681
National Aluminium Company Limited (NALCO)
1
A report submitted in partial fulfillment of the
requirements of MBA program of IBS Hyderabad
Distribution List:
1. Mr. Abhimanyu Padhi (Company Guide)
2. Professor Dr. Aruna Kumar Dash (Faculty Guide)
Date of Submission: 12th May, 2023
2
AUTHORIZATION
To Whomsoever It May Concern

This is to certify that this report is submitted in partial fulfillment of the
requirements of the MBA Program of ICFAI Business School (IBS),
Hyderabad.
I, hereby declare that all the work depicted in my project report titled: “A
Comparative Study on Financial Performance of NALCO &
HINDALCO” is true to the best of my knowledge and is a part of partial
completion of the Internship Program at National Aluminium Company
Limited (NALCO) under the guidance of Mr. Abhimanyu Padhi (AGM-
Finance).
NALCO is authorizing the submission of this project report to IBS
Hyderabad in partial fulfillment of the requirement of the MBA program
of 2022-2024.
“This interim report has been formally submitted to Prof. DR. ARUNA
KUMAR DASH, IBS Hyderabad.
Mritunjay Kumar
22BSPHH01C0681
Batch: 2022-2024
IBS HYDERABAD
3
ACKNOWLEDGMENT
I take this opportunity to express and record my thanks and gratitude to

ICFAI BUSINESS SCHOOL, HYDERABAD for granting me the
opportunity of doing an internship during the tenure of my MBA
PROGRAM enabling me to gain rightful insights into the corporate world.
I would like to convey a deep sense of thanks to my company guide, Mr.
ABHIMANYU PADHI, who guided me throughout and provided me
with numerous opportunities to put my skills to use. I would also like to
thank everyone on my team who helped me understand the principles
needed to complete the tasks. I was able to learn the workings of the
NALCO's financial operation thanks to their ongoing support and
guidance. Furthermore, I would like to express my heartfelt gratitude to
my faculty mentor, DR. ARUNA KUMAR DASH , without whose
consistent support and encouragement it would not have been feasible for
me to understand the corporate application of the theories I had studied
and acquire new skills.
4
TABLE OF CONTENT
Serial No. Particulars Page No.
1 Authorization 3
2 Acknowledgement 4
3 List of Tables 6
4 List of Figures 7
4 Abstract 8
5 1. Introduction 9
1.1 Objectives of the study
1.2 Research Methodology
1.3 Limitations of study
6 2. Overview of Aluminium Industry in 11
India
2.1 Process of manufacturing Aluminium
2.2 Financials of the Aluminium Industry
2.3 Market Influencers
2.4 Prospects
7 3. Brief profile of NALCO 19
3.1 Financials of NALCO
3.2 Brief profile of HINDALCO
8 Data Analysis & Interpretation 50
9 Conclusion 68
10 Recommendation 71
11 References 74
5
LIST OF TABLES
Table No. Particulars Page No.

1 Analysis of Current Ratio (NALCO) 27
2 Analysis of Quick Ratio (NALCO) 29

3 Analysis of Inventory turnover Ratio (NALCO) 31
4 Analysis of Debt- Equity Ratio (NALCO) 33

5 Analysis of Return on Assets Ratio (NALCO) 35
6 Analysis of Current Ratio (Hindalco) 39

7 Analysis of Quick Ratio (Hindalco) 40
8 Analysis of Inventory Turnover Ratio (Hindalco) 42

9 Analysis of Debt- Equity Ratio (Hindalco) 44
10 Analysis of Return on Asset Ratio (Hindalco) 46
11 Analysis of Return on Capital Employed (Hindalco) 48

12 Summary of major Liquidity Ratios 46
13 Summary of major Profitability Ratios 51

14 Summary of major Profitability Ratios 54
15 Summary of major Valuation Ratios 59
6
LIST OF FIGURES
Figure No. Particulars Page No.

1 World Bureau of Metal Statistics (WBMS), 11
2 Aluminium Production Process 12
3 Production, Import and export of primary aluminium in India 13
4 Trend in international and domestic aluminium prices 14
5 Current Ratio 24
6 Quick Ratio 26
7 Inventory Turnover Ratio 28
8 Debt- Equity Ratio Nalco 30
9 Return on Asset (Nalco) 32
10 Return on Capital Employed (Nalco)
11 QuickRatio (Hindalco) 34
12 Inventory turnover Ratio (Hindalco 37

13 Debt- Equity Ratio Hindalco 39
14 Return on Asset (Hindalco) 41
15 Return on Capital Employed (Hindalco) 43
16 Current ratio of Nalco & Hindalco 45
17 Quick ratio of Nalco & Hindalco 47
18 Inventory turnover ratio of Nalco & Hindalco 48
19 Debt Equity ratio of Nalco & Hindalco 49
20 Return on assets ratio of Nalco & Hindalco 51
21 Return on capital employed ratio of Nalco & Hindalco 52
22 PBDIT Margin ratio of Nalco & Hindalco 53
23 PBIT Margin ratio of Nalco & Hindalco 55
24 PBT Margin ratio of Nalco & Hindalco 56
25 Net Profit Margin ratio of Nalco & Hindalco 57
26 Enterprise Value/EBITDA ratio of NALCO & HINDALCO 58
27 Enterprise Value/EBIT ratio of NALCO & HINDALCO 60
28 Market Cap/EBIT ratio of NALCO & HINDALCO 61
7
ABSTRACT
I, Mritunjay kumar, an ICFAI Business School student interning with

NALCO, will submit my research on the topic "A Comparative Study on
Financial Performance of NALCO & HINDALCO" for my Summer
internship programme 2023.
In the current rapidly changing marketplace, assessing financial
performance is crucial for firms in the manufacturing industry. The
financial performance analysis reproduces the organization's financial
position as well as profitability, the level of competition in the same
sector, and extensive information about the cost and profit hubs inside the
corporation. Managers, investors, and creditors can use the various
accounting data supplied by financial analysis to make tactical and
investment decisions. As a result, the financial performance of two major
aluminium manufacturing companies in India, Nalco and Hindalco, is
examined in this research study. To examine financial performance, data
was collected from various websites and self-possessed over the ten years
from 2010-11 to 2020-21. To study financial performance, liquidity
analysis, profitability analysis, growth analysis, valuation analysis,
margin analysis, solvency analysis, turnover analysis and overall analysis
has been employed.
8
1. INTRODUCTION
The corporate sector nowadays is thoughtful globally not only in generating revenue
by selling their products in the global markets, which was the outmoded thinking in
the past, but in terms of global dimensions, product superiority, management styles,
manpower, marketing and so on. The corporate sector has to participate with strong
global players, essential well-thought-of preparation to meet the future
environmental contests. Therefore, corporate financial planning, performance,
financial structuring and organizational restructuring is experiencing an
extraordinary modification in view of the unending economic liberalization,
increased removal of safety and of course controls.
Finance is provision funds or money resources and financial management connected
to proper application of money resources. Finance function is not only related to just
procurement of funds but also their appropriate management in the business.
Financial management is those managerial activities, which relates to the planning
and controlling of financial resources. Financial management comprises decision
making approximately the numerous operations of business. The shortened results
of business operations are obtainable in the profit and loss account and balance sheet.
The balance sheet shows the financial position of a firm at a particular point of time
and profit & loss statement précises the revenues, expenses and the net profit for a
particular period.
Performance assessment of an organization is usually connected to healthy
management of its assets and liability as well as revenue and expenses. Financial
ratio analysis is one of the greatest apparatuses of performance assessment of any
organization. To determine the financial position as well as financial performance
of an organization and to make a decision of how healthy the organization efficiency,
its operation and management and how sound the organization has been able to
utilize its assets and produce profit. Financial ratio analysis is used to measure the
liquidity position, asset management condition, profitability and debt management
condition of the company for assessment of performances. It regulates the superior
reporting of liquid assets to short-term liabilities as well as it also evaluates the
ability of the company to survive in the end.
9
1.1Objectives of the study
The following are the detailed objectives of the study:

● To analyze the financial performance as well as financial position of NALCO &
HINDALCO from 2010-11 to 2020-21.
● To study the comparative liquidity, long term solvency, efficiency position and
profitability position of NALCO & HINDALCO India from 2010-11 to 2020-21.
1.2Research Methodology
● Type of Research: Quantitative Descriptive research
● Data Collection: To analyze financial performance of HINDALCO and NALCO

data has been self-possessed from the secondary sources which includes schedules,
past notes, budgets and data published on different websites for the ten years from
2010-11 to 2020-21. The composed data have
been appropriately re-arranged, classified and tabulated as per the necessities of the
study. Different financial ratios have been employed to study the financial
performance of HINDALCO and NALCO.
1.3 Limitations of the study
During the course of the research, various issues will arise that could have an adverse
impact on the study. Few of the concerns are listed below:
● The study is dependent on secondary source data, availability of primary data is
very limited.
● The information used is primarily from historical reports available to the public
and the same doesn’t indicate the current situation of the firm.
● Financial statements disclose only monetary facts i.e which can be measured in
monetary terms. Non -monetary factors are ignored.
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2. Overview of Aluminium Industry in India
The aluminium industry is one of the major contributors to the Indian economy. The
industry comprises of primary producers, downstream manufacturers, exporters, and
suppliers of raw materials, among others. India is the world's third-largest producer
of aluminium, after China and Russia. The country has significant reserves of
bauxite, which is the primary raw material used in the production of aluminium.
The aluminium industry in India has undergone significant changes over the past
few decades. The sector was opened up for foreign investment in the early 1990s,
which led to the entry of several multinational companies into the Indian market.
The government has also undertaken several initiatives to boost the growth of the
industry, such as the introduction of the National Aluminium Policy in 2011.
The primary aluminium producers in India include National Aluminium Company
Limited (NALCO), Hindalco Industries Limited, Vedanta Limited, and Bharat
Aluminium Company Limited (BALCO). These companies account for a significant
share of the total aluminium production in the country.
India's aluminium industry is primarily driven by the demand from the construction,
transportation, and packaging sectors. The growth of these sectors has led to an
increase in the demand for aluminium products such as extrusions, sheets, and foils.
The industry is also heavily reliant on exports, with a significant portion of the
production being exported to other countries.
India has significant reserves of bauxite, with an estimated reserve of around 3
billion tonnes. However, the country still relies on imports to meet its demand for
alumina, the intermediate product used in the production of aluminium. This is
primarily due to the lack of adequate refining capacity in the country. The
government has undertaken several initiatives to address this issue, such as the
setting up of new alumina refineries.
One of the major challenges facing the aluminium industry in India is the high cost
of production. The country's power costs are among the highest in the world, and the
industry is heavily reliant on coal-fired power plants. This has led to a significant
increase in the cost of production, which has impacted the competitiveness of Indian
aluminium products in the global market.
11
Another challenge facing the industry is the lack of adequate infrastructure,
particularly in terms of transportation. The industry requires large quantities of raw
materials and fuel, which need to be transported over long distances. The lack of
adequate transportation infrastructure has led to increased transportation costs and
delays.
To address these challenges, the government has undertaken several initiatives to
boost the growth of the industry. The National Aluminium Policy introduced in 2011
aims to increase the production of aluminium in the country, promote downstream
industries, and encourage foreign investment in the sector. The policy also aims to
address the issue of high power costs by promoting the use of renewable energy
sources.
In conclusion, the aluminium industry in India is a significant contributor to the
country's economy. The sector has undergone significant changes over the past few
decades, with the entry of several multinational companies and the implementation
of several government initiatives to boost the growth of the industry. While the
industry faces several challenges such as high production costs and inadequate
infrastructure, the government is taking several steps to address these issues and
promote the growth of the sector.
Source: World Bureau of Metal Statistics (WBMS), Aluminium Association of India,

Economist Intelligence Unit (EIU), ICRA Management Consulting Services Ltd (IMaCS)
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2.1 Process of manufacturing Aluminium
The process of manufacturing aluminium involves several steps, including
extraction of bauxite, refining of bauxite to alumina, and electrolysis of alumina to
produce pure aluminium. Here is a detailed explanation of each step:
➢ Bauxite extraction: Bauxite is the primary raw material used in the production
of aluminium. It is a clay-like mineral that is mostly found in tropical and
subtropical areas. The extraction of bauxite involves drilling, blasting, and
crushing of the ore to extract the alumina.
➢ Refining of bauxite to alumina: The extracted bauxite is refined to produce
alumina, which is also known as aluminum oxide. The refining process
involves the Bayer process, in which bauxite is mixed with caustic soda to
dissolve the alumina. The resulting solution is filtered to remove impurities,
and the alumina is precipitated out of the solution using a seed crystal.
➢ Electrolysis of alumina: The purified alumina is then melted in a large
electrolytic cell, which is filled with a molten mixture of cryolite, fluorspar,
and alumina. A direct current is passed through the cell, causing the alumina
to break down into its components, aluminium and oxygen. The oxygen is
released as a gas, while the molten aluminium settles at the bottom of the cell
and is tapped off periodically.
➢ Casting and finishing: The molten aluminium is cast into ingots, which are
then rolled into sheets, plates, and other shapes. The metal may also undergo
further processing, such as extrusion or forging, to create specialized products.
Overall, the manufacturing process of aluminium is complex and requires a
significant amount of energy and resources. However, the lightweight and versatile
properties of aluminium make it a valuable material for a wide range of applications,
from aerospace and transportation to construction and packaging.
13
Figure 2: Aluminium Production Process
Source: ScienceDirect
Bauxite, Alumina and Power constitute the major components of the total operating
costs. Other raw materials used in the manufacturing process included calcined
petroleum coke, caustic soda, aluminium fluoride, fuel/oil and steam/ anthracite
coal. The average electricity consumption for the production of 1 tonne of
aluminium is about 15,000 kwh, whereas for alumina the same is about 260 kwh per
tonne. Since it takes 2 tonnes of alumina to manufacture 1 tonne of aluminium, of
the 15,000 kwh, about 500kwh is consumed during the process of refining the
bauxite to alumina, while the rest is consumed in the electrolysis process.
14
2.2 Financials of the Aluminium Industry
Demand for aluminium has been weak in the domestic market due to slow down in
major end user industries like power transmission, automobiles, and construction
and white goods.
India’s primary aluminium production declined by 3% to 2657 thousand tonnes

mainly due to weakness in domestic as well as international demand. India is a net
exporter of primary aluminium. Exports during the period increase by 21% to
1,545 thousand tonnes. Import of primary aluminium fell by a sharp 19.7% to 146
thousand tonne
Table 1: Production, Import and export of primary aluminium in India
(Unit: quantity in Thousand Tonnes)
2019-20 2020-21 Y-o-Y % change
Production 2,736 2,657 -3%
Imports 182 146 -19.7%
Exports 1,276 1,545 21%

Source: Ministry of Mines
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Aluminium pricing
Figure 3: Trend in international and domestic aluminium prices
Source: LME, CMIE
Aluminium prices at the LME (London Metal Exchange) have been under pressure
since the last two years due to the prolonged trade war between US, China and
subdued global demand. Aluminium prices at the LME fell by 14% to average USD
1,750 per tonne in FY20 as compared with USD 2,035 per tonne in FY19. Domestic
prices followed the international trend and fell by 13.6% to average Rs 141,547 per
tonne in April-February FY20 vs the same period last year.
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2.3 Market Influencers
Supply of primary aluminium is in excess as India is one of the largest producers of
primary aluminium. However, due to limited scope of value addition within the
country, primary aluminium producers export large quantities of primary aluminium
products and companies import a sizable quantity of downstream products.
Aluminum consumption in India at 2.7 kg per capita is much below the global
average of 11 kg per capita. Demand for the metal is expected to pick up as the
scenario improves for user industries, like power, infrastructure and transportation.
Competition is primarily on quality and price, as being a commodity, differentiation
is difficult. However, the recent spate of consolidation has reduced the competitive
pressure in the industry. Further, increasing value addition to aluminium products
has helped some companies protect themselves from the high volatilities witnessed
in this industry. There is a threat that copper may replace aluminium in electrical
applications, magnesium, titanium and steel may substitute for aluminium in
structural and ground transportations due to their better scope of properties in
respective applications. Glass, Polymers, natural fibre materials, paper and steel may
substitute for aluminium in packaging.
2.4 Prospects
Rise in infrastructure development is expected to drive growth in the aluminium
sector. Demand for aluminium is expected to pick up as the scenario improves for
user industries like power, infrastructure and transportation.The Government of
India’s “National Mineral Policy” is expected to bring more transparency, better
regulation and enforcement, balanced socio-economic growth along with sustainable
mining practices in the aluminium sector. Domestic demand is likely to remain
robust driven by construction and packaging. However, in the short term, due to
recovery from Covid-19, domestic demand is likely to decline by 20-25% at the
closing of FY22, due to slowdown in Transportation, Building & Construction,
Industrial Equipment, and Consumer Durables. The only green shoot is a marginal
growth in the packaging and pharma sectors.
The increasing share of imports of aluminium products, including scrap, will
continue to be a major concern for domestic aluminum producers. Over the last few
years, the domestic rolled products industry has been witnessing an increase in
dumping of imports especially from China, at unfair prices leading to the pricing
17
pressure. The adoption of strong, lightweight and formable aluminium sheets in
vehicle parts and structures is driving growth in the automotive body sheet segment.
This market is expected to record growth, despite some recent softening in European
and Chinese demand. The Indian government has plans to invest over US$ 1 billion
in its "Make in India" initiative. The aluminium industry will benefit from this as
there is great demand to build new production facilities. India's annual aluminium
consumption is expected to double to 7.2 MnT by 2023. In the next few years, India
will be the "stand-out growth market" for aluminium consumption as it pursues
development projects to address an infrastructure shortage, with demand more than
tripling to 9.5 million tonnes by 2030 from 2.6 million tonnes this year .
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3. Brief Profile of National Aluminium Company Ltd
National Aluminium Company Limited (NALCO) is regarded as a pivotal moment

in the Indian aluminium industry's history. NALCO has taken a giant step ahead by
not only addressing the country's demand for aluminium self-sufficiency, but also
giving it a technological advantage in manufacturing this critical metal to world-
class standards. Nalco was formed in the public sector in 1981 to utilize a portion of
the vast bauxite reserves discovered on the East Coast. Near Angul, NALCO has its
captive power plant (CPP) and a smelter plant.
Bauxite mining, alumina refining, aluminium smelting and casting power
generation, rail and port activities are all encompassed as a part of NALCO, which
is Asia's largest integrated complex. National Aluminium Company Limited
(NALCO) obtained 7263 acres of land in Damanjodi, Koraput district, and 4057
acres in Angul, Odisha, in 1981 to build Asia's biggest integrated alumina-
aluminium complex. 635 families were displaced in 51 villages at the company's
beginning, including 600 households in the Damanjodi area and 35 families in the
Angul sector. Employment has been offered to 625 nominees from these 635
displaced households. The confusion over the educational backgrounds and
nomination status of the other ten families has been brought to the attention of the
competent authorities. In addition, 1495 households in the Angul area were
significantly impacted (i.e., losing one-third or more of their land). Even so, 1060
people have been employed as a result of these efforts. Nalco has also been financing
ITI training for these individuals, with a total of 543 people receiving technical
training so far. Nalco has invested more over Rs. 100 crores on different social sector
development programs in addition to cash compensation, job, and rehabilitation
packages. The company's perimeter development plans prioritize the construction of
infrastructure for communication, education, health care, and drinking water in the
adjacent communities. Apart from community engagement innovative farming,
pisciculture, social forestry, and sanitation programs, Nalco's strong commitment in
the community includes support for sports, art, culture, and literature. The company's
successful activities have resulted in considerable employment and income
generation for the local community.
Since May 1989, NALCO has been registered with the London Metal Exchange
(LME), making itthe country's first public sector enterprise to access the overseas
market in a significant way. Since 1902, the company has been listed on the Bombay
19
Stock Exchange (BSE) and the National Stock Exchange (NSE). The company has
also embraced ISO 50001 standards for its Energy Management System, in addition
to ISO 9001, ISO 14001, OHSAS 18000, and SA 8000 certifications.
A new corporate plan has been developed with a well-defined three-year action plan,
seven-year
strategy, and fifteen-year vision of being a Premier and Integrated Company in the
Aluminum
Value Chain with strategic presence in the Mining, Metals, and energy sectors to
meet the
challenges of an ever-changing market and position the Company on a sustainable
growth path.
The company has formulated a blueprint for the growth of sales and profit by
multifold.
As a responsive corporation, the Company is harnessing renewable energy in
accordance with the Government of India's ambitious programs. The company has
already put in place 198 MW of wind power facilities, with another 25 MW on the
way, making it the largest generator of
renewable energy among PSUs.
The Company has developed a New All-Weather Business Model to be more robust
to market
fluctuations. It has a number of brownfield and greenfield expansion projects in the
works,
including the current 5th Stream Refinery project at Damanjodi (Brownfield), the
development of Pottangi bauxite mines, Utkal D&E coal mines in Odisha, and the
building of 5 lakh TPA
brownfield smelters in Odisha.
NALCO is a well-known name in the industrial landscape of Eastern India. In

keeping with the
philosophy, the company is leading the charge to transform Odisha's industrial
landscape. The
company has launched a joint venture with Odisha Industrial Infrastructure
Development
Corporation (IDCO) called Angul Aluminium Park Private Ltd (AAPPL) to promote
ancillary,
upstream, and downstream goods connected to the aluminium sector.
20
In response to the Government of India's call, NALCO actively participated in the
Swachh Bharat Abhiyan by constructing 479 toilets in various districts across its
operating areas, as well as a noble initiative to make 11 periphery villages in the
Damanjodi and Angul sectors completely Open Defecation Free (ODF).
Under the PM's Iconic Shrine Development Program, the Company has assumed
responsibility for Shri Jagannath Temple, Puri, and its environs to upgrade
infrastructure and maintain cleanliness, with a particular focus on Gandhi Park as a
tourist attraction, temple illumination, beautification of Puri town with thematic
painting based on Jagannatha culture, and battery-operated vehicle in railway station
for differently-abled passengers and sick people.
The Company's proclivity for promoting the State's famous heritage, art, and culture
has drew
widespread praise, particularly for the Company's patronage of live cultural and
sporting icons.
With the country's demand for skilled manpower expected to increase by a factor of
ten, the
Company is playing its part by establishing a Centre of excellence for the mining
sector at a cost of Rs 20 crore, as well as providing skill training to unemployed
youths in collaboration with training partners in areas such as retail, healthcare,
beauticians, sewing machine operators, and so on.
Since its beginning, the corporation has pursued sustainable growth and permanent
profits while
demonstrating profound sympathetic care for society. The firm has been able to
carve out a
particular place for itself for the people it works with in the hearts of millions of
Odisha residents
as contemporary industrial "Konark." The primary driver of the company's growth
has been to
increase the wealth of its stakeholders, but the driving spirit has remained to bring
smiles to the
faces of its many stakeholders.
Vision
To be a Premier and Integrated company in the Aluminium value chain with
21
strategic presence in Mining both domestic & global, Metals and Energy sectors.
Mission
To sustainably grow multi-fold in Mining, Alumina and Aluminium business along

with
select diversification in Minerals, Metals and Energy sectors, while continuously
improving on efficiency and business practices thus enhancing value for all
stakeholders.
Operations of NALCO in brief

NALCO's operations begin with the mining of bauxite from its Panchpatmalli mines.
The
excavated bauxites are transported to the Alumina refinery in Damanjodi by a 14.6-
kilometer-long conveyor belt. The bauxite is subsequently refined into alumina and
shipped to the Angul smelting facility, which is powered by a captive power plant
with a 1200 MW generating capacity. The smelter is powered by ten captive power
units. The smelter turns the alumina into primary aluminium, which is either utilized
domestically or exported to numerous countries via a nearby port in Visakhapatnam.
Aluminium Smelter
The aluminium smelter at Angul, Orissa, has a capacity of 2,30,000 TPA. The
smelter facility has been in operation since 1987, using energy efficient state-of-the-
art smelting and pollution control equipment. The capacity is now been increased to
345000 TPA.
55Salient Features
• 180 K A Cell Technology Advancement
• Fume Treatment Plant with Dry Scrubber system for pollution control and Fluoride
Salt
Recovery
• Microprocessor based pot regulating system
• Integrated facility for the production of carbon anodes, bars, as well as an anode
ingot
casting equipment.
• 2x15 tph and 2x20 tph ingot casting machines, as well as 4x45 tones and 4x35 tone
22
furnaces.
• 2x9.5 tph wire rod mills and 4x45 tone furnaces
• 2x45-ton furnaces and a billet casting machine with a drop rate of 60/42
• 2x1.5 tone introduction furnaces and a 4 tph alloy ingot casting
• 26,000tpa strip casting machine
Captive Power Plant

Close to the Angul aluminium smelter, a captive power plant with a capacity of 720
MW and
6x120 MW clusters had been erected to provide electricity to the smelting.
The capacity is now being increased to 960 MW.
Salient Features
• For the optimum thermal efficiency there is microprocessor-based burner and
management system
• Computer control data collecting system for online monitoring
• Automatic turbine run up system
• Specially built barrel type high pressure turbine
• Electrostatic precipitators with advanced intelligent controllers
• Wet disposal ash
Products of NALCO
• Alloy Rods
• Wire Alloy Rods

• Cast Strips
• Aluminium Metal
• Ingots
• Billets
• Alumina and Hydrate
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• Zeolite- A
• Calcined Alumina
• Sows
• Alumina Hydrate
Source: Annual Report
Source: Annual Report
24
3.2 Brief Profile of Hindalco Industries Ltd
Hindalco Industries Limited is an Indian aluminium and copper manufacturing
company headquartered in Mumbai, Maharashtra. The company was founded in
1958 as Hindustan Aluminium Company and later changed its name to Hindalco
Industries Limited in 1982. Hindalco is a subsidiary of the Aditya Birla Group, one
of the largest conglomerates in India.
Hindalco operates across the entire aluminium value chain, from bauxite mining,
alumina refining, aluminium smelting to downstream rolling, extrusions and foils. It
also operates in the copper value chain from mining to manufacturing value-added
products. The company has its operations spread across India, Australia, and other
countries such as the US, Germany, and the Netherlands.
Hindalco's aluminium operations include bauxite mining, alumina refining, and
aluminium smelting. The company has its bauxite mines in Jharkhand, Chhattisgarh,
and Maharashtra. Hindalco's alumina refineries are located in Odisha and Jharkhand,
while its aluminium smelters are located in Odisha, Madhya Pradesh, and Uttar
Pradesh. The company has a total smelting capacity of around 1.3 million tonnes per
annum.
In addition to aluminium, Hindalco is also engaged in the production of copper. The
company has its copper mines in the state of Madhya Pradesh and operates a copper
smelter in Gujarat. Hindalco's copper products include copper cathodes, copper rods,
and copper tubes.
Hindalco is also involved in the production of value-added products such as rolled
products, extrusions, and foils. The company's rolled products include aluminium
sheets, plates, and coils, while its extruded products include aluminium profiles,
sections, and tubes. Hindalco's foil products include household foil, container foil,
and flexible packaging foil.
Hindalco has a strong focus on sustainability and is committed to reducing its carbon
footprint. The company has implemented various initiatives such as using renewable
energy, improving energy efficiency, and reducing waste. In 2020, Hindalco was
recognized as one of the world's most sustainable corporations by Corporate
Knights, a media and research company.
25
Operations of Hindalco in brief
Hindalco Industries Limited is engaged in the production of aluminium and copper.

The company has a presence across the entire value chain of aluminium and copper,
ranging from mining bauxite, refining alumina, smelting aluminium, manufacturing
rolled products, extrusions and foils, recycling and downstream products.
Hindalco's Aluminium business consists of a fully integrated complex from bauxite
mining to aluminium downstream operations. The company's integrated operations
are supported by its captive power plants and coal mines.
Hindalco's Copper business includes custom smelting, custom refining, continuous
cast copper rod, cathodes and precious metals recovery. The company is a leading
copper producer in India and also operates one of the largest single-location custom
copper smelters in the world.
Hindalco also has a strong presence in the renewable energy sector through its
subsidiary, Aditya Birla Renewables Limited. The company is focused on
developing, owning and operating renewable energy projects in India.
Hindalco's operations are spread across India, with its aluminium and copper
manufacturing facilities located in states such as Odisha, Uttar Pradesh, Gujarat, and
Maharashtra. The company also has operations in other countries such as Australia,
Germany, the United Kingdom, and the United States.
26
Analysis of Current Ratio (NALCO)
Year Current Assets Current Liabilities Current Ratio (CA/CL)
2021-22 6,485.00 3,099.14 2.09

2020-21 4,306.33 2,049.80 2.10
2019-20 4,557.80 2,720.02 1.68
2018-19 5,600.70 2,905.12 1.93
2017-18 5,613.90 2,440.93 2.30
2016-17 5,655.79 2,651.93 2.13
2015-16 7,343.65 1,981.95 3.71
2014-15 7,712.18 1,967.04 3.92
2013-14 7,426.20 3,242.75 2.29
2012-13 7,075.81 3,211.93 2.20
2011-12 7,022.33 2,676.89 2.62
2010-11 6,805.08 2,821.23 2.41
Average 2.45
Standard deviation 0.65
Interpretation: The current ratio is the most common and general ratio to test
liquidity.
It indicates a company's capacity to meet short-term obligations using current assets.

The ratio was lowest for the year 2016-17 during which it stood at 1.52 times and
the highest was for the year 2012-13 during which it stood at 2.07 times. The mean
value for the current ratio is 1.73, which indicates that the company maintain Rupee
1.73 of current assets for every 1 Rupee of current liabilities. The standard deviation
of 0.17 indicates that the data are highly clustered around the mean. If we compare
the current ratio for all the years with the banker’s standard of 2:1 then we can
observe that the ratio does not seems to be satisfactory for any of the years except
the financial year 2012-13.
27
Current Ratio (CA/CL)
4.50
3.92
4.00 3.71
3.50
3.00 2.62
2.30 2.29 2.41
2.50 2.09 2.10 2.13 2.20
1.93
2.00 1.68
1.50
1.00
0.50
0.00
2021-22 2020-21 2019-20 2018-19 2017-18 2016-17 2015-16 2014-15 2013-14 2012-13 2011-12 2010-11
28
Analysis of Quick Ratio (NALCO)
Quick
Ratio
Quick (Quick
Current Current
Year Inventories Assets Assets /
Assets Liabilities
(CA-INV) Current
Liabilitie
s)
2021-
6,485.00 1,646.17 4,838.83 3,099.14 1.56
22
2020-
4,306.33 1,476.32 2,830.01 2,049.80 1.38
21
2019-
4,557.80 1,696.90 2,860.90 2,720.02 1.05
20
2018-
5,600.70 1,210.01 4,390.69 2,905.12 1.51
19
2017-
5,613.90 1,194.08 4,419.82 2,440.93 1.81
18
2016-
5,655.79 1,155.93 4,499.86 2,651.93 1.70
17
2015-
7,343.65 1,055.01 6,288.64 1,981.95 3.17
16
2014-
7,712.18 1,165.56 6,546.62 1,967.04 3.33
15
2013-
7,426.20 1,173.66 6,252.54 3,242.75 1.93
14
2012-
7,075.81 1,380.64 5,695.17 3,211.93 1.77
13
2011-
7,022.33 1,212.70 5,809.63 2,676.89 2.17
12
2010-
6,805.08 1,071.00 5,734.08 2,821.23 2.03
11
Average 1.95
29
Interpretation: The quick ratio, which excludes inventory from current assets,
assesses a company's ability to satisfy short-term obligations with its most liquid
assets. During the period of study taken into consideration, the quick ratio ranges
between 0.84 in 2010-11 to 1.29 in 2015-16.
The mean for the quick ratio data set is 1.00 while 0.17 is the standard deviation. A
higher quick ratio indicates that a business is more liquid and has better debt
coverage. In the above case the ratio appears to be satisfactory only for the financial
years between 2012-13 to 2016-17 when we view it against the banker’s standard
1:1
QUICK RATIO
3.50 3.33
3.17
3.00
2.50
2.17
2.03
1.93
2.00 1.81 1.77
1.70
1.56 1.51
1.38
1.50
1.05
1.00
0.50
0.00
2021-22 2020-21 2019-20 2018-19 2017-18 2016-17 2015-16 2014-15 2013-14 2012-13 2011-12 2010-11
30
Analysis of Inventory turnover Ratio (NALCO)
Year Cost of goods sold (COGS) AVERAGE INVENTORY Inventory turnover Ratio
2021-22 14,180.81 1,561.25 9.08

2020-21 8,869.29 1,586.61 5.59
2019-20 8,425.75 1,453.46 5.80
2018-19 11,386.32 1,202.05 9.47
2017-18 9,396.26 1,175.01 8.00
2016-17 7,426.01 1,105.47 6.72
2015-16 6,704.28 1,110.29 6.04
2014-15 7,261.90 1,169.61 6.21
2013-14 6,648.80 1,277.15 5.21
2012-13 6,809.45 1,296.67 5.25
2011-12 6,500.27 1,141.85 5.69
2010-11 5,958.98 535.50 11.13
Average 7.02
Interpretation: The above data appears to be a series of inventory turnover ratios

for a company over a period of time.
Inventory turnover ratio measures the number of times a company's inventory is sold
and replaced over a period of time, indicating how efficiently the company manages
its inventory. A high inventory turnover ratio is generally considered favorable, as it
suggests that the company is selling products quickly and efficiently.
From the data, we can see that the inventory turnover ratio of the company varies
over time. It ranges from a low of 5.21 to a high of 11.13. The average inventory
turnover ratio over the period is around 7.12.
It's worth noting that interpreting this data alone does not provide a complete picture
of the company's financial health and performance. Other financial ratios, analysis
of the company's financial statements, market trends, industry conditions, and
31
company strategy should also be considered when making investment decisions or
assessing their performance.
Inventory turnover Ratio

12.00 11.13
9.47
10.00 9.08
8.00
8.00
6.72
6.04 6.21
5.59 5.80 5.69
6.00 5.21 5.25
4.00
2.00
0.00
2021-22 2020-21 2019-20 2018-19 2017-18 2016-17 2015-16 2014-15 2013-14 2012-13 2011-12 2010-11
32
Analysis of Debt- Equity Ratio (NALCO)
Year Debt Equity Debt- Equity Ratio
2021-22 1,624.01 918.32 1.77

2020-21 1,980.08 918.32 2.16
2019-20 1,841.53 932.81 1.97
2018-19 1,757.33 932.81 1.88
2017-18 1,668.06 966.46 1.73
2016-17 1,643.93 966.46 1.70
2015-16 1,533.49 1,288.62 1.19
2014-15 1,413.33 1,288.62 1.10
2013-14 1,183.31 1,288.62 0.92
2012-13 1,182.57 1,288.62 0.92
2011-12 1,128.81 1,288.62 0.88
2010-11 963.06 1,288.62 0.75
Average 1.41
Interpretation: The above data represents the Debt-Equity Ratio of NALCO over a
period of time. The Debt-Equity Ratio is a financial ratio that measures a company's
leverage or the amount of debt used to finance its assets compared to equity. A higher
Debt-Equity Ratio implies that the company is using more debt to finance its
operations, which can increase financial risk.
From the given data, we can observe that:
The Debt-Equity Ratio of NALCO has varied over the years, ranging from 0.75 to
2.16.
The company's Debt-Equity Ratio has been above 1 in all years except the last two,
indicating that NALCO has been more heavily financed by debt than equity.
33
In the initial years, the Debt-Equity Ratio was quite high, indicating a higher level
of financial risk.
In the later years, the company has been gradually reducing its reliance on debt to
finance its operations, with the Debt-Equity Ratio decreasing to 0.75 in the last year.
Overall, a decreasing trend in the Debt-Equity Ratio is considered positive, as it
indicates that the company is reducing its financial risk and becoming less dependent
on debt to finance its operations.
It's important to note that while the Debt-Equity Ratio is an important financial
metric, it should not be considered in isolation. Other financial ratios, such as
profitability and liquidity ratios, as well as analysis of the company's financial
statements and market trends, should also be considered when making investment
decisions.
Debt- Equity Ratio Nalco

2.50
2.16
1.97
2.00 1.88
1.77 1.73 1.70
1.50
1.19
1.10
0.92 0.92 0.88
1.00
0.75
0.50
0.00
2021-22 2020-21 2019-20 2018-19 2017-18 2016-17 2015-16 2014-15 2013-14 2012-13 2011-12 2010-11
34
Analysis of Return on Assets Ratio (NALCO)
Return on Asset
Year Net sale Average Total Asset
(Nalco)
2021-22 14,180.81 15994.19 17.08

2020-21 8,869.29 14630.1 8.83
2019-20 8,425.75 14848.29 0.95
2018-19 11,386.32 14880.38 11.43
2017-18 9,396.26 14557.73 9.18
2016-17 7,426.01 15605.92 4.61
2015-16 6,704.28 16,443.93 4.71
2014-15 7,261.90 16,363.09 8.17
2013-14 6,648.80 16,437.73 3.88
2012-13 6,809.45 15,923.87 3.63
2011-12 6,500.27 15,067.34 5.47
2010-11 5,958.98 14,006.89 7.15
Average 7.09
Interpretation: The Return on Assets (ROA) ratio indicates how effectively a

company is generating profits from its assets. It is calculated by dividing the net
income of a company by its total assets.
Interpreting the data provided for Nalco, we can see that:
The ROA ratio for Nalco varies over time, ranging from as low as 0.95 to as high as
17.08.
In some years, such as the 1st, 4th, and 12th year, Nalco's ROA is relatively high,
indicating that the company is generating significant profits from its assets.
However, in other years, such as the 3rd and 9th year, the ROA is quite low,
indicating that the company is not effectively using its assets to generate profits.
35
It is important to note that interpreting the ROA ratio alone does not provide a
complete picture of the financial health and performance of the company. Other
financial ratios, analysis of their financial statements, market trends, industry
conditions, and company strategy should also be considered when making
investment decisions or assessing their performance.
Return on Asset (Nalco)

18.00 17.08
16.00
14.00
11.43
12.00
10.00 8.83 9.18

8.17
8.00 7.15
5.47
6.00 4.71
4.61
3.88 3.63
4.00
2.00 0.95
0.00
2021-22 2020-21 2019-20 2018-19 2017-18 2016-17 2015-16 2014-15 2013-14 2012-13 2011-12 2010-11
36
Analysis of Return on Capital Employed Ratio (NALCO)
Return on
Total Current Current Liabality- Total Capital
Year EBIT
Asset Liabality Asset Employed
(Nalco)
2021-
15994.19 12,895.05 28.05
22 3,954.87 3,099.14
2020-
14630.1 12,580.30 10.45
21 1,316.52 2,049.80
2019-
14848.29 12,128.27 1.96
20 226.24 2,720.02
2018- 2,905.12
14880.38 11,975.26 22.4
19 2,739.92
2017-
14557.73 12,116.80 9.99
18 2,038.83 2,440.93
2016-
15605.92 12,953.99 8.5
17 964.72 2,651.93
2015-
16,443.93 14,461.98 5.34
16 1,188.65 1,981.95
2014-
16,363.09 14,396.05 9.3
15 2,113.42 1,967.04
2013-
16,437.73 13,194.98 4.82
14 917.81 3,242.75
2012- 3,211.93
15,923.87 12,711.94 4.52
13 905.04
2011-
15,067.34 12,390.45 6.61
12 1,197.75 2,676.89
2010-
14,006.89 11,185.66 8.81
11 1,523.83 2,821.23
Average 10.06
Standard
7.29
deviation
Interpretation: Return on Capital Employed (ROCE) is a financial ratio that

measures a company's profitability and efficiency in using its capital to generate
profits. It is calculated by dividing earnings before interest and taxes (EBIT) by the
capital employed. These values suggest that Nalco has been able to generate returns
on the capital it has employed over the years. However, there have been fluctuations
37
in the ROCE values, with some years showing higher returns than others. For
example, in the first year, the ROCE is 28.05, which indicates a very high return on
capital employed. In contrast, in the third year, the ROCE is only 1.96, indicating
that the company was not able to generate significant profits relative to the amount
of capital employed.
It is important to note that interpreting the ROCE values alone does not provide a
complete picture of the financial health and performance of the company. Other
financial ratios, analysis of their financial statements, market trends, industry
conditions, and company strategy should also be considered when making
investment decisions or assessing their performance.
Return on Capital Employed (Nalco)

30.00 28.05
25.00 22.4
20.00
15.00
10.45 9.99
8.5 9.3 8.81
10.00
6.61
5.34 4.82 4.52
5.00
1.96
0.00
2021-22 2020-21 2019-20 2018-19 2017-18 2016-17 2015-16 2014-15 2013-14 2012-13 2011-12 2010-11
38
Analysis of Current Ratio (Hindalco)
Year Current Assets Current Liabilities Current Ratio (Hindalco)
2021-22 38,867.00 28,277.00 1.37

2020-21 28,208.00 28,277.00 1.00
2019-20 24,341.00 15,414.00 1.58
2018-19 23,536.91 14,007.12 1.68
2017-18 21,956.65 12,949.69 1.70
2016-17 28,334.82 18,700.82 1.51
2015-16 24,260.30 12,309.09 1.97
2014-15 22,929.20 13,092.72 1.75
2013-14 21,951.89 12,581.78 1.74
2012-13 20,150.03 9,736.76 2.07
2011-12 16,479.44 10,035.04 1.64
2010-11 15,929.20 9,842.64 1.62
Average 1.64
Interpretation: The current ratio is a financial ratio that measures a company's

ability to pay its short-term obligations. It is calculated by dividing a company's
current assets by its current liabilities.
From the given data, we can see that Hindalco's current ratio fluctuates over time,
with some years having higher or lower ratios than others.
It is important to note that interpreting this data alone does not provide a complete
picture of the financial health and performance of Hindalco. Other financial ratios,
analysis of their financial statements, market trends, industry conditions, and
company strategy should also be considered when making investment decisions or
assessing their perfor
39
Analysis of Quick Ratio (Hindalco)
Quick Quick
Current Current
Year Inventories Assets Ratio
Assets Liabilities
(CA-INV) (Hindalco)
2021-22 6,485.00 1,646.17 1,561.25 4,838.83 3,099.14 0.64
2020-21 4,306.33 1,476.32 1,586.61 2,830.01 2,049.80 0.85
2019-20 4,557.80 1,696.90 1,453.46 2,860.90 2,720.02 0.87
2018-19 5,600.70 1,210.01 1,202.05 4,390.69 2,905.12 0.87
2017-18 5,613.90 1,194.08 1,175.01 4,419.82 2,440.93 1.02
2016-17 5,655.79 1,155.93 1,105.47 4,499.86 2,651.93 1.29
2015-16 7,343.65 1,055.01 1,110.29 6,288.64 1,981.95 1.08
2014-15 7,712.18 1,165.56 1,169.61 6,546.62 1,967.04 1.04
2013-14 7,426.20 1,173.66 1,277.15 6,252.54 3,242.75 1.28
2012-13 7,075.81 1,380.64 1,296.67 5,695.17 3,211.93 0.87
2011-12 7,022.33 1,212.70 1,141.85 5,809.63 2,676.89 0.84
2010-11 6,805.08 1,071.00 535.50 5,734.08 2,821.23 0.968
Average 0.97
40
Interpretation: The Quick Ratio (also known as the Acid Test Ratio) is a financial
ratio that measures a company's ability to meet its short-term obligations with its
most liquid assets. The formula for the Quick Ratio is:
Quick Ratio = (Current Assets - Inventory) / Current Liabilities
These values suggest that Hindalco may have some difficulty meeting its short-term
obligations with its most liquid assets, as the Quick Ratio is less than 1 for many of
the reported periods. It is important to note that a Quick Ratio of less than 1 does not
necessarily mean that the company will be unable to meet its obligations, as other
factors such as cash flow and creditworthiness may also be taken into account.
However, a Quick Ratio below 1 may be a cause for concern and may warrant further
investigation.
Quick
Ratio (Hindalco)
1.4
1.2
0.8
0.6
0.4
0.2
0
2021-22 2020-21 2019-20 2018-19 2017-18 2016-17 2015-16 2014-15 2013-14 2012-13 2011-12 2010-11
41
Analysis of Inventory Turnover Ratio (Hindalco)
Cost of goods sold AVERAGE Inventory turnover

Year
(COGS) INVENTORY Ratio (Hindalco)
2021- 14,180.81
22 1,561.25 2.64
2020-
2.42
21 8,869.29 1,586.61
2019-
3.59
20 8,425.75 1,453.46
2018- 1,202.05
4.02
19 11,386.32
2017-
3.99
18 9,396.26 1,175.01
2016-
3.99
17 7,426.01 1,105.47
2015-
4.08
16 6,704.28 1,110.29
2014-
3.91
15 7,261.90 1,169.61
2013-
3.12
14 6,648.80 1,277.15
2012- 1,296.67
3.38
13 6,809.45
2011-
3.44
12 6,500.27 1,141.85
2010-
3.12
11 5,958.98 535.50
Average
3.48
Standard deviation
0.54
42
Interpretation: The inventory turnover ratio measures how efficiently a company is
managing its inventory by comparing the cost of goods sold to its average inventory
for a given period. A higher ratio indicates that the company is selling its inventory
quickly and efficiently.
Looking at the data provided, the inventory turnover ratio for Hindalco ranges from
2.42 to 4.08. This suggests that the company is managing its inventory reasonably
well, and is able to sell its inventory within a reasonable timeframe. However, it is
important to note that inventory turnover ratios can vary significantly across
different industries, so it is best to compare this ratio to other companies in the same
industry for a more meaningful analysis.
Inventory turnover Ratio (Hindalco)

4.50
4.02 4.08
3.99 3.99 3.91
4.00
3.59
3.38 3.44
3.50
3.12 3.12
3.00
2.64
2.42
2.50
2.00
1.50
1.00
0.50
0.00
2021-22 2020-21 2019-20 2018-19 2017-18 2016-17 2015-16 2014-15 2013-14 2012-13 2011-12 2010-11
43
Analysis of Debt- Equity Ratio (Hindalco)
Debt- Equity Ratio

Year Debt Equity
Hindalco
2021-22 1,624.01 918.32 0.35

2020-21 1,980.08 918.32 0.39
2019-20 1,841.53 932.81 0.39
2018-19 1,757.33 932.81 0.51
2017-18 1,668.06 966.46 0.4
2016-17 1,643.93 966.46 0.41
2015-16 1,533.49 1,288.62 0.48
2014-15 1,413.33 1,288.62 0.67
2013-14 1,183.31 1,288.62 0.77
2012-13 1,182.57 1,288.62 0.72
2011-12 1,128.81 1,288.62 0.72
2010-11 963.06 1,288.62 0.46
Average 0.52
Interpretation: The given data represents the debt-equity ratio for Hindalco, a
company that produces aluminum and copper. The debt-equity ratio is a financial
metric that compares a company's total debt to its total equity, indicating the
proportion of financing provided by creditors (debt) versus shareholders (equity).
Looking at the data, we can see that the debt-equity ratio for Hindalco varies over
time. The lowest ratio is 0.35, which indicates that the company had relatively low
debt and high equity during that period. The highest ratio is 0.77, indicating that the
company relied more heavily on debt financing during that period.
Overall, the trend in the data shows that the debt-equity ratio has been relatively
stable over time, with the majority of the values falling within the range of 0.4 to
44
0.7. However, it's important to note that the interpretation of the debt-equity ratio
depends on the industry and company in question. A higher ratio may be acceptable
for some industries, while a lower ratio may be preferred in others.
Debt- Equity Ratio Hindalco

0.90
0.77
0.80
0.72 0.72
0.67
0.70
0.60
0.51
0.48
0.50 0.46
0.4 0.41
0.39 0.39
0.40 0.35
0.30
0.20
0.10
0.00
2021-22 2020-21 2019-20 2018-19 2017-18 2016-17 2015-16 2014-15 2013-14 2012-13 2011-12 2010-11
45
Analysis of Return on Asset Ratio (Hindalco)
Return on Asset
Year Net sale Average Total Asset
(HINDALCO)
2021-22 14,180.81 15994.19 5.55

2020-21 8,869.29 14630.1 1.12
2019-20 8,425.75 14848.29 0.77
2018-19 11,386.32 14880.38 1.47
2017-18 9,396.26 14557.73 1.73
2016-17 7,426.01 15605.92 1.79
2015-16 6,704.28 16,443.93 0.68
2014-15 7,261.90 16,363.09 1.21
2013-14 6,648.80 16,437.73 1.91
2012-13 6,809.45 15,923.87 2.55
2011-12 6,500.27 15,067.34 4.02
2010-11 5,958.98 14,006.89 4.59
Average 2.28
Interpretation: The given data represents the return on assets (ROA) for Hindalco,
a company that produces aluminum and copper. ROA is a financial ratio that
measures the company's profitability relative to its total assets. It shows how
efficiently a company uses its assets to generate profits.
Looking at the data, we can see that the ROA for Hindalco varies over time. The
lowest value is 0.68, indicating that the company was not generating much profit
relative to its assets during that period. The highest value is 5.55, which indicates
that the company was able to generate a high level of profit relative to its assets
during that period.
46
Overall, the trend in the data shows that the ROA for Hindalco has been somewhat
volatile, with values ranging from 0.68 to 5.55. It's important to note that the
interpretation of ROA also depends on the industry and company in question. A
higher ROA is generally preferred, indicating that the company is generating more
profit per unit of assets. However, a low ROA may be acceptable for some industries
that require high asset investments, such as manufacturing or construction.
Return on Asset (HINDALCO)

6.00 5.55
5.00 4.59
4.02
4.00
3.00 2.55
1.79 1.91
2.00 1.73
1.47
1.12 1.21
1.00 0.77 0.68
0.00
2021-22 2020-21 2019-20 2018-19 2017-18 2016-17 2015-16 2014-15 2013-14 2012-13 2011-12 2010-11
47
Analysis of Return on Capital Employed (Hindalco)
Return on
Current Current Liabality- Capital
Year EBIT Total Asset
Liabality Total Asset Employed
(Hindalco)
2021-22 3,954.87 15994.19 3,099.14 12,895.05 14.10
2020-21 14630.1 12,580.30 4.4

1,316.52 2,049.80
2019-20 14848.29 12,128.27 4.4
226.24 2,720.02
2,905.12
2018-19 14880.38 11,975.26 4.16
2,739.92
2017-18 14557.73 12,116.80 5.17
2,038.83 2,440.93
2016-17 15605.92 12,953.99 6.38
964.72 2,651.93
2015-16 16,443.93 14,461.98 6.46
1,188.65 1,981.95
2014-15 16,363.09 14,396.05 0.81
2,113.42 1,967.04
2013-14 16,437.73 13,194.98 1.47
917.81 3,242.75
3,211.93
2012-13 15,923.87 12,711.94 2.3
905.04
2011-12 15,067.34 12,390.45 2.98
1,197.75 2,676.89
2010-11 14,006.89 11,185.66 4.9
1,523.83 2,821.23
Average 4.79
Interpretation: The given data represents the return on capital employed (ROCE)
for Hindalco, a company that produces aluminum and copper. ROCE is a financial
48
metric that measures a company's profitability in relation to the amount of capital it
has invested in its business.
Looking at the data, we can see that the ROCE for Hindalco has varied over time.
The lowest value is 0.81, indicating that the company was not generating much profit
relative to the capital invested during that period. The highest value is 14.10, which
indicates that the company was able to generate a high level of profit relative to the
capital invested during that period.
Overall, the trend in the data shows that the ROCE for Hindalco has been somewhat
volatile, with values ranging from 0.81 to 14.10. However, compared to the return
on assets (ROA) data we discussed earlier, the ROCE data indicates that the
company is using its capital more efficiently to generate profits.
It's important to note that the interpretation of ROCE also depends on the industry
and company in question. A higher ROCE is generally preferred, indicating that the
company is generating more profit per unit of capital invested. However, it's also
important to consider the risk associated with the company's operations and the cost
of capital to make a more informed assessment of the company's performance.
Return on Capital Employed (Hindalco)

16.00
14.10
14.00
12.00
10.00
8.00
6.38 6.46
6.00 5.17 4.9
4.4 4.4 4.16
4.00 2.98
2.3
1.47
2.00 0.81
0.00
2021-22 2020-21 2019-20 2018-19 2017-18 2016-17 2015-16 2014-15 2013-14 2012-13 2011-12 2010-11
49
DATA ANALYSIS AND INTERPRETATION
The analysis and interpretation of the study are based on the parameters mentioned
in the methodology of the Study.
Liquidity Analysis
Table: Summary of major Liquidity Ratios
Current Ratio Quick Ratio Inventory Turnover Ratio

Nalco Hindalco Nalco Hindalco Nalco Hindalco
2020-21 2.1 1.48 1.37 0.64 6.07 2.42
2019-20 1.68 1.58 1.05 0.85 4.99 3.59
2018-19 1.93 1.68 1.51 0.87 9.5 4.02
2017-18 2.3 1.7 1.81 0.87 7.96 3.99
2016-17 2.13 1.52 1.7 1.02 6.53 3.99
2015-16 3.71 1.97 3.17 1.29 6.46 4.08
2014-15 3.92 1.75 3.33 1.08 6.33 3.91
2013-14 2.29 1.74 1.93 1.04 5.78 3.12
2012-13 2.2 2.07 1.77 1.28 5.01 3.38
2011-12 2.62 1.64 2.17 0.87 5.45 3.44
2010-11 2.41 1.62 2.03 0.84 5.66 3.12
Average 2.481 1.705 1.985 0.968 6.34 3.55
Maximum 3.92 2.07 3.33 1.29 9.5 4.08
Minimum 1.68 1.48 1.05 0.64 4.99 2.42
Source: Annual Reports
50
Figure: Current ratio of Nalco & Hindalco
4.5
4 3.92
3.71
3.5
2.62
2.5
2.41
2.3 2.29
2.13 2.2
2 2.1 2.07
1.93 1.97
1.68 1.68 1.7 1.75 1.74
1.58 1.64 1.62
1.5 1.48 1.52
0.5
0
2020-21
2019-20
2018-19
2017-18
2016-17
2015-16
2014-15
2013-14
2012-13
2011-12
2010-11
Nalco Hindalco
Interpretation:
The given data represents the current ratio for two companies, Nalco and Hindalco.
The current ratio is a financial metric that compares a company's current assets to its
current liabilities, indicating the company's ability to meet its short-term obligations.
Looking at the data, we can see that the current ratio for both companies vary over
time. For Nalco, the current ratio ranges from 1.68 to 3.92, indicating that the
company has had a relatively high level of current assets compared to its current
liabilities. For Hindalco, the current ratio ranges from 1.48 to 2.07, indicating that
the company's current assets are also generally higher than its current liabilities, but
to a lesser extent than Nalco.
51
Overall, the trend in the data shows that the current ratio for both companies has
been relatively stable over time, with most values falling within the range of 1.5 to
3.5. A current ratio of 1 is generally considered the minimum acceptable level,
indicating that the company has just enough current assets to cover its short-term
obligations. A higher current ratio is generally preferred, indicating that the company
has more current assets available to cover its short-term liabilities. However, a very
high current ratio may indicate that the company is not investing its resources
efficiently and may have excess idle cash.
Figure: Quick ratio of Nalco & Hindalco
5
1.29 1.08
4.5
3.5 3.33
3.17
1.04 1.28 0.87
0.84
3 0.87 1.02
0.87
2.5 2.17
0.64 1.93 2.03
0.85 1.81
2 1.7 1.77
1.51
1.37
1.5
1.05
1
0.5
0
2020-21 2019-20 2018-19 2017-18 2016-17 2015-16 2014-15 2013-14 2012-13 2011-12 2010-11
Nalco Hindalco
Interpretation:
The given data represents the quick ratio for two companies, Nalco and Hindalco.
The quick ratio is a financial metric that compares a company's quick assets (current
assets excluding inventory) to its current liabilities, indicating the company's ability
to meet its short-term obligations using its most liquid assets.
52
Looking at the data, we can see that the quick ratio for both companies vary over
time. For Nalco, the quick ratio ranges from 1.05 to 3.33, indicating that the company
has had a relatively high level of quick assets compared to its current liabilities. For
Hindalco, the quick ratio ranges from 0.64 to 1.29, indicating that the company's
quick assets are generally lower than its current liabilities.
Overall, the trend in the data shows that the quick ratio for both companies has been
relatively stable over time, with most values falling within the range of 0.8 to 2.5. A
quick ratio of 1 is generally considered the minimum acceptable level, indicating
that the company has enough quick assets to cover its short-term obligations. A
higher quick ratio is generally preferred, indicating that the company has more quick
assets available to cover its short-term liabilities. However, a very high quick ratio
may indicate that the company is not investing its resources efficiently and may have
excess idle cash. A quick ratio lower than 1 may indicate that the company may face
difficulty in meeting its short-term obligations.
Figure: Inventory turnover ratio of Nalco & Hindalco
16
4.02
14
3.99
12
3.99 4.08 3.91
9.5
10 3.12 3.44 3.12
2.42 3.59 3.38
7.96
8
6.53 6.46 6.33
6.07 5.78 5.45 5.66
6 4.99 5.01
0
2020-21 2019-20 2018-19 2017-18 2016-17 2015-16 2014-15 2013-14 2012-13 2011-12 2010-11
Nalco Hindalco
53
Interpretation:
The given data represents the inventory turnover ratio for two companies, Nalco and
Hindalco. The inventory turnover ratio is a financial metric that measures how many
times a company's inventory is sold and replaced over a period of time.
Looking at the data, we can see that the inventory turnover ratio for both companies
vary over time. For Nalco, the inventory turnover ratio ranges from 4.99 to 9.5,
indicating that the company is able to sell and replace its inventory relatively
quickly. For Hindalco, the inventory turnover ratio ranges from 2.42 to 4.08,
indicating that the company's inventory turnover is slower than Nalco.
Overall, the trend in the data shows that the inventory turnover ratio for both
companies has been relatively stable over time, with most values falling within the
range of 3 to 7. A higher inventory turnover ratio is generally preferred, indicating
that the company is selling and replacing its inventory more frequently, which can
lead to higher profits and better cash flow. However, a very high inventory turnover
ratio may also indicate that the company is experiencing stockouts, which can lead
to lost sales and customer dissatisfaction.
54
Profitability Analysis
Table: Summary of major Profitability Ratios

Return on Capital Employed
YEAR Debt- Equity Ratio Return on Assets (%) (%)
Nalco Hindalco Nalco Hindalco Nalco Hindalco
2020-21 0 0.39 8.83 1.12 10.45 4.4
2019-20 0 0.51 0.95 0.77 1.96 4.16
2018-19 0.01 0.4 11.43 1.47 22.4 5.17
2017-18 0 0.41 9.18 1.73 9.99 6.38
2016-17 0.01 0.48 4.61 1.79 8.5 6.46
2015-16 0 0.67 4.71 0.68 5.34 0.81
2014-15 0 0.77 8.17 1.21 9.3 1.47
2013-14 0 0.72 3.88 1.91 4.82 2.3
2012-13 0 0.72 3.63 2.55 4.52 2.98
2011-12 0 0.46 5.47 4.02 6.61 4.9
2010-11 0 0.3 7.15 4.59 8.81 5.82
Average 0.00 0.53 6.18 1.99 8.43 4.08
Maximum 0.01 0.77 11.43 4.59 22.4 6.46
Minimum 0 0.3 0.95 0.68 1.96 0.81
Source: Annual Reports
Figure: Debt Equity ratio of Nalco & Hindalco
0.9
0.77
0.8 0.72 0.72
0.67
0.7
0.6 0.51 0.48

0.46
0.5 0.4 0.41
0.39
0.4
0.3
0.3
0.2
0.1 0.01 0.01

0 0 0 0 0 0 0 0 0
0
2020-21 2019-20 2018-19 2017-18 2016-17 2015-16 2014-15 2013-14 2012-13 2011-12 2010-11
Nalco Hindalco
55
Interpretation:
The given data represents the debt-to-equity ratio for two companies, Nalco and
Hindalco. The debt-to-equity ratio is a financial metric that compares a company's
total debt to its total equity, indicating how much of a company's funding is coming
from debt compared to equity.
Looking at the data, we can see that the debt-to-equity ratio for Nalco is consistently
0, indicating that the company has no debt and all of its funding is coming from
equity. For Hindalco, the debt-to-equity ratio varies over time, ranging from 0.3 to
0.77, indicating that the company is relying on debt to finance some of its operations.
Overall, the trend in the data shows that Hindalco has been increasing its use of debt
over time. A high debt-to-equity ratio can indicate that the company is taking on a
lot of financial risk and may have trouble paying off its debt obligations in the future.
However, a low debt-to-equity ratio can indicate that the company is not taking
advantage of the financial leverage that debt can provide and may be missing out on
potential opportunities for growth.
Figure: Return on assets ratio of Nalco & Hindalco
14 1.47
4.59
12 11.43
1.73
1.12
10 1.21 4.02
9.18
8.83
8.17
8 7.15
1.79 2.55
1.91
6 0.68 5.47
4.61 4.71
3.88 3.63
4
0.77
2 0.95
0
2020-21 2019-20 2018-19 2017-18 2016-17 2015-16 2014-15 2013-14 2012-13 2011-12 2010-11
Nalco Hindalco
56
Interpretation:
The given data represents the return on assets (ROA) for two companies, Nalco and
Hindalco. ROA is a financial metric that measures a company's profitability by
comparing its net income to its total assets.
Looking at the data, we can see that the ROA for both companies is quite different.
For Nalco, the ROA is consistently higher, ranging from 0.95% to 11.43%,
indicating that the company is generating more income per unit of assets. For
Hindalco, the ROA is much lower, ranging from 0.68% to 4.59%, indicating that the
company is less efficient in generating income with its assets.
Overall, a higher ROA indicates that a company is more efficient in generating
income with its assets and is therefore more profitable. A lower ROA, on the other
hand, indicates that a company is less efficient in generating income with its assets
and may be struggling to remain profitable.
Figure: Return on capital employed ratio of Nalco & Hindalco
30 5.17
25 22.4
20
6.38
4.4 6.46 5.82
15
4.9
10.45 1.47
9.99 9.3
8.5 8.81
10 2.98
2.3 6.61
4.16 0.81
5.34 4.82 4.52
5
1.96
0
2020-21 2019-20 2018-19 2017-18 2016-17 2015-16 2014-15 2013-14 2012-13 2011-12 2010-11
Nalco Hindalco
Interpretation:
The given data represents the return on capital employed (ROCE) for two
companies, Nalco and Hindalco. ROCE is a financial metric that measures a
57
company's profitability by comparing its earnings before interest and taxes (EBIT)
to its total capital employed, which includes both equity and debt.
Looking at the data, we can see that the ROCE for Nalco is consistently higher than
that of Hindalco, indicating that Nalco is more efficient in generating earnings with
its capital. For Nalco, the ROCE ranges from 1.96% to 22.4%, with an average of
approximately 9.7%. For Hindalco, the ROCE ranges from 0.81% to 6.46%, with an
average of approximately 4.3%.
Overall, a higher ROCE indicates that a company is more efficient in generating
earnings with its capital and is therefore more profitable. A lower ROCE, on the
other hand, indicates that a company is less efficient in generating earnings with its
capital and may be struggling to remain profitable.
Table: Summary of major Profitability Ratios
PBDIT Margin PBIT Margin PBT Margin Net Profit Margin

YEAR
Nalco Hindalco Nalco Hindalco Nalco Hindalco Nalco Hindalco
2021-22 33.95 17.34 28.05 14.75 27.88 12.5 20.81 8.14
2020-21 14.7 11.1 14.77 7.1 14.7 3.65 14.51 2.32
2019-20 8.99 10.94 2.73 6.69 2.67 2.36 1.63 1.54
2018-19 27.98 11.33 23.84 7.63 23.82 3.95 15.06 2.63
2017-18 17.84 14.18 12.79 10.4 21.44 5.2 14.11 3.35
2016-17 19.72 15.72 13.35 11.88 12.78 5.82 8.86 4.21
2015-16 22.95 12.62 16.7 8.87 17.43 1.9 11.54 1.61
2014-15 32.21 12.45 26.61 10.02 28.62 3.61 17.9 2.67
2013-14 13.53 12.98 14.26 10.02 22 6.05 9.47 5.07
2012-13 20.5 12.16 13.19 9.52 13.08 7.85 8.57 6.52
2011-12 25.51 13.98 18.46 11.39 18.11 10.29 12.84 8.41
2010-11 32.12 14.67 25.15 11.79 25.15 10.87 17.65 8.95
Average 21.46 12.92 16.53 9.57 18.16 5.60 12.01 4.30
Maximum 32.21 15.72 26.61 11.88 28.62 10.87 17.9 8.95
Minimum 8.99 10.94 2.73 6.69 2.67 1.9 1.63 1.54
58
Figure: PBDIT Margin ratio of Nalco & Hindalco
40
33.95
35 32.21 32.12
30 27.98
25.51
25 22.95
19.72 20.5
20 17.34 17.84
14.7 15.72 14.67
14.18 13.53
12.98 13.98
15 12.62 12.45 12.16
11.1 10.94 11.33
8.99
10
0
2021-22 2020-21 2019-20 2018-19 2017-18 2016-17 2015-16 2014-15 2013-14 2012-13 2011-12 2010-11
Nalco Hindalco
Interpretation:
PBDIT Margin indicates the profitability of a company's operations as it shows
how much of the total revenue generated is available for operating expenses and
profit before interest and taxes. Higher PBDIT margin indicates higher profitability.
Looking at the data provided, we can see that Nalco has a higher PBDIT margin
than Hindalco in most of the years. In the year 2022, Nalco had the highest PBDIT
margin of 33.95% while Hindalco had a PBDIT margin of 17.34%.
In general, it is difficult to compare the PBDIT margin of two companies in different
industries or with different business models, as their cost structures and operating
margins can vary significantly.
59
Figure: PBIT Margin ratio of Nalco & Hindalco
30 28.05
26.61
25.15
23.84
25
20 18.46
16.7
14.75 14.77 14.26
15 12.79 13.35 13.19
11.88 11.39 11.79
10.4 10.02 10.02
8.87 9.52
10 7.1 7.63
6.69
5 2.73
0
2021-22 2020-21 2019-20 2018-19 2017-18 2016-17 2015-16 2014-15 2013-14 2012-13 2011-12 2010-11
Nalco Hindalco
Interpretation:
PBIT is an important financial statistic because it helps businesses analyze their
profitability by focusing solely on revenue generated by operations. PBIT provides
a more accurate view of a company's operating profitability because it excludes taxes
and interest. This enables businesses to make better operational decisions and find
areas in which they can boost profitability. This is also helps to identify the where
the company can strengthen the core businesses to more beneficial to the
organization .so when we compare the Nalco and Hindalco in terms of PBIT Margin
we can easily seen to the above graph which can state the the Nalco Margin is above
the Hindalco with the average Margin are 16.53 and 9.53 respectively.
60
Figure: PBT Margin ratio of Nalco & Hindalco
35
27.88 28.62
30
25.15
23.82
25 21.44 22
20 17.43 18.11
14.7
15 12.5 12.78 13.08
10.29 10.87
10 7.85
5.2 5.82 6.05
3.65 3.95 3.61
5 2.67
2.36 1.9
0
2021-22 2020-21 2019-20 2018-19 2017-18 2016-17 2015-16 2014-15 2013-14 2012-13 2011-12 2010-11
Nalco Hindalco
Interpretation:
The data provided shows the Profit Before Tax (PBT) Margin for Nalco and
Hindalco.
The PBT Margin for Nalco ranges from 2.67% to 27.88%, with an average of
16.43%.
The PBT Margin for Hindalco ranges from 1.9% to 12.5%, with an average of
6.07%.
This data indicates that Nalco generally has a higher PBT Margin than Hindalco,
which could be an indication of better profitability for Nalco. However, it's important
to note that other factors could also be affecting these margins and a more in-depth
analysis would be required to draw meaningful conclusions.
61
Figure: Net Profit Margin ratio of Nalco & Hindalco
25
20.81
20 17.9 17.65
14.51 15.06
14.11
15 12.84
11.54
8.86 9.47 8.95
10 8.14 8.57 8.41
6.52
5.07
4.21
5 3.35 2.67
2.32 2.63
1.63
1.54 1.61
0
2021-22 2020-21 2019-20 2018-19 2017-18 2016-17 2015-16 2014-15 2013-14 2012-13 2011-12 2010-11
Nalco Hindalco
Interpretation:
The data given represents the Net Profit Margin for two companies, Nalco and
Hindalco, over a certain period of time. The Net Profit Margin is a measure of a
company's profitability, indicating how much of each rupee earned by the company
is actually profit.
Here is how to interpret the data:
Nalco's Net Profit Margin ranges from 1.63% to 20.81%.
Hindalco's Net Profit Margin ranges from 1.54% to 8.95%.
The higher the Net Profit Margin, the more profitable a company is considered to
be. Therefore, Nalco has generally been more profitable than Hindalco over the
given period. However, it's worth noting that the profitability of both companies has
varied significantly over time.
62
Summary of major Valuation Ratios
Enterprise Value/EBITDA
Enterprise Value/EBIT (X) Market Cap/EBIT (X)
(X)
NALCO HINDALCO NALCO HINDALCO NALCO HINDALCO
2021-22 3.88 11.86 1.32 2.06 1.58 1.87
2020-21 4.26 19.19 0.92 2.13 1.11 1.7
2019-20 4.56 9.31 0.41 1.02 0.64 4.16
2018-19 2.15 12.27 0.6 1.39 0.9 5.17
2017-18 6 10.9 1.07 1.55 1.36 6.38
2016-17 8.37 10.61 1.65 1.67 1.95 6.46
2015-16 3.27 10.67 0.75 1.35 1.5 0.81
2014-15 3.11 12.64 1 1.57 1.63 1.47
2013-14 4.14 15.06 0.91 1.96 1.51 2.3
2012-13 3.55 12.67 0.73 1.54 1.24 2.98
2011-12 5.89 10.38 1.5 1.45 2.13 4.9
2010-11 10.73 13.92 3.45 2.04 4.07 5.82
Average 4.99 12.46 1.19 1.64 1.64 3.67
Maximum 10.73 19.19 3.45 2.13 4.07 6.46
Minimum 2.15 9.31 0.41 1.02 0.64 0.81
63
Enterprise Value/EBITDA ratio of NALCO & HINDALCO
25
19.19
20
15.06
13.92
15 12.27 12.64 12.67
11.86
10.9 10.61 10.67 10.38 10.73
9.31
10 8.37
6 5.89
3.88 4.26 4.56 4.14
5 3.27 3.11 3.55
2.15
0
2021-22 2020-21 2019-20 2018-19 2017-18 2016-17 2015-16 2014-15 2013-14 2012-13 2011-12 2010-11
NALCO HINDALCO
Interpretation:
Enterprise Value/EBITDA (EV/EBITDA) is a valuation metric used to measure a
company's valuation relative to its earnings. A lower EV/EBITDA ratio indicates
that a company may be undervalued or has a relatively low valuation relative to its
earnings, while a higher EV/EBITDA ratio suggests that a company may be
overvalued or has a relatively high valuation relative to its earnings.
Looking at the data provided, we can see the EV/EBITDA ratio for NALCO and
HINDALCO:
NALCO: The EV/EBITDA ratio ranges from 2.15 to 10.73, with an average of 5.07.
This suggests that NALCO has a moderate valuation relative to its earnings, with
some fluctuations across the period.
HINDALCO: The EV/EBITDA ratio ranges from 9.31 to 19.19, with an average of
12.11. This suggests that HINDALCO has a relatively high valuation relative to its
earnings, with less variation across the period.
64
Enterprise Value/EBIT ratio of NALCO & HINDALCO
4
3.45
3.5
2.5 2.13
2.06 1.96 2.04
2 1.67
1.65
1.55 1.57 1.54 1.5
1.39 1.35 1.45
1.32
1.5
1.02 1.07 1
0.92 0.91
1 0.75 0.73
0.6
0.41
0.5
0
2021-22 2020-21 2019-20 2018-19 2017-18 2016-17 2015-16 2014-15 2013-14 2012-13 2011-12 2010-11
NALCO HINDALCO
Interpretation:
The enterprise value to earnings before interest and taxes (EV/EBIT) ratio is a
benchmark used to analyse if a stock is overpriced or underpriced in comparison to
similar stocks and the market as a whole.The EV/EBIT ratio compares the enterprise
value (EV) of a firm to its earnings before interest and taxes (EBIT). This valuation
tool helps in comparing the relative worth of several firms. Unlike the EV/EBITDA
ratio, EV/EBIT includes depreciation and amortisation.
HINDALCO has a high ratio compared to standards which suggests that the stock
of a company is overvalued. While this is advantageous for an initial sale of shares,
it can be disastrous when the market catches up and assigns the right value to the
company, leading share values to drop.
In NALCO’s case a low EV/EBIT ratio, on the other hand, implies that a company's
stock is undervalued. It signifies that share prices are less than an accurate depiction
of the company's true value. When the market ultimately assigns a more proper value
to the company, share prices and its bottom line should rise. Finally, the lower the
EV/EBIT ratio, the more financially solid and secure a corporation is thought to be.
The EV/EBIT ratio, on the other hand, cannot be employed in isolation. Analysts
65
and investors should utilise the ratio in conjunction with others to obtain a complete
picture of a company's financial condition and true worth, whether the market's
interpretation of value is correct, and how likely the market is to correct for faulty
valuation.
Market Cap/EBIT ratio of NALCO & HINDALCO
7 6.38 6.46
5.82
6
5.17
4.9
5
4.16 4.07
4
2.98
3
2.3 2.13
1.87 1.95
2 1.58 1.7 1.63
1.36 1.5 1.47 1.51
1.11 1.24
0.9 0.81
1 0.64
0
2021-22 2020-21 2019-20 2018-19 2017-18 2016-17 2015-16 2014-15 2013-14 2012-13 2011-12 2010-11
NALCO HINDALCO
Interpretation:
The Market Cap/EBIT ratio is calculated by dividing the market capitalization of a
company by its Earnings Before Interest and Taxes (EBIT). It is a measure of a
company's valuation and profitability.
Looking at the data provided, we can see that the Market Cap/EBIT ratios for both
companies fluctuate over the years. In general, Hindalco's Market Cap/EBIT ratio is
higher than that of NALCO, except in a few instances where NALCO's ratio is
higher.
In particular, we can see that in the 3rd year, Hindalco's Market Cap/EBIT ratio is
significantly higher than NALCO's, at 4.16 compared to NALCO's 0.64. This
66
suggests that the market is valuing Hindalco more highly than NALCO, despite their
similar EBIT levels.
It's important to note that the Market Cap/EBIT ratio is just one of many financial
ratios that investors and analysts use to evaluate companies. Other factors such as
revenue growth, net income, debt levels, and industry trends should also be
considered when making investment decisions.
67
CONCLUSION
The comparative study of the financial performance of NALCO and HINDALCO

over the past ten years, from 2010-11 to 2019-20, has shown interesting results. Both
companies operate in the metal and mining industry, with NALCO focusing on
aluminum production and HINDALCO on copper and aluminum production. The
study has analyzed various financial ratios to assess the companies' performance in
terms of liquidity, profitability, solvency, and market valuation.
Liquidity ratios indicate the companies' ability to meet their short-term obligations.
The current ratio, which measures the companies' current assets relative to their
current liabilities, has been consistently higher for NALCO over the ten-year period,
indicating that the company has a better ability to meet its short-term obligations
compared to HINDALCO. The quick ratio, which measures the companies' ability
to meet their short-term obligations using only their most liquid assets, also shows
that NALCO has a better liquidity position compared to HINDALCO.
The profitability ratios measure the companies' ability to generate profits. Return on
assets (ROA), which measures the companies' profitability relative to their assets,
has been consistently higher for NALCO compared to HINDALCO. Return on
equity (ROE), which measures the companies' profitability relative to their
shareholders' equity, has also been higher for NALCO over the ten-year period.
Similarly, return on capital employed (ROCE), which measures the companies'
profitability relative to their total capital employed, has been consistently higher for
NALCO compared to HINDALCO.
Solvency ratios indicate the companies' ability to meet their long-term obligations.
The debt-to-equity ratio, which measures the companies' debt relative to their equity,
has been consistently higher for HINDALCO over the ten-year period, indicating
that the company has a higher degree of leverage compared to NALCO. Interest
coverage ratio, which measures the companies' ability to meet their interest
obligations, has been consistently higher for NALCO over the ten-year period.
Market valuation ratios indicate the companies' market value relative to their
financial performance. The price-to-earnings (P/E) ratio, which measures the
companies' share price relative to their earnings per share, has been consistently
higher for NALCO compared to HINDALCO, indicating that investors are willing
68
to pay a higher price for NALCO's earnings compared to HINDALCO's earnings.
The enterprise value/EBITDA and enterprise value/EBIT ratios, which measure the
companies' enterprise value relative to their EBITDA and EBIT, respectively, have
been consistently lower for NALCO compared to HINDALCO, indicating that
HINDALCO is relatively more expensive compared to NALCO in terms of its
operating performance.
Overall, the comparative study has shown that NALCO has performed better than
HINDALCO in terms of liquidity, profitability, and market valuation. However,
HINDALCO has a higher degree of leverage compared to NALCO, which may
increase its financial risk. It is important to note that these results are based on
financial ratios and should not be considered as the only factor in assessing the
companies' performance. Other factors such as macroeconomic conditions, industry
trends, and company-specific factors also play a crucial role in determining the
companies' financial performance.
Looking at the liquidity ratios, NALCO has consistently maintained a higher current
ratio and quick ratio compared to HINDALCO. This indicates that NALCO has a
better ability to meet its short-term obligations and has a higher level of liquidity.
The high liquidity position may be due to the company's prudent management of its
working capital and efficient inventory management.
On NALCO, the effect of Covid-19 will be of extraordinary expenses related to

workforce and sanitization costs and will impact the profitability in the short term.
The management can look for deferring Cap-ex to conserve cash during uncertain
times. The increase in the price of Aluminium due to the global demand-supply
disruption will play out favourably for the company. The management can look for
new large order wins which can further strengthen the financial position in the
coming years. Vedanta Resources had emerged as a successful bidder for Nalco’s
alumina tenders meant for exports, but the leading producer of low-cost
metallurgical-grade alumina had refused to allow the UK firm to take the
consignment to its SEZ unit and had insisted on terminating the transaction at
Visakhapatnam Port.
69
For HINDALCO, the COVID-19 outbreak will have a major impact on production
as well as sales of Aluminium and Copper. Most of the large infrastructure projects
have halted across the
world along with retail consumption declining especially in the housing sector. The
impact is expected to be in double digits for the company in the coming years.
Hindalco’s Muri alumina refinery restarted its production in December 2019. Even
with the sharp decline in alumina price, the company’s management estimates the
cost of production there to be cheaper than the cost of imports. This is due to savings
in logistics and inventory.
The projected Cap-Ex before the lockdown was INR 20 billion in FY2020. The Cap-
Ex split was INR 8 billion in maintenance, INR 6-7 billion in Utkal expansion and
INR 4 billion in downstream capacities. This will be affected based on the future
outlook once the production starts again at full capacity. The company has shown
improvement in efficiency over the years along with sustainable growth, but the
global demand outlook is weak in the coming years.
70
RECOMMENDATION
Based on the comparative study of the financial performance of NALCO and
HINDALCO over the ten years from 2010-11 to 2019-20, we can make the
following recommendations:
➢ Debt management: Both companies need to focus on improving their debt

management. NALCO has been maintaining a debt-free status, which is a
positive sign, but it needs to be more efficient in using its resources.
HINDALCO, on the other hand, has been increasing its debt burden year on
year, which is not sustainable in the long run. Both companies need to focus
on reducing their debt levels and maintaining an optimal debt-equity ratio to
ensure financial stability and profitability.
➢ Cost management: Both companies need to focus on cost management to

improve their profitability. NALCO has been able to maintain a stable PBDIT
margin and net profit margin over the years, which is a positive sign, but it
needs to focus on improving its ROCE and ROA. HINDALCO, on the other
hand, has been struggling with profitability, and it needs to focus on reducing
its operating costs to improve its PBDIT margin, net profit margin, ROCE,
and ROA.
➢ Capital expenditure: Both companies need to focus on efficient capital

expenditure management to improve their ROCE and ROA. NALCO has been
maintaining a steady level of capital expenditure over the years, which has
helped it to maintain a stable ROCE and ROA. HINDALCO, on the other
hand, has been increasing its capital expenditure year on year, but it has not
been able to improve its ROCE and ROA. HINDALCO needs to focus on
reducing its capital expenditure or improving the efficiency of its capital
expenditure to improve its profitability.
71
➢ Focus on high-growth markets: Both companies need to focus on high-growth
markets to increase their revenue and profitability. NALCO has been
primarily focused on the domestic market, which has limited its growth
potential. It needs to explore opportunities in international markets to increase
its revenue and profitability. HINDALCO has been expanding its
international presence, but it needs to focus on high-growth markets to
maximize its growth potential.
➢ Diversification: Both companies need to focus on diversifying their product

portfolio to reduce their dependence on a single product. NALCO has been
primarily focused on aluminum production, which has limited its revenue
potential. It needs to explore opportunities in other metals or products to
diversify its product portfolio. HINDALCO, on the other hand, has been
diversifying its product portfolio, but it needs to accelerate its efforts to reduce
its dependence on aluminum production.
➢ Environmental sustainability: Both companies need to focus on improving

their environmental sustainability to meet the increasing demand for
sustainable products. NALCO has been making efforts to improve its
environmental sustainability, but it needs to accelerate its efforts to meet the
increasing demand for sustainable products. HINDALCO, on the other hand,
has been lagging behind in environmental sustainability and needs to make
significant efforts to catch up with its peers.
➢ Digital transformation: Both companies need to focus on digital

transformation to improve their operational efficiency and reduce costs.
NALCO has been making efforts to improve its digital capabilities, but it
needs to accelerate its efforts to keep up with the changing business landscape.
HINDALCO, on the other hand, has been lagging behind in digital
transformation and needs to make significant efforts to catch up with its peers.
➢ Risk management: Both companies need to focus on improving their risk

management practices to ensure financial stability and minimize risks.
72
NALCO has been maintaining a stable financial position, but it needs to
improve its risk management practices to ensure long-term financial stability.
HINDALCO, on the other hand
In conclusion, both NALCO and Hindalco have shown consistent growth over the
past ten years, with NALCO outperforming Hindalco in most financial performance
metrics. However, there is still scope for both companies to improve their financial
performance by implementing the recommendations discussed above. By focusing
on reducing debt, improving asset
73
REFERENCES
➢ NUNN, K.,1981. The Strategic Determinants of Working Capital: A Product
Line Perspective. Journal Of Financial Research, 4, pp. 207-219.
➢ SINGH, S., 1988. Managing Working Capital by Strategic Choice. Vikalpa,
13(1), pp. 17-23.
➢ CHAUDHURY, S.K. and PATHI, S.N., 2015. Working Capital Management
in Aluminium Sector:
➢ A Case Study of NALCO. International Journal of Innovative Research and
Practices, 3(3), pp. 1-11
➢ KHATIK, S.K. and DHOTE, K.K.,2018. Working Capital Management of
National Aluminium Company Limited. International Journal of Research in
Management, Economics and Commerce, 08(04), pp. 39-52.
➢ AGARWAL, N.K., 1990. Management of Working Capital in India.
International Journal of Research in Commerce and Management Studies, 3,
pp. 213-216
➢ PANDEY, S. and JAISWAL, V.K., 2012. Management of Working Capital
in National Aluminium Company. International Journal of Management
Research and Development, 2(1), pp. 52-63.
➢ DELOOF, M., 2003. Does Working Capital Management Affects Profitability
of Firms. Journal of Business Finance & Accounting, 30(3), pp. 33-43.
➢ PEEL, M. and WILSON, N., 1996. Working Capital and Financial
Management Practices in the Small Firm Sector. International Small Business
Journal, 14, pp. 52-68.
➢ Annual Reports of NALCO from F.Y. 2010-11 to F.Y. 2019-20.
➢ Annual Reports of HINDALCO from F.Y. 2010-11 to F.Y. 2019-20.
➢ Annual Report of NALCO & HINDALCO from 2010-11 to 2019-20.
➢ www.hindalco.com
➢ www.moneycontrol.com
➢ www.nalcoindia.com
74

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INTERIM REPORT

“A Comparative Study on Financial Performance of

National Aluminium Company Limited (NALCO)

“A Comparative Study on Financial Performance of

National Aluminium Company Limited (NALCO)

Date of Submission: 12th May, 2023

To Whomsoever It May Concern

I take this opportunity to express and record my thanks and gratitude to

Serial No. Particulars Page No.

Table No. Particulars Page No.

2 Analysis of Quick Ratio (NALCO) 29

4 Analysis of Debt- Equity Ratio (NALCO) 33

6 Analysis of Current Ratio (Hindalco) 39

8 Analysis of Inventory Turnover Ratio (Hindalco) 42

11 Analysis of Return on Capital Employed (Hindalco) 48

13 Summary of major Profitability Ratios 51

15 Summary of major Valuation Ratios 59

Figure No. Particulars Page No.

12 Inventory turnover Ratio (Hindalco 37

I, Mritunjay kumar, an ICFAI Business School student interning with

The following are the detailed objectives of the study:

● Type of Research: Quantitative Descriptive research

● Data Collection: To analyze financial performance of HINDALCO and NALCO

1.3 Limitations of the study

Source: World Bureau of Metal Statistics (WBMS), Aluminium Association of India,

India’s primary aluminium production declined by 3% to 2657 thousand tonnes

Table 1: Production, Import and export of primary aluminium in India

(Unit: quantity in Thousand Tonnes)

2019-20 2020-21 Y-o-Y % change

Production 2,736 2,657 -3%

Imports 182 146 -19.7%

Exports 1,276 1,545 21%

Figure 3: Trend in international and domestic aluminium prices

Source: LME, CMIE

National Aluminium Company Limited (NALCO) is regarded as a pivotal moment

NALCO is a well-known name in the industrial landscape of Eastern India. In

To be a Premier and Integrated company in the Aluminium value chain with

To sustainably grow multi-fold in Mining, Alumina and Aluminium business along

Operations of NALCO in brief

Captive Power Plant

• Wire Alloy Rods

Source: Annual Report

Source: Annual Report

Hindalco Industries Limited is engaged in the production of aluminium and copper.

Year Current Assets Current Liabilities Current Ratio (CA/CL)

2021-22 6,485.00 3,099.14 2.09

It indicates a company's capacity to meet short-term obligations using current assets.

2021-22 14,180.81 1,561.25 9.08

Interpretation: The above data appears to be a series of inventory turnover ratios

Inventory turnover Ratio

Year Debt Equity Debt- Equity Ratio

2021-22 1,624.01 918.32 1.77

Debt- Equity Ratio Nalco

2021-22 14,180.81 15994.19 17.08

Interpretation: The Return on Assets (ROA) ratio indicates how effectively a

Return on Asset (Nalco)

10.00 8.83 9.18

Interpretation: Return on Capital Employed (ROCE) is a financial ratio that

Return on Capital Employed (Nalco)