sterlite industries (india) ltd

8/3/2019 Sterlite Industries (India) Ltd

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STERLITE INDUSTRIESSTERLITE INDUSTRIES(INDIA) Ltd.(INDIA) Ltd.

(Copper Unit)(Copper Unit)

COMPANY REVIEW SESSION

Presented By

DeepshikhaNighat Fatima HussainHemant Kumar Kabra

Subrat Kumar Mohanty


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COMPANY PROFILECOMPANY PROFILE

SIIL is the principal subsidiary of Vedanta Resources Plc, adiversified & integrated FTSE 100 metals & mining company,located in India & Australia.

Indias largest non-ferrous metals & mining company and are oneof the fastest growing private sector companies.

Listed on BSE & NSE in India and 1 st Indian metals company

listed in NYSE .

Sterlite develops & manages a diverse portfolio of mining &metals businesses to provide returns to its shareholders and creatingvalue for the communities where it operates.


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G ROUP STRUCTUREG ROUP STRUCTURE


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MANA G EMENT

Chairman : Mr. Anil Agarwal

Executive Vice-Chairman : Mr. Navin Agarwal

Non Executive Director : Mr. Berjis Minoo Doshi

Mr. Gautam Bhailal Doshi

Mr. Sandeep H. Junnarkar

Chief Executive Officer : Mr. Mahendra Singh Mehta


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HISTORY OF THE COMPANY

Incorporated on September 08, 1975 as Rainbow Investments Limited inCalcutta (now know as Kolkata).R egistered Office shifted from Calcutta to Bombay (Mumbai) in the year 1979

1986: Sterlite Cables Limited, acquires the Shamsher Sterling Corporation, changes

the name to Sterlite Industries ( India) Limited.

1988: Sterlite Industries makes an initial public offering of its shares on the Indian

stock exchange

1991: Sterlite Industries establishes Indias first continuous copper rod plant

1997: Commissions first privately developed copper smelter in India at Tuticorin in

Tamil Nadu.

1999: Acquires Copper Mines of Tasmania Pty Ltd. & Thalanga Copper Mines Pty Ltd.2005: Expansion of Tuticorin Smelter to 300,000 TPA2006: Expansion on Tuticorin smelter to 400 KTPA through innovativedebottlenecking.

2007: Sterlite Industries primary listing on NYSE in June 2007


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VISION & MISSION

To be the worlds largest leading copper producer delivering sustainable value to all

stakeholders by leveraging technology and best practices by 2015.

To build a knowledge and process driven organization through TPM

To create sustainable value through safe, clean and green processes

To sustain leadership position in domestic and global market through

market development and customer delight.

To be the best and most respectable corporate citizen

To leverage technology to its full potential across the business cycle

To harness the profitable and growing CCR/value added product from

240KMT to 600 KMT per annum


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PRODUCTS PROFILE:PRODUCTS PROFILE:

Main productions are : Copper cathodeMain productions are : Copper cathodeContinuous cast rods (CCR)Continuous cast rods (CCR)

BY PRODUCTS :BY PRODUCTS :

Sulphuric AcidSulphuric Acid Phosphoric AcidPhosphoric Acid Hydrofluoro siliciHydrofluoro silici GypsumGypsum

Ferro sandFerro sand SlimeSlime


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AWARDS AND RECO G NITIONSAWARDS AND RECO G NITIONS2005

British Safety Councils Safety Award. Sterlite Featured in "Best Companies to work for in India": Business Today Survey

2006 G reentech Environment Excellence Award. CII National Award for Excellence in Energy Management.

2007 CII National Award for Excellence in Energy Mgmt for both Tuticorin

& Silvassa operations G reentech Environment Excellence Award 2007 CII HR Excellence Award, Commendation Certificate.

2008 CII, Energy Efficient Unit, 2008 CII Water Efficient Unit Award, Excellent Water Efficient unit, 2008 CII-ITC Sustainability Award, Certificate of Commendation for Strong Commitment to excel

2009 IT Department of Sterlite achieves ISO 27001 certification.


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CORPORATE SOCIAL RESPONSIBILITY

SterliteSterlite IndustriesIndustries R edR ed R ibbonR ibbon Club,Club, inin associationassociation withwith GovernmentGovernment BloodBlood Bank,Bank,

organizedorganized aa BloodBlood DonationDonation CampCamp..

ConstructedConstructed undergroundunderground drinkingdrinking waterwater sumpsump inin aa villagevillage atat aa costcost of of 22..1010 lakhslakhs

withwith waterwater holdingholding capacitycapacity of of 3030,,000000 litersliters..

SterliteSterlite initiativesinitiatives havehave helpedhelped thethe womenwomen toto havehave accessaccess toto workingworking capitalcapital andand

trainingtraining..

SterliteSterlite IndustriesIndustries LtdLtd.. launchedlaunched thethe CoastalCoastal LivelihoodLivelihood ProjectProject toto promotepromote

technicaltechnical skillsskills amongamong coastalcoastal youthyouth inin TuticorinTuticorin. .

ActivitiesActivities likelike treetree plantation,plantation, healthhealth camps,camps, sponsoringsponsoring childchild birthdaybirthday areare somesome of of

thethe eventsevents wherewhere employeesemployees havehave activelyactively participated,participated, etcetc..


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HRHR StrategyStrategy

Get Nurture and GrowGet Nurture and Grow

Skill & DevelopmentSkill & Development

Knowledge managementKnowledge management

Leadership DevelopmentLeadership Development


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G EO G RAPHICAL SE G MENTATION:G EO G RAPHICAL SE G MENTATION:

STERLITE INDUSTRIES (INDIA) LTD

R EFINER IESIN

FUJA IRAHUAE

PLANTSIN

TUT ICORINTUT ICORINTAM ILN ADUTAM ILN ADU

SO UTH IN D IASO UTH IN D IA

COPPE R MINEIN

TA SMA NI AAU ST RA LIA

R EFINERYIN

SILV A SS A

U NION TE RRI T ORYO F DAD RA

WE STE RN IN D IA


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STRATE G IC MANA G EMENTSTRATE G IC MANA G EMENT

DoubleDouble thethe coppercopper smeltingsmelting capacitycapacity toto meetmeet growinggrowing

regionalregional demanddemand

ContinueContinue toto retainretain andand furtherfurther sharpensharpen costcost efficiencyefficiency

CommissionCommission captivecaptive powerpower plantplant andand continuecontinue toto drivedrive

operationaloperational excellenceexcellence initiativesinitiatives

IncreasingIncreasing capacitiescapacities throughthrough GreenfieldGreenfield andand

BrownfieldBrownfield projectsprojects..


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LeveragingLeveraging our our projectproject executionexecution andand operatingoperating skillsskills andand

experienceexperience inin buildingbuilding andand operatingoperating captivecaptive power power plantsplants toto developdevelopaa commercialcommercial power power generationgeneration businessbusiness. .

ContinuingContinuing toto focusfocus onon assetasset optimizationoptimization andand reducingreducing thethe costcost of of

productionproduction. .

SeekingSeeking further further growthgrowth andand acquisitionacquisition opportunitiesopportunities thatthat leverageleverage

transactional,transactional, projectproject executionexecution andand operationaloperational skillsskills..

ConsolidatingConsolidating corporatecorporate structurestructure andand increasingincreasing directdirect ownershipownership

of of underlyingunderlying businessesbusinesses to to derivederive additionaladditional synergiessynergies asas anan

integratedintegrated groupgroup


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STUDY BASED ON MICHAEL PORTERMODEL:

SUPPLIERPOWER

THREAT OF NEW

ENTRANTS

THREAT OF SUBSTITUTES

BUYERPOWER

DE G REE OF RIVALRY


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THREATTHREAT OF NEW ENTRANTS:OF NEW ENTRANTS:

Capital requirement is highCapital requirement is high

Issues relating to the setup of mining industry are moreIssues relating to the setup of mining industry are more

Stringent rules by GOVT has been setup in case ofStringent rules by GOVT has been setup in case of

mining industrymining industry


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SUPPLIER POWER:SUPPLIER POWER:

11% of raw material is from its mining activity and the11% of raw material is from its mining activity and the

remaining is importedremaining is imported

It mostly deals with the forward contractIt mostly deals with the forward contract

Spot market is reduced thus eventually reducing per unSpot market is reduced thus eventually reducing per un

Cost.Cost.


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Major supplier in terms of copper supply in IndiaMajor supplier in terms of copper supply in India

Spreading globally by developing mines out side homeSpreading globally by developing mines out side home

countrycountry

76% of power sector is included in the customer list of76% of power sector is included in the customer list of

the companythe company

Global presenceGlobal presence

BUYER POWER:


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THREATTHREAT OF SUBSTITUTES:OF SUBSTITUTES: Import of electrical goods is to an large extent substituting the

copper supply. In case of increasing cost, aluminum might be taken as substitute to

switch the cost.

DE G REE OF DE G REE OF RIVALRY:RIVALRY: Main competitors

Hindustan copperHindalco copper

Major supplier for power sector & telecom industry Brand image Cost determination Capacity


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11,822.41 12,673.58 11,548.3813,114.88

15,292.57

0.00

2,000.00

4,000.00

6,000.00

8,000.00

10,000.00

12,000.00

14,000.00

16,000.0018,000.00

2007 2008 2009 2010 2011

(R S. IN C RO R E)

Years

S a

l e s

i n c r o r e


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0

200

400

600

800

1000

1200

1400

1600

2007 2008 2009 2010 2011

784.03784.03

951.63951.63

1,236.431,236.43

831.5831.5

1,419.711,419.71

(R S. IN C RO R E)

Years

P r o

f i t a

f t e r

t a x

i n c r o r e


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0.00

2.00

4.00

6.00

8.00

10.00

12.00

2007 2008 2009 2010 2011

6.63

7.51

10.71

6.34

9.28

M a r g

i n s

i n %

Years


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6.45

5.94

8.98

7.02

5.16

0

1

2

3

4

5

6

7

8

9

10

2007 2008 2009 2010 2011

Years

I n v e n

t o r y

T u r n o v e r

R a

t i o


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0

510

15

20

25

30

20072008

20092010

2011

2007 2008 2009 2010 2011Series1 15.87 14.52 17 28.76 25.85


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0

0.5

1

1.5

2

20072008

20092010

2011

T o

t a l A s s e t s

T u r n o v e r

R a

t i o

2007 2008 2009 2010 2011Series1 1.63 0.77 0.65 0.48 0.53


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20072008

20092010

2011

1.96

2.77

1.53 1.67

1.11


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0

0.1

0.2

0.3

0.4

0.5

0.6

0.7

2007 2008 2009 2010 2011

0.63

0.25 0.27 0.24 0.25

Years

D e

b t e q u

i t y R a

t i o


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0.00

1.00

2.00

3.00

4.00

5.00

6.00

7.00

8.00

2007 2008 2009 2010 2011

5.96

7.63 7.54

4.68

7.84

I n t e r e s t

C o v e r a

g e

R a

t i o


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02468

1012141618

20072008

20092010 2011

2007 2008 2009 2010 2011Series1 17.59 7.23 8.8 3.73 6.11


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Indian Promoters, 3.08%

Foreign Promoters,54.64 %

Banks, F I, InsuranceCompanies , 5.14 %

Foreign InstitutionalInvestors (F IIs), 13.23 %

Mutual F unds (includingUT I), 3.5 %

Private CorporateBodies, 5.72 %

Indian Public, 3.91 %

NRIs / OCBs,

0.16 %

Shares held bycustodians, 8.08 %

Clearing Member, 0.08 %Trusts, 2.14 %

Foreign Bodies D R,0.33%

SHARE HOLDIN G PATTERNSHARE HOLDIN G PATTERN


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14.0414.0413.4313.43

17.4517.45

9.899.89

4.224.22

0

2

4

6

8

10

12

14

16

18

20

2006-07 2007-08 2008-09 2009-10 2010-11

EPSEPS

Years

E a r n

i n g p

e r

S h

a r e

i n

R s

.


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D ividendPaid

Splittingof shares

Bonus

INDEX

RightIssue


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Sterlite Hind Copper Hindalco

LTP (17/8/2011) 134.35 225.25 142.75% change 1.95 (1.47%) -5.25 (-2.28%) -1.60 (-1.11%)

5 2-week High/Low 195.90 / 130.00 485.40 / 230.00 251.90 / 140.60

Results (in cr.) As on Mar 11

Sales 15,310.29 1,146.52 23,859.21

PAT 1,419.71 224.1 2,136.92Market Cap. 44956.15 21622.34 27328.34

Ratios

Operating profit Margin% 15.05 31.27 14.68Net operating margin% 9.27 19.55 8.96

EPS 4.22 2.42 11.17

Bonus and Dividends

2011 1.1 0.5 1.502010 3.75 / BONUS 1:1 0.5 1.352009 3.5 -- 1.352008 4 -- 1.85

2007 -- -- 1.70

PEER ANALYSISPEER ANALYSIS


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FUTURE OUTLOOKFUTURE OUTLOOK

StrongStrong demanddemand of of copper copper inin thethe worldworld andand inin IndiaIndia..

7676 %% of of totaltotal salessales isis toto power power sector sector onlyonly..

ByBy--productsproducts areare alsoalso helpfulhelpful inin increasingincreasing EBITDAEBITDA

IncreasingIncreasing capacitycapacity of of bothboth smelter smelter andand miningmining activityactivity..

Power Sector

42%

Construction28%

IndustriesMachinary

9%

T ransportation

12%

T elecommunication

9%

U se of Copper

ExpandingExpanding thethe capacitycapacity ofof TuticorinTuticorin planplanConstructionConstruction ofof 160160 MWMW captivecaptive powerpower plantplant..


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Various legal issues faced by the company:

1. E nvironmental & pollution related issues.

2. Forest Clearance issues.

3. Tax related cases pending in court .


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sterlite industries (india) ltd

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