1. Birlas have paid $6 billion for Novelis which is on the higher side and thus acquisition has not gone well with investors.
2. Following issues are going to keep Hindalco in a fix and require herculean task to fix them:-
(a) Consolidated debt of Hindalco increase from Rs 6279 crore to Rs 30000 crore.
(b) Novelis has huge debt i.e $2.23 Billion on net worth of $322 million.
(c) Financial irregularities in reporting of Novelis and thus Dec 2005 saw its CFO exiting.
(d) Restructuring in Novelis has already cost $46 million.
(e) Full time CEO not available with Novelis.
3. So stay away from Hindalco as Novelis may wipe out fourth of Hindalco Consolidated EPS as recovery is only likely in FY 2011.
2. Following issues are going to keep Hindalco in a fix and require herculean task to fix them:-
(a) Consolidated debt of Hindalco increase from Rs 6279 crore to Rs 30000 crore.
(b) Novelis has huge debt i.e $2.23 Billion on net worth of $322 million.
(c) Financial irregularities in reporting of Novelis and thus Dec 2005 saw its CFO exiting.
(d) Restructuring in Novelis has already cost $46 million.
(e) Full time CEO not available with Novelis.
3. So stay away from Hindalco as Novelis may wipe out fourth of Hindalco Consolidated EPS as recovery is only likely in FY 2011.
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