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Business News/ Companies / People/  Hindalco’s focus is on reducing costs: Debnarayan Bhattacharya
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Hindalco’s focus is on reducing costs: Debnarayan Bhattacharya

MD and head of Aditya Birla Group's global metals business on the road ahead for the company

Debnarayan Bhattacharya, MD and head of Aditya Birla Group’s global metals business. Photo: Sameer Joshi/MintPremium
Debnarayan Bhattacharya, MD and head of Aditya Birla Group’s global metals business. Photo: Sameer Joshi/Mint

Mumbai: Aditya Birla Group company Hindalco Industries Ltd announced its March quarter results on Thursday. While its aluminium and copper output rose significantly, its profit took a hit. Hindalco managing director and head of the group’s global metals business Debnarayan Bhattacharya spoke to Mint about the road ahead for the company. Edited excerpts:

When is a turnaround in terms of profit after tax expected for your alumina refinery as well as the Mahan and Aditya smelters? The alumina refinery, Utkal Aluminium International Ltd, reported a net loss of 496 crore last fiscal...

Because of the financing charges, there is a loss at the profit-after-tax level. I am saying that at the Ebitda (earnings before interest, tax, depreciation and amortisation) level, there is no loss because that is under our control. Financing charges will reduce over a period of time, but they will remain high for the rest of this year.

In the last three months, realizations for aluminium have softened. You have indicated a rough patch for the aluminium business. Indian companies have limited control over the pricing aspect, so how are companies dealing with this?

The only thing you should focus on is to reduce your costs, your cost of production, improve your asset intensity by producing more from the same asset.

Can you talk about margins on alumina and aluminium?

Alumina is used for our smelting business. We supply alumina to the smelter, so it’s an internal transfer. And whatever we export—aluminium, we are in the Top 3 in terms of cost of production.

Does it make more business sense to have a presence in the alumina business rather than the aluminium business?

The point is that I can’t keep the smelters idle. It’s an integrated business. On paper it sounds feasible, but in reality it’s not possible.

In hindsight, do you think you should have had lower smelter capacity?

Maybe you will change your mind if tomorrow premiums go to $2,200 per tonne But we have the assets with which we could have become the last man standing if the coal blocks had not been de-allocated. When we planned these projects, mines were very much with us and there was a sovereign guarantee that these mines will come to us.

You won four coal blocks in the recent round of coal auctions. The expectation was the new allottees would be able to start mining at the operational blocks from 1 April. What is the update?

It is in the hands of the government... when the documentation is completed. I‘ll be surprised if the wait (for the documentation) goes beyond June. I never expected that these mines will resume production from 1 April.

Would any further delay in starting coal mining at these blocks beyond June become a serious issue?

The delay is not a serious issue, but surely an issue. We have manpower employed, there is a cost involved.

The copper business has fared well and is expected to do well.. Would you look to focus more on this business?

We are evaluating options to expand capacity in the copper business, but that does not necessarily mean we will go ahead. This would be organic in nature. We’re not looking at inorganic expansion, in the aluminium and copper business. However, if something comes up we will not reject it. The focus is on consolidation.

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Published: 29 May 2015, 01:03 AM IST
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