“If you are fat, then you are not efficient,” says Debu Bhattacharya, Managing Director of Aditya Birla Group’s flagship firm Hindalco Industries. That is true for man and machine according to Bhattacharya, who is also the Vice-Chairman of Hindalco's US subsidiary Novelis. In an interview with BusinessLine , he speaks about the rising demand for aluminium and the company’s plans to raise funds from the market and boost automotive-aluminium business. Edited excerpts:-

Which are the non-conventional sectors other than automobile, where you see demand for aluminium?

Substitution, extension and new applications are the areas where aluminium would be used. To begin with, cans were earlier made of steel, but now aluminium has replaced it. Here we see substitution happening. Secondly, the usage of aluminium will rise as now automotive manufacturers, who earlier used the metal only for boots, are now using for side panels.

It is also being used for roofing, and Everlast (a Hindalco brand) is popular in Kerala. The advertisements are in Malayalam, so I am also learning the language.

We understand Novelis is planning to de-risk its portfolio by increasing its share of automotive-aluminium to 20-25 per cent by 2020 from less than 10 per cent now. Your comments…

We were involved with Jaguar Land Roverin developing car bodies in aluminium, when JLR was a Ford Motors company (It’s now controlled by Tata Motors). Companies such as Ford, going for ‘light-weighting’, are using this metal. Cars are not different from human beings; if you are fat then you are not efficient.

Is Novelis not looking at aerospace?

We are not looking at aerospace. We have a huge potential in automotive, and we don’t intend to be there in every sector. Every aircraft uses 75,000 tonnes of aluminium, so the natural extension would be that we will begin competing with Boeing. It doesn’t make sense.

You have never done a major acquisition after Novelis. Are you looking at acquisitions?

Right now, we are embarking on getting full capacity utilisation of all our plants, and ensure that Hindalco’s balance sheet is satisfactory.

We have already spent $5 billion here (Hindalco) and $2 billion in Novelis, so we want to ensure that is being put in the right place; then only we will look for other expansion or acquisitions.

Hindalco has got approvals to raise up to ₹5,000 crore. Would this be a QIP?

Qualified institutional placement (QIP) is one of the options. We are going to the market not because we need cash, but because we believe this is a good time to go to the market. We never wait for the lean time, we go when the market provides the best opportunity.

Hindalco’s debt stands at about ₹23,000 crore. Is that worrying?

We take every bit of debt seriously as it has to be serviced. The gross debt is about ₹23,000 crore, and we have a treasury of about ₹8,000 crore. So the net debt is about ₹15,000 crore.

Our debt is engineered in such a way that it would be serviced along with the commencing of the projects.

So, we can service our debt without problem. But more than the debt, it is about the balance sheet.

Is the balance sheet stretched? That’s what we always look for.

There have also been cost overruns in certain projects…

Some projects are in unfriendly terrains. So, there is an overrun on time, and cost run being a natural extension to it. We have never done greenfield projects of these sizes and in areas without any infrastructure at all. We are putting pipelines of about 30-40 km just for water. Some of these issues were not known when we started. Yes, there are some cost overruns due to the unknown geography, scope extension and the changes we have to undertake on the ground.

For how long do you think the profits would continue to be under strain?

These drags on profits will continue to be there, even though I wouldn’t be able to say for how many more quarters… Because of the assets you have on ground, there will be depreciation and the loans have to be serviced.

On the two mines in Australia?

One of our mines is a high-cost mine, and we are doing a portfolio review on that. Should we keep it, should we sell it, should we run it in partnerships? That’s what we are debating now. This would be completed in the next few months. We will continue to run the other one.

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