The Hindu Business Line : Aluminium auditor

With Hindalco in the news for the Novelis acquisition, it may be apt to read Technical Guide on Internal Audit in Aluminium Industry, from the ICAI's Committee on Internal Audit. The book, based on a draft prepared by Rajendra K. Kasliwal, CFO of Hindalco, has informative chapters on mining, production, marketing, and finance.

The first stage in the aluminium production chain is bauxite mining. "In India, all the bauxite mines are open cast mines with varying quantities of overburdens... Approximately, three tonnes of bauxite yield one tonne of alumina," says the author. Primary aluminium is produced by electrolytic reduction of alumina.

Electrical power, steam, and fuel oil are the three sources of energy in the alumina production process, he explains in a chapter titled `internal audit of production function'. Since it requires a lot of electrical energy to convert refined alumina into aluminium, power cost can go up to 40 per cent of the operating cost. "Power consumption depends largely upon volts per pot and current efficiency. Volts per pot vary on account of technology, cell and busbar design, bath composition, and power fluctuations... " Technical stuff, you may fret, but as auditors you would need to know all this.

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