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What does the company’s move from expansion to consolidation entail, apart from the clearance for Mahan?
When you capitalise, you want 100 per cent juice coming out. It takes time. Fixed cost gets divided and that improves the profit. So, sweating the assets is our focus now. Mahan currently uses 50 per cent, Utkal about 25 per cent and Aditya around 20 per cent. These facilities have to be ramped up.
You have invested a lot in Novelis’ recycling plant, to improve margin from the arm. But has not that margin shrunk, keeping benefits from the metal price low?
When LME (benchmark London Metal Exchange prices) is low, it is less beneficial but we earn enough. Because the benefit is a part of LME price. When you buy scrap, (suppose) they say I will give you 15 per cent less of LME, so, if LME comes down, you are benefiting but it tends to come down. So, the benefit will always be there and our strategy will continue.
Do you see global demand rising?
In 2014 and 2015, I expect there will be small deficit of the metal, good enough for the sentiment to improve.
With a new stable government at the Centre, do you see demand for aluminium picking up?
More than 40 per cent of aluminium consumption in India is in the electricity sector. So, any electrification drive of the government will help. We are banking on that. Besides, consumption in building construction has increased and we are relying on that. Also, rail wagons using aluminium, which is so all over the world, help the track carry more as wagons become lighter. As railway infrastructure improves and technology adoption improves (we see demand coming from that sector, too).
Global bond prices are down to attractive levels. Will you refinance some of your debt?
We are always looking for such opportunities. We have net debt of Rs 19,000 crore on a standalone basis and $5.3 billion on the books of Novelis. We will, of course, be opportunistic. But I am not in a position to share anything on that at this moment.
