With March-quarter margins having contracted due to higher cost and not-so-strong revenue stream, Hindalco Industries has drawn a roadmap to lower cost of production amid efforts to insulate business from vagaries of LME prices.

Hindalco's managing director Satish Pai, in an interview with Aditi Divekar, talks about tapping the downstream market and owning new rakes (wagon trains) to tackle cost issues.

Hindalco’s expenses have gone up 16 per cent in Q4 on year-on-year basis. How do you plan to curtail costs going ahead?

Sequentially, Hindalco’s cost of production was flat and going ahead we see it drop by 3 per cent as coal availability has improved along with rake availability. Pre-monsoon, we are maintaining inventory position of 20-22 days and so we are confident about our cost base and operational stability for the coming quarters.

Rake availability for coal is an issue which keeps coming on and off for Hindalco. How are you planning to resolve this issue permanently?

To begin with, we have applied for owning of two rail rakes. Our total requirement is 10 rakes but we have started off with a small number. There is no point asking for rakes if the tracks are not in place, hence have applied for two rakes as of now.

With the European Commission placing roadblocks, where do you see the Novelis-Aleris deal?

We are sticking to the earlier deadline of September. They (EC) wanted some time and had asked questions to which we have responded. The EC has to clear this within a specified time and so we are sticking to our deadline. There is nothing extraordinary or unforeseen that has happened.

Majority of Hindalco standalone aluminium business today remains exposed to London Metal Exchange price fluctuation. What is your plan to insulate this business from LME price vagaries?

Currently out of total 1.3 million tonne production only 300,000 tonne is downstream. Our plan over the next five years is to increase this to 600,000 tonne and then move to one million.

Which segments is Hindalco looking to expand on the downstream side?

In the auto sector, truck and bus segments look lucrative for the aluminium downstream. For Hindalco, the transportation sector has grown by 12 per cent in FY19 on year-on-year basis. Apart that, aluminium foils have taken off well since the plastic ban.