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A business model defines how a business will operate and in large part dictates the level of success it can hope to achieve.

Hindalco has adopted totally integrated business model in the case of aluminium business.

The “integrated” model is used by large companies to leverage on their size, their power in multiple aspects of the industry and their dominating position across the value chain.

Hindalco Industries Limited has long been a leading integrated producer of aluminium, among the industry’s top companies across Asia. The aluminium operation extends from mining of bauxite to the production of not only primary aluminium but also the value added downstream products such as flat rolled products (FRP), extrusions and also customised consumer products such as foils.

The objective is to play optimally in the aluminium value chain balancing between the more volatile high margins upstream products and the steadier low margins downstream portfolio.

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Hindalco's upstream strategies for the aluminium industry focuses on continuing existing low cost operations and progressing on new greenfield projects; that will further improve cost competitiveness through lowest production costs; by controlling key resources, such as bauxite mines, refineries, power plants and coal; and reaping benefits of economies of scale. We also maintain our focus on sustainable development.

Indian bauxite is of the highest quality — it is Gibbsitic bauxite with high alumina content, less than 2 per cent Boehmite content, a very low reactive silica content and negligible organic content. It has higher liquor purity and productivity, which is more cost efficient.

Also, in India, large deposits of bauxite can be found in a single plateau, allowing for more efficient extraction. India also has abundant coal supplies, easy availability of labour and is located in close proximity to the fast-growing markets.

Captive bauxite mines that provide the highest quality bauxite and a refinery located near the mine, state-of-the-art technology and economies of scale further enhance our cost advantage.

Aluminium is a power intensive industry. One tonne of aluminium requires over 15,000 Kwh of power. Power constitutes almost 40 per cent of the total cost of production. Low cost, uninterrupted power is absolutely vital for the successful aluminium operations.

Our smelters fully backed by captive power plants located at the pitheads of the owned coal mines make us one of the lowest cost producers globally.

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We are the market driver for aluminium products in India, being the largest downstream producer.

We leverage our strengths further when it comes to downstream strategy. The recent acquisition of downstream producer Novelis gives us a well-diversified geographical market base and enhances our stature in the area of downstream production.

Novelis is the world leader in rolled aluminium products; thus, this acquisition extends our reach in the industry.

Novelis also has long-standing relationships with leading customers, which Hindalco expects to grow. This combination of strong integrated and downstream production offers us multiple advantages.

Copper
We have one of the world's largest single-location custom smelters at our Dahej facility in Gujarat, India along with a power plant and nearby jetty.

In our pursuit of vertical expansion, we extended our presence in copper production across national borders when we acquired the Nifty and the Mt. Gordon mines in Australia. These mines secure partial supply of our concentrate requirement.

The efficient handling of logistics and transportation in this business is paramount in keeping costs low, and that is why our ownership of the all-season jetty at Dahej is so financially advantageous. We are also mindful of opportunities related to the production of copper that can benefit the business.

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Gold and silver have an affinity to copper ore. We extract them, as well as trace amounts of platinum and palladium after copper refining. We ensure that the dispatch of these precious metals is conducted using special armoured vehicles that we contract on a long-term basis through agencies.

We use the sulphuric acid employed in copper processing by converting it to phosphoric acid and then using that to produce the fertilisers diammonium phosphate and nitrogen phosphorus potassium compound.

We also import the rock phosphate required to produce phosphoric acid using our jetty, which is capable of handling more than four million tpa of cargo. The jetty is also used to import copper concentrate, ammonia and coal and to export copper products. One and two million tpa of commercial cargo can additionally be handled, depending on captive cargo requirements.

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Another strong growth catalyst is research and development.

We maintain a steady focus on research, which has resulted in advances in the company's operations and commercial strategy as well as an increased focus on foreign trade.

All told, we are well positioned for greater value creation.