rediff.com: Hindalco open to bidding for BALCO

Hindalco Industries, India's biggest primary aluminium producer is keen to buy the government's stake in state-run Bharat Aluminium Company, or BALCO, but is yet to take a final decision, the firm's president said on Monday.

"We are open to making a bid for BALCO, but there are certain issues which have to be looked into before we submit any proposal to the government," Hindalco president A K Agarwala told Reuters by telephone from the firm's site in Uttar Pradesh.

Hindalco runs a 242,000 tonne-per-annum aluminum smelter, which is working at capacity.

"BALCO has capacities in upstream and downstream projects, but we do not have details about its technology, bauxite mines and the large labour force," Agarwala said.

In Monday afternoon trade, Hindalco's shares rose 5.7 per cent or Rs 47 to Rs 872.10 at the Bombay Stock Exchange, or BSE.

The Indian government on Monday invited offers from companies and joint ventures interested in buying government stakes in medium-sized BALCO.

The government in an advertisement said it plans to sell 51 per cent of its stake in the firm to a long-term strategic investor, to whom management control will be transferred.

Companies interested in taking stake in the firm are required to submit their "Expression of Interest" by June 30, 2000.

BALCO has two units including an integrated aluminum complex with a 200,000 tonne-per-year alumina plant and a 100,000 tonne-per-annum smelter and some downstream facilities.

"There a number of issues which have to be deeply studied before we take a final view on BALCO," Agarwala said.

BALCO is among the 28 state firms listed by the government, as part of its ambitious divestment programme for sale to strategic investors. This includes transfer of a large chunk of equity and management control to the buyer.

Hindalco in March said it would buy Alcan Aluminium's 54.62 percent stake in Indian Aluminium Limited, its local unit, which will give it ready access to the high-margin, downstream aluminium products segment.

The total deal includes a further 20 per cent stake in an acquisition worth more than Rs 10 billion ($ 223 million), if fully accepted.

Indal has a working aluminum capacity of 43,000 tonne. Its shares were trading Rs 7.25 lower at Rs 147.75 on the BSE.

BALCO's acquisition would further cement Hindalco's hold in the domestic primary and secondary aluminium segment.

National Aluminum Company, 87 per cent government-owned is the other main producer. Its 230,000 tonne-per-annum smelter is operating at slightly below capacity levels in Orissa.

The government, in the past has also expressed interest to divest part of its holding in Nalco. Its shares were Rs 0.50 lower at Rs 44.50 at the BSE on Monday.

The other private sector player Madras Aluminium has a 30,000 tonne per annum smelting capacity.

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