The Nalco disinvestment exercise has led to flurry of negotiations between domestic and international metals majors.

The country's largest aluminium company, Hindalco, is exploring the option of teaming up with Alcoa, the world's largest aluminium company, to pitch for the 30% strategic stake in Nalco.

This possible joining of hands between the two aluminium giants will, however, not be new to both. Hindalco had a contract with Alcoa under which both companies had mutually agreed to collaborate with each other in any venture in India or abroad. The contract expired last year.

Market sources indicated that Sterlite Industries could be talking to various foreign companies including international steel major, the LN Mittal group. This, however, was strongly refuted by Sterlite.

The other possible venture is between the world's second largest Russian Aluminium (RusAl) and the Khemkas of the Moscow-based San group. "This is primarily because the San group has varied interests in Russia and RusAl wants to team up with an Indian company before bidding for Nalco," sources said. RusAl has 2.5 million tonnes of primary aluminium facility.

Officials at the 2.42 lakh tonne Hindalco, flagship of the Aditya Birla group, are however, tightlipped about any possible tieups. Company president Askaran Agarwal said: "The decision whether to go it alone or rope in a partner will be taken in due course. Our intent is to go for that option which will create shareholder value."

A possible joint bid by Hindalco and Alcoa has also been welcomed by analysts. "It would ease funding requirements needed to bag Nalco," said one. Initial estimates have put the value of the strategic stake on block, at Rs 2,500 crore or more.

"This apart, both companies easily meet the net worth requirement of $300 million," the analyst added. Hindalco's net worth till March 31, 2002 is Rs 5,717 crore, while Alcoa's is at $28.4 billion.

Alcoa, with a capacity of 4.1 million tonnes, has reportedly already expressed its intention to participate in the Nalco disinvestment.The two companies had jointly bid for Balco last year. Hindalco had in fact, submitted two expressions of interest for Balco - one along with Alcoa and another on its own.

Later when Alcoa wanted to withdraw from the race, Hindalco bid on its own. Balco was later snapped up by Sterlite Industries, who is also in this race for Nalco.The race for Nalco has also seen a new entrant in the form of Tata Steel, the country's largest private sector steel company. The Economic Times had reported on August 14, that the company was internally discussing the option of putting in an expression of interest.

The government wants to pare down its stake in Nalco to 26% from the current 87% through a three stage process that includes domestic public offer (10%), an ADR (20%) and strategic sale (30%). Nalco at 2.3 lakh tonnes is the country's second largest aluminium company and Asia's largest alumina maker.

MUMBAI: M V RAMSURYA
TIMES NEWS NETWORK
[ FRIDAY, AUGUST 16, 2002 3:40:10 AM ]