Search the Internet          Tips  Sites: Finance, Investment

Balco wants govt to write down equity 10%

Bharat Aluminium Company Ltd has asked the Union government to write off nearly 10 per cent of its equity in the state-owned company ahead of its planned privatisation, a company official said.

"We applied to the ministry of mines last month after our board's approval to reduce our equity by Rs 238 million," a Balco official who declined to be identified said.

The move follows a company decision to write-off expenditure on a bauxite-mining project in Orissa that was abandoned in the early 1990s, the official said.

Balco's equity currently stands at Rs 2.444 billion, all of it held by the Indian government.

"We still have to hear from the government," the official said, adding the reduction would also need the approval of the country's Department of Company Affairs.

Balco is a vertically integrated aluminium maker with its own mines, smelter and refinery and produces about 15 per cent of India's aluminium.

Last June the government invited bids for the sale of a 51 per cent stake to a strategic investor, and has shortlisted three companies as potential buyers.

They include the world's largest aluminium producer, Pittsburg-based Alcoa Inc, India's largest aluminium company Hindalco Industries Ltd, and copper and telephone cable maker Sterlite Industries Ltd.

Alcoa and Hindalco now plan to jointly bid for the stake in Balco, an official close to the sale said.

India's Divestment Minister Arun Shourie told reporters last week the government would invite price bids from the three companies in the next few days and hoped to complete the share sale before March 31, the fiscal year-end.

Balco, set up in 1965, runs a 200,000 tonne per annum alumina plant and 100,000 tonne aluminium smelter at Korba in Chhattisgarh. It has also set up 40,000-tonne hot and cold rolling mills at the plant.

At Bidhanbag in West Bengal, Balco has a 600-tonne capacity foil plant and hot and cold rolling mills with an annual capacity of 3,600 tonnes.

Tell us what you think of this report