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Uma Bharti turns against Nalco selloff

Gaurav Raghuvanshi & Ajay Singh in New Delhi

After George Fernandes and S S Dhindsa, it is now the turn of Coal and Mines Minister Uma Bharti to write a letter to the prime minister questioning the 'manner in which government companies are being sold.'

While the coal and mines ministry was yet to move a proposal to the Cabinet Committee on Divestment for re-consideration of the modalities of the three-stage divestment of National Aluminium Company Ltd, Bharti is believed to have raised the issue of timing of the strategic sale and the American depository receipt issue by the aluminium major.

Bharti confirmed she had written a letter to the Prime Minister but refused to give details. "I am not against divestment, but I do have differences on the way they (the ministry of divestment) are going about it," the minister said.

An official of the department of mines said the ministry had objected to the timing of the three-stage sell-off: strategic sale (29.15 per cent equity), ADR (20 per cent) and domestic issue (10 per cent). The ministry was in favour of strategic sale only after the public float.

"Our ministry is of the view that the government can realise a better price if it sells Nalco after first augmenting its infrastructure. Nalco has the best bauxite reserves in the world. Why gift the profit making company to a foreigner for them to profit from our resources," the mines official said.

The coal and mines ministry had suggested fresh investments in the company directly or through a joint venture to augment capacity and improve transport infrastructure from Nalco's two plants at Sonabeda and Angul in Orissa to its own port facility in Visakhapatnam.

According to the CCD decision on Nalco, the government had decided to begin work on all the three parts simultaneously. It has already received expressions of interest (EoIs) from 16 companies domestic and international companies, including the world's top three aluminium makers Alcan, Alcoa and Brazil's CVRD.

The government has also set in motion the process for the public offer of 10 per cent of the company's shares followed immediately by the ADR issue of 20 per cent.

As per the schedule drawn up for the divestment of the company, the entire three-phase process has to be completed back to back. Post divestment, government holding in the company would fall to 26 per cent.

Nalco has an installed capacity of 15,75,000 tonnes of alumina refining and 48,00,000 tonnes of bauxite production per annum. The company made a net profit of Rs 99.13 crore (Rs 991.3 million) for the quarter ended June 30 this year, which is 36 per cent lower than Rs 154.66 crore (Rs 1.546 billion) profit in the corresponding period last year.

The company earned a net profit of Rs 410 crore (Rs 4.10 billion) on a turnover of Rs 2,385 crore (Rs 23.85 billion) in 2001-02.

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