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Centre divestment move threatens Balco recast plans
Arijit De
Mumbai, Jan 20: The government's proposed disinvestment drive is believed to have cast a shadow on the ongoing growth plans of public sector Bharat Aluminium (Balco).While the centre is looking for a suitor to pick up 40 per cent equity in Balco -- leaving a majority with itself, but providing full management control -- it is believed possible suitors are trying to ensure the public sector company's immediate plans do not include proposals which may upset future applecarts.Ministry of mines sources say a multinational, which plans a positive response to merchant banker SBI Capital Markets' proposal for a stake buyout, is trying to influence the ministry to reverse Balco's move to set up a cold-rolling mill (CRM).It appears that in case of a takeover, the public sector company is proposed to be used as a source for primary metal, rather than an integrated maker of value-added downstream products.The only multinational with operations in aluminium in India is the Canadian giant Alcan, which already makes
downstream products here through the Calcutta-based major, Indal. On whether Indal had approached the government with a proposal, senior company sources denied any such move. The firm does not does not indulge in such lobbying, they said.The centre has initiated the disinvestment process for Balco on the recommendation of the Disinvestment Commission for a 40 per cent strategic sale.An inter-ministerial group (IMG), set up for the purpose, is learnt to have recommended a 51 per cent sale of government stake in Balco to lure international majors. This, however, is yet to be cleared by the union cabinet. SBI Capital Markets has been commissioned to appoint a merchant banker, whose primary task is to scout for a buyer of the 40 per cent government stake. The Disinvestment Commission's recommendations also include further offloading of up to 76 per cent by the government at a later stage to domestic financial institutions, banks and Balco employees.Balco has already initiated the setting up of a CRM at a
capital cost of Rs 156 crore, to be funded entirely through internal accruals. It is to be commissioned by end-1999.Ministry sources say questions have been raised on Balco's cold-rolling mill plans as a management change will follow the strategic disinvestment. They say hectic lobbying is on to stall the expansion till the disinvestment process is completed.
Copyright © 1998 Indian Express Newspapers (Bombay) Ltd.
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