A memorandum of understanding (MoU) has been signed between the promoters for transfer of Ipicol's 12 per cent-plus holding in the venture at Rs 22 per share. While Indal currently holds a 35.33 per cent stake in the extrusions company, the shareholding of technical collaborators Hydro Aluminium is 24.5 per cent. Orissa Extrusions has an equity base of Rs 14.77 crore.

With this equity recast, which raises the stakes of Indal and Hydro Aluminium, the company is likely to derive better marketing and technological support from its promoters. Orissa Extrusions is currently quoting below par on the National Stock Exchange.

Indal and Hydro are also collaborating on the ambitious Utkal Alumina project to be located in the samestate. Besides, the promoters of Orissa Extrusions have also taken the lead to repay institutional debts under a "one-time settlement". Indal, Hydro Alumninium and Ipicol have signed an agreement to extend loans of over Rs 10 crore to Orissa Extrusions, which will be deployed to meet its obligations to the financial institutions.

According to the agreement, Indal will lend Rs 3.7 crore for the settlement of Orissa Extrusions' dues, while Hydro Aluminium and Ipicol will pump in Rs 3.8 crore and Rs 2.96 crore respectively.

The change in the equity structure is, however, subject to the approval of shareholders and the centre, as it will enhance the promoter's stake to beyond 30 per cent of Orissa Extrusions' paid-up equity.

Orissa Extrusions, a Rs 50-crore company, is engaged in the manufacture of aluminium extrusions, a wood-substitute which has applications in house-building, transport and architecture. The company reported a net loss of Rs 2.21 crore in 1996-97, with a paltry operating profit of Rs 1.69crore. The company's reserves have turned negative at Rs (-)12.13 crore as on March 31, 1997.

Aluminium extrusions are looked at as building materials of the future, and the current market conditions continue to be quite slugggish. Recent months have, however, seen significant productivity and product- quality improvements at Orissa Extrusions, and the company is gearing up to churn out sophisticated products for the domestic and international markets.

Orissa Extrusions was floated as a joint-sector company promoted by Indal and Ipicol. The company's anodising plant started operations in 1991. Soon thereafter, Hydro Aluminium joined as a co-promoter.

At Utkal Alumina, the ambitious Rs 4,000-crore project with Hydro and Indal as co-promoters, the land acquisition for the first phase has been completed and a technology-licence agreement is expected to be finalised soon.

Canadian giant Alcan, the largest shareholder of Indal, has expressed its intention to acquire a 20 per cent stake in the project, inwhich Tata Industries is also a co-promoter.