This time around, L&T wants to be in the project only as a minority partner and an engineering-procurement-construction (EPC) contractor, instead of going for an equal joint venture which was its original plan.

Most international aluminium giant's have lined up at L&T's doors, say sources, adding that even Alcoa has evinced renewed interest after rival Alcan chose to increase its presence in the country. Sources familiar with the negotiations say that Pechiney of France, the world's largest aluminium company, has nosed ahead of the other aluminium multinationals.

L&T officials said that the partner is likely to be finalised within the next one month.

The project, as had been planned earlier, will come up in Orissa and is likely to cost around $1 billion.

An L&Tofficial said: "It is wrong to say that we have revived the alumina project. We had never shelved it in the first place. All we were looking for is the right partner, and the financial viability of the project."

Industry sources say that Pechiney has been testing the Indian aluminium sector "seriously" for over a year now. It had even commissioned a UK-based investment bank, which has an Indian partner, for a feasibility study.

Pechiney has been present in India as a technology partner to National Aluminium, but has no equity presence. It has recently signed an agreement with Sterlite Industries for transfer of technology to its proposed greenfield smelter.

Alcan is one of the two aluminium multinationals, other than Norsk Hydro of Norway, which has management control in an Indian company.

A director with a domestic aluminium industry said: "The substantial delay will be beneficial for the project. Alcoa had walked out citing downward trend in international alumina prices way back in 1995. "It hasbeen proved correct as prices are now nearing five-year lows. Prices over the next three-four years can only increase."

The project, if it finally takes off, will be the third export-oriented alumina project in the country. Indal, along with Alcan, Norsk Hydro and the Tatas, is setting up a similar-sized alumina project in Orissa.

After much delay, the Gujarat government too has managed to rope in new partners, after Raytheon walked out, for a 7.5-lakh tonne per annum alumina project in Kutch.

L&T has earlier faced severe criticism from investors, particularly from the foreign institutional investors (FIIs), for its decision to diversify into alumina and steel. The company had last year announced shelving of a severely criticised steel project proposal while it remained non-committal on the alumina project.

INSIGHT

L&T's decision to go ahead with the alumina project will have a negative impact on its stock price. This follows the poor performance of the company in the first half of thecurrent fiscal. Being engaged in a working capital intensive industry, the company is facing problems generating free cash. In such a scenario setting up a greenfield plant makes little sense for the company. The only benefit for the company in this long gestation period project in the short to medium term will be that it will get the EPC contract for setting up the plant. However, this will be a huge price to pay for a project in which L&T will be a minority shareholder and the only source of income generation will be from of dividend payment.