New Delhi, Jan 21: The government will call financial bids within a week for the sale of profit-making Bharat Aluminium Company Ltd (Balco). The government expects to privatise the public sector company in this fiscal.Sources in the department of disinvestment (DoD) told The Financial Express that the bidders have completed the exercise with due diligence and have given their comments on the shareholders' agreement. The sources said that objections raised by the Madhya Pradesh government have also been taken care of and all the hurdles have been cleared for the Balco privatisation.
The MP government had raised objections to the fact that the Korba unit is based on tribal land. The land was given at a very nominal price because the company was in the public sector. But the same benefit cannot be extended to a private company, the government had argued.
The DoD, however, has sorted out the land issue, and this is likely to make Balco the first company to be privatised in this fiscal, sources said.
It may be recalled that the erstwhile Disinvestment Commission had recommended immediate offloading of 40 per cent equity in favour of a strategic buyer, with an agreement for further dilution of 26 per cent through public issue within two years. The government was suggested to divest its balance holding of 26 per cent in full at an appropriate time in future.
The government had decided to sell 51 per cent equity to a strategic buyer. Sterlite and the Alcoa-Hindalco consortium are said to be the leading bidders for Balco.
Balco was incorporated in 1965 with an integrated alumina-aluminium complex at Korba. The alumina plant has a capacity of 2,00,000 tonne per annum (tpa) and is based on Hungarian technology. The aluminium smelter, with 1,00,000 tpa capacity, is based on Soviet know-how.
Balco got another unit at Bidhanbag, near Asansol in West Bengal, by way of nationalisation in 1984.
The Balco has an authorised capital of Rs 500 crore and a paid-up capital of Rs 488.85 crore. The company earned a net profit of Rs 134.79 crore in 1997-98, which came down marginally to Rs 134.77 crore in the next fiscal.For 1999-2000, the government had set a profit target of Rs 141.97 crore.
Till December 1999, the company had earned Rs 83.43 crore.
Copyright © 2001 Indian Express Newspapers (Bombay) Ltd.
