Sterlite May Buy Govt's 49% Stake In BalcoPublished by MAC on 2004-02-24
Source: Business Standard ()
Sterlite may buy govt's 49% stake in Balco
Mansi Kapur, Reeba Zachariah in Mumbai, Business Standard (India)
February 24, 2004
Sterlite Industries is looking at buying Bharat Aluminium Company from the government. Sterlite, which controls 51 per cent in the aluminium major, has a call option for the residual 49 per cent stake, which can be exercised after March 1.
Sterlite chairman Anil Agarwal told Business Standard, "We are planning to put forth a proposal to the Sterlite board on this issue as we are inclined to increase our stake in the company. However, no final decision has yet been taken. At the moment, we are in the process of evaluating various options."
Sterlite had acquired 51 per cent stake in Balco from the government in 2001 at a consideration of Rs 551.5 crore (Rs 5.51 billion).
The company had yet not decided on the method of raising funds for picking up the remaining stake in Balco, Agarwal said.
Sterlite has also lined up expansion plans for Balco. It is planning to invest around $800 million for the expansion project.
The existing one lakh tonne capacity at Balco's Korba smelter will stand enhanced to 350,000 tonne by March 2006.
Sterlite is also planning to set up a 1.4 million tonne alumina refining unit in Orissa. "We are looking at using 50 per cent of the alumina produced at the Orissa refinery for captive purposes. The alumina will be used for the expanded capacity at Balco's Korba smelter," Agarwal said.
The combined domestic market share of Balco and Madras Aluminium Company in which Sterlite holds an 80 per cent stake, is almost 21 per cent of aluminium sales.
Vedanta Resources, which holds around 60 per cent in Sterlite, has recently raised $1 billion at the London Stock Exchange through an initial public offering.
The proceeds from the IPO will be used to fund Sterlite's expansion projects in group companies Balco, and Hindustan Zinc.