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Divestment ministry stresses Nalco sale

Gaurav Raghuvanshi in New Delhi

The ministry of divestment has reiterated that any delay in the strategic sale of National Aluminium Company Ltd can be counter-productive.

The ministry has also questioned Coal and Mines Minister Uma Bharti's assertion that Nalco's profits were on an upswing.

Bharti's contention that the company be allowed to implement its Rs 4,000-crore (Rs 40 billion) expansion and modernisation plan before the strategic sale is the reason cited by the divestment ministry to hasten the selloff.

"Nalco will not have the benefit of depreciation on its new equipment. The cost of power will double. Moreover, the company would have to meet its export obligations because of its commitment to the government for duty waiver on equipment imported for its Rs 300-crore (Rs 3 billion) diversification venture with Mukand," a divestment ministry official said.

The divestment ministry, which has already sent its comments to the Prime Minister's Office after Bharti wrote to Prime Minister Atal Bihari Vajpayee, also said lower tariffs and over-capacity in the industry would make it imperative to diversify and export, something that could be done effectively with an international giant.

The official also echoed Divestment Minister Arun Shourie's views that Nalco's fate could be the same as the loss making Steel Authority of India's, which was highly profitable less than five years ago.

Bharti had described Shourie as a 'strange salesman' who says what he is selling will soon turn into junk.

"Any non-strategic sector company, to make it more flexible and responsive to opportunities, should be freed from government control. The minister's comment was not on the assets, it was on the constraints of being a public sector unit," the official said.

Nalco's net profit fell 35 per cent from Rs 656 crore (Rs 6.56 billion) in 2000-01 to Rs 404 crore (Rs 4.04 billion) in 2001-02. Net profit to sales ratio has been falling over the years and was at 16 per cent in 2001-02.

Because of huge bauxite reserves and low production cost, Nalco's divestment has attracted over a dozen companies, including the world's top three aluminium producers Alcan, Alcoa and Brazil's CVRD.

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