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Wednesday, Jul 10, 2002

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Nalco jumps on strategic sale talk

Virendra Verma

MUMBAI, July 9

THE share price of public sector National Aluminium Company (Nalco) gained sharply today on media reports that the Government is planning to divest its stake first to a strategic partner. The interest in the stock resulted in a couple of block deals of over 70 lakh shares in the counter on the BSE.

Today on the BSE, Nalco gained 9.08 per cent at Rs 105.75 with volumes of 86.13 lakh shares. On the NSE, the stock ended 9.43 per cent higher at Rs 105.50 with volumes of 16.12 lakh shares. Volumes jumped sharply compared to Monday when they were 82,400 shares on the BSE and 95,700 shares on the NSE.

Dealers said the block deals were done between FIIs (buyer) and a leading domestic institution (seller).

The sharp jump in the share price was on the Disinvestment Secretary, Mr Pradeep Baijal's statement that the Government was likely to offer its equity in Nalco first to a strategic partner and then a public issue followed by ADR/GDR. He also said that the Government was expected to take decision on the timing and sequence of the sale process within a week.

Earlier, the Government had planned a public offer followed by ADR/GDR and finally stake sale to strategic partner.

Dealers said that the Government would get a better valuation for its stake if it offered the stake to a strategic partner. They also said almost global aluminium majors such as Alcan, Alcoa, Pechiney and others were interested in buying out the 26-per cent Government's stake.

In addition, Hindalco, the largest aluminium manufacturer in the country, is also interested in buying the Government's stake. Hindalco, through its investment companies, currently holds around seven per cent stake in Nalco.

Analysts said that Nalco is one of the low-cost producer of alumina (raw material for manufacturing aluminium) and aluminium. The stock is also expected to get better valuation as the brown-field project with increase in the smelter capacity by 1.15 lakh tonne, is expected to go on stream by the end of this year.

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