The Hindu Business Line : Indal, Hindalco merger ruled out for now

THE Vice-Chairman of Indian Aluminium Company Ltd (Indal), Mr A.K. Agarwala, has ruled out the possibility of a merger in the immediate future between Indal and Hindalco Industries Ltd (Hindalco). Both are Aditya Birla Group companies and Hindalco already controls 96.6 per cent of Indal's total equity.

However, a decision might be taken in the future if a situation so warrants, he said while presiding over Indal's 66th annual general meeting in the absence of the company Chairman, Mr Kumar Mangalam Birla.

On the sidelines of the AGM here, Mr Agarwala said people may have the impression that the two companies could be merged once Hindalco acquired the remaining 3.4 per cent of Indal's equity stake from minority shareholders, who have been offered an exit option to tender their shares in favour of Hindalco at Rs 120 per share, by February 15, 2005.

However, he ruled out any such merger in the immediate future, while hastening to add that "anything could happen in the corporate world."

Incidentally, the minority shareholders had urged the Indal board to reconsider the offer price because they felt it is too low compared to the initial offer of Rs 190 per share the company had made earlier.

Mr Agarwala was upbeat about Indal's future with the company going all out to augment its smelter capacity at Hirakud in Orissa, from 65,000 tonnes to 100,000 tonnes a year, its combined alumina refinery capacity from 4,60,000 tonnes to 11,50,000 tonnes a year, and the captive power plant's capacity at Hirakud from 87 MW to 287 MW.

The entire expansion programme would be completed over the next two and a half years, entailing a further investment of about Rs 300 crore. In the last couple of years, the company had already invested about Rs 800 crore in two phases towards brown-field expansion.

The Vice-Chaiman said alumina refinery capacity at Muri in Jharkhand had been expanded with backward integration into new bauxite mines in Jharkhand and Orissa.

He assured shareholders that the company had sufficient bauxite reserves to take care of its requirement in alumina refineries.

Indal was bullish on the Union Railway Minister's idea of replacing old steel wagons with aluminium wagons. Replying to a specific shareholder's question, The President & CEO of the company, Dr S.K. Tamotia, said that Indal has already developed a prototype wagon, which will be sent to the Research Design & Standards Organisation of the Ministry of Railways. Once it is approved, he said the company hopes to get sufficient orders from the Railways.

He indicated that the Railways usually replaced about 10,000 wagons a year. Indal expects to have 50 per cent of the total replacement order.

This year's General Budget would not seriously affect the company. The total impact would be about Rs 6 crore, he said.

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