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The Ministry of Mines has given in-principle approval to DIPAM for divestment of its stake in BALCO (Bharat Aluminium Company Ltd). The latter has been asked to prepare a roadmap for the stake offload, Ministry officials said.
While the Centre owns 49 per cent in the aluminium-maker, Anil Agarwal’s Vedanta holds the majority 51 per cent.
Of the nine directors on BALCO’s board (including Chairman SK Roongta), four are government nominated. All four are posted in the Ministry of Mines.
The government-nominated directors are, Nirupama Kotru – who is also on the board of Hindustan Zinc Ltd and is a Joint Secretary rank officer; Farida Mahmood Naik – a joint secretary rank officer who is also on the board of Hindustan Zinc; Mustaq Ahmed - an officer of Indian defence account service of 2006 and a director level officer of the Ministry; and Sanjeev Verma – a director on Hindustan Copper’s board and a director level officer. Naik and Verma were appointed on BALCO’s board in November and December, respectively.
“We have given our approval to go ahead with the divestment of BALCO. Now the divestment details and processes are to be prepared by DIPAM,” a Mines Ministry official told businessline.
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According to the official, the Centre “is not gaining much” with the stake. Moreover, the Centre does not see BALCO as a strategically important company like Hindustan Copper Ltd.
BALCO produces nearly 20 per cent of the country’s aluminium requirement and has an annual production capacity 6,00,000 tonnes.
No Dividends
Not yet listed in the bourses, the aluminium-maker has not declared dividends for the last three years – FY22, FY21 and FY20.
Its Board of Directors have in their report (for FY22) mentioned that “it would be prudent, not to recommend any dividend”; while in the earlier years it was stated that the company “wish to conserve resources for future expansion and growth” and also because of “uncertain performance” due to Covid.
In FY22, BALCO saw a 40 per cent growth in revenue from operations, y-o-y to ₹13,607 crore; while Profit After Tax improved 160 per cent to ₹2,736 crore. It prepaid loans to the tune of ₹1151 crore.
Nearly 48 per cent of BALCO’s sales were to the Indian markets, specifically for the use in the electrical and transportation industries. “The company sold an overall of 40 per cent of its total sales as value added product.”
Aluminium exports were at 2,85,380 tonnes or ₹6,313.02 crore ( including export incentive of ₹29.72 crore).
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