| Earlier this year, the finance ministry had written to the mines ministry seeking its views on a proposal to sell equity in Nalco through the public offer route. |
| The mines ministry, in turn, sought the company management's view on the divestment. The company's views will now be incorporated by the mines ministry in its response to the disinvestment department under the finance ministry. |
| The letter cites several reasons for opposing the sale of equity, sources said. |
| "The commodity (aluminium) cycle looks like it may be peaking and therefore, it has to be seen whether it is appropriate to go in for a public issue," the official said. |
| Metal prices in general have touched record high levels for the past few months. Spot aluminium prices closed at $1706 per tonne on the London Metal Exchange. |
| Analysts see the commodity cycle for aluminium waning and do not expect the prices to go up. The labour unions have also told the management they were opposed to any move to dilute stake in the company. |
| A previous effort by the government to sell equity in the company in 2002 was aborted following stiff opposition from the unions and within the then National Democratic Alliance government. |
| The move to sell 20 per cent forms part of plan by the finance ministry to sell minority stake in profit-making public enterprises, both listed and unlisted, without ceding management control. |
| The proceeds from the disinvestment would be parked in the National Investment Fund. Returns generated on this corpus would be used to finance social sector projects and investment requirements of profitable public sector units. |
| Government currently holds 87 per cent stake in the aluminium major with the remaining held by the public, financial institutions and others. |
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