Sterlite Industries today announced its decision to hive off its copper business and the investment portfolio into a new company, while it would continue to hold the power transmission line, aluminium conductor business and other non-metal related assets in the parent company.
The move comes only two years after a restructuring that saw the optic fibre business being separated from the main company to give both a clear focus. It also comes at a time when its main rival, the Aditya Birla group, is consolidating the aluminium and copper businesses under one roof.
The assets and liabilities of the copper business would be transferred as a going concern with effect from April 1, 2003, and shareholders would have the option of accepting one share of Rs 5 in the new company for every share held in Sterlite Industries, or a sum of Rs 175 in lieu thereof.
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Sterlite executives were unavailable for comment. With more than 85 per cent of its turnover coming from the copper business, the decision to hive off the copper business is seen by analysts as a move to de-risk the company from its proposed expansion into the aluminium business, especially after its acquisition of Balco.
Sterlite is also planning a three-fold expansion of its copper business to around four lakh tonne per annum. At the same time, the group is eyeing both the public sector major Hindustan Copper and National Aluminium Company.
With the copper business being hived into a separate company, the Sterlite management would ensure a better valuation for its proposed international listing, analysts said, reacting to the move.
Since the aluminium business bears a relatively greater risk profile in view of the cash requirements for the modernisation plans, especially after the group