Indian Aluminium Co (Indal), the newest member in the Aditya V Birla group stable, is all set to exit from Orissa Extrusions (OEL).
The A V Birla subsidiary, which produces extrusions, is a joint venture between Norsk Hydro of Norway, the Orissa government and Indal.
Hindalco, which now controls 74 per cent in Indal, was recently directed by the Board for Industrial and Financial Reconstruction (BIFR) to submit a rehabilitation proposal for the ailing OEL to ICICI, the operating agency.
Senior officials at Indal said: "We have send a notice to the state government and have informed BIFR that the project cannot be viably rehabilitated." The company, hence, now wants to exit from the venture.
Keeping in line with its new policy of exiting non-core activities, the company has already sold its entire stake in Indal Hydro Extrusions, the other joint venture with Norsk Hydro where Indal held a 50.5 per cent stake. Indal has received a consideration of Rs 5 crore for the stake, the officials said.
According to a study conducted by ICICI, the cost of the rehabilitation was estimated to be only around Rs 15 crore. Low capacity utilisation was the primary reason for poor sales. The unit employed around 150 workers.
ICICI was to submit the report after examining the rehabilitation proposal to the bench appointed by the BIFR. It was also said that if no consensus emerged on the rehabilitation scheme, the bench may issue a winding up notice.
According to the scheme, the entire funding was to be done through equity infusion and interest-free unsecured loans from the promoters. Hydro, Norway, had, however, refused to participate in the scheme at the very beginning as it was never involved in the management of the company.
