BL Bagra, chairman and managing director of National Aluminium Company (Nalco), today said the aluminium major does not need to tap the markets in the next three years for expansion, but it is up to the government to take a call on disinvesting its stake in the company.
The government, with 87.15% holding in Nalco, has put the company on its disinvestment radar during the current fiscal.
Finance Minister Pranab Mukherjee had informed the Lok Sabha on Friday that the proposal for disinvestment of 10% government stake in the Navratna company is under consideration.
However, Bagra said the company has enough cash for implementing its expansion plans.
"In March, we were asked by the Department of Disinvestment [about fund raising]. We do not need money [from markets] to fund our expansion for next three years and that's what we told them. Now it is up to the government to decide [on divesting its stake]," Bagra said.
In 2010-11, Nalco had reported a net profit of Rs 1,069.30 crore, while its turnover was Rs 6,055.76 crore and the company was sitting on a cash surplus of about Rs 3,800 crore.
When asked about the timing of proposed disinvestment, the Nalco Chairman said, "It will depend on market conditions but we would go for it as and when told [by the government]."
He also indicated that the earliest possible schedule could be February-March next year for the follow-on public offer.
"Even if we start working now, it would take roughly 5-6 months to hit the markets," Bagra said.
By divesting 10% of its holding in Nalco, the government may rake in about Rs 1,700 crore at current market price. The company's shares today closed at Rs 65.20 apiece on the Bombay Stock Exchange, up 8.85% from their previous close.
The Orissa-based company, with an alumina refinery capacity of 2.1 million tonne per annum and an aluminium smelter of 4.6 million tonne, has recently completed its second phase of expansion at an investment of Rs 4,402 crore.
Besides, it also has bauxite mining capacity of 6.3 million tonne and generates 1,200 MW captive power.
On the disinvestment front, the government has plans to mop up Rs 40,000 crore from selling its stake in different public sector units.
However, adverse market conditions have played spoilsport for the government, as so far it has managed to mop up only over Rs 1,100 crore by selling its 5% equity in the Power Finance Corporation -- the first follow-on public offer of a PSU in the current fiscal.
