THE COMPASS
Hindustan Copper's (HCL) privatisation attempt has been given a new twist. HCL will now be broken up in two companies and disinvested accordingly.
A new firm will be formed by separating Khetri Copper operations and the Taloja plant. Khetri Copper Complex has an ore capacity of 19.5 lakh tonne and smelter capacity of 31,000 tonne. Taloja plant houses the continuous cast copper rod plant and has an annual capacity of 60,000 tonne.
The split up is probably being done to make disinvestment an attractive proposition without the government having to invest substantial sums in restructuring the company. According to news reports, 51 per cent of the new company will be offered to a strategic investor.
Given the poor financial condition of Hindustan Copper, a strategic sale would have been difficult. Despite copper prices improving in the current fiscal, the company is still making losses at the operational level. It made an operating loss of Rs 42.49 crore in the half year ended September 1999. This is, however, lower compared to Rs 75.06 crore for the previous corresponding period.
Hence, to make the divestment more attractive, the government is spinning off an integrated and in all likelihood more profitable part of its business. Hindustan Copper will be given a 49 per cent stake in this company for the asset value, according to news reports.
Hindustan Copper will be left with the Indian Copper Complex which has an ore capacity of 12.6 lakh tonne in Bihar and smelting capacity of 16,500 tonne. There will also be the Malanjkhand mines which have a capacity of 20 lakh tonne. These operations will be restructured by closing down unviable mines, improving processes, debottlenecking capacity and reducing manpower. Only if these measures are successful will the government manage a tidy sum for the second round of disinvestment.
BASF India
BASF AG has initiated worldwide restructuring operations of its colourants business but this will have only a marginal impact on its Indian operations. It has decided to transfer the textiles dyes business to a new company which will be formed along with DyStar. It is also planning to sell its masterbatch business but this is not undertaken by BASF India. BASF AG has decided to focus on textile chemicals, pigments, leather dyes, chemicals and printing systems within the colourants segment.
The transfer is not expected to have a significant impact on BASF India. The textiles dyes business has a turnover of about Rs 20 to Rs 22 crore (including exports), according to a company source. This amounts to about six per cent of the company's turnover. This business will be transferred to the new company while other textile business like auxiliaries and chemicals will be retained.
The new company will have sourcing or toll manufacturing arrangement with BASF India. The latter will not pick up a stake in the new company being formed, according to a source. Exports of textile dyes i
