The public sector Bharat Aluminium Co Ltd (Balco) has embarked on a Rs 1000 crore expansion-cum-modernisation programme over the next four years.
The expansion project will include the setting up of a cold rolling mill, captive power generation and modernisation of existing facilities, particularly in energy consumption. This was revealed by P Mazumdar, director (finance), Balco.
Balco is one of the four major alumina and downstream aluminium products manufacturer in the country. Its Korba integrated aluminium complex has bauxite mine, alumina plant, smelter and semi fabrication units.
A new cold rolling mill of 40,000 tonnes per annum capacity along with its associated manufacturing facilities is being installed at Balco's facility at Korba in Madhya Pradesh. The cold rolling mill will cost Rs 157 crore.
FATA Hunter Engineering of Italy has prepared the feasibility report for the cold rolling mill and the project will be implemented in three years.
Balco has decided to appoint Mecon as its consultants. The company plans to set up two captive power generation units having a capacity to produce 67 mw of power each. The coal-based units will cost Balco Rs 450 crore, Mazumdar said.
At present, Balco has a captive power generation capacity of 270 mw at Korba. In spite of this, it faces a shortfall of around 40 mw. With new power generation capacities being set up, Balco will be completely self sufficient in its power requirements, including for its expanded capacities.
However, the major problem facing Balco is its inefficient smelters which are based on Soderbarg technology from Russia. Balco's per tonne of aluminium energy consumption is 17,500 units, as against its competitors who use pre-baked technology that consumes around 14,000 units for a tonne of aluminium.
With the modernisation programme, the company hopes to reduce its energy consumption to 15,000 units from 17,500 units per tonne of aluminium produced.
The one lakh tonnes per annum aluminium modernisation will cost Balco Rs 100 crore. Other facilities at Korba too are being modernised.
In fiscal 1996-97, Balco made a major dent in the global market with the export of 5,000 tonnes of ingots valued at Rs 28 crore.
SBI Caps picked for capital recast
Avertino Miranda PUNE
Bharat Aluminium Co Ltd (Balco) has commissioned SBI Caps for its capital restructuring programme.
The move is significant as the company's management is said to be opposed to a single partner taking up 40 per cent stake in Balco, as suggested by the Disinvestment Commission. Balco is one of the 40 PSUs that will disinvest as proposed by the commission. SBI Caps will look into various options of reducing the Rs 488-crore equity capital of the PSU, including redeemable cap route or debt conversion.
The main objective of the restructuring is to enable the company to get a better share premium when its equity will be disinvested.
The commission has proposed 40 per cent disinvestment of Balco s capital to a single partner who has the technology and ability to invest in the modernisation and expansion programme of the PSU.
However, the company s management is against the idea of a foreign partner as it feels it has the capacity to undertake the entire expansion and modernisation programme on its own.
Besides, there is no major local manufacturer that has the financial muscle to undertake a large investment of Rs 1,000 crore in modernisation and expansion.
Balco has a very low debt-equity ratio of 0.12:1. It also has a cash surplus of Rs 250 crore (as on March 31, 1997).
The company s management has pointed out it could easily go in for additional debt, both domestic and foreign, to raise funds for the expansion programme. Besides, internal accruals could be a major part of the funding.
