Hindalco may buy out Alcan in Utkal Alumina

THE Aditya Birla group flagship Hindalco may buy out Canadabased Alcan’s 45% equity stake in the joint venture Utkal Alumina International after the global company said it plans to exit the project. As per the initial shareholders’ agreement between the Birlas and Alcan, Hindalco has the first right of refusal for its partner’s stake. Hindalco and Alcan were to jointly build the project, which is estimated to cost Rs 4,500 crore, with the Birlas owning 55% in the project. In its statement, Alcan said it has taken initial steps to sell its 45% interest in Utkal Alumina and expects the transaction to be completed this quarter. “We have carefully weighed the opportunity and risk presented by the Utkal project and, given constraints within the governance structure that limit Alcan’s ability to participate in key decisions, believe that we have acted in the best interests of all our stakeholders,” it said in a statement posted on its website. Alcan didn’t say how much it expects from the stake. A group spokesperson declined comment on the issue. It is also not known how much investment has been made so far. The project is currently in the engineering phase, with about 66% of the land required for the project already acquired, said sources. Govt clearances delay project HINDALCO and Alcan formed Utkal Alumina in 1992 to build a 1.5-million-tonne alumina refinery in Orissa. The project has been slow in taking off the ground due to delays in government clearances. Initially, it had equity participation from Indal, Alcan and Hydro Aluminium of Norway and the Tatas. Indal became a wholly-owned subsidiary of Hindalco, while the other partners moved out of but subsequently, only Alcan and Hindalco had evolved a formula under which each promoter, in proportion to equity holding, would lift the percentage of the total production and sell independently.

Courtesy: EconomicTimes