Danmetal Keen On Buying Pennar Aluminium

Denmark-based Danmetal A/s has shown interest in the outright acquisition of Pennar Aluminium Company Ltd (Palco).

Palco, a unit of the Hyderabad-based Pennar Group, is based at Dahali near Nagpur. The company is now before the Board for Industrial and Financial Reconstruction (BIFR).

The Danish firm recently sent a high-level team to inspect Palco's existing plant and machinery. Based on the expert opinion, the company has indicated interest in acquiring the Palco works.

Danmetal has promised to send firm offers for the acquisition to the operating agency, the Industrial Development Bank of India (IDBI), in a fortnight.

Palco president and chief executive officer P Bhaskara Rao said the managing director of the Danish firm was impressed by the facilities available at the Nagpur plant. He said his company has informed IDBI about the interest shown by Danmetal.

It is learnt that Danmetal has offered to make a one-time lump-sum payment of Rs 110 crore for the plant and machinery of Palco. It will not assume responsibility for the liabilities.

Alternatively, Danmetal is prepared to acquire Palco on deferred payment basis, paying 10 percent of the debt portion upfront and settle the balance in five equal annual instalments.

Palco, a manufacturer of aluminium rolled products and conductors, became sick in 1998. Indian aluminium majors Hindalco and Sterlite had shown interest in acquiring the unit. But the proposal of the Danish firm is understood to be more attractive.

If the deferred payment proposal is finally cleared, Danmetal has indicated that an American collaborator, A E Inc., which is in the business of aluminium products in the US, will join hands with it.

After going sick, the plant is basically undertaking conversion jobs of about 700 tonne per month compared with a capacity of about 2500 tonne per month. As on December 2000, the company has principal dues of about Rs 175 crore and interest overdues of Rs 142 crore.