Nalco to choose project partner in 15 days

The recent arrest of AK Srivastava, the now suspended chairman and managing director (CMD) of National Aluminium Company Limited (Nalco), hasn't hit the decision-making process of the company, said acting CMD and Director (finance), B L Bagra. The company would choose the partner for its ambitious $4-billion Indonesian aluminium smelter project in the next fortnight.

Bagra said though Srivastava was suspended from his role by the government, he hasn't been removed yet. “He is still the CMD, but in suspension. The process to select a new CMD can begin only when the job of the current CMD is terminated.” Bagra said there was no delay in decision-making at the company. He said, “As the acting CMD of the company, I have full control over the discretionary powers of the business and we are functioning normally.” Srivastava was suspended from his role in February this year after he, along with his wife and two accomplices, was caught accepting a bribe.

Talking about the $4-billion Indonesian project, Bagra said the commercial bids submitted by the two shortlisted companies, MEC Coal and Bumi Murau Coal, would be opened this week and within a period of 15 days, the company would choose the partner. He said, “We had asked IFCI to conduct due diligence on Bumi Murau, since we had carried out the due diligence for the first bidder. IFCI had submitted its report last week, and we will go through it now.”

Bagra said ideally, Nalco would like to hold stake in the coal mine of one of these two companies, which would supply coal to the power plant of the proposed aluminium smelter.

Nalco plans to set up a half-a-million-tonne aluminium smelter and a 1,250 Mw power plant in Indonesia. According to the deal, Nalco would offer a stake in the smelter project to the final partner, in lieu of a stake in the coal mine that would supply coal to the power plant. The company is ready to offer up to 49 per cent stake in the project and the debt to equity ratio is estimated at 7:3.

The company has no plans to raise any money for its expansion plans. Bagra said, “We have cash accruals of Rs 1,000 crore every year, and that is sufficient for our annual capital expenditure.”

The cash and cash-equivalents in the company's books are close to Rs 5,000 crore. “We don't need funds for this year or for the next year,” said Bagra.