Pennar To Induct Foreign Partners In Palco

The Pennar group has decided to restructure Palco, its aluminium plant near Nagpur, with the induction of foreign partners in all areas of operation -- equity, management and marketing.

According to the groups chairman, Nrupendra Rao, the restructuring has been necessitated to reduce the high debt burden, upgrade technology, increase capacity, widen the product mix range and make operations cost effective.

Rao said Palco would be split into two separate companies, one for the strips, coils and sheets and the second for the conductors. Foreign partners will be inducted for both the firms. Palco may function as the holding company, he added.

Several global majors in the aluminium sector have shown an interest in the two divisions, he said. A company from Atlanta had visited the plant and had held discussions earlier this week. Another overseas major would be visiting the unit early next week, Rao informed.

He was confident that the restructuring process would be completed in one to three months.

The Pennar chief said the company was facing a liquidity crunch mainly due to the liberalisation of imports. Import duty, which was 120 per cent when the plant was set up, has come down to 22 per cent now. Due to the low duty, there was largescale imports, he said.

Added to this, the market had not grown to the extent projected by the company.

Palco was planned in technical collaboration with Pechiney of France and has a marketing tie up with the German conglomerate, MG NE Group (jointly owned by Metallgesellschaft AG and Debis, a subsidiary of Dailmer Benz AG).