Indal Goes On The Offensive Over Sterlite Charges

Indian Aluminium (Indal) has come out strongly to counter the charges made by Sterlite in recent weeks relating to the companys future, its technology usage and growth in alumina production.

At a press conference held in the city yesterday, company officials reiterated that Alcan would continue to add value to the company in terms of technology and long-term commitment.

Indal officials made direct references to Sterlite in terms of their growth potential, capacity utilisation and forex earnings. They also argued that Sterlite's commitment to the alumina industry would stand to be questioned considering their broad-based nature into various fields from alumina to optic fibres.

 

Vijaya Sampath, vice president (legal) and company secretary, Indal, said, It does become extremely irritating and distracting to suddenly have a hostile bid announced on us. It becomes even more confusing for the shareholders, she said.

Indal officials strongly refuted the charge that Alcan's technology had already been utilised to the maximum, and was thus not required.

One cannot just substitute technology overnight, and Alcans technology is required at this stage, Sampath said. The company would continue to depend on Alcan for technology as newer processes and methods are constantly being developed.

Indal made an attempt to focus attention on Sterlite's own problems in capacity utilisation. Sampath pointed out that Sterlite's own track record in capacity utilisation of several divisions was not good.

With such performance, what kind of value can they add to Indal? she asked.

The role of the domestic financial institutions will be crucial, and they are set to take a view on this issue shortly.

The Alcan and Sterlite offers are set to open on April 18, and the crucial details relating to price and the number of shares can be altered upto May 9.

ndal officials declined to comment on what would be the next stand by Alcan following Sterlite's counter offer last week.

We are sure that Alcan will do everything to defend the company, Sampath added.

Sterlite officials, in response, have argued against the figures which have been presented by Indal, stating that their company was into import substitution with the raw material being imported and value addition being done locally.

Indal has claimed that Sterlite's forex earnings are negative, at (-)Rs 1169 crore as against Rs 72 crore for Indal. The latter has also argued that Sterlite's return on capital employed was much lower than theirs, being 12 per cent for Indal and 7.7 per cent for Sterlite in 1995-96 and 7 per cent and 6.5 per cent for 1996-97.