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No time frame for Nalco stake sale, says govt

Surojit Gupta in New delhi

There was no set time frame for selling a slice of National Aluminium Co, the country's second-largest aluminium firm, a top government official told Reuters on Thursday.

The statement by divestment secretary Pradip Baijal impacted the stock market as investors, viewing this as a glitch in the divestments and reforms programme, sold shares of state-run firms.

There is "no time frame", Baijal said when asked when he hoped to complete the sale in Nalco, in which the government is initially selling a 29.15 per cent stake along with management control.

Initial bidding for the government's stake in Nalco ended on Monday, and Baijal said there had been good response. The government owns 87.15 per cent of Nalco.

"The response has been good. There are foreign companies also," Baijal told Reuters. He gave no further details.

But nALCO shares were pulled down as doubts surfaced about the government's privatisation programme which suffered a setback last week after stake sales in two large oil companies were deferred for three months.

The aluminium maker's shares fell 2.56 per cent to Rs 93.30 at the close, while the 30-issue benchmark Bombay share index ended down 0.96 per cent at 3,040.30 -- its lowest close since mid-August.

Another divestment ministry official, who did not wish to be named, said nearly a dozen bidders had submitted proposals.

Among those interested were the world's second-biggest aluminium producer Russia's RusAl; Alcoa Inc of the United States; Switzerland's Glencore International AG; and French metals group Pechiney, the official said.

In the second round of the Nalco sale, the government plans to cut its holding to 26 per cent through stake sales of 10 per cent to domestic investors, 20 per cent through American Depositary Receipts and two per cent to the employees.

Domestic opposition to the Nalco sale mounted on Thursday as political parties and trade unions launched a 12-hour strike to protest against the decision to privatise the firm in Orissa where the company's main plant is located.

The resistance has clouded the positive response from potential buyers in Nalco, the next big-ticket privatisation on the cards after the government last week deferred stake sales in Hindustan Petroleum Corp and Bharat Petroleum Corp.

The government's decision to delay the privatisation of HPCL and BPCL because of Cabinet differences over the selloff drive has sparked investor fears over the future of privatisation.

STRIKE IMPACT

Schools and colleges were shut and public transport was off the roads in major cities in Orissa as the strike against the Nalco privatisation began. Train services were also hit when strike supporters blocked tracks.

The strike was backed by the regional Biju Janata Dal party which heads the Orissa government and is a key partner in the central coalition government.

"The strike is total and people have expressed their collective displeasure over the proposed privatisation of Nalco," said BJD secretary general Damodar Rout.

A senior Nalco official would not say whether production had been hit, but told Reuters plants were being maintained.

Baijal also said the government hoped to complete sale of a strategic stake in the country's biggest shipping line, Shipping Corp of India, by December, but needed "some time" to iron out minor problems. He did not elaborate.

The government, which owns 80 per cent of SCI, plans to sell 51 per cent to a strategic partner. It earlier said it would invite bids by end-August but the deadline has lapsed.

India has set a budget target of raising Rs 12,000 crore (Rs 120 billion) through stake sales in state-run firms in the year to March 2003. But the government has admitted it will fall short of the target after delaying the sales of HPCL and BPCL.

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