Aiming big

New Delhi, July 15 (PTI): Aluminum producer Nalco is in talks to buy Indonesia’s Ashan Aluminum (Inalum) for up to Rs 8,000 crore in what could be the largest overseas acquisition by a state-owned metal firm.

A Japanese consortium holds a 59 per cent stake in Inalum, which owns a 2.1-lakh-tonne plant in the North Sumatra province, while the rest is with the Indonesian government.

Sources privy to the development said the licence of the Japanese consortium to run the firm was coming to an end next year and the Indonesian government has invited the Indian PSU for discussions.

Nalco has made a detailed presentation to a committee of the Indonesian cabinet, elaborating its plans to take Inalum further. It expressed the intention of running Inalum or acquiring any stake or both.

Inalum was set up in 1976 as a joint venture between the Indonesian government and Nippon Asahan Aluminium (NAA), a consortium among 12 Japanese companies.

Initially, the shareholding ratio between the Indonesian government and NAA was 10 per cent and 90 per cent, respectively.

In October 1978, the ratio changed to 25 per cent for the government and 75 per cent for the consortium. After June 1987, the Indonesian government held 41.13 per cent, while the consortium owned 58.87 per cent.

The share composition then changed to 41.12 per cent for the Indonesian government and 58.12 per cent for NAA in February 1998.

Indonesia’s contract with NAA was to run the company for 20 years, which is ending next year, prompting Jakarta to scout for firms which can take care of its future.

Sources said this did not mean that the doors had been shut on NAA.

The Indonesian government is in touch with Nalco as well as with the Japanese firm.

No decision has been taken yet, they said.

Sources said there was a strong pressure from the Japanese government to renew the contract, but invitation from the Indonesian government to Nalco was an indication that it was open to bringing in a new partner.

“If it is a 100 per cent acquisition, together with the ownership of all captive power plants, it will roughly cost Nalco Rs 7,000-8,000 crore,” a source said.

Nalco chairman B. L. Bagra said, “We have expressed our interest also to take over Inalum. We have shown interest to get associated with it. Once the contract with the Japanese ends, whether the Indonesian government will offer us a part of equity or full equity or it will give to the Japanese only, we don’t know. We are yet to hear from them.”

“We are open to picking up part of the equity. We are open to fully acquire the company. We are open to just run the company and for both running the company with some stake,” he added.

Inalum is the first Indonesian company to produce aluminium.