National Aluminium Company Ltd., or Nalco, a public sector enterprise of Government of India and the second largest aluminium producer, is likely to acquire 51% stake in Tajik Aluminium Company or Talco, a primary aluminium producer owned by the Tajikistan Government, for undisclosed sum, according to media reports.
Sources said in a statement that NALCO has approached the Government with the proposal and awaits its approval. Sources added that the matter is also under consideration of the Tajik Government.
Once the deal materializes, it will see the combine emerging as one of the world's top-three aluminium producers with an output of 8,00,000 metric tonnes or MT, the release stated.
Talco located in Tursunzoda, a city in western Tajikistan, runs the largest aluminium manufacturing plant in central Asia and is one of Tajikistan's largest enterprises. In 2006, Talco produced 416,000 MT of aluminium.
According to sources, Talco wanted to buy aluminium without going for the global tendering process being adopted by Nalco. However, Nalco now feel that instead of supplying alumina, it would like to acquire 51% stake in the equity and management control of Talco. During the fiscal 2008, Nalco Produced 4,684,684 MT of bauxite and 359,213 MT of aluminium.
Talco depends entirely on imports to run its smelters and the acquisition will now provide opportunity for the company to procure necessary raw materials by virtue of access to bauxite mines of Nalco. Moreover, the cost per unit of production will come down and Nalco will benefit from the existing smelters of Talco.
KPMG Director, tax and regulatory, Nabin Ballodia, said in a statement, that Talco is not technologically advanced and an acquisition of an aluminium company in South Korea could have been a better choice,
The report indicated that acquisition by Nalco will not a smooth sailing, as the Tajikistan authorities are also thinking in lines of privatizing Talco, retaining the majority stake. In such circumstances, acquisition by Nalco will be a tricky issue.
For Nalco, the benefit will be in the form of acquiring smelter plants, which are world leader in production. Also the cost of power generation is significantly cheaper in Tajikistan and will benefit the company since production of aluminium is high power consuming, the release stated.
Nalco, which is in the midst of a $1.2 billion expansion plan to be completed in December, has already inked a memorandum of understanding with the Indonesian government to set up a five-lakh tonne smelter and a 1,250MW captive power plant with investment to the tune of Rs.14,000 crores.
Source: RTT News