BALCO is the 3rd largest producer of Aluminium in the country. It has a turnover exceeding Rs. 900 crores and has huge real estate, including the BALCO township. The replacement cost of its 270 MW power plant itself is more than Rs. 1,500 crore. And the replacement cost of its Fixed Assets is valued at over Rs. 5000 crore. Whereas Sterlite Industry was handed over the company’s control for Rs. 552 crore for a 51% stake in BALCO.
In handing over BALCO to Sterlite group, the Central Government showed undue haste. It ignored the Supreme Court order prohibiting the transfer of tribal lands to non-tribals. Land for BALCO was acquired for public purpose and cannot be transferred to private hands as per the section 44(A) of the Land Acquisition Act. It has claimed that the valuation of BALCO is just and fair, it was done by experts and it could not be challenged in the court. However, these experts took only 11 days to complete the valuation. Replacement cost of entire BALCO ( both units, power plant, township) was calculated in 3 days flat, which included travel time
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Privatisation by stealth |
Issues of fair valuations and transparency apart, the BALCO
deal raises important questions about the way the privatization is being
carried out.
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It was left to the workers at the plant to fight it out. And despite predictions in the press about their giving in meekly, they have held out. In the meantime, the past seems to be catching up with Mr. Shourie's paragon of virtue, Sterlite Industries. The Sterlite group, which was black listed one time by the Ministry of Telecommunications for supplying substandard optic fibre, fined Rs. 28 crore, has been banned by SEBI for entering the market for 3 years. The orders came in a case of rigging of its own share prices in 1998. The Sterlite Group cannot now raise the resources (Rs. 3,000 crore) to finance expansion and modernisation of BALCO.
Come to think of it, the Central Government’s, “inability to finance such modernisation” was the reason to disinvest, read dump, BALCO in the first place. The trade unions have opposed the deal tooth and nail. The workers have resolved to fight BALCO privatisation, come what may. The 8 central trade unions, including the AICCTU, have pledged their all out support. They know that the BALCO struggle is a test case. If they can block BALCO privatisation the greater disinvestment designs of the government will be put on hold. A countrywide solidarity movement among workers and general public is on. In a convention in Delhi held earlier in April, a Citizens’ Committee has been formed to mobilise solidarity for the BALCO workers. For its own populistic compulsions, the Ajit Jogi govt. too has taken an initial stand against the BALCO deal. The struggle is on. Menwhile, the SEBI intervention has come. Best laid plans of the government and the Sterlite group have come unstuck.
Aluminium Sector Prospects
In the long term, the outlook regarding the white metal in India is optimistic. An increase in the number of potential applications for which aluminum could be used is expected to spur demand for this metal in the future. The electrical sector, using it in the form of wire rods for transmission of electricity, is the biggest user. However, with the increasing use of aluminum in the automobile, packaging, consumer durables and construction sectors, demand for aluminum is bound to increase. This, coupled with the fact that India is amongst the low cost producers of the metal in the world, implies that long term prospects for the sector is very encouraging. Source : Indiainfoline.co |
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Sold for a song
BALCO was established in 1965 as the primary aluminium industry in India. Bharat Aluminium Company Limited (BALCO) was a dividend paying, profit-making company in the aluminium sector. BALCO has two working units -- an integrated aluminium complex situated at Korba in Chhattisgarh and the other in West Bengal at Bidhanbag, equipped to produce downstream facilities. Balco is vertically integrated from sourcing of bauxite from its captive mines, refining and smelting to produce aluminium and a variety of semi finished products Financial Highlights
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–Girish Ghildiyal