INDIA BUSINESS WORLD - MAY 2006
THE MONTH THAT WAS...

HINDALCO INKS MOU WITH MP FOR RS 7,700-CR GREENFIELD SMELTER

 THE Aditya Birla Group flagship, Hindalco Industries, has entered into a memorandum of understanding (MoU) with the Madhya Pradesh government to set up a green field aluminium smelter project in the state for an estimated Rs 7,700 crore.

The project consists of a 3.25-lakh tonne smelter and a 750-mw captive power plant and a captive coal mine. The mines will be jointly owned by Essar Power and Hindalco. The project will add Rs 2,800 crore to the company's topline after commissioning, company officials said.

The coal mine will be located at Mahan in Singrauli coalfields. The coal from the mines will be transported to the power plant which will be located close to the smelter site. Hindalco managing director D Bhattacharya said the company has decided to transport coal to the power plant rather than set up the power plant close to the mine so that the transmission losses could be minimised when the power reaches the smelter.

While 60% of the project cost will be funded through debt, 40% will be financed through internal accruals. “We have tied up the finances for the project,” said Hindalco advisor RK Kasliwal. Bhattacharya said the project was scaleable to over a million tonnes and the company can potentially invest over Rs 18,000 crore over a decade in the project. Over 5,000 acres of land has been earmarked for the project, said Bhattacharya.

Hindalco is also building a 1.5-million tonne alumina project called Utkal which will feed the required alumina to the new smelter. The alumina project is estimated to be completed over the next 36 months.

Bhattacharya said the company has decided to shift a similar-sized project in Jharkhand from Rajbar to Latehar as the earlier site was part of a wild life sanctuary. This project also comprises a 3.25 lakh smelter and a 750 MW power plant.