Over 30 companies have shown interest in buying out Vedanta Resources' 39% stake in India Foils. The company was put on the block after Vedanta decided to exit the downstream metals business. Vedanta Resources holds 39% in India Foils through Madras Aluminium Company (MALCO).
Even tough it is too early to say who would clench the deal, industry sources say, Hindalco Industries, India's largest aluminium manufacturer, is considered one of the serious bidders in the race. Also, Alcoa, which is one of the largest aluminium manufacturers in the world, has been trying to make inroads into the growing Indian aluminium market, and has evinced interest in India Foils. Besides large aluminium manufacturers, the India Foils sale has also attracted packaging companies, which require huge quantities of aluminium foils as raw material.
ICICI Securities has been appointed by Vedanta to identify a strategic partner to whom the stake would be divested. 'We should also get an appropriate valuation for the management stake in India Foils, failing which we may choose not to divest our stake,' a Vedanta group official said in an interview with a leading newspaper,
However, Hindalco seems to be most suited to buy out Vedanta in India Foils as the company is already a leader in the Indian aluminium foils market. Currently, the foils business is the second-largest value-added product segment for Hindalco, accounting for 10% of its total metal products sales.
Volumes in Hindalco's foils business climbed 26,004 tonnes, adding Rs4540m to its top line. The foils business has been highly profitable for Hindalco with realisations on foils being 93% higher compared to the realisations on ingots.
India Foils, based in Kolkata, is among the largest aluminium foil manufacturers in India after Hindalco. The London Stock Exchange-listed company is however looking at exiting the foils business as it intends to focus on its core business of manufacture of non-ferrous metals and mining.
