UAIL is a joint venture between Indian Aluminium (Indal), Alcan, Hydro Aluminium and Tata Industries.

A top industry official said the reallocation of the equity among the three partners following the Tatas' intention to move out of the project is still to be decided on. "It is the promoter's prerogative to decide on the new structure or the equity pattern", the official pointed out.

A 20 per cent stake with the Tatas works out to be almost Rs 320 crore. It is believed that this may not necessarily be shared equally between the remaining partners -- Indal, Alcan and Norsk Hydro -- but may be tilted towards any one of them. Under the existing equity break-up, Alcan and Indal have a 20 per cent equity each while Hydro has a 40 per centstake.

The financial advisors would put in a draft financial model only after the fresh equity pattern has been decided upon and a term sheet is submitted on receiving a firm commitment from the lenders and the owners. The entire process of due diligence will take a longer time with a fresh equity proposal on the cards.

The finalisation of the term sheet happens to be the binding factor of a borrower's agreement which in a way would mean access of funds by the promoters on the basis of a mutually agreed statement, the official said.

Tata Industries, one of the promoters, had recently expressed its intentions to move out of the UAIL joint venture as part of a policy decision to move away from non-core areas. Although industry sources ruled out any problem in the wake of a certain member pulling out, a revised joint venture may require a fresh clearance from the Foreign Investment Promotion Board, it is contended.

A promoters meeting in Delhi in late February reviewed the existing equity structure andother project details. According to the official, the debt amount will be decided on after taking into account crucial factors like financing options which could range from project finance to supplier's credit, apart from the normal finance from banks and financial institutions.

The memoranda of information comprising minute details of the project have already been submitted by the promoters. The details include information on land requisition, return on investment and other factors as well.

The due diligence which is being done by Warburg will start initiating a dialogue with various financial bodies. According to sources, once the equity is decided by end-March, project specifics including construction risks, cost overruns, raw material offtake and a gamut of other issues can be decided upon.

It is estimated that the UAIL project in the Raygada district of Orissa will produce almost one million tonne per annum of calcined alumina for the international alumina market.