"We have decided not to go ahead with the proposed aluminium project until we rope in a strong international partner keen to pick up a majority stake in the venture," Sterlite chairman and managing director Anil Agarwal said.

The company, Agarwal said, was examining the option of separating its copper and cable businesses and will soon appoint an independent consultant to look into the proposal.

"Although the management feels that the copper and cable businesses can do well together, we have been getting feedbacks from our investors that a demerger will add to shareholder value. The company will soon seek advise from a reputed management consultant on the matter," Agarwal told The Financial Express.

"Although we are among the largest and lowest cost producers of copper and cables, the same is not reflected in the price-earning ratio of the company. Hence, we are examining if separation of the two businesses will add to shareholder value," Agarwal said.

On the Orissa aluminium project, Agarwal said that Sterlite would go ahead only if a global aluminium company like Kaiser, Pecheney or Billiton is prepared to join as a major partner.

Sterlite has put in around Rs 12 crore on the venture so far on land acquisition, and would like to hold only a token stake in the venture, if it takes off at a later stage. The company has also commissioned a feasibility study on the project, which will be completed in another six months.

Sterlite has, meanwhile, decided to expand capacity of its copper smelter from one lakh tonnes to 1.2 lakh tonnes during the calendar year. The increase in capacity, to be achieved through de-bottlenecking will not involve a very marginal investment, said finance director Tarun Jain.

The second phase of the expansion, which will increase capacity to 1.7 lakh tonnes, will be completed by the next fiscal. "The financial outlay for the second phase of expansion is yet to be firmed up," Jain said.

Sterlite is planning to enter into a host of strategic tie-ups with overseas mining companies to ensure uninterrupted supply of high-grade copper concentrate. "These tie-ups will help us obtain around 30 per cent of the copper concentrates, which will result in better yields for the company," said the chief executive officer of the copper division CV Krishnan.

The board of the company, which met in Mumbai on Tuesday, approved a stock option scheme for its employees to "reward human capital". The scheme, which has been worked out by Price Waterhouse Coopers, will cover top executives of the company during the first year. The scheme will be extended to other employees in a phased manner and will involve an annual dilution of 2 per cent of the share capital.

Copyright © 1999 Indian Express Newspapers (Bombay) Ltd.