The earlier bids for PALCO were put in by Hindalco, the flagship of the Aditya Birla group, and Sterlite Industries, the Rs 2,000 crore copper and cables major.

Operating agency (OA) Industrial Development Bank of India (IDBI) will examine the bids in a meeting which will be held shortly, institutional sources said.

The aluminium sector would be a new business foray for Vatsa Corporation which currently deals in the music business. Raviraj Foils has put in its bid with the request to takeover PALCO on lease for over one year. Raviraj Foils plans to go in for backward integration with the setting up of a caster unit.

IDBI has been appointed by the Board of Industrial and Financial Reconstruction (BIFR) as the OA to call bids for PALCO, through either a takeover or a merger, based on the profile which has to be prepared in consultation with PALCO.

The institution will create a second charge on the company's assets in favour of a consortium of banks. A joint meeting of all concerned will be held to sort out the issues, sources said.

At the meeting to be convened shortly, IDBI is expected to take a final decision to hand over the management of PALCO to the preferred bidder. IDBI will achieve a general consensus and iron out the differences among creditors whose consent will be sought for any recommendation by the OA to BIFR.

Sterlite Industries had earlier suffered a set back in its bid to takeover PALCO. Between May 1999 and October 1999, Sterlite Industries had submitted before the BIFR three proposals for reviving PALCO. It had also asked the BIFR for more time to negotiate with the sick company's creditors and to improve its proposal which was turned down by the BIFR bench following which the bench directed the IDBI to invite global bids for PALCO.

The bench had stated that no preferential treatment would be given to Sterlite.

Hindalco, another serious contender in the race for PALCO, had conducted techno-economic viability and financial viability studies through Tata Consultancy Services (TCS) and SB Billimoria.

The Pennar unit at Nagpur, with an annual capacity of 30,000 tonne rolled products and 15,000 tonne of conductors, is the third largest manufacturer of aluminium sheets in the organised sector after Hindalco and Indal. With a combined capacity of 1.70 lakh tonne, Hindalco and Indal together account for 59 per cent of the aluminium sheets market.

Since the market is fragmented, PALCO's share stands at 5.8 per cent as in 1997-98. The share is down from 7.3 per cent in 1995-96. Five years after it commenced commercial operation in December 1993, PALCO was declared sick.

The promoters have a 12.8 per cent holding in the Rs 162 crore equity of PALCO, while the FIs hold 25.6 per cent.

As on December 1998, the company had accumulated losses of Rs 153 crore and a negative net worth of Rs 83.14 crore. In April 1998, it was declared sick.