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Nalco moves Supreme Court against Vedanta’s unit

While the PSU uses the commodity to meet its in-house need of metal smelter at Angul, the surplus alumina of over 1.2 million tonne is exported annually.

State-run aluminium producer National Aluminium Company (Nalco) on Tuesday moved the Supreme Court against the Odisha High Court’s March order that allowed Vedanta’s Jharsuguda unit to participate in its tender for the sale of surplus 30,000 mt of metallurgical grade calcined alumina.

Nalco, the leading producer of low-cost metallurgical grade alumina in the world, while opposing Vedanta’s participation, told the Bench led by Chief Justice SA Bobde that as per its policy, the tender for alumina exports can be issued only to overseas customers and, therefore, Vedanta cannot participate in the tender.

The PSU said that since 2005 it sells alumina to overseas firms only and if at all Vedanta wants to participate, it could apply only as a foreign buyer through its London-based company and not as a domestic purchaser. While the PSU uses the commodity to meet its in-house need of metal smelter at Angul, the surplus alumina of over 1.2 million tonne is exported annually.

Senior counsel Ranjit Kumar, appearing for Nalco, alleged that “Vedanta wants to finish Nalco. They have a predatory approach. Vedanta doesn’t want calcina to be exported by the PSU as it buys it from us and also exports it… Vedanta is the highest in production and exports and almost commands 48% market share. They are also given many tax and duty exemptions for conducting operations in SEZ.”

Stating that the bidding conditions stipulated by Nalco are “arbitrary and discriminatory,” senior counsel Mukul Rohatgi, appearing for Vedanta, contended that “we both are competitors… Alumina is a raw material… Nalco says they will sell alumina only to a foreign player and get foreign exchange…”

Vedanta being a SEZ unit, is deemed to be foreign buyer located outside the territory of India, hence, it should be treated at par with the overseas entities, Rohatgi added.

He said that Nalco should sell alumina to Vedanta only if it emerged as the highest bidder and the PSU’s stand was against public interest as the conditions prevented the government company from realising maximum revenue from the sale of its alumina.

As per the provisions of SEZ Act 2005, the SEZs are categorised as a territory outside of India and supplies from Domestic Tariff Area to SEZ is considered as export. Vedanta, which has established a SEZ unit at Jharsuguda, Odisha, for aluminum production with capacity of 12.5 lakh tonne per year, made a huge investment of Rs 12,000 crore with the understanding that Calcined Alumina would be supplied by its Lanjigarh alumina refinery, which is entirely dependent upon alumina from third-party sources. The Lanjigarh plant ran into problem due to denial of mining at Niyamgiri on grounds of ecology and tribal protests.

The HC had, while allowing Vedanta, noted the lack of economic sense requiring the Anil Agarwal company to apply as a foreign firm. “Because, on one hand, it (Nalco) refuses Vedanta to participate in the tender and on the other hand Nalco has allowed it to apply through a sister concern based in London and spend huge foreign exchange to transport it to London and back to its plant in the SEZ, it doesn’t find any favour with commercial sense.” The SC will continue hearing on Wednesday.

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Source: Financial Express