India's top aluminium producer, Hindalco Industries Ltd (HALC.BO: Quote), said on Monday its board had approved a proposal to use $2 billion in its share premium reserve to write-off costs relating to its foreign acquisition and domestic expansion.
Hindalco acquired Canadian aluminium product maker Novelis for $5.9 billion in 2007, and has also announced investment of 198 billion rupees ($4 billion) over three years to expand capacity in India.
The company aims to transfer up to 98 billion rupees from its share premium reserve to a new business reconstruction reserve for this purpose, company secretary Anil Malik told Reuters.
We may need to take approvals from shareholders and the court or even the central government, depending on what course we finally decide, he said.
Under current accounting standards, Indian firms charge costs of acquisition or expansions against their profit & loss account, but can alter this in special cases, after taking shareholder and regulatory approvals, he said.
Hindalco shares were down 2.5 percent at 44.55 rupees, in a Mumbai market .BSESN down 3 percent. ($1=48.7 rupees) (Reporting by Prashant Mehra and Janaki Krishnan; )
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