India has dropped plans to sell a controlling stake in state-run National Aluminium Company (Nalco), the country's second-largest aluminium producer, before the end of the financial year in March.

"The strategic sale happening in the current year is not possible now," Reuters reported an unnamed disinvestment ministry official as saying.

No reason was given for the delay.

On Monday the Hindustan Times reported French aluminium company Pechiney's interest in Nalco was waning.

Three months ago workers at Nalco's plants in the south-eastern Orissa state prevented potential buyers from conducting due diligence by barring inspections of the facilities.

The latest postponement is another blow to India's struggling privatisation programme, which was trumpeted as the basis of reinvigorating Asia's third-largest economy.

Carving up the company

Workers and politicians oppose plans to sell off the company, fearing job cuts and because it is profitable.

The government planned to sell 29.15% to a strategic investor, which would take management control of the company.

A stake of 10% was also earmarked for domestic investors, 20% for a US rights issue and 2% was to be distributed to employees, leaving the Indian government with a 26% stake.

Apart from Pechiney, the world's second-largest aluminium producer, Russia's RusAl, Alcoa of the US, Switzerland's Glencore International had all expressed an interest.

In December the sale of stakes in Hindustan Petroleum and Bharat Petroleum were put off because of disagreements within the coalition government.

The government admitted that it would not hit its target of 120bn rupee ($2.5bn) worth of privatisations by the end of the financial year in March.

Nalco's shares fell up to 5.1% to 88.25 rupees on the Bombay Stock Exchange before recovering slightly.