The Government expects to complete its residual stake sale in Hindustan Zinc and Balco within the next 3-6 months. Sterlite has already made its offer to buy remaining stake in these two companies.
A senior Government official told Business Line , “We had our first meeting late last month and hope to have another soon. These meetings will pave the way for finalising the plan for residual stake sale.”
At present the Government has a residual stake of 49 per cent in Balco and 29.53 per cent in Hindustan Zinc. Both the companies were strategically divested by the Government. Sterlite is a part of Anil Agarwal's Vedanta Group.
Vedanta had earlier said it has offered to pay Rs 16,000 crore for residual stake in both the companies. However, the official claimed that Sterlite's offer was Rs 15,000 crore for Hindustan Zinc and Rs 2,000 crore for Balco. The Vedanta chief, Mr Anil Agarwal, said on Friday that they were waiting for a response from the Government.
The official clarified that the matter will be first examined by a group of secretaries consisting of the Disinvestment Secretary and the Mines Secretary and officials. Then it will go the Committee of Secretaries and on its recommendation, the Empowered Group of Ministers (EGoM) will take a call on the valuation.
“The entire process cannot be done in haste, so it will take some time,” he added.
Since Hindustan Zinc is a listed concern, there is not much complication in fixing the valuation. But the real issue is about Balco, as it is not a listed entity.
“We will discuss with the company and the financial advisors like SBI Caps before reaching a mutually agreed price,” he explained.
Change in the value of net worth, increase in revenue besides other factors will be considered before arriving on valuation.
The Government had sold 51 per cent of its equity in Balco at Rs 551.50 crore in 2000.
The Government has asked Sterlite to make a formal proposal. A letter in this regard was sent following Empowered Group of Ministers' (EGoM) decision taken in its meeting on November 30.
The EGoM had decided to ask Sterlite to send a formal proposal in response to the Vedanta Group Chairman, Mr Anil Agarwal's letter to the Prime Minister on July 4.