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The legal decks have been cleared for selling remaining Government stake in Hindustan Zinc Ltd. This sale can fetch over Rs 15,000 crore.
“Hindustan Zinc has ceased to be a Government company for almost a decade. One way could be to sell the shares in the open market if the prevailing market (price is) considered to be fair,” the Attorney General G.E. Vahanvati said in his opinion communicated to the Law Ministry. He also mentioned that this would be a policy decision which has to be taken after considering all the facts and circumstances.
This means the Cabinet Committee on Economic Affairs (CCEA) can now take a final decision for selling remaining stakes through the open auction method. Such a method will invite various bidders and those bidding high will get shares. This will lower the pressure on the Government which is struggling to meet the the disinvestment target of Rs 40,000 crore and residual stake target of Rs 14,000 crore. Till now, the Government has got less than Rs 3,000 crore under disinvestment and yet to open account in residual stake sale target.
According to sources, the top law officer informed that he did not have to consider the question of amendment of the Acquisition Act and the fact that the CBI had filed a preliminary inquiry on the original disinvestment in the HZL. The company was strategically divested to Vedanta group companies during 2002-03.
Hindustan Zinc along with Balco are now owned by Vedanta group companies. The Government currently owns 29.5 and 49 per cent respectively. The Government wants to exit from both companies. There were call options available for Vedanta but could not be exercised fully due to legal hurdles. Now, the Finance Ministry favours open auction method for selling residual stake in both companies. The Attorney General has already given its opinion for Balco paving the way for stake sale.
The sources also informed that the AG noted the submission by the Government that HZL is not a Government company on the basis of shareholding. “Besides, the preliminary inquiry being conducted by the CBI is in original disinvestment in HZL in 2002-03 which has now become fait accompli, “ he said.
AG’s opinion were sought after the Prime Minister called a meeting on December 3 to review disinvestment and residual stake sale matter.
Disinvestment is related with selling Government’s stake in Central Public Sector Enterprises and residual stake sale refers to selling remaining stake in private companies which were once owned by the Government.
In the residual stake sale matter related to HZL and Balco, the Finance Ministry is being represented by the Law Minister Kapil Sibbal as the Finance Minister P Chidambaram P. Chidambaram has rescued himself from the exercise, having provided legal services to Vedanta in the past.
>thomas.k.thomas@thehindu.co.in
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