Ministers’ panel urged to decide on residual stake sale in Balco, Hindustan Zinc

A group of top bureaucrats which studied the issue of residual stake sale in Hindustan Zinc and Balco, has requested an Empowered Group of Ministers (EGOM) to decide on the matter.

The panel, comprising Secretaries from several ministries, pointed out that the Vedanta Group's offer to buy out the Government's residual stake was enough to at least half of the total disinvestment target for 2012-13.

A highly-placed source told

Business Line , “A group of secretaries discussed Vedanta's offer . It was decided to seek the EGOM's view to proceed further.” The panel consisted of Secretaries from the Department of Mines, Disinvestment and Law, besides others.

He also said that the EGOM was likely to discuss whether the offer was reasonable or not. It may also decide about the methodology for the sale process. However, he refused to give a time line for the next EGOM meeting. The EGOM is chaired by the Finance Minister.

The Vedanta Group has offered Rs 15,000 crore for buying 26 per cent stake in Hindustan Zinc and Rs 2,000 crore for 49 per cent in Balco. Since the Government has fixed a target of Rs 30,000 crore through the disinvestment route for fiscal 2012-13, the stake sale in these entities will be a big help, the source added.

Strategic sale

Balco and Hindustan Zinc were sold to Vedanta Group companies way back in 2000-2002 as a strategic sale. Though there was a call option for Vedanta, it could not be exercised due to a legal battle. However, the matter came into the limelight again last July when the group's Chairman, Mr Anil Agarwal, wrote a letter to the Prime Minister.

Following this, the EGOM in its meeting on November 30, decided to ask the group to submit formal proposals. Vedanta did follow up with an offer letter, which expired on January 31, 2012. However, the source clarified that validity of the offer was just a technical matter which could easily be sorted out.

Balco is an unlisted company. So, arriving at a valuation is not easy. But SBI Capital was helping the Government arrive at a mutually agreed price, a senior Government official said.

On the other hand, since Hindustan Zinc is a listed company, the deal is not very complex. The official said rules mandated by the markets regulator, SEBI, will apply for arriving at a price.

shishir.s@thehindu.co.in