Balco, Hind Zinc gets conditional nod for govt stake sale

Government's divestment plan is gathering steam. Bharat Aluminium Company (Balco) and Hindustan Zinc (HZL), former PSUs that were sold to mining giant Vedanta Resources in 2001-2003 has received conditional nod for government’s stake sale, reports CNBC-TV18 quoting Ministry of Corporate Affairs (MCA) sources.

However, the nod comes with a rider that both Vedanta and government have to first withdraw all litigations, only then valuation of HZL and Balco will be completed. According to sources, Vedanta will have right to buy stake in both the companies at a price discovered by valuers if the valuation is unacceptable to govt and Vedanta.

Vedanta to offer 'fair' price for HZL, Balco

Sources also add that the Finance Ministry has suggested e-auction route for residual stake sale. At present, the government holds 29.5 per cent stake in HZL and 49 per cent stake in Balco.

In January, Anil Agarwal-led Vedanta Resources had offered Rs 17,275 crore for government's remaining stakes in HZL and Balco. This amounts to over 57 per cent of government’s disinvestment target of Rs 30,000 crore.

At present, Hindustan Zinc is the richest profit-making subsidiary of Vedanta with a cash and cash equivalent of Rs 19,136 crore as on September, 2012. The company had reported a net profit of Rs 5,526 crore and net revenues of 11,405 crore in 2011-12.

On the other hand, Balco is an unlisted subsidiary of Vedanta and its valuation has been a bone contention between the mining firm and the government.