Feb 21, 2013, 08.59 AM | Source: PTI
The Mines Ministry has sought the Law Ministry's opinion on selling the remaining government stake in Hindustan Zinc and Bharat Aluminium Company.
"The Law Ministry has been asked to provide its opinion as there are lots of complex issues in selling remaining stakes in both the firms (Hindustan Zinc and BALCO). "The issues include taking approval from Parliament for the stake sale, particularly for Hindustan Zinc as it was formed through a statute," a source close to the development said.
Selling remaining government stake in Hindustan Zinc requires Parliament approval as it was incorporated in January, 1966 as a public sector company, after the erstwhile Metal Corporation of India Ltd was nationalised.
The Law Ministry had pointed out earlier that a Supreme Court order of 2003 had stayed disinvestment of HPCL and BPCL, saying they were formed through a statute and required Parliament approval and same is applicable on Hindustan Zinc also. He added that Law Ministry's views have also been sought on other issues like selling shares through auction route and Vedanta's first right of refusal.
Besides, the government has more or less zeroed in on offer for sale (auction) route as the preferred method of the share sale for the two companies to fetch the best price, the source said, adding that this also needs to be vetted by the
Law Ministry. Refusing to give a timeline for selling the remaining stake in both the firms, the source said that it could happen "some time next fiscal even if things are hurried up as lot of procedures needs to be followed".
In January 2012, Vedanta Resources had offered Rs 17,275 crore for buying out the remaining stake of the government in Hindustan Zinc and BALCO. The company Board had also taken shareholders approval in August last year to sweeten the offer by up to 25 per cent to Rs 21,635 crore.
"The government is not in any hurry for selling its remaining stakes in the two firms", the source said, while noting that disinvestment target of Rs 30,000 crore for the current fiscal is unlikely to be missed by a big amount. Besides, government is expecting to meet more than 50 percent of the next year's target of Rs 40,000 crore through stake sale in Coal India alone and is in "comfortable situation on the disinvestment front".
He added that after the Law Ministry's opinion, steps will be taken to appoint a consultant for valuation of BALCO. Mines Secretary R H Khwaja had declined to give any time frame last week on the proposed share sale, saying that "these are all complex issues, which require lot of consultations. There is no yes or no type thing".
At present, Hindustan Zinc is the richest profit-making subsidiary of Vedanta with a cash and cash equivalent of Rs 19,282 crore as on December 2012. The company had reported a net profit of Rs 5,526 crore and net revenues of 11,405 crore in 2011-12.
Similarly, BALCO -- an unlisted company-- had produced about 2,46,000 tonnes of Aluminium and had 18 per cent market share by production volume in the country in 2011-12. It had reported a gross revenue of Rs 3,050 crore and EBITDA of Rs 374 crore during the last fiscal.