Stake sale in Balco, Hindustan Zinc referred to EGoM

A panel of secretaries today referred the issue of residual government stake sale in Balco and Hindustan Zinc to Vedanta Group to an Empowered Group of Ministers (EGoM), which will meet soon to take a decision.

"The CoS (Committee of Secretaries), which met today, has reservations over the valuation of Balco as it found the offer conservative, while it also discussed the offer for stake buy in Hindustan Zinc (HZL). The matter has now been referred to EGoM," a source said.

In January, Vedanta had offered to buy remaining stake of the government in the two firms for over Rs 17,000 crore. While HZL's  stake was valued at about Rs 15,500 crore, Balco was about Rs 1,800 crore.

The issue concerns the price at which the government will sell its stake in the two companies to Vedanta. While Vedanta wants to buy residual stake in Balco at 2001 price, the government is seeking market price, which is high.

 Vedanta had acquired government's 51% stake in Balco in 2001 during the NDA regime for Rs 551 crore. Vedanta group company Sterlite Industries had acquired 64% stake in HZL in 2002.

Government still has 29.54% stake in HZL and 49% holding in Balco.

Earlier, this month Vedanta Group chief Anil Agarwal had said that he is yet to receive any communication from the government for his offer. Vedanta has earlier opted to buy residual stake in HZL based on one month's average stock price.