Yet to hear from govt on HZL, Balco stake sale: Vedanta

Vedanta Resources is yet to hear anything "officially" on disinvestment of Hindustan Zinc and Balco, but sees "conviction" on part of the government to move ahead with the proposed stake sale, a top company official said today.

 

Meanwhile, earlier this month, the Mines Ministry has floated a draft Cabinet Note on selling residual stake of the government in Hindustan Zinc.

 

It has said that Parliament approval is required in selling remaining stake of government in the company as it was incorporated after the erstwhile Metal Corporation of India Ltd was nationalised through the Metal Corporation (Nationalisation and Miscellaneous Provisions) Act, 1976.

 

The London-lister mining conglomerate, which had acquired majority stake in Bharat Aluminium Company (Balco) and Hindustan Zinc during 2001-2003, has been in talks with the government for more than two years now on acquiring remaining stakes in the two firms.

 

"We are yet to get any official version of the government on this side (disinvestment of Hindustan Zinc)... All we know is that it is very much part of the government's disinvestment fund raising programme and we see conviction on the part of the government to move ahead on this count," company's CEO M S Mehta said during an investor call.

 

According to Vedanta's understanding, he added, the "government is largely trying to work out the modalities of making this transaction (disinvestment of Hindustan Zinc) happen."

 

About a fortnight ago, Vedanta group chairman Anil Agarwal had told PTI that he is open to various options for acquiring remaining stakes in Hindustan Zinc and Balco and would participate in the auction if the government takes that route to divest its residual stakes in the two erstwhile PSUs.

 

Vedanta currently holds 51% stake in Balco and 64.92% stake in Hindustan Zinc through its subsidiary Sterlite Industries (now Sesa Sterlite).

 

In the draft Cabinet Note, the Mines Ministry has cited a Supreme Court order of 2003, which had stayed disinvestment of HPCL and BPCL, saying that they were formed through a statute and required Parliament approval and same is applicable on Hindustan Zinc also.

 

The ministry further said that the Law Ministry has consistently been saying that selling the remaining stake in Hindustan Zinc can't be done without amending the Act.

 

It has also proposed to bring a bill to amend the Act within 3 months after the Cabinet approval on the proposal to offload remaining stake in Hindustan Zinc. It will submit a final note for Cabinet's consideration after taking comments from the other concerned ministries. 

 

Government had sold majority stakes in both, Hindustan Zinc and Bharat Aluminium Company (Balco) to Vedanta's subsidiary Sterlite Industries (now Sesa Sterlite) during 2001-2003. Now it holds residual stake of 29.5% in Hindustan Zinc and 49% in Balco.

 

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.

 

It also took shareholders' approval in August last year to sweeten the offer by up to 25% to Rs 21,635 crore. However, the permission has now expired as the company did not seek renewal of the one year approval this year due to stalled talks and lack of clarity.

 

At present, Hindustan Zinc is the richest profit-making subsidiary of Vedanta with a cash and cash equivalent of Rs 22,365 crore as on June 2013. The company had reported a net profit of Rs 6,899 crore and revenues of 12,526 crore in 2012-13.

 

Similarly, Balco -- an unlisted company-- had produced about 2,47,000 tonne of Aluminium and had about 18% market share by production volume in the country in 2012-13. It had reported a gross revenue of Rs 3,426 crore and profit after tax of Rs 37 crore during the last fiscal.