Govt moving cautiously in Hindustan Zinc residual stake sale

With the CBI filing a preliminary inquiry into the original disinvestment in Hindustan Zinc Ltd (HZL), Prime Minister Manmohan Singh wants the Mines Ministry to move cautiously while selling the residual stake in the company.

At a high-level meeting held last month under the Chairmanship of Singh, it was decided to seek opinion of Attorney General before going ahead with the sale of the residual stake in HZL.

The meeting to decide on residual stake in HZL and also Balco was attended by Ministers of Mines and Law and secretaries of other concerned departments.

"It was also agreed during the meeting that the Ministry of Mines would refer all these facts to the Ministry of Law and Justice.

"The Law Minister mentioned that the opinion of the Attorney General would be obtained and sent to the Ministry of Mines," according to the record of the discussions of the meeting held in the first week of December.

It was also mentioned that CBI had filed a preliminary inquiry on the original disinvestment in HZL.

Some of the issues that arose on HZL are "Whether the amendment of the original Act is a necessary pre-condition for proceeding with sale of the residual stake through auction in view of the Supreme Court's judgement in the HPCL/BPCL case and also the 2012 case challenging disinvestment in Balco."

During the meeting it was also discussed "whether the de-facto position of Government now being a minority shareholder changes the legal position based on earlier cases or alters the basis of legal opinions given by the Ministry of Law and Justice earlier" and "in the light of this, can the government proceed with the sale of the residual equity in the open market and realise the locked up value of its stake without effecting any change in the Act.

Currently the government holds 29.5% stake in HZL. Majority stake in the erstwhile PSU was sold to Vedanta group.

Hindustan Zinc is the richest profit-making subsidiary of Vedanta and had cash and cash equivalent of Rs 23,632 crore as of September, 2013.