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Law ministry okay for stake sale in Balco

The group had shareholder approval to raise the offer up to Rs 24,663 crore

BS Reporters  |  New Delhi 

The law ministry has given a green signal for sale of the government's residual stake in Bharat Aluminium Company (Balco).

It has said there appears no legal problem in doing so, sources told Business Standard.

The government has 49 per cent of Balco's equity; the majority is with the Anil Agarwal-owned Vedanta group. The latter had earlier offered about Rs 17,000 crore to buy out the government in both Balco and Hindustan Zinc, where the equity holding is the same.

The group had shareholder approval to raise the offer up to Rs 24,663 crore. However, the government was learnt to be keen on selling through an auction, hoping to get a better price. Vedanta, too, can bid in such an auction.

The matter was referred to the law ministry after the prime minister chaired a review meeting on disinvestment last month. Now, the mines ministry would prepare a note for the Cabinet Committee on Economic Affairs to take up the matter regarding Balco. Vedanta-owned Sterlite had bought a 51 per cent stake in 2001 for Rs 552 crore.

Finance Minister P Chidambaram has recused himself from the exercise, having provided legal services to Vedanta in the past. Law Minister Kapil Sibal was nominated to represent the finance ministry in this matter.

The government has been trying to boost its revenue to contain the fiscal deficit at 4.8 per cent of gross domestic product in 2013-14. The year's Budget had targeted raising of Rs 14,000 crore by selling stakes in non-government companies, beside Rs 40,000 crore through direct disinvestment. The government has managed a total of a little less than Rs 3,000 crore so far.

The Centre's fiscal deficit had touched 94 per cent of the Budget estimate for the financial year in only eight months.

In its struggle to increase revenue, the government is also likely to revive the Specified Undertaking of Unit Trust of India. A proposal to this effect might be taken up by the cabinet on Thursday.

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First Published: Thu, January 09 2014. 00:46 IST