Only Balco sale may go through before 2006

Talks of compromise between the ruling United Progressive Alliance and its Left allies over disinvestment notwithstanding, the government will be able to sell residual stake in only one company "" Balco "" before the end of this fiscal, but that too hinges on several factors.

"The union cabinet has given its nod to the sale of government shares in a couple of PSUs but only sale of 49 per cent shares in Balco would be possible in 2005-06. But even that depends on many factors," sources said.

Though SBI Capital Markets is doing a valuation of the government's holding in Balco, finance ministry officials are still not sure that everything would work out as per plan.

They feel that the sale would depend on how the 49 per cent government stake in Balco is valued by the advisors.

"The advisors are expected to submit their report in a few weeks," sources said. Finance Minister P Chidambaram has said the government was expecting a good return from the sale of residual stake in Balco.

Sterlite acquired 51 per cent stake in Balco in March 2001 for Rs 551.50 crore. Some Sterlite officials have already said they expect the value of the government's 49 per cent shares in the company to be around Rs 750-800 crore.

If SBI Caps values the government holding in the company above what Sterlite is expecting, the buyer might back-off.

Finding another route for sale of its stake in Balco would take more time.

So far this year, the government has been able to sell only eight per cent residual stake in Maruti Udyog Limited.

The shareholders' agreement signed between the government and Sterlite at the time of disinvestment of Balco had specified that Sterlite should not sell its stake in Balco for three years, while the government could sell its remaining stake at any time, on which Sterlite would have the first right of refusal.