The Telegraph
Since 1st March, 1999
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Soren to vet 49% Balco sale

New Delhi, June 9: The government will see whether it at all needs to sell the residual 49 per cent stake it holds in Balco.

“I will ask my officers to see whether there is any need to sell this stake ... I am not in favour of the government being pushed into selloffs,” coal and mines minister Shibu Soren told The Telegraph.

In a controversial deal, which rocked Parliament for months, Sterlite Industries had bought a 51 per cent stake in Balco three years ago, for a paltry Rs 551 crore.

The Opposition, including the Congress and the Left, had termed it a classic case of crony capitalism as analysts valued the firm at over Rs 3,500 crore.

Sterlite had applied earlier this year to buy out the residual stake to the NDA government. However, no decision was taken at that time and it was later agreed that this decision would devolve on the newly-elected government.

Soren said, “We will have to probe everything before coming to a decision. We cannot be seen taking any partisan decisions.”

Left leaders had said yesterday that they would prefer to thrash out the entire gamut of divestment issues, and specifically that of the residual stake sale in Balco, in one go, instead of going in for piece-meal solutions.

“We submitted our application to the NDA government and six months have not elapsed since,” said Sterlite director Tarun Jain. “We are waiting for the governmetn’s response.” If the government doesn’t respond to the application within six months, the application is considered to be rejected.

The Sterlite application was submitted to Mamata Banerjee when she became the mines minister in the NDA government.

A clause in the Balco selloff pact did stipulate that the government could either decide against the residual sale or, if it did not take a decision, then it would have to let the stake pass on to Sterlite at a fixed price after a lapse of six months.

However, government officials say Sterlite has sold its majority holding to Vedanta, a London-based offshore fund.

Although company officials say Vedanta too is owned by the Aggarwal family which owns Sterlite, it remains a different legal entity. The shareholders’ agreement on Balco between the government and Sterlite preclude the latter from selling these firms to any other company for a three-year period.

The move to transfer a majority control of 55.2 per cent to Vedanta took place after the government did not respond favourably to an earlier application by Sterlite seeking to allow a Mauritius-based holding company Twinstar Holdings to take a 75 per cent stake. It was also revealed in that application that Twinstar already owned a 55 per cent stake in Sterlite.

Twinstar, says a note prepared by the finance ministry’s foreign investment unit, is owned by UK-based NRI Vinod Shah through another financial cut-out, Volcan Investments Ltd, which owns the Mauritius-based fund. Jain claimed that Twinstar was all along owned by the Aggarwals and Vinod Shah’s name had crept into the application “by mistake”.

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