Das Munshi: Calling the shots

New Delhi, Oct. 25: A committee of secretaries will decide on the government’s stand in its ongoing legal battle with Sterlite Industries, which has sought to buy the remaining 49 per cent stake in Bharat Aluminium Company (Balco).

The committee will comprise secretaries of the departments of legal affairs, the department of disinvestment and the ministry of mines.

Sterlite holds a 51 per cent stake in Balco.

Briefing reporters after the meeting of the cabinet committee on economic affairs, information minister P.R. Das Munshi said the panel would also undertake a due-diligence exercise of the report of the Comptroller and Auditor General of India on the price and valuation of the selloff.

In 2001, Sterlite bought a 51 per cent stake in Balco from the government for Rs 551.50 crore at Rs 49.01 per share. In March 2004, Sterlite sent a call notice to acquire the remaining 49 per cent.

The government, however, rejected the offer as it felt the offer price was too low and partly because the attorney-general had said it was not bound to sell the residual stake under the Indian law.

In October last year, Sterlite made a fresh offer for the residual Balco stake.

The matter was then referred to the attorney-general who declared the call option as “ultra-vires” of the Companies Act, 1956.

The attorney-general ruled that call options were invalid under the present law and said the shares need not be sold at all or could be sold at market price or auctioned to anyone willing to buy it.

Sterlite then asked Delhi High Court to restrain the government from selling equity to any other buyer or the public.

Das Munshi said since the issue of selling the stake was in the high court, the committee would consider the government’s position in the case and in the ongoing arbitration. The government has also appointed Pawan Chopra, a retired secretary, as the mediator in the matter.