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Go-ahead for HZL stake sale

New Delhi, Jan. 20: The government today decided to accept the attorney-general’s advice and move ahead with the sale of residual stake in HZL, which could fetch it about Rs 20,000 crore.

“Hindustan Zinc has ceased to be a government company for almost a decade. One way could be to sell the shares in the open market if the prevailing market (price is) considered to be fair,” attorney-general G.E. Vahanvati had earlier said.

In 2002-03, the then NDA government had sold a 26 per cent stake in HZL to Sterlite Opportunities and Ventures Ltd of Vedanta Group for Rs 445 crore. The Anil Agarwal entity exercised a call option in 2003-04 to buy another 18.92 per cent for Rs 323.88 crore.

The Centre continues to hold a 29.5 per cent stake in the company, which Vedanta sought to acquire.

“It has been cleared,” commerce and industry minister Anand Sharma told reporters after a meeting of the Cabinet Committee on Economic Affairs, headed by Prime Minister Manmohan Singh.

HZL today traded at Rs 135 a share on the BSE, up 4.29 per cent over the last close.

Sources said the department of disinvestment would finalise the mode of sale, which in all probability would be an open bidding.

The government also owns some 49 per cent stake in Balco, which like HZL is run by Vedanta Group. This stake sale could fetch about Rs 4,000-6,000 crore, despite it being an unlisted firm. However, no decision has been taken on its sale as the cabinet note has not been vetted by different ministries.

In 2001, the NDA government had sold a 51 per cent stake in Balco to Vedanta-owned Sterlite in a controversial deal for Rs 551 crore.

The deal had then been challenged in Parliament by the Congress as well as by the Left, with current law minister Kapil Sibal claiming that it could have fetched Rs 3,000 crore or more.

After the Congress-led UPA came to power, the issue of letting Sterlite exercise the call option to buy the remaining stake in the aluminium maker came up.

A ruling by the then attorney-general Milon Kumar Banerji in 2006, however, had placed the put and call options in jeopardy as he opined that these were invalid under the existing law.

 
 
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