The Telegraph
Thursday , November 29 , 2012
Since 1st March, 1999
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Hind Zinc e-auction

New Delhi, Nov. 28 (PTI): The finance ministry has proposed an e-auction to sell its residual stakes in Hindustan Zinc and Balco in which Vedanta Resources, the existing majority stakeholder of the companies, can also participate.

“The appropriate transparent manner to divest/dispose of shares of the two companies (HZL and Balco) will be through an e-auction of the shares,” finance secretary R. S. Gujral said in a recent communication to the mines ministry.

The government, which holds 29.5 per cent in HZL and 49 per cent in Balco, is looking to exit the two firms in which Anil Agarwal-led Vedanta Group holds majority stakes. The government had sold controlling stake in these companies between 2001 and 2003.

“This may be feasible if Sterlite/Vedanta has the right to participate in the open bid/auction and have to opportunity to purchase the shares offered by the government in the said auction,” the letter added.

In January, Agarwal-led Vedanta Resources had offered Rs 17,275 crore for the government’s remaining stakes in HZL and Balco.

Even as the finance ministry believes that it makes no strategic sense to hold on to the minority stakes in the two companies, they feel the right valuation can be obtained through auction.

The letter further said that since the government held only a minority stake in the two companies, they should not be called public sector undertakings and “there are no strategic issues involved in maintaining any controlling stake in the company”.

With this push from the finance ministry, it now seems that the long-pending stake sale may take place soon after the cabinet committee on economic affairs takes a decision.

At present, Hindustan Zinc is the richest profit-making subsidiary of Vedanta with reserves of cash and cash equivalent of Rs 19,136 crore as on September 2012.