The finance ministry has proposed e-auction to sell the government’s residual stake in Hindustan Zinc and Balco in which Vedanta Resources, the existing majority stakeholder of the companies, could also participate.
“The appropriate transparent manner to disinvest/dispose of shares of the two companies (HZL and Balco) would be through an e-auction of the shares,” finance secretary RS Gujral said in a communication to the mines ministry.
The government, which currently holds 29.5 per cent stake in HZL and 49 per cent in Balco, is looking at exiting from the two firms in which Vedanta holds majority stake.
The government had sold controlling stake in these companies between 2001-2003.
“... 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,” he added.
In January, Vedanta Resources had offered Rs 17,275 crore for government’s remaining stakes in HZL and Balco. The letter further said that since the government holds only minority stake in the two companies, they should not be called public sector undertakings and “there is 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 (CCEA) takes a decision in this regard.
At present, HZL is the richest profit-making subsidiary of Vedanta with a cash and cash equivalent of Rs 19,136 crore as on September, 2012. Balco is an unlisted subsidiary of Vedanta and its valuation has been a bone contention between the mining firm and the government.