The much-awaited sale of the government?s 29.5% stake in mining company Hindustan Zinc (HZL) may not take place in the current financial year owing to the ?lengthy process? involved in arriving at the right valuation.
A Department of Disinvestment (DoD) official said that stake sale would take time. ?The valuation of the government?s stake is involved. We are yet to begin the process and cannot comment on the time line. It is not that we have the share price and can go by it. It will be a lengthy process,? said DoD joint secretary Sangita Choure.
In the third week of January, the Cabinet Committee on Economic Affairs (CCEA) had approved the sale of the government?s 29.5% residual stake in HZL through an open-market auction. Through this, the government was hoping to raise about R17,000 crore.
However, analysts said the HZL stake sale should not be difficult as shareholders of the London-based Vedanta Resources had raised its offer to R21,000 crore from R17,000 crore to acquire the remaining stake in the miner.
?The road is clear for both parties. It should not be that difficult,? said a senior analyst of a US-based financial services firm in Mumbai.
Several domestic and foreign brokerages like HSBC, Deutsche, Macquarie, Edelweiss, Kotak Institutional Equities and Credit Suisse have a constructive view on the stock, and expect it to go up 15-20%. However, reports quoting a mines ministry official highlight that the HZL stake sale may not be an easy process given the legal aspect and controversies.
In October 2013, the CBI launched an investigation into the strategic sale of HZL to Anil Agarwal?s Sterlite Opportunities & Ventures by the NDA government in 2002. The government had sold its controlling stake in HZL to Vedanta chairman Anil Agarwal between 2001 and 2003. The sale of 26% government stake in HZL, along with management control, was initiated in August 2000.
The share sale was concluded in March 2002 and management control handed over to the sole bidder, Sterlite. Subsequently, the government offloaded another 18.92% equity in the firm in favour of Sterlite in November 2003, pursuant to the first call option. On BSE, the HZL scrip settled at R124.10, down R1.15 or 0.92% from the previous close.
