The finance ministry has created a draft cabinet note saying that Hindustan Zinc cannot be classified as a public sector undertaking (PSU) and hence no parliamentary approval is required to offload the government's stake in it, sources told FE.
If North Block’s view is approved by the cabinet, it will go a long way in helping the government meet its FY14 disinvestment target. About 29.5% of Hindustan Zinc's (HZL) stake is owned by the Centre, after about 65% was sold to Vedanta in FY03. The finance ministry has been aiming to raise R15,000 crore this fiscal by divesting residual government stakes in some companies, including Hindustan Zinc, part of its R55,000-crore disinvestment target for the year.
Sources said the views of the finance ministry in the note, which was circulated a few weeks ago, are in contrast with that of the mines ministry, which had stated that parliamentary approval is required for divesting the remaining government stake in HZL. Hindustan Zinc was incorporated after the erstwhile Metal Corporation of India was nationalised through the Metal Corporation Act, 1976.
According to the mines ministry, the apex court order had stayed the proposed disinvestment of two PSUs in 2003, saying the two companies were formed through a statute and required Parliamentary approval. The same is applicable to Hindustan Zinc, too, even though it was divested before the court order. Currently, HZL, the second-largest zinc producer in the world, is the richest profit-making subsidiary of Vedanta and had cash and cash equivalents of R23,632 crore as of September, 2013.