Vedanta Group, the owner of Hindustan Zinc and Balco, will not get any preference when the government auctions its residual stake in the two companies in this financial year, a top government official said.
There is no legal hurdle in the sale of the residual stake in HZL and Balco, and Vedanta, the majority owner, will be permitted to participate in the auction like any other bidder, said Economic Affairs Secretary Arvind Mayaram.
"We have very clearly recommended that there should be no put and call option given to the original buyer (Vedanta). It should be auctioned. No first right of refusal, but they will have a right to participate in the auction.
"So whoever gives the highest price to the government can buy the shares, whether it is the owner at the moment who is the majority shareholder today or anybody else," he said.
On whether there is a legal impediment to the government's stake sale, Mayaram said: "I see no legal bar...The legal position is that it is a private company. It is no longer a government company...Therefore we are very confident that divestments will happen before March 31."
The government, which holds a 29.5 per cent stake in HZL and 49 per cent in Balco, is looking at exiting the two companies in which the Anil Agarwal-led Vedanta Group holds the majority stake. The government sold controlling stakes in the companies between 2001-2003.
The government sold a 51 per cent stake in Bharat Aluminium Company Ltd (Balco) to Vedanta firm Sterlite Industries (now Sesa Sterlite) in 2001. The valuation of the remaining 49 per cent stake in Balco has remained a bone of contention as the aluminium major is not a listed entity.
Mayaram said: "We will go through a bidding process and it will be a transparent bidding process. So the price discovery will be a market price discovery."
The Mines Ministry is currently preparing the final Cabinet note to divest the Balco stake through an offer for sale.