New Delhi: The Union Cabinet on Wednesday approved the sale of the remaining 29.58 per cent stake of the government. Hindustan ZincSources said, that would bring in over Rs 38,000 crore to the exchequer at current prices.
The Cabinet Committee on Economic Affairs (CCEA) approved the sale of 1249 crore shares of the government stake in the zinc producer, which was sold in 2002 to mining mogul Anil Agarwal’s Sterlite Industries.
Sources privy to the developments said the modalities for the stake sale would be decided by DIPAM.
This decision will give a boost to the government’s disinvestment drive in the current financial year. The government has budgeted Rs 65,000 crore from PSU disinvestment and strategic sale.
It has already garnered a little over Rs 20,500 crore from the sale of its 3.5 per cent stake in Life Insurance Corporation (LIC).
HZL has been taken after the privatization of Bharat Petroleum Corporation Limited (BPCL) stalled after two out of three bidders exited the competition.
Other strategic disinvestments like Shipping Corporation of India (SCI) are facing procedural delays.
In 2002, the government sold its 26 per cent stake with management control to Sterlite, which is part of Agarwal’s Vedanta group, for Rs 40.5 per share. A year later, another 18.92 percent was bought by the mining group.
The government got around Rs 769 crore in two transactions.
Vedanta exercised the call option under the share purchase agreement but the government opposed it. The firm dragged the government to arbitration but later withdrew, paving the way for stake sale.
Last month, Agarwal told PTI that his group cannot buy more than the government’s 5 per cent stake in HZL unless the terms of the contract are changed.
He had indicated that his group would consider buying the entire stake if the terms were amended and shareholding offered.
The sale of 29.5 per cent stake, representing over 124.96 crore shares, would fetch about Rs 38,000 crore to the exchequer at the current market price.
Shares of HZL closed at Rs 305.05, up 3.14 per cent on the BSE. The stock touched a high of Rs 317.30 per share during the day.
Until 2002, HZL was a state-owned company.
In April 2002, the government sold a 26 per cent stake in HZL to Sterlite Opportunities and Ventures Ltd (SOVL) for Rs 445 crore – allowing Vedanta Group to acquire management control in HZL.
The Vedanta Group subsequently increased its ownership in HZL to 64.92 per cent from 20 per cent market and 18.92 per cent from the government in November 2003.
The Cabinet Committee on Economic Affairs (CCEA) approved the sale of 1249 crore shares of the government stake in the zinc producer, which was sold in 2002 to mining mogul Anil Agarwal’s Sterlite Industries.
Sources privy to the developments said the modalities for the stake sale would be decided by DIPAM.
This decision will give a boost to the government’s disinvestment drive in the current financial year. The government has budgeted Rs 65,000 crore from PSU disinvestment and strategic sale.
It has already garnered a little over Rs 20,500 crore from the sale of its 3.5 per cent stake in Life Insurance Corporation (LIC).
HZL has been taken after the privatization of Bharat Petroleum Corporation Limited (BPCL) stalled after two out of three bidders exited the competition.
Other strategic disinvestments like Shipping Corporation of India (SCI) are facing procedural delays.
In 2002, the government sold its 26 per cent stake with management control to Sterlite, which is part of Agarwal’s Vedanta group, for Rs 40.5 per share. A year later, another 18.92 percent was bought by the mining group.
The government got around Rs 769 crore in two transactions.
Vedanta exercised the call option under the share purchase agreement but the government opposed it. The firm dragged the government to arbitration but later withdrew, paving the way for stake sale.
Last month, Agarwal told PTI that his group cannot buy more than the government’s 5 per cent stake in HZL unless the terms of the contract are changed.
He had indicated that his group would consider buying the entire stake if the terms were amended and shareholding offered.
The sale of 29.5 per cent stake, representing over 124.96 crore shares, would fetch about Rs 38,000 crore to the exchequer at the current market price.
Shares of HZL closed at Rs 305.05, up 3.14 per cent on the BSE. The stock touched a high of Rs 317.30 per share during the day.
Until 2002, HZL was a state-owned company.
In April 2002, the government sold a 26 per cent stake in HZL to Sterlite Opportunities and Ventures Ltd (SOVL) for Rs 445 crore – allowing Vedanta Group to acquire management control in HZL.
The Vedanta Group subsequently increased its ownership in HZL to 64.92 per cent from 20 per cent market and 18.92 per cent from the government in November 2003.