Appoints private entity to evaluate co’s assets
Focussing its attention on the much delayed sale of its residual stake in Hindustan Zinc ltd (HZl), the Government is likely to undertake the bidding route for the purpose and according to sources close to the development, the entire exercise could be completed in the next two to three months. Simultaneously the Department of Disinvestment (DoD) is learnt to have selected a private entity for evaluating HZl's assets.
Sources said that the entity - RBSA Valuation Advisers - was short listed by the Government earlier this month from among other chartered accountant firms and merchant bankers to conduct the evaluation of HZl's assets.
The new NDA Government needs funds and with the pressure on it to deliver, especially after presenting a pragmatic budget, it would like to make full use of the prevailing positive atmosphere, a source privy to the matter, told The Pioneer. Government holds 29.54 per cent stake in HZl while it has 49 per cent stake in Bharat Aluminium Company (BAlCO). In both the companies, Anil Agarwal-led Vedanta Group holds majority stake and has made repeated offers to the Government in the past to buy out the residual stakes in them. In fact in October 2013, Vedanta shareholders had approved increasing the offer to acquire the Government's remaining stake in HZl. Subsequently the Vedanta board is now empowered to make an offer of up to Rs 21,636.56 crore for the Government's stake in HZl.
If the bidding route is followed by the Government, then Vedanta will have to compete with other companies for buying out the residual stakes. At the current share price of HZl, the Government could generate around Rs 16, 000 crore through the residual stake sale.Though the Union Cabinet under the UPA Government in January this year had decided to sell its residual stake in HZl as well as in BAlCO through an open market option, the issue remained on the back burner due to the lok Sabha elections.
During a major part of the UPA Government's tenure, opinions were divided within it on whether to sell off the HZl's stake by amending the Act of Parliament through which the company was created, or by auctioning the share. In BAlCO's case though, there was no confusion as it is an entity which has been set up through the Companies Act.
The NDA Government, sources said, is likely to follow the bidding route for HZl's stake sale and its urgency regarding the pending issue could be gauged from the fact that the DoD had been directed last month to invite proposals from merchant bankers or chartered accountant firms with experience in handling valuation of companies to assess the fair share value of HZl. In fact it was the NDA Government which had sold majority stakes in both HZl and BAlCO to the Vedanta Group between 2001-03.