Govt stake sale in HZL allowed by SC


The Centre can now go forward with its long-thwarted plan to exit Hindustan Zinc. Its remaining 29.5% stake in the Vedanta-controlled integrated the mining company in the open market since it already ceased to be PSU was to sell by the Supreme Court.

Yet, the court found sufficient material for registration on the usual case by the CBI into the government’s sale 2002 around 26% stake in the company, along with management controlled by  Vedanta, which given the various allegations of the valuation that would precede by the disinvestment and irregular bidding process.

The government’s residual stake is worth around Rs 40,000 crore at current market prices in HZL.

The 2002 disinvestment promoted the subsequent sale of controlling stake to the Anil Agarwal-led multinational mining-to-metals conglomerate.

The court took notes of Vedanta’s submission that it wasn’t planning to execute its second call option under the share purchase agreement, meanwhile conceding the government to sell the residual stake in the open market.

In 2002 Sterlite, the second tranche of the disinvestment has plucked 26% of the government’s shareholding in HZL at Rs 40.51 per share. It may be perceived, aggregating to around Rs 445 crore.

The Comptroller and Auditor General’s in 2006 had also symbolized the undervaluation of the assets.

The CAG’s report asserted was not in sequence with the share purchase agreement,  as the prevailing rate, also that the subsequent sale of an 18.92% equity to Sterlite in 2002 at the old rate of Rs 40.51 per share,  then was Rs 119.10 per share, resulting in a loss of about Rs 650 crore.

July 2020, the CBI statement had given on its status in various recommendations along with a ‘self-contained note’ of March 2017 detailing the closure of preliminary interrogation.

The discounted cash flow method for valuation relied on untraceable officials of BNP Paribas, was allegedly chosen on March 22, 2002, without any justification, despite the first report of the Disinvestment Commission recommending the asset valuation method, in case of a strategic sale, on according to the CBI report.

The Union government’s stand that the residual shareholding of 29.5%, exchange be offloaded in the open market to add the revenues for public purposes and shall take place on following the Sebi rules and regulations to assure that the best price is realized for the sale of the shareholding noted by the SC on its judgment noted.

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