The government has approved the sale of Hindustan Zinc's remaining shares.

  • May 26, 2022, 1 p.m.

The Cabinet Committee on Economic Affairs (CCEA) on Wednesday approved the sale of the government’s remaining stake in Hindustan Zinc Ltd (HZL), as the Centre looks to accelerate its disinvestment drive. The sale of the entire 29.5 per cent stake in HZL would fetch the Centre Rs 38,062 crore, according to the closing price of the company’s shares on Wednesday.

The government may sell its stake in tranches through an offer for sale (OFS), and the same will be structured by the Department of Investment and Public Asset Management (DIPAM), an official said. This will help the Centre move closer to its Rs 65,000-crore divestment target for the financial year 2022–23.

The Centre has so far garnered Rs 23,575 crore in the current financial year in divestment proceeds through the initial public offering (IPO) of Life Insurance Corporation of India (LIC) and the offer for sale of Oil and Natural Gas Corporation.

In 2002, the government sold 26 per cent of its stake in HZL to Vedanta’s Sterlite Industries. The group then acquired an additional 20 per cent through an open offer.

In 2003, an extra 19 percent was bought by the Anil Agarwal-managed conglomerate. In 2009, the company exercised a call option according to the share purchase agreement, which was contested by the Centre.

This led to Vedanta invoking arbitration to claim settlement. The conglomerate recently withdrew from the arbitration proceedings, clearing the way for the government to sell its 1.24 billion shares in HZL.

At present, Vedanta owns 64.9 percent of HZL. Agarwal has reportedly said the company can just buy the Centre’s 5 percent stake after considering the price of the shares on offer.

In November last year, the Supreme Court allowed the Centre to sell its residual stake in HZL, noting that the company was no longer a public sector undertaking (PSU). The Centre, in its affidavit, had earlier said the residual shareholding of 29.54 per cent would be sold in the open market.

Though the sale of the residual stake in the company was not questioned, the apex court had directed the Central Bureau of Investigation (CBI) to investigate the initial transaction under which the Centre had sold 26 per cent of HZL and enabled its eventual privatisation.

Some of the Centre’s nearly-completed privatisation transactions, such as Central Electronics (CEL) and Pawan Hans (PHL), have hit a roadblock with the winning bidders having pending legal cases against them. The big-ticket privatisation of Bharat Petroleum Corporation Ltd (BPCL) has fallen through with just one bidder remaining in the fray, and the government is now redrawing a new strategy to sell its stake in the oil PSU.

Author : Rajdhani Delhi Representative

Rajdhani delhi representative

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