It’s time to look at residual stake sale in HZL and BALCO: Goyal

It’s time to look at residual stake sale in HZL and BALCO: Goyal

In what would fetch the exchequer more than Rs 25,000 crore, the Modi led BJP government will soon initiate the process of selling its residual stake in Hindustan Zinc Ltd and Bharat Aluminium Company Ltd (BALCO).

The government holds 49 per cent stake in Bharat Aluminium Co (Balco) and 29.54 per cent in Hindustan Zinc Ltd (HZL) and the majority stake is being held by NRI billionaire Anil Agarwal’s Vedanta Resources.

In a recent interview to a leading business news channel, union minister of state for power, coal, mines and RE, Piyush Goyal said that he believes that “it was time to look at divesting the residual stake in the two companies and give freedom to the companies to grow and progress independently and efficiently.”

“We are examining all the options and I see no logic in arguing on this issue. We may all recall that these companies were almost laggards. I remember when HZL was sold, the expectation was that it will run out of its raw material and may be 4-5 years is the max that the company can run……It’s now over 10 years and the company has gone from strength to strength.”

Goyal added that the residual value that the GoI had at that time was Rs 1200-1500 cr, “while today the government can get over Rs 25000 cr…so that kind of valuation that has happened in that company.”

“Now that 49% and about 29% is left with the govt……I mean once that you have gone beyond the threshold of 51% and management control has been divested, then it is immaterial and there is no reason for the government to continue to hold that stake,” Goyal said.

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“I personally believe that it is time that we looked at divesting that stake and give freedom to the company to grow and progress indepndently and efficiently.”

Asked if this would need Cabinet approval, Goyal said, “It will indeed have to go to the Cabinet…we have to look at court cases that are going on…take some more legal opinion…it will be a composite decision but I think the time is appropriate for us to start looking at that.”

Chairman Vedanta Resources Anil Agarwal has also been to purchase the residual stake in HZL and Balco.

Vedanta had in 2000-01 acquired government’s 51 per cent stake in Bharat Aluminium Company Ltd for Rs 551.50 crore, and in 2002-03 it bought 26 per cent stake in Hindustan Zinc Ltd for Rs 445 crore.

The firm acquired 18.92 per cent stake in HZL in exercise of call option clause in the shareholder’s agreement between government and the firm. It had also acquired an additional 20 per cent stake in HZL from public.

“It is a commodity. It goes up and down. Whenever they are ready… But, generally I would say they would get about Rs 25,000 crore for both. Its original value was Rs 500 crore,” Agarwal had recently told PTI in an interview.

Anupama Airy
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Anupama Airy

Founder and Editor at EnergyInfraPost
Independent Journalist and Energy Expert.​ (Worked with leading mainline financial and national daily for 23 years.​)​ Also, Guest Contributor with busines​sinsider.in
Currently, Writing a Book for Penguin India Titled Greased Pole:How Politics and Lobbying Stifled India’s Energy Dreams. The author can be reached on anupama.airy@gmail.com (9810661825)​
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