Mumbai: Vedanta Resources on Monday said the long-drawn arbitration process for buying government’s remaining 49% stake in Balco is over and the group expects to complete the acquisition by the end of this fiscal.
“Arbitration process is concluded. Award is expected soon. By March, we hope to acquire government’s residual stake,” Vedanta Resources chairman told the news agency in an interview.
The metal and mining group is also hopeful of taking forward the process to buy government’s residual stake in another erstwhile PSU Hindustan Zinc Ltd (HZL).
“The Balco arbitration is about whether call option of is a valid or not. If it is established (that call option is valid) then it would be valid for Hindustan Zinc Ltd as well,” he added.
The government now holds 49% stake in Balco and 29.5% in HZL.
The government earlier this year had said that it will sell its residual stake in the two firms for a much higher price as the strategic sale of equity in these companies was done in “haste.”
“Disinvestment in Balco and Hindustan Zinc (HZL) was done in haste. I personally feel it needs to be more priced,” Mines Minister B. K. Handique had said.
During the tenure of NDA government, the NRI billionaire Anil Agarwal-led firm had bought 51% stake in Bharat Aluminium Company (Balco) for Rs 551 crore and over 64% in Hindustan Zinc for over Rs 750 crore. Later, Vedanta Group increased its holding in HZL by a small margin.
Sterlite Industries was slated to exercise its call option to acquire the residual stake in Balco in 2004. The controller and auditor general valued the residual stake much higher and the then attorney general even termed the mining firm’s call option as illegal.
The issue of residual equity in Balco had created a rift between Vedanta and the government, and the matter reached the Delhi High Court in 2006.
Call Option is an agreement that gives the buyer a right to buy some part of an asset at a specified price at a specified time frame.
The acquisition of the residual equity in the two companies is crucial for Vedanta’s overall corporate restructuring programme into a commodity-focused vertical, which it is hoping to complete in the current fiscal, Agarwal had earlier said.