New Delhi: Metal and mining major Vedanta Resources hopes to buy out the government’s minority equity in its group firms Balco and Hindustan Zinc (HZL) in the next three to four months, a top company official said.
The government now holds 49% stake in Balco and 29.5% in HZL. The balance of HZL’s equity is held by the public.
“As far as our call options are concerned, in case of Balco we are currently in arbitration, a couple of arbitration meetings have taken place, and hopefully we believe that based on the arbitration proceedings, we should see a successful closure of this in the next three to four months,” Vedanta Resources vice-chairman Naveen Agarwal said.
Speaking at an analysts call conference after the announcement of the first quarter results of Vedanta’s flag- ship firm Sterlite Industries, Agarwal said he hoped the company would be able to also acquire the minority stake of the government in Hindustan Zinc by the end of this year.
“We continue to be engaged with the government on this matter and we believe that in view of the current environment on disinvestment, (the company) should see the closure during the current year,” he added.
During the tenure of NDA government, the NRI billionaire Anil Agarwal-led firm had bought 51% stake in Bharat Aluminium Company (Balco) for Rs551 crore and 64% in Hindustan Zinc (HZL) for over Rs750 crore.
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 assset 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, its chairman Anil Agarwal had earlier said.
Vedanta Resources has earmarked a sum of Rs7,000-8,000 crore to buy out the residual stakes in both the firms.