New Delhi: Sterlite Industries, which holds the majority 51% stake in aluminium major Balco, may seek legal recourse after a government panel turned down its call option to obtain the residual stake in the latter.
A three-member government panel, set up at the instance of the Delhi high court for arbitration in the matter, on 25 January had struck down the Vedanta group firm’s call option terming it “a violation of the rules and regulation”.
“Sterlite Industries, which is making efforts to acquire the remaining 49% stake in Balco for about a decade now, may seek recourse to the high court,” a person privy to the development told PTI.
With the call option, Sterlite was looking at acquiring the remaining stake in Balco. Call option is an agreement that gives the buyer a right to buy some part of an asset at a specified price and particular timeframe.
While Sterlite, in a filing to the Bombay Stock Exchange, said that it would decide its future course of strategy, the company did not elaborate on strategy or give any timeframe.
When contacted, a Vedanta spokesperson refused to comment on the issue saying, “We are going through the award”.
Meanwhile, the government would also seek legal opinion before proceeding with the divestment of its residual stake in Bharat Aluminium to garner the maximum value.
“We are studying the award and taking legal opinion before proceeding on Balco. The next step will be based on legal opinion as to how to get the best value for the residual stake,” mines secretary S Vijay Kumar told PTI.
During the tenure of NDA government, Sterlite snapped up 51% stake in Balco for Rs551 crore in 2001. As per the deal, Sterlite was slated to exercise the call option to buy remaining 49% stake in 2004.
However, the process was delayed due to valuation issues. The Controller and Auditor General (CAG) valued the residual stake much higher and the attorney general even termed the Sterlite’s call option as illegal.
Following the rift between the government and Sterlite, the Balco issue reached the Delhi high court in 2006. The court had set up the arbitration panel.