Shishir Sinha | New Delhi, May 25 |
The Cabinet’s decision was followed by a Supreme Court ruling on November 18 allowing the Centre to disinvest its residual stake in HZL in the open market
The Centre will divest its entire residual stake in Hindustan Zinc Limited (HZL) to mop up ₹36,000 crore. Currently, government owns 29.54 per cent in the company, while Vedanta group has 64.92 per cent share.
After the announcement, share of Hindustan Zinc rose by around ₹12 to close at ₹307.50 on BSE.
A senior government official confirmed to BusinessLine that Union Cabinet in its meeting on Wednesday gave approval to stake sale. Now process will be taken forward according to rules and regulations, he added.
This decision is followed by Supreme Court ruling on November 18 which allowed the Centre to disinvest its residual stake in HZL in the open market The apex court allowed the sale as HZL ceased to remain a government company since sale of its majority stake in 2002.
The Court had taken objection to the closure of preliminary inquiry (PE) by the CBI in the HZL disinvestment during 1997-2003 and directed registration of a regular case by CBI and to fully investigate the Atal Bihari Vajpayee-led NDA government’s decision in 2002 to disinvest its majority shareholding in HZL.
Incorporated in 1996, Hindustan Zinc was a majority government-owned company. In 2002, the government sold 26 per cent of its equity in the company through a strategic sale to Vedanta.
After the initial stake purchase, Anil Agarwal-led group acquired 20 per cent in the firm from the open market through mandatory open offer. Later, in August 2003, Vedanta group bought an additional 18.92 per cent stake in Hindustan Zinc and currently owns nearly 65 per cent in the company.
In an interview to a news channel recently, Vedanata Group Chairman Anil Agarwal had said that he was waiting for government announcement.
“We are not the buyer, it will come to the market, and the market will buy. We can’t buy more than an additional 5 per cent stake in the Hindustan Zinc out of the remaining,” he had said.
The latest Cabinet decision comes at a time when the government’s proposal to divest its stake in public sector undertakings is not seeing much progress on the ground.
For instance, strategic sale ofBharat Petroleum and Shipping Corporation are yet to reach the financial bid stage. At the same time, strategic sale of Pawan Hans and Central Electronic Limited have to be stopped mid way due to controversy over successful bidder.
In the FY23 Budget, the government has announced that ₹65,000 crore will be realised through disinvestment and out of that, over ₹23,500 crore has been obtained through offer for sale (OFS) through stock exchanges, employee OFS and IPO (initial public offer). Though government has repeatedly saying that it is not relying on disinvestment proceeds for meeting the fiscal target, the proceeds, however, are considered an important source in bridging the fiscal gap to a limited extent.