Modi govt to sell remaining 29.5 % stake in Hindustan Zinc Ltd, Cabinet Committee on Economic Affairs approves the proposal

The Cabinet Committee on Economic Affairs (CCEA) has approved the sale of its remaining 29.5 per cent stake in Hindustan Zinc Ltd (HJDL) as the Center seeks to speed up its disinvestment drive as some major privatization proposals are facing hurdles. According to the market closing price of the company’s shares on Wednesday, the Center will get about Rs 38,062 crore from the sale of the entire 29.5 percent stake in HJDL.

An official said the government may sell its shares in installments through offer for sale (OFS) and this would be structured by the Department of Investment and Public Asset Management.

In 2002, the government sold its 26 percent stake to Vedanta’s Sterlite Industries. The group then acquired 20 percent in HJDL through an open offer. An additional 19 percent was bought by the group managed by Anil Agarwal in 2003. In 2009, the company had exercised a call option as per the shareholders’ buyout agreement, which was opposed by the Centre, leading to Vedanta calling for arbitration to claim the settlement. With the group now withdrawing the arbitration proceedings against the Centre, the way has been cleared for the government to sell its 1.24 billion shares in the company.

At present, Vedanta holds 64.9 percent stake in Hindustan Zinc Ltd. Anil Agarwal of Vedanta Ltd has reportedly said that the company can buy only 5 percent stake in the Centre, after considering the price of the shares on offer.

In November last year, the Supreme Court had allowed the Center to sell its residual stake in HJDL, observing that the company is no longer a public sector undertaking. The Center in its affidavit had earlier said that the remaining 29.54 percent stake would be sold in the open market.

While the sale of the remaining stake in the company was not questioned, the apex court had directed the Central Bureau of Investigation (CBI) to probe the initial transaction, under which the Center sold 26 percent stake in HJDL, and its eventual privatization. was enabled.

The stake sale will help the Center move closer to its disinvestment target of Rs 65,000 crore for the financial year 2022-23. The massive privatization of Bharat Petroleum Corporation Limited (BPCL) has failed and only one bidder is in the fray, and the government is now devising a new strategy to sell its stake in the oil PSU.

The Center has so far raised Rs 23,575 crore in disinvestment proceeds through initial public offering (IPO) of Life Insurance Corporation of India (LIC) and proposal for sale of Oil and Natural Gas Corporation (ONGC) in the current financial year so far.

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