The dispute between Sterlite Industries and the government over the former's acquisition of the remaining 49 per cent stake in aluminium maker Bharat Aluminium Company (Balco) seem to end soon with SBI Capital Markets submitting its valuation report to the mediators last week. |
Sources said SBI Caps submitted the report on Thursday to the mediators, appointed by both the parties, and the matter was likely to come up in the winter session of Parliament. |
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The Anil Agarwal-promoted Sterlite Industries, which bought a 51 per cent stake in Balco when the government divested the stake in 2001, last month gave a call option notice for acquiring a 49 per cent residual stake in the unlisted company for Rs 1,089 crore, along with an interest on the 36-month delayed payment from the government. |
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The sources said Sterlite Industries preferred to pay the interest rates, rather than a further revaluation of Balco, given that the value will be much higher at the ruling aluminium prices of $2,400 per tonne "� up nearly 60 percent from $ 1,800 per tonne in 2004, when it first exercised the right to purchase the residual stake from the government. |
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Analysts expect the aluminium prices to perk up further to $2,600-2,800 per tonne on an average for the next two years, making the deal a win-win situation for Sterlite Industries at the current valuation of Rs 1,089 crore-plus the interest rates. |
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Tarun Jain, director of Sterlite Industries, declined to comment. |
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Recently, the Cabinet Committee on Economic Affairs (CCEA) decided to set up a committee of secretaries of the departments of legal affairs, |
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disinvestment and mines for finalising the government's position on the ongoing legal battle with Sterlite Industries.The three-year dispute was referred to the attorney general by the government in 2006. |
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The ministry of mines had told the CCEA that according to the shareholders' agreement, the Centre may be forced to sell its remaining 49 per cent stake in Balco at 75 per cent of the pre-determined price if Sterlite's right is upheld in the arbitration process. The timing of Balco's valuation is the bone of contention between the two parties. |
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Sterlite and the government had signed an agreement in 2001, giving Sterlite Industries the option to buy the residual stake in Balco three years later. |
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In 2004, when Sterlite exercised that right the valuation process was delayed partly because of the government asked for extensions. |
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After some delay, SBI Caps carried out Balco's valuation using 2004 data and the valuation report was submitted early last year. SBI Caps valued the government's stake in Balco at Rs 842.52 crore. But, as international aluminium prices have shot up since then Balco is a more valuable company today. |
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