Group of secys to decide on Balco-Sterlite stake dispute

A group of secretaries would meet soon to decide on the next course of action for disinvestment of the government's residual 49 per cent equity stake in Bharat Aluminium Company to Sterlite Industries.

The company's valuation may prove to be controversial. Sterlite acquired majority control of Balco during the government's disinvestment programme in 2001.

The mines ministry has decided to go by the advice of Attorney-General Milon K Banerji, who recently advised the government not to sell its stake in Balco because it was undervalued.

Banerji, after his opinion was sought by the law ministry, informed the government that its stake in Balco's shares has been valued at Rs 842.52 crore according to the circumstances prevailing in 2004, when Sterlite exercised its right to buy the residual stake. The valuation exercise was completed by SBI Caps based on 2004 data.

Subsequently, Sterlite sent the government a cheque of about Rs 1,099 crore as payment for the 49 per cent residual stake in Balco. The payment took into account interest on the Rs 842.52 crore valuation between 2004 and 2006.

Sources said the government has been in a dilemma ever since Sterlite industries sent the cheque even before the dispute over valuation was ironed out.

They added that between 2004 and now, the aluminium industry's fortunes have witnessed a sea-change. Banerji has advised the government that it would not be in public interest to sell Balco's shares at the prices arrived at on the basis of 2004 data.