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Vedanta Resources today said it has received positive "indications" from government on the mining conglomerate's move to acquire the remaining stake in the erstwhile state-owned Hindustan Zinc Ltd, and it may happen soon.
"We are also looking forward... (Buying remaining stake of government in) Hindustan Zinc should happen. We are engaged with the government and it should happen," Vedanta Chairman Anil Agarwal said in a conference call, announcing Vedanta's results for April-September, 2013.
"We are getting the indications but it is a democratic process. Sometimes it gets delayed but it will happen," Agarwal added.
The government has not taken a final decision yet on selling stakes in the two erstwhile PSUs including HZL and the consultation in on between various departments.
The Mines Ministry had said in a draft Cabinet Note last month that Parliament approval is required for selling HZL's remaining shares as it was incorporated through a statute.
However, Finance Ministry has taken a contrasting view, saying that HZL is no more a public sector company and selling shares through auction route does not require Parliament nod.
During 2001-2003, the London-listed Vedanta had acquired 51% stake in Bharat Aluminium Company (Balco) and 64.92% stake in HZL.
On October 30, Vedanta had renewed shareholders' nod to empower it for making offers for acquiring remaining stake of the government in HZL and Balco. The nod was also for raising the offers by up to 43% or up to Rs 24,663 crore ($3.969 billion) from the last offer of Rs 17,275 crore, made in January, 2012.
As per the shareholders approval, Vedanta Board can now make an offer up to rupee equivalent of $3.482 billion (or Rs 21,637 crore) for acquiring government's remaining 29.5% stake in Hindustan Zinc. The upper ceiling is nearly 40% increase of January, 2012 offer to the government.
If Vedanta makes the offer at that level (Rs 21,637 crore) for HZL's remaining stake, it would help the government meet over 39% of the Rs 55,000 crore disinvestment target for the current fiscal. Besides, it will be over 144% of targeted Rs 15,000 crore by the government from residual stake sales.
HZL is the richest profit-making subsidiary of Vedanta and had cash and cash equivalent of Rs 23,632 crore as of September, 2013. For the half year ended September, 2013-14 fiscal, it has reported net profit of Rs 3,300 crore and revenues of Rs 6,460 crore.
The Rajasthan-based zinc producer was incorporated after the erstwhile Metal Corporation of India Ltd was nationalised through the Metal Corporation (Nationalisation and Miscellaneous Provisions) Act, 1976.
According to Vedanta, it has increased the valuation of government stake in HZL to over Rs 17,000 crore from the levels of Rs 500 crore in 2002-2003, when majority stake in the erstwhile PSU was divested to it and selling remaining stake in the company is "just a housekeeping work".
In the draft Cabinet Note, the Mines Ministry has cited the Act, and a 2003 order of the Supreme Court on HPCL-BPCL disinvestment, saying that without Parliament's approval, remaining stake can not be sold in HZL.
In 2003, the apex court order had stayed the proposed disinvestment of the two oil PSUs, saying that they were formed through a statute and required Parliament approval.
The same is applicable to Hindustan Zinc also, even though it was divested before the court order, the Mines Ministry has argued.
It has proposed a Bill to amend the Act within 3 months after the Cabinet approval.
