Sterlite Industries India is planning to buy out government's stake in Hindustan Zinc and Bharat Aluminium Company.
The company has offered Rs16000 crore for the stake in both the companies in which the majority holding was acquired by the Vedanta group about a decade ago. The company is also to buy planning coal mine in Latin America for $5 billion.
The federal government holds a 29.54% stake in Hindustan Zinc and 49% in Balco.
In 2002, Sterlite Opportunities and Venture acquired 26% stake in Hindustan Zinc. Subsequently, it bought 20% public holding in the company. In 2003, it acquired additional 18.92% stake from the government exercising call option.
In 2001, Sterlite acquired 51% stake in Balco for Rs551 crore. At that time the company had cash reserves of Rs437 crore.
The sale agreement had a call option that gave Sterlite the option of buying out the remaining 49% government stake by March 2004. But when Sterlite tried to exercise the call option to buy the remaining stake at Rs1099 crore, differences cropped up over the valuation of the company.
In 2006, SBI Caps had valued the government’s stake at Rs843crore, but that was based on 2004 numbers. This valuation, however, drew criticism from several quarters including the mines ministry and the Comptroller & Auditor General.
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The company has offered Rs16000 crore for the stake in both the companies in which the majority holding was acquired by the Vedanta group about a decade ago. The company is also to buy planning coal mine in Latin America for $5 billion.
The federal government holds a 29.54% stake in Hindustan Zinc and 49% in Balco.
In 2002, Sterlite Opportunities and Venture acquired 26% stake in Hindustan Zinc. Subsequently, it bought 20% public holding in the company. In 2003, it acquired additional 18.92% stake from the government exercising call option.
In 2001, Sterlite acquired 51% stake in Balco for Rs551 crore. At that time the company had cash reserves of Rs437 crore.
The sale agreement had a call option that gave Sterlite the option of buying out the remaining 49% government stake by March 2004. But when Sterlite tried to exercise the call option to buy the remaining stake at Rs1099 crore, differences cropped up over the valuation of the company.
In 2006, SBI Caps had valued the government’s stake at Rs843crore, but that was based on 2004 numbers. This valuation, however, drew criticism from several quarters including the mines ministry and the Comptroller & Auditor General.
....more info