The government is likely to defer the sale of its remaining 49 per cent stake in Balco to Sterlite till an inquiry into the alleged violation of some clauses in the shareholders agreement by the company's new management is completed.
Government sources said Prime Minister Manmohan Singh, who also has charge of the coal and mines ministry, was in favour of the move following representations from trade unions and the Left parties.
The Balco Saga: Complete Coverage
The unions and the Left had alleged that the Balco management had violated the shareholders agreement on the issues of payment of dues and retrenchment.
A Sterlite executive said there had been no violation of the shareholders agreement and the government had time till December to sell its residual stake. "We have not heard from the government recently," he said.
But coal and mines ministry officials said following the Prime Minister's observation the government had also dropped its plans to appoint AF Ferguson for a valuation exercise. The ministry had shortlisted the consulting firm to carry out due diligence.
Sterlite had acquired 51 per cent in Balco and, as per the shareholders agreement, had exercised a call option in March to buy the government's remaining stake. The Centre had to sell its remaining stake within three months but had sought an extension of three months because of general elections.
The government had sold its stake in the aluminum major for Rs 551 crore (Rs 5.51 billion) and was expecting at least Rs 700 crore (Rs 7 billion) from the sale of the residual equity.
The government had accounted for the sale proceeds from Balco while budgeting for Rs 4,000 crore (Rs 40 billion) from divestment this fiscal year. National Thermal Power Corporation and Maruti Udyog were the other companies on the list.
While the initial public offer for NTPC has been completed and received well, the sale of the government's residual 18 per cent stake in Maruti may be deferred to the next fiscal year with Heavy Industry Minister Santosh Mohan Deb suggesting a relook at the deal.
Roadblock
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Prime Minister Manmohan Singh is in favour of stalling the stake sale following several representations from trade unions and Left parties on the issue
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Sterlite has said there has not been any violation of the shareholders agreement
- The government has also dropped its plans to appoint AF Ferguson to undertake a valuation exercise
