The government has decided to sell 44 per cent stake in Balco to Sterlite and offer 5 per cent equity to employees. The Centre, which holds 49 per cent stake in the company, has appointed AF Ferguson as the advisor for the sale.
Officiating Coal and Mines Minister Dasari Narayan Rao has turned down a proposal to sell the residual government stake of 49 per cent in the Company to Balco, senior government officials told Business Standard.
The ministry had earlier proposed to sell the entire stake to Balco on the grounds that employees may not pick up the remaining equity.
In case the employees do not pick up the entire 5 per cent equity, remaining portion will be offered to Sterlite, the officials said. The pricing formula for employees has, however, not been worked out so far, they added.
Officials said that the valuation of the company would have increased since Balco acquired the stake in 2001. According to estimates, the government hopes to garner at least Rs 700 crore (Rs 7 billion) from the sale of its remaining 49 per cent in the company. It had sold 51 per cent stake in the public sector for a consideration of Rs 551.50 crore (Rs 5.515 billion).
Sterlite had acquired 51 per cent stake in the company and as per the shareholder agreement, had exercised a call option in March to buy the government's remaining stake.
The Centre had to sell its remaining stake within a period of three months but due to the general elections had sought a three months extension.
The deadline for selling the remaining 49 per cent stake expires on September 15. Officials, however, said that the deadline is expected to be missed since AF Ferguson has been given three weeks to submit its valuation. the advisor was appointed earlier this month.
The Sterlite management, however, does not have any problems with fresh delays. "There is no problem with the deadline. It can be extended to a mutually convenient date," a Sterlite executive said.
Balco will be the first public sector company where the United Progressive Alliance government will exit completely. It proposes to sell its stake in Maruti Udyog Ltd during the course of the fiscal to meet its disinvestment target of Rs 4,000 crore (Rs 40 billion).
