The Hindu Business Line : Balco valuation: Ministry to examine A-G report

The Ministry of Mines will take up the Attorney-General's (A-G) report on the valuation report of Balco prepared by SBI Capital Markets (SBI Caps) next week for examination.

The report, submitted by SBI Caps in January this year, had come under criticism from within the Ministry and was referred to the A-G's office by the Ministry for comments.

The A-G's report has stated that the Government need not sell its 49 per cent stake to Sterlite, saying that the valuation by SBI Capital did not reflect the true value of the company.

It also said that the shareholders' agreement violates the Companies Act.

SBI Capital has valued the 49 per cent stake at Rs 842.52 crore based on 2004 data.

But since 2004 the aluminium industry's fortunes have witnessed many changes, the A-G said, adding that it would not be in the public interest to sell Balco's shares at prices arrived at on the basis of 2004 data.

Officials said, "The legal opinion will have go be taken into cognisance but it is not binding. The Minister of Mines may take a political decision and move ahead with the plan if it needs to be done politically."

They added: "But earlier also there had been many questions in the Parliament regarding valuation and now legal opinion also points that out. Now, this will become an even bigger hurdle for the Government to push through because the shareholders' agreement holds the Government legally bound to sell the residual stake."

The deadline for completing the transaction was in March this year. The strategic partner, Sterlite, had submitted a cheque for Rs 1,098 crore before March-end but the cheque had neither been accepted nor cashed.

Meanwhile, the labour unions have said that they would again go on strike as the existing Sterlite management is not sticking to earlier commitments.

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