The Hindu Business Line : CCEA to refer Balco valuation to panel

The Cabinet Committee on Economic Affairs (CCEA) on Thursday initiated the first step to break away from the more than two-year long status quo on the issue of selling 49 per cent residual stake held by the Government in Bharat Aluminium Company Ltd (Balco) to the strategic partner Sterlite Industries by deciding to return the cheque of Rs 1,098 crore given by Sterlite to the Ministry of Finance in March.

Simultaneously, the CCEA decided to set up a Committee of Secretaries (CoS) to look into the issue of valuation of the company and negotiate for a settlement with Sterlite.

The CoS will also undertake a due-diligence exercise of the report of the Comptroller & Auditor General of India (CAG) on the price and valuation while negotiating on sale of the remaining equity, the Minister for Information & Broadcasting, Mr P.R. Dasmunshi, said here after the meeting.

The CAG had said in its latest report that in case of four PSUs, including Balco, adequate efforts were not made to get the title deeds to the land and buildings and this impacted the ``valuation of the properties adversely...''

"The Committee of Secretaries under the Law Secretary and comprising Disinvestment Secretary and Mines Secretary will be overlooked by the Cabinet Secretary," he said.

Sterlite had acquired 51 per cent stake in Balco in March 2001 for Rs 551.50 crore. In the shareholder's agreement, while Strelite had a call option (to acquire the remaining shares at its call), the Government was deprived of a put option (to offload the shares at choice).

HC directive

The CCEA decision follows a recent direction by the Delhi High Court to the Centre to reach a negotiated settlement with Sterlite on its claim for 49 per cent shares in Balco by first week of September, failing which arbitration proceedings would start.

Last week, the Law Minister, Mr H.R. Bhardwaj, had also indicated that the Balco issue was headed for arbitration and said that "we are fighting a litigation. They cannot force us to sell."

More Stories on : Aluminium | Disinvestment | PSU

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