Financial Daily from THE HINDU group of publications
Tuesday, Dec 20, 2005
Financial Daily from THE HINDU group of publications Tuesday, Dec 20, 2005 |
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Industry & Economy
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Disinvestment Money & Banking - Financial Services SBI Caps wins bid for valuation of Govt stake in Balco Ambarish Mukherjee
New Delhi , Dec. 19 THE Core Group of Secretaries on Disinvestment has decided to award the valuation of the Government-owned 49-per cent stake in Bharat Aluminium Company Ltd (Balco) to SBI Capital Markets Ltd for a fee of Rs 22 lakh. The Government had sold 51 per cent stake in Balco in March 2001 to Sterlite Industries. Subsequently, Sterlite exercised its call option in March 2004 in accordance with the shareholders' agreement, because of which the Government will have to sell the residual stake to the London-based Vedanta Resources owned aluminium major by March 2007. However, a particular clause in the shareholders agreement has created a difference of opinion within the Government that restricts the option for a second valuation. Sources said that according to the clause, the valuation arrived at by the independent valuer will have to be the final. There is no scope for a second valuation. According to the clause, the valuation will be made by the valuer as an expert and not as an umpire or arbitrator, and it shall be final and binding on the parties and there shall be no appeal from such valuation. When Balco was disinvested initially in 2001 to Sterlite, the valuation of Rs 551.50 crore raised several protests; the Government was charged with favouritism and cases were filed in the Supreme Court. This time too, sources said there had been serious disagreement within the Government on appointing SBI Capital Markets for the valuation with such a strict clause. Also, sources said initially it was decided that SBI Caps would be persuaded to take up the valuation for a charge ranging from Rs 9 lakh to Rs 14 lakh. However, the final charge agreed to by the Core Group of Secretaries on Disinvestment stood at Rs 22 lakh.
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