The Hindu Business Line : Hindustan Zinc, Sterlite Industries turn active

Kolkata April 11 Hindustan Zinc, Sterlite Industries and Sterlite Optical Technology counters were active on the bourses as the Sterlite group's right to exercise a call option for buying the residual Government stake in the former became effective from today. The 2002 shareholder agreement has already seen Sterlite group's stake move up from 26 per cent to the present 62.94 per cent in HZL.

Incidentally, the price offered by Sterlite Opportunities & Ventures, an SPV promoted by the Sterlite Industries (India) Ltd and Sterlite Optical Technologies Ltd, at a price of Rs 445 crore was substiantially higher than an offer for HZL made by Sterlite Industires in November 2001. The share price of HZL gained over three per cent to close at Rs 702 and clocked a volume of 3.47 lakh shares on the NSE and 3.95 lakh shares on the BSE.

Sterlite Industries recorded a value improvement of 6 per cent with a spurt in traded volumes on both the BSE and NSE.

The combined volume of over 30 lakh shares at two exchanges was a record of sorts in recent times. Sterlite Optical gained over 6 per cent with a volume of 4.56 lakh shares on the NSE and 4.68 lakh shares changed hands on the BSE.

HZL was incorporated in January 1966 as a public sector company after the takeover of the erstwhile Metal Corporation of India Ltd.

Before the 2002 divestment, Government of India held 75.92 per cent in HZL while financial institutions, other corporate bodies (including NRIs) and Indian nationals held the balance equity. It was also a profit making and listed company.

The transaction documents underwent certain modifications before the final divestment call was made, which included the sequencing of call and put options and their pricing, the provision to have the chairman nominated by the strategic partner once it acquires 51 per cent stake, unlimited environmental indemnity for a period of three years and a clear road map for the Government to exit from the company. Besides, the sale price had been de-linked from public offer price under the SEBI Takeover Code.

Further, 2002-03 Budget announced customs duty reduction from 35 per cent to 25 per cent, which had a positive impact on the profitability of HZL.