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The decks have been cleared for selling the Government’s remaining stake in aluminium major Balco with the Law Ministry giving its nod to the proposal.
The stake sale is expected to generate up to Rs 4,000 crore in the current fiscal.
A note prepared by the Law Ministry, seen by Business Line , stated, “Subject to Attorney General’s opinion and noticing that there appears no constitutional or legal issue involved in the matter, the proposal in the note is a policy decision we may concur in.”
The Ministry has given its remarks in a response to the proposal floated for approval by the Cabinet Committee on Economic Affairs.
The note has mentioned the two opinions given by AG, first dated April 27, 2006 and the second one dated December 12, 2013. The latest one opined that the Government is no longer bound by restrictions on the transfer of its shares as mentioned in the shareholders’ agreement and/or in the articles.
“The Querist (the Government) is therefore at liberty to dispose of its residual stake in Balco by offer for sale route. However, the Querist should consider the difficulties it may encounter in taking such steps,” it said.
Now, the Mines Ministry will move to the Cabinet Committee for formal approval. This comes after the Prime Minister Manmohan Singh recently chaired a meeting to review disinvestment and residual stake sale.
In the meeting, the Finance Ministry was represented by the Law Minister Kapil Sibal after Finance Minister P. Chidambaram withdrew from this matter citing his personal involvement in Vedanta Group Companies in past.
The Finance Ministry favoured open auction method for selling stake in Balco. This will help in getting maximum revenue as shares will be allocated to the highest bidders. Since Balco’s shares are not traded on any stock exchange, the process could involve fixing floor price on which bidders can bid.
Residual stake sale in Balco along with Hindustan Zinc is crucial at a time when the Government is deeply concerned about shortfall in disinvestment target. The Government has so far been able to mobilise less than Rs 3,000 crore against the target of Rs 40,000 crore through selling minority shareholding in Central Public Sector Undertakings while the account for residual stake in non Government companies sell shows zero against the target of Rs 14,000 crore.
Both the residual stake sales have been pending for a long.
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