Vedanta expects to buy Govt stake in HZL, Balco by year-end

Vedanta Resources expects to acquire residual stake in Hindustan Zinc and Balco from the Government by this calendar year.

Mr Anil Agarwal, Chairman, Vedanta, said, “There has been a lot of value addition in both Hindustan Zinc and Balco after they were acquired by us. Talks with the Government are progressing as expected and we hope to close the deal by end of this year.

Vedanta holds 69.5 per cent in HZL and 51 per cent in Balco.

On coal, he said the company was waiting for the Government to open up coal blocks for auction. There were some coal blocks that had come along with the acquisition of Balco which are under production and it had helped the company gain expertise in mining. This apart, the company is also exploring possibilities of acquiring coal assets in Latin America.

OIL BLOCKS

Cairn India has a diversified asset base with 10 blocks; one in Rajasthan, three on west coast and five on east coast, including one in Sri Lanka.

The Rajasthan block in the Barmer basin has an estimated gross resource of about 6.5 billion barrels of oil equivalent. Cairn India's gross operated production last quarter (Q3 FY 2011-12) was about 170 boepd (barrels of oil equivalent per day), contributing close to 20 per cent of India's domestic crude oil production.

Subject to obtaining approval from its joint venture partner and the Government of India, Cairn India plans to ramp up the gross operated production to 260,000-plus boepd, which based on 2011 figures would be equivalent to about 30 per cent of India's current crude oil production.

On the roadmap for consolidation of the Indian subsidiaries, Mr Agarwal said Sesa Goa also intends to establish an ADS (American Depository Shares) facility, comparable to Sterlite's current ADS. This would allow holders of Sterlite's ADS as of the record date to receive Sesa Goa ADS with appropriate adjustments to reflect the foregoing exchange ratio. Each Sterlite ADS at present represents four equity shares of Sterlite.

On consolidation of Vedanta Aluminium, he said it would be done via the merger of Ekaterina Ltd (a Mauritius holding company for Vedanta's 70.5 per cent shareholding in VAL) into Sesa Sterlite and the issue of 72.3 million Sesa Goa shares to Vedanta after obtaining necessary approvals. Based on Sesa Goa's closing price on February 24, 2012 of Rs 227 per share, the equity value of VAL equates to Rs 2,332 crore.

Madras Aluminium (Malco) will merge into Sesa Sterlite, through the issue of 78.7 million Sesa Goa shares to the shareholders of Malco.

Based on Sesa Goa's closing price on February 24, 2012 of Rs 227 per share, the value of Malco equates to Rs 1,790 crore, including the value of Malco's existing 3.6 per cent shareholding in Sterlite. As part of the merger, Malco's existing shareholding in Sterlite will be cancelled by Sesa Sterlite.

Mr Agarwal said despite India growth, no major investment has happened in Orissa in the last 20 years. Vedanta had invested $10 billion in the state for setting up the Aluminium project. “We are operating at 30 per cent capacity and are close to breakeven. We are confident of resolving issues relating to sourcing of bauxite in one or two years and then ramp up production to one million tonne.”

COMMENT NOW