Govt won’t sell residual stake in HZL, Balco this year

NEW DELHI: The government has said residual stake sales in Hindustan Zinc Ltd (HZL) and Bharat Aluminium (Balco) are not likely to take place this year, the reason disinvestment proceeds are likely to come in well below the Rs 54,000 crore targeted in the current fiscal.

However, the “decision to disinvest in Hindustan Zinc and Balco stands”, said economic af fairs secretary Arvind Mayaram, adding that the process requires time and may not be completed before March 31. The government has proposed to sell all of its 29.5% stake in HZL and its 49% holding in Balco through open auction which were together expected to fetch about Rs 20,000 crore. The companies are majority owned by Anil Agarwal’s Vedanta Group.

The government now expects to raise around Rs 19,027 crore from asset sales, which includes Rs 3,000 crore from the disposal of its Axis Bank holding. The deferral of the stake sale in these companies has pushed up the disinvestment target for the next fiscal to Rs 51,925 crore – Rs 36,925 crore from regular asset sales and Rs 15,000 crore from residual stake sales.

The government has so far managed to raise around Rs 3,500 crore from divestment proceeds.

It expects to get another Rs 12,500 crore in the next one month through the sale of stakes in companies such as Indian Oil Corporation (IOC), Hindustan Aeronautics Ltd (HAL) and from the proposed Central Public Sector Enterprises Exchange Traded Fund. ONGC and Oil India will buy a 10% government stake in IOC, which is expected to fetch around Rs 5,000 crore.

“We will launch the ETF by early next month, so that will help us achieve the revised target of Rs 16,027 crore,” said a government official. Finance minister P Chidambaram expressed hope that the next government will be able to achieve the Rs 51,925 crore target for 2014-15.

“We have drawn a road map. We will also look at non-performing companies and sell them as companies,” he said, adding that he wasn’t unhappy with the disinvestment process this year. “Some of these companies came with alternate proposals,” he said, citing the example of Coal India, which chose to pay a special dividend instead of a stake sale.

For this year, the government expects to raise Rs 3,000 crore through residual stake sales in private firms against the budgeted Rs 14,000 crore.