HZL stake sale terms may be modified

after last week's failure in disinvesting 26 per cent stake in hindustan zinc, the government appears to be in no hurry to resume the process. according to senior sources, the government is concerned with falling zinc prices, which closed at $777 per tonne on monday, nearly half of what it was a year back. ministry sources have indicated that the government could resume the process only in february. the government may modify some of the terms and conditions to make the company more attractive to prospective buyers. however, these sources are not sure as to whether a february sale will fetch a higher price. as long as zinc prices remain low valuation will also be lower, the sources explained, adding that the sterlite industries' bid was also rejected for being lower that the reserve price. moreover, reports by various research agencies and even by a inter-ministerial study group say that the prices are not expected to firm up before the next financial year. the grievance of some bidders about the terms and conditions is also being looked into. out of an initial nine bidders, all foreign companies had exited, reportedly discouraged by various riders on the disinvestment. foreign companies which had pitched in included uk-based allied deals, glencore, lord bagri-promoted metdist and phelps and dodge. uk-based allied deals had objected to the obligation to pay 12 per cent interest on the valuation of the remaining stake in hzl, from the date of acquiring the initial 26 per cent. according to the sebi, any company garnering the 26 per cent stake will also have to make an open offer to acquire an additional 20 per cent. this was too costly, allied deals had said. the government had also decided that the successful bidders would have to set up a major greenfield smelter at an estimated cost of rs 1,250 crore within five years of taking over the company. the smelter would be of 100,000 tonnes capacity at kapasan in rajasthan. moreover, the government had indicated that it would reserve the right to appoint five out of the 11 directors on the new hzl board. though the government has opted to cede management control to the strategic partner, it would, however, retain the right to appoint the chairman. the partner would be given the power to nominate the managing director. zinc, used extensively by the auto and galvanising industries, is mostly imported. while hzl has a capacity of 160,000 tonnes, the other domestic major binani industries has 30,000 tonnes. india imports 60,000 tonnes to meet its demand. the international lead and zinc study group has said global usage of zinc is expected to contract by 0.7 per cent in 2001 and by 3.1 per cent in the west. this fall will be influenced by a 10.7 per cent decrease in the us, reflecting negative trends in the construction and automotive sectors.

HZL stake sale terms may be modified

AFTER last week’s failure in disinvesting 26 per cent stake in Hindustan Zinc, the government appears to be in no hurry to resume the process. According to senior sources, the government is concerned with falling zinc prices, which closed at $777 ...

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