Hope to buy residual HZL, Balco stakes: Vedanta
15 Jan 2015 1:10 AM GMT
“This government is very determined to go ahead and sell the shares. They are working on it and this financial year they want to disinvest and get this money. We are here to pay the right price and it is a very transparent process. We all abide by that,” Agarwal said.
London Stock Exchange-listed metal and mining conglomerate Vedanta Resources holds 64.9 per cent stake in HZL and 51 per cent stake in Balco. It had offered over $2.57 billion and $296.5 million respectively to buy government’s residual stakes in these two firms in January 2012.
In August 2012, Vedanta got shareholders’ approval to raise the offer by around 25 per cent but the one-year approval period has expired.
“It has to be at a market driven value and in a most transparent manner. It is already there in the share purchase agreement. Very clear cut formula. So, they have to take a view (on) what they want to do,” he said. The billionaire claimed the previous government was “indecisive” but after his recent meeting with Finance Minister Arun Jaitley he was hopeful that the deal would be done soon and in a transparent manner. Agarwal had met Jaitley on December 24 last year.
“For sometime the (previous) government was indecisive, which I am sure this government won’t be. It creates a very wrong signal (if you are indecisive).
“The shares were meant to be given, the whole idea was to disinvest. They had given us a time of five years to build up...now it is ten years. I am very confident after meeting the Finance Minister and he was very confident that he will do it within this financial year,” he said.
Agarwal said the “what happened in India” had not sent a good message to foreign investors. “The foreign investor is not getting confidence and the most important thing is to creating stock value,” he said. Post disinvestment, HZL has grown five-fold from 0.17 million tonnes (MT) of metal to one MT. Silver production has also grown to 400 tonnes, making HZL the largest silver producer in India. It also added a 474 MW thermal power plant.
HZL has infused Rs 12,000 crore investments in four expansions. “The mine life which was about 5-7 years at the time of disinvestment is today of about 35 years,” Agarwal said.
As per the company, it has paid royalty to the tune of over Rs 1,000 crore in 2013-14. Its turnover was Rs 1,470 crore in 2002 and rose to Rs 13,459 crore in 2013-14. “Cash and Cash equivalents as on September 30, 2014 stood at Rs 27,475 crore while the contribution to exchequer in 2002 was Rs 364 crore which has gone up to Rs 4439 crore in 2013-14,” as per the company.
Vedanta had in April 2002 bought 26 per cent stake in HZL. It had two call options to purchase all of the government of India’s shares in HZL at fair market value. It exercised the first call option on August 29, 2003 and acquired 18.9 per cent additional stake in the company.
Vedanta also acquired additional 20 per cent stake in HZL through an open offer, increasing its shareholding to 64.9 per cent. To acquire government’s remaining 29.5 per cent share in HZL, it had exercised the second call option in 2009 which was disputed by the government. Consequently, Vedanta invoked arbitration and filed a statement of claim.
The arbitration proceedings are under progress in early stages. The next date of hearing is fixed on February 23, 2015. The government appointed valuers have visited the sites of Hindustan Zinc and Balco recently.
London Stock Exchange-listed metal and mining conglomerate Vedanta Resources holds 64.9 per cent stake in HZL and 51 per cent stake in Balco. It had offered over $2.57 billion and $296.5 million respectively to buy government’s residual stakes in these two firms in January 2012.
In August 2012, Vedanta got shareholders’ approval to raise the offer by around 25 per cent but the one-year approval period has expired.
“It has to be at a market driven value and in a most transparent manner. It is already there in the share purchase agreement. Very clear cut formula. So, they have to take a view (on) what they want to do,” he said. The billionaire claimed the previous government was “indecisive” but after his recent meeting with Finance Minister Arun Jaitley he was hopeful that the deal would be done soon and in a transparent manner. Agarwal had met Jaitley on December 24 last year.
“For sometime the (previous) government was indecisive, which I am sure this government won’t be. It creates a very wrong signal (if you are indecisive).
“The shares were meant to be given, the whole idea was to disinvest. They had given us a time of five years to build up...now it is ten years. I am very confident after meeting the Finance Minister and he was very confident that he will do it within this financial year,” he said.
Agarwal said the “what happened in India” had not sent a good message to foreign investors. “The foreign investor is not getting confidence and the most important thing is to creating stock value,” he said. Post disinvestment, HZL has grown five-fold from 0.17 million tonnes (MT) of metal to one MT. Silver production has also grown to 400 tonnes, making HZL the largest silver producer in India. It also added a 474 MW thermal power plant.
HZL has infused Rs 12,000 crore investments in four expansions. “The mine life which was about 5-7 years at the time of disinvestment is today of about 35 years,” Agarwal said.
As per the company, it has paid royalty to the tune of over Rs 1,000 crore in 2013-14. Its turnover was Rs 1,470 crore in 2002 and rose to Rs 13,459 crore in 2013-14. “Cash and Cash equivalents as on September 30, 2014 stood at Rs 27,475 crore while the contribution to exchequer in 2002 was Rs 364 crore which has gone up to Rs 4439 crore in 2013-14,” as per the company.
Vedanta had in April 2002 bought 26 per cent stake in HZL. It had two call options to purchase all of the government of India’s shares in HZL at fair market value. It exercised the first call option on August 29, 2003 and acquired 18.9 per cent additional stake in the company.
Vedanta also acquired additional 20 per cent stake in HZL through an open offer, increasing its shareholding to 64.9 per cent. To acquire government’s remaining 29.5 per cent share in HZL, it had exercised the second call option in 2009 which was disputed by the government. Consequently, Vedanta invoked arbitration and filed a statement of claim.
The arbitration proceedings are under progress in early stages. The next date of hearing is fixed on February 23, 2015. The government appointed valuers have visited the sites of Hindustan Zinc and Balco recently.
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