NEW DELHI: The Union Cabinet on Wednesday approved the sale of the government's residual 29.58 per cent stake in Hindustan Zinc, which at current prices would fetch over Rs 38,000 crore to the exchequer, sources said.
The Cabinet Committee on Economic Affairs (CCEA) approved the sale of 124.9 crore shares government holds in the zinc producer which was sold to mining mogul Anil Agarwal's Sterlite Industries in 2002.
Sources with direct knowledge of the development said the stake sale modalities will be decided by the Dipam.
The decision would give a push to the government's disinvestment drive in the current fiscal. The government has budgeted Rs 65,000 crore from PSU disinvestments and strategic sales.
It has already got a little over Rs 20,500 crore from sale of its 3.5 per cent stake in Life Insurance Corporation (LIC).
HZL has been taken up after privatisation of Bharat Petroleum Corporation Ltd (BPCL) got stalled following two of the three bidders walking out of the contest.
Other strategic disinvestments such as Shipping Corporation of India (SCI) are facing procedural delays.
The government had in 2002 sold its 26 per cent shareholding along with management control to Sterlite, which is part of Agarwal's Vedanta group, for Rs 40.5 per share. A year later, another 18.92 per cent was bought by the mining conglomerate.
In the two transactions, the government got around Rs 769 crore.
Vedanta exercised a call option as per the share purchase agreement but the government contested it. The firm dragged the government to arbitration but later withdrew it, paving the way for the stake sale.
Last month, Agarwal told PTI that his group cannot buy more than 5 per cent of the government's residual stake in HZL unless the terms of the contract are changed.
He had indicated that his group will consider buying the entire stake if the terms are amended and the shareholding is offered to it.
The sale of a 29.5 per cent stake representing over 124.96 crore shares would fetch around Rs 38,000 crore to the exchequer at current market prices.
Shares of HZL closed at Rs 305.05, up 3.14 per cent on the BSE. During the day, the scrip touched a high of Rs 317.30 a share.
HZL was a government-owned company till 2002.
In April 2002, the government offloaded a 26 per cent stake in HZL to Sterlite Opportunities and Ventures Ltd (SOVL) for Rs 445 crore -- thereby giving Vedanta group management control in HZL.
Vedanta group later bought 20 per cent from the market and another 18.92 per cent from the government in November 2003, raising its ownership in HZL to 64.92 per cent.
