Govt's Balco exit plan might delay

Govt's Balco exit plan might delay

by PTI, NEW DELHI

8th February 2006

The government's plan to sell residual shares in Bharat Aluminium Company (Balco) could get delayed, as it is not happy with the value pegged by its advisor for the stake.

"The valuation of government's 49 per cent stake in Balco is not up to its expectations. It might go for revaluation of the stake," sources said.

The government had appointed SBI Caps to value its residual stake in Balco and the advisors gave their report recently.

The value of the 49 per cent stake arrived at by advisors is just a fraction of what the government was expecting, sources added. Finance Minister P Chidambaram has already said that the government is expecting a good return from the sale of its residual stake in the aluminium company.

Even officials in the Finance Ministry had said that government might not sell its stake in Balco if the valuation is not to its liking.

The government had sold 51 per cent stake in Balco to Sterlite in March 2001 for Rs 551.50 crore.

The shareholders' agreement signed between the government and Sterlite at the time of disinvestment of Balco had said that Sterlite should not sell its stake in Balco for three years while the government could sell its remaining stake at any time, on which Sterlite would have first right of refusal.

The acquirer exercised the right when the government decided to exit Balco.

If the government decides to go for second round of valuation of its remaning stake in Balco, it could give rise to a whole range of issues, which can delay the process of disinvestment, sources said.