The government on Thursday set up a Committee of Secretaries (CoS) to decide on its stand on the contentious issue of selling the residual 49 per cent stake in aluminum company Balco to Sterlite Industries.
Sterlite currently owns 51 per cent in Balco through its UK-based holding company Vedanta Resources Plc. It had bought the public-sector aluminum producer's stake from the government in 2001 for Rs 551.50 crore at Rs 49.01 per share.
In March 2004, Sterlite sent a call notice to the government offering Rs 1,098 crore for the remaining 49 per cent stake. The government, however, rejected the offer following observations made by the Comptroller and Auditor General (C&AG) that raised questions about the price and valuation of Balco at which it was disinvested in 2001. The matter was referred to the Attorney General in 2006 after a dispute over pricing and valuation.
"The Cabinet Committee on Economic Affairs (CCEA) today considered the call option notice given by Sterlite Industries India, to acquire 10,81,06,005 equity shares, held by Government of India, in Balco," Information and Broadcasting Minister Priyaranjan Dasmunsi said.
Dasmunsi said that the committee, which would have the law, disinvestment and mines secretaries as members, would finalise the government's position from time to time to consider legal issues as and when they arise.
The minister said since the issue of selling the stake was in the high court, the committee would consider the government's position in the case, and in the ongoing mediation and arbitration as well.
According to sources, while suggesting to set up a committee of secretaries, the mines ministry told the CCEA that the Centre may be forced to sell its remaining 49 per cent stake in Balco at 75 per cent of the pre-determined price, according to the shareholders' agreement, if Sterlite's right to buy the shares is upheld in the arbitration process. "If the arbitration award goes against the government, it may have legal and financial implications," said the ministry in a note submitted to the CCEA.