Court against complete sale of stake in a company that produces rare minerals
GN Bureau | January 19, 2016
Questioning the rationale for selling of 29 per cent of valuable shares in the company which deals with strategic minerals, the supreme court today restrained the government from going ahead with any further disinvestment of Hindustan Zinc Ltd.
The government has been under pressure to sell stake to raise funds and meet disinvestment target before the budget next month. In 2002, under the government’s disinvestment programme, Hindustan Zinc was acquired by Sterlite, now called Vedanta Ltd.
Interestingly the verdict comes on the day the Hindustan Zinc is holding a meeting of the board of directors of the company. Today's board meet will consider and approve, the un-audited financial results with limited review of the company for the 3rd quarter and nine month ended December 31, 2015 (Q3).
HZL, which is celebrating 50 years of existence in 2016, has mines located in Agucha, Sindesar Khurd, Zawar, Rajpura Dariba, and Kayad in Rajasthan. Its smelters are located in Dariba, Chanderiya and Debari, also in Rajasthan. It was formed under an Act of Parliament on January 10, 1966 as an integrated zinc-lead-silver producing company.
However, the SC said that it is not stopping Sterilite Vedanta, which has taken over the company from carrying out investment.
Few days back, the Vedanta Group had announced an investment of Rs 8,000 crore in next three to five years to expand operations and capacity.
The firm aims to take the existing ore production levels of 9.36 million tonnes per annum (MTPA) to 14 MTPA and finished metal production to 1.10 MTPA from 0.85 MTPA.
“As the company celebrates its Golden Jubilee year, it is all set to invest another Rs.8,000 crore in the coming 3-5 years on expansion of its mines and smelting operations,”the company said.
Vedanta Group chairman Anil Agarwal said: “When we acquired HZL as part of government’s disinvestment programme in 2002, our focus was to make India self-sufficient in zinc.
“We are very proud that by adopting latest environment friendly technology, large investment in capacity expansions and continuous exploration, HZL is able to increase production five-fold and yet have reserves for another 30 years.”
The investment of Rs.12,000 crore in the past years have brought many changes in not just asset optimisation but also building new facilities into the business to give value to the shareholders, the statement said. It produces 474 MW of captive thermal power and 274 MW of wind energy.
HZL CEO Sunil Duggal said the firm was exploring new areas where zinc could add value to consumers.
The company is also looking to set-up a new fertiliser plant with a capacity to manufacture 0.5 MTPA of Di-Ammonium Phosphate in district Udaipur with an estimated investment of Rs.1,350 crore.
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