‘Withdrawal of Allied Deals from HZL race will not affect its divestment’

Ravi Kapoor

New Delhi, Aug 26: THE government has said that withdrawal of Allied Deals from the race for takeover of Hindustan Zinc Ltd (HZL) will not affect privatisation of the zinc major.

Speaking to The Financial Express, disinvestment minister Pradip Baijal said, “I have not been officially informed about Allied Deals’ withdrawal. However, even if it is true, this is not going to affect HZL divestment.”

The privatisation process of HZL is going on as per the department of disinvestment’s (DoD) schedule, he said.

The government expects to complete the HZL sale by the end of this calendar year, “unless some major roadblock comes in the way.”

The bidders for the zinc major have already completed the process of due diligence and valuation is under way, Mr Baijal said.

The DoD would like to finalise the shareholders’ agreement and the share purchase agreement as soon as possible, but the DoD secretary refused to disclose any time frame for the finalisation of these agreements. The agreements would be taken to the Cabinet Committee on Disinvestment for clearance.

Financial bids for HZL would be called only after the finalisation of shareholders’ and share purchase agreements, Mr Baijal said.

Last week, Allied Deals, promoted by non-resident Indian Viren Rastogi, pulled out of the race for the profit-making HZL. Allied Deals informed the global advisers for HZL privatisation, BNP Paribas, about their decision and alleged that the government was not serious with regard to handing over adequate powers to the strategic partner.

This, Allied Deals charged, would hamper the strategic partner’s “commercial and strategic decision-making” after the privatisation.

According to Allied Deals, “Given the fact that the government is only disinvesting a minority stake, we have found several of the clauses incompatible with standard market practice.” The NRI-promoted company also found the government’s privatisation guidelines too difficult to comply with.

The government is selling 26 per cent of its equity in HZL. This will bring down its shares in the zinc major from 75.92 per cent to 48.92 per cent. The rest of the equity in the company is held by the public and the employees.

Currently, the bidders for HZL include Sterlite Industries, the AV Birla group and Binani Zinc. Global majors Glencore and Metdist are also in the fray. Korea Zinc has tied up with Binani for the take-over of HZL.