According to official sources, the Australian company has started the work on HZL’s environmental due diligence and is expected to submit its report in the first week of February to the ministry of disinvestment. They, however, refused to divulge the name the Australian company.
The environmental due diligence report will be handed over to the bidders in mid-February. The bidders — which includes Binani, the Birlas and the Sterlite group, apart from a few foreign companies — will take that into account while bidding for the public sector giant.
Environmental audit was one of the factors that scuttled the privatisation of HZL last year. The bidders had raised the issue of environmental clearances. When financial bids were called in November last year, only the Sterlite group responded, and that too was below the reserved
The government is offloading 26 per cent of its 75.92 per cent stake in HZL to a strategic partner with an appropriate role in management. BNP-Paribas were appointed as global advisers for the privatisation of HZL.
The government expects HZL will remain attractive for the bidders because it is the only integrated producer of both zinc and lead in the country enjoying 60 per cent of market share. It also have a dominant status both in the mining and in the smelter segment.
In fact, HZL’s dominant status in the market caused concern in official circles if its privatisation would lead to a monopoly situation. The government decided to go ahead with privatisation, saying that what should cause concern was abuse of market dominance, and not market dominance per se.
At any rate, in the post-WTO scenario the possibility of monopolistic practice becomes very restrictive.
What makes HZL a good buy is the fact that its reserves in the Rampura-Agucha mines are among the best in the world in terms of average metal content.
Further, the growth prospects of Hindustan Zinc Limited are quite bright, as demand is increasing.
The government expects the strategic buyer to improve HZL’s performance by reducing cost of production.
The average conversion cost of HZL is higher than the accepted international norm.
The paid-up capital of HZL is Rs 422.53 crore. It earned a profit of Rs 90.42 crore in 1999-2000. Its net worth on March 31, 2000, was Rs 1,044.79 crore.
HZL’s plants are located in Rajasthan, Andhra Pradesh, Bihar and Orissa.