Sources privy to the discussions said that talks have been held at the highest level in the government and one view was that sale of shares in the market will not only help the government realize better value but also avoid controversy, especially related to pricing.
The share sale has been held up for several years as UPA-1 cited provisions of the Companies Act to deny the share sale.
In both cases, the shareholders’ agreement provided for the acquirer to exercise a call option or gave Agarwal’s outfits the right to buy the shares after a specified period. But UPA-1 decided against selling shares in every company where call options were provided for but has now woken up to selling residual stake as it faces an acute cash crunch.
Coupled with its inability to cut down on wasteful expenditure, it has already missed the fiscal deficit target of 5.1% of GDP and stares at the prospect of a sovereign ratings downgrade, which will put Indian securities in junk grade and hamper investment into the country.
As a result, it is pursuing an aggressive disinvestment programme with a target to mop up Rs 30,000 crore by selling stakes in several public sector companies such as NMDC, Oil India andNTPC through the public offer and auction route.
Sources said an offer for sale or auction of HZL shares was one of the options that was being pursued.
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