The Finance Ministry has recommended auction of government's minority holding in erstwhile state-run firm Hindustan Zinc saying Parliament approval on selling its residual stake is not needed as the company can no more be classified as a PSU, sources said.
New Delhi: The Finance Ministry has recommended auction of government's minority holding in erstwhile state-run firm Hindustan Zinc saying Parliament approval on selling its residual stake is not needed as the company can no more be classified as a PSU, sources said.
The views of the Finance Ministry are in contrast with that of the Mines Ministry which had stated in the draft Cabinet note that Parliament approval is required in divesting government's residual stake in Hindustan Zinc as the company was incorporated through a statute.
The draft Cabinet Note was circulated earlier this month.
"The Finance Ministry in its opinion on the draft Cabinet note has said that Hindustan Zinc is not a public sector company anymore. The majority stake in the company was divested long back and hence despite being incorporated through an Act, the company cannot be categorised as a PSU now," an official source said.
He said the Finance Ministry has therefore said approval of Parliament for stake sale is not required. It has also recommended adopting the auction route for selling residual stake in Hindustan Zinc, the source said, adding that "it would be the most transparent methodology".
Hindustan Zinc was incorporated after the erstwhile Metal Corporation of India Ltd was nationalised through the Metal Corporation (Nationalisation and Miscellaneous Provisions) Act, 1976.
During 2002-2003, government had divested about 64.92 percent stake in Hindustan Zinc stake to Vedanta group. The government holds 29.5 percent stake.
Citing the Act and a 2003 order of the Supreme Court on HPCL-BPCL disinvestment, the Mines Ministry had said in its Cabinet note that Parliament approval is required for selling remaining stake of Hindustan Zinc.
According to the Mines Ministry, the apex court order had stayed proposed disinvestment of the two oil PSUs in 2003, saying the two companies were formed through a statute and required Parliament approval. The same is applicable to Hindustan Zinc also, even though it was divested before the court order.
The Mines Ministry has not given any particular time-line for stake sale in the domestic zinc makers saying feedback from some other ministries are still awaited.
The Mines Ministry, the parent ministry of Hindustan Zinc, had also proposed to bring a Bill to amend the Act within 3 months after the Cabinet approval.
The Finance Ministry has been aiming to raise Rs 15,000 crore this fiscal by divesting residual government stakes in some companies, including Hindustan Zinc. This is part of Rs 55,000 crore target through disinvesting shares in PSUs in the current fiscal.