INDIA
BUSINESS WORLD -
MAY 2006
THE MONTH THAT WAS...
STERLITE SENDS NOTICE TO GOVT ON BALCO
SEEKING to acquire the residual 49% stake in Balco, Sterlite Group has sent a legal notice to the government alleging a “breach of shareholders agreement”. The notice follows the payment of Rs 1,098 crore by Sterlite to acquire the remaining stake in the company. Sterlite had earlier bought a majority stake in the erstwhile public sector undertaking for Rs 551 crore in 2001. According to agency reports, the group's director (finance) Tarun Jain has, however, said they would not comment on any developments regarding Balco.
However, there are reservations within the government, with Committee of Secretaries considering the Attorney General's advice to not sell 49% stake in Balco at a price which Sterlite was willing to pay. According to the shareholders' agreement signed when Sterlite bought Balco, the Anil Agarwal-controlled company was given the option to buy the remaining stake by 2004.
As the process could not be completed before 2004 due to procedural delays, the Attorney General advised the government to either renegotiate the value of 49% stake or sell it to public. The Attorney General also said that the government has an option of not selling its stake in Balco at all.
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