Hindustan Zinc spurts on news of Rs20,000 crore stake sale plan

Shares of Hindustan Zinc Ltd opened higher at Rs175 and touched a record high of Rs184 on the BSE on reports that the government is offloading its residual stake in the company.

A combined 2.72 million shares changed hands on the counter till 1035 hours on BSE and NSE. The stock, however, ended at Rs165.90, still showing a gain of Rs3.15 or 1.94 per cent.

Reports said the government is planning to sell its residual stake in Hindustan Zinc  for an estimated Rs20,000 crore through an offer for sale (OFS), and is in final stages of discussion with market regulator Securities and Exchange Board of India  for changes in the OFS norms.

The OFS mechanism is currently open to promoters of listed companies for diluting or offloading holdings. The top 100 companies by market capitalisation have been availing of this route to meet the minimum public shareholding norm.

The government holds 29.54 per cent stake in HZL and has already initiated the process of fresh valuation of the erstwhile PSU to push through the long pending stake sale in the current financial year.

"In HZL we are looking at OFS. Talks are on with SEBI for a change in OFS guidelines to allow non-promoters to dilute stake," a senior government official said.

The finance ministry is in discussion with SEBI to change the norms, which will allow non-promoters as well to offload their stake through the OFS route, the official added. This will pave the way for the government to exit HZL.

The cabinet had, in January, cleared the sale of the residual stake in HZL.

The department of disinvestment has already invited proposals from merchant bankers or chartered accountant firms with experience in handling valuation of companies.

HZL had paid-up capital of Rs845 crore as of 31 March 2013.

The London-listed Vedanta holds 64.92 per cent stake in HZL. The Vedanta board is now empowered to make an offer of up to Rs 21,636.56 crore for the government's stake after its shareholders approved increasing the offer to acquire the government's remaining stake in HZL, in October last.