Hindustan Zinc divestment gathers speed

Though the department of disinvestment did not disclose the two bidders' names, reliable sources confirmed that Sterlite Industries and the Lord Bagri-promoted Metdist are the only ones that were left in the race. Indo-Gulf Corporation and Binani Industries pulled out of the race on the same day, the sources said.

When the process of divestment began, there were in all nine companies, which had sought to pick up the 26-per cent stake in Hindustan Zinc in the first phase. In the second phase, the successful bidder will have to make an open offer for an additional 20 per cent stake, which would eventually carry its stake to 46 per cent.

Hindustan Zinc is the fifth government company to have been placed on the block. Others before it were Balco, Modern Foods, Hindustan Teleprinters and CMC Ltd. The next step will involve the cabinet committee for disinvestment, which will consider the bids submitted by the two parties. The party, whose bid would be more than the reserve price, undisclosed as yet, would be given the 26-per cent stake and it will also become the strategic partner of the government.

According to the conditions, the strategic partner will also have to set up a greenfield smelter at an estimated cost of Rs 1,250 crore within the next five years. The 1-lakh-tonne smelter will be built in Kapasan, Rajasthan. Hindustan Zinc's four smelters have a combined installed capacity of 1,69,000 tonnes of zinc and 43,000 tonnes of lead, besides a rock phosphate mine. Its mines are located in Rajasthan, Andhra Pradesh and Orissa.

Though the exact reasons are not available, reliable sources say Binani Industries is keen on completing expansion of its own zinc capacity to 1 lakh tonnes from the existing 30,000 tonnes in technical collaboration with Korea Zinc.