India’s top investigating agency started a probe into the role of billionaire Anil Agarwal and some government officials in the sale of a stake in Hindustan Zinc Ltd., citing irregularities in the divestment process.
A preliminary inquiry has been initiated into Agarwal, who bought a majority stake in the nation’s biggest zinc producer in 2002 through Sterlite Industries (India) Ltd., Central Bureau of Investigation spokeswoman Kanchan Prasad said yesterday in a phone interview. Sterlite was merged with iron ore miner Sesa Goa Ltd., also controlled by Agarwal, in August this year to form Sesa Sterlite Ltd.
Agarwal’s holding company Vedanta Resources Plc has been trying to buy the government’s 29.5 percent holding in Hindustan Zinc, of which Sesa Sterlite owns 64.9 percent. Vedanta, which also owns 51 percent of aluminum producer Bharat Aluminium Co., is seeking to purchase the government’s 49 percent stake. It has shareholder approval to spend as much as $3.48 billion to buy the stakes.
“Since the stake sale by the government, Hindustan Zinc has grown more than fivefold,” the company said in reply to an e-mail seeking comment on the probe. “At the time of disinvestment, the company’s reserves and resources were 143.7 million tons, which have been increased through rigorous exploration to 348 million tons. Since disinvestment, the company has successfully executed four phases of expansion plans with an investment of 120 billion rupees ($1.9 billion).”
Hindustan Zinc dropped 2.2 percent to 132.05 rupees at the close of trade in Mumbai, while Sesa Sterlite fell 2.3 percent to 199 rupees, the lowest since Nov. 22. The benchmark S&P BSE Sensex fell 0.3 percent.
The Central Bureau of Investigation is also probing companies including billionaire Kumar Mangalam Birla-owned Hindalco Industries Ltd., Jindal Steel & Power Ltd. and Tata Steel Ltd. in a separate case related to the allocation of coal blocks. The nation’s auditor in August 2012 said the allocation of coal mines without an auction had cost the government 1.86 trillion rupees.