International metals major Sterlite Industries has approached the government, seeking to acquire the latter's 49 per cent residual stake in aluminium major Balco.
The move comes as the Anil Aggarwal-promoted group exercised its call option, three years after it first acquired majority stake in Balco in a controversial deal, which even reached the Supreme Court.
Official sources, while confirming that the Sterlite group had intimated the government about the proposal to hike its stake, said the deal was yet to be concluded.
The three-year period, prescribed under the shareholders agreement for exercising the option, ended earlier this year.
Sterlite had acquired 51 per cent stake in Balco for Rs 551 crore (Rs 5.51 billion) from the Centre in one of the first strategic sales pursued by the previous National Democratic Alliance government.
The sources said if the deal goes through, the strategic partner (Sterlite) would have to shell out either the fair value as determined by the valuators or pay 14 per cent compounded interest over the price it had paid the government three years back for the acquisition.
Since the group had moved the Centre around the time of elections, no decision had been taken.
The move also comes as a sequel to Sterlite group blocking NDA government's efforts to sell a portion of the residual equity in Balco through the public offer route.
Sterlite had argued that any move to sell the residual stake, over which it had a call option, would be detrimental to it, as the company had drawn up plans for merging all its metals holdings under one company before listing on the international bourses.
Aggarwal had then floated Vedanta as a group company, which listed on the London Stock Exchange last year.
The Balco deal had generated a lot of controversy in 2001 with opponents of the sale locked into a bitter struggle with the government in the apex court, which ruled that the sale had not violated any norms and the legislature was the appropriate forum to deliberate policy matters which could not be agitated before judiciary.
Following the takeover by Sterlite, the group announced plans to expand the operations by investing some Rs 4,000 crore (Rs 40 billion) for upgrading smelter capacity to 400,000 tonnes from the current 100,000 tonnes.
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