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Government seeks resignation of three Balco directors

The government has sought the resignation of three functional directors of Bharat Aluminimum Company (Balco) as part of pre-signing formalities for sale of 51 per cent stake to Sterlite Industries for a total of Rs 5.51 billion even as the privatisation issue is hanging fire in Parliament.

Highly placed government sources said that the process was on for completing the formalities prior to the signing of a formal deal with Sterlite to enable the transfer of management of the PSU to the strategic partner.

"The formalities will be completed in less than a week's time," sources said but declined to comment as to when the formal agreement between government and the new partner would be signed and money would be transacted to the exchequer.

The government's decision earlier this week for selling majority stake in Balco to Sterlite through an open competitive bid route had created a furore both inside and outside the Parliament.

Government has indicated that formal signing of the deal would be done only after the issue was settled in Parliament, where opposition parties have demanded discussion under a censure motion.

When contacted, a top functionary of Balco said that government was in fact withdrawing the functional directors and the process would be completed along with the signing of the deal with the Sterlitie.

The three functional directors to be withdrawn from Balco board are P Majumdar (Finance), K Chhatopadhyay (Plant and Operations) and P C Agarwal (Commercial), sources said.

Other formalities included demating of shares to avoid elaborate paperwork for transferring government holding to the new partner, sources said.

Asked if change of ownership could attract cancellation of mining lease granted to Balco as threatened by the Chattisgarh government, officials said that "ownership pattern could not attract any provision whatsoever for revocation of lease."

Chattisgarh Chief Minister Ajit Jogi had threatened to cancel Balco's mining lease in case the Centre did not reconsider its decision to sell majority stake to Sterlite at a 'throwaway price'.

Government officials said on condition of anonymity that the state government had a say only in case of minor minerals and Balco was leased for extracting bauxite which is a major mineral.

"As per the law the appeal for cancellation of any mining lease lies with the Centre," they said adding that as per Mining Concession Rules - 27 - revocation of mining rights could be done only in case of default in payment of royalty or rent.

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