Hindustan Zinc's experience offers a lesson in how strategic divestment can create long-term value for the nation, according to Nilesh Shah, managing director of Kotak Mahindra Asset Management Company. Shah argues that selling a government stake in a public sector undertaking (PSU) while retaining a minority holding can generate wealth for future generations rather than amounting to a sale of the country's “family jewels”.
Citing Hindustan Zinc, Shah said the government sold around 45% of its stake in the loss-making company, along with management control, to the Vedanta Group about two decades ago for approximately Rs 769 crore. The government had retained a minority stake of around 29% in the company, which was loss-making at the time of the sale.
