Billionaire Agarwal May Increase Hindustan Zinc Stake

Nov. 27 (Bloomberg) -- Indian billionaire Anil Agarwal's London-based resources group may raise its stake in Hindustan Zinc Ltd. to strengthen control of the South Asian nation's largest producer of the metal.

Agarwal's Sterlite Industries (India) Ltd. is in talks to buy the government's 29 percent holding, Vedanta Resources Plc spokesman Dhanpal Jhaveri said. Sterlite, a subsidiary of Vedanta, owns 65 percent and has an option to buy the stake.

Vedanta's interest extends a record year for takeovers and investments in commodities companies, led by BHP Billiton Ltd.'s proposed $128 billion takeover of Rio Tinto Group. Zinc is the world's worst-performing metal this year, triggering a 25 percent drop in Hindustan Zinc's share price.

``The company may not have to pay a huge premium as zinc prices have fallen sharply in the recent months,'' said Sanjay Makhija, vice president at Mumbai-based Fortune Financial Services Ltd. Zinc prices have fallen 43 percent this year on the London Metal Exchange.
Agarwal said he acquired Sesa Goa Ltd, India's largest non- state iron ore exporter, in April, to help build a metal conglomerate like Rio Tinto.

``We have indicated our intention to buy the stake but have yet to decide a date,'' Jhaveri said. Sterlite may buy the Hindustan Zinc stake by December, CNBC-TV18 reported earlier.
Udaipur-based Hindustan Zinc rose 6.6 percent to 737.15 rupees at the 3:30 p.m. close on the Bombay Stock Exchange, the biggest gain in a month.

Sterlite is awaiting details from mediators on purchasing a stake in Bharat Aluminium Co, Jhaveri said. Last month the government set up a panel to study a plan by Sterlite to buy the remaining stake. The panel comprises top bureaucrats.
Sterlite, 68 percent owned by Vedanta, bought 51 percent of the state-owned aluminum maker from the government in 2001.

Bharat Aluminium shares are not publicly traded.