In a bid to acquire majority stake in Hindustan Zinc following its privatisation last year, Sterlite Industries has approached the government seeking to buy additional equity in the company.

The deal is expected to fetch the government around Rs 300 crore (Rs 3 billion), sources said.

Anil Aggarwal promoted Sterlite Group, which assumed management control over the zinc major last April, has told the government that it was interested in acquiring additional 18 per cent stake from the latter, sources associated with the divestment process said in New Delhi.

If the deal goes through Sterlite Industries would increase its holding to well over 60 per cent.

The group acquired 26 per cent from the government, while an open offer following from the deal resulted in the company also buying an additional 20 per cent stake, taking its tally to 46 per cent.

Under the terms of the share holders agreement, the joint venture partner has the right to exercise the call option after the expiry of 18 month period from the close of the deal. The option would enable the partner to hike its stake in the company.

The government has sold its 26 per cent stake to Sterlite for a consideration of Rs 445 crore (Rs 4.45 billion) along with management control, and it currently holds 48 per cent equity.

HZL deal followed the controversial decision by the government to sell 51 per cent stake in aluminium major Balco to the same group in 2001.

As per the data available with the Bombay Stock Exchange on April 2003, mutual funds and banks together hold a marginal 1.46 per cent while the Indian public own 3.19 per cent with the rest being spilt among private corporate bodies and non-resident Indians.

HZL is the largest zinc producer in the country with an annual capacity of 170,000 MT spread across three facilities mostly located in Rajasthan.

Debari and Chanderiya smelters account for close to 95,000 MT.

It also runs two lead smelters in Tundoo (Bihar) and Chanderiya with a total capacity of 43,000 MT.

HZL sources its zinc ore requirements from three mines including the world famous Rampur Agucha Mine, considered to be the fifth best mine in the world.

India's domestic zinc industry is controlled by two groups with Binani Industries being the only other player, while the rest of country's requirement is sourced from abroad.