Mining conglomerate Vedanta Group-owned Hindustan Zinc's demerger process will kickstart once the central government, which owns roughly 29 percent in the mining company, completes its long pending divestment process, chief executive officer Arun Misra told Moneycontrol in an interview on April 19.
Moneycontrol reported last year that the government was weighing offloading only 3.5 percent of its 29.5 percent stake in Hindustan Zinc Limited via the offer for sale (OFS) route in the initial tranche. However, Misra said that the government is apprehensive that if the restructuring takes place now, it may hamper the process of divestment.
"Restructuring and OFS both can happen simultaneously. One doesn't stop the another. Current share prices are one of the best with HZL being traded at over 400, best time for government to divest and get maximum value for their investment. Suppose, if the divestment is done next quarter, restructuring will follow," he added.
Shares of the company fell 4.62 percent at Rs 292.3 in the month of March. The company announced on April 18 that it has now become the 3rd largest silver producer globally as per the World Silver Survey 2024 conducted by The Silver Institute, USA.
Last month, Reuters reported that the government has rejected the miner's proposal to split into different units as it is not convinced such a move would boost shareholder value.
"Now the market is completely ready for divestment and the government should completed its divestment now. We expect the government to complete the divestment process because we have been waiting for such a long time," Misra said but did not mention any timeline for the same.
The Union Cabinet had given approval in 2022 to sell the government’s entire stake. Till 26 percent, some rights remain with the shareholder; anything below that, would mean foregoing several rights. So the government may offload only 3.5 percent of its stake in the company.
HZL is an Indian integrated mining and resources producer of zinc, lead, silver and cadmium. It is a subsidiary of Vedanta Limited. Vedanta holds a 64.92 percent stake in Hindustan Zinc.
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