Hindustan Zinc may put off demerger
Hindustan Zinc Ltd (HZL) could put on hold its restructuring plan to create two separate entities for now after the government, which owns a 29.54% stake in the miner, resisted that bid.
In a letter to the mines ministry this month, HZL said it wouldn't push ahead with any demerger proposal that the government disapproves of and that it would take the Centre on board while adopting such a plan, people aware of the details told ET. «The matter is going to be put off, although the company would take a formal decision in due course,» one of them said.
Anil Agarwal-controlled Vedanta Ltd holds 64.92% in HZL.
HZL's letter came in response to the government's rejection of the company's proposal to create only two separate entities-one for zinc/lead and another for silver-while turning the recycling business into a subsidiary, they said. This is for a second time in just over a year that HZL's proposals have been shot down by the government-the last one was about the miner's acquisition of parent Vedanta's global zinc assets in a $2.98-billion cash deal.
In a meeting on September 29, 2023, HZL's board had asked the company to explore a corporate restructuring to create three separate legal entities for zinc and lead, silver, and recycling business to unlock shareholder value.
In signs of its discomfort with the plan, the Centre wrote to HZL in October 2023, making it clear that as per rules the approval of the government-the most important minority shareholder-would be required for any such business reorganisation,
