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Hindustan Zinc’s business restructuring plan to create at least two separate business entities across zinc, lead and silver verticals is yet to get clearance from the Centre, particularly government-nominated directors on the board of the Vedanta-owned company, said sources.
The Mines Ministry, which is a minority shareholder, had specifically written to the company, pointing out that any restructuring of business operations would require their clearance.
According to Arun Misra, CEO and Wholetime Director, Hindustan Zinc, necessary clearances are expected to be in place before the next board meeting scheduled in April.
“We are working with the Mines Ministry....in all likelihood these clearances should be in place before the next board meeting scheduled in April,” he told businessline.
The board currently has nine members with Priya Agarwal Hebbar, Anil Agarwal’s daughter, being the Chairperson. Three of the board members are government nominees.
The Anil Agarwal-owned Vedanta has a majority 64.92 per cent stake in the company, while the Centre, through the Mines Ministry, holds 29.54 per cent. The remaining 5.54 per cent is public shareholding.
The government nominees include Nirupama Kotru, a director since July 26, 2021, an IRS officer and currently Joint Secretary and Financial Advisor with Ministry of Coal and Ministry of Mines; Veena Kumari Dermal (from July 29, 2021), a Joint Secretary in Mines Ministry; and Farida M Naik (from March 2017), also a Joint Secretary in the Ministry.
In a September 29 meeting, the Hindustan Zinc board asked the company to explore creating separate legal entities across its existing verticals to unlock shareholder value. The board asked a committee of directors to evaluate the suggestions and recommend options and alternatives.
Restructuring plans
Misra said restructuring will see two separate businesses being created — first, zinc and lead with recycling being a part of this entity — the second entity will concentrate on silver-making. Over the coming years, recycling will be carved out as a separate business.
According to him, restructuring will “not alter” the position of the owners and other shareholders of the company; rather, it will unlock value and lead to capital appreciation.
“In fact, it will bring-in more investor focus for each of the separate businesses,” said Misra, adding that restructuring is seen as a “risk-free decision” with revenue shares, dividend outgo and others remaining the same.
Previously, the Hindustan Zinc board had a run-in with the Centre, with the latter objecting to the acquisition of Vedanta’s overseas (zinc) mines. The $3-billion all-cash deal was objected to by the Ministry and the proposal subsequently fell through.
Q3 results
Hindustan Zinc reported a standalone net profit of ₹2,038 crore, down 6 per cent y-o-y for the quarter-ending December 31, 2023. Net profit in the corresponding quarter was ₹2,157 crore.
On a sequential basis, the net profit rose 17 per cent from ₹1,737 crore. The firm posted a revenue from operations of ₹7,310 crore for Q3 FY24, lower by 7 per cent from ₹7,866 crore y-o-y.
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