Vedanta-owned Hindustan Zinc has come up with re-worked demerger plans. It will now look to have two companies — one for zinc and lead and the second for silver — against the previous plans to have three demerged entities.
The company top brass is again engaging with the government to bring the Ministry of Mines— the majority of the minority shareholder — on board with the now modified demerger proposals, Arun Misra, CEO and MD, Hindustan Zinc, told businessline.
While Anil Agarwal-owned Vedanta has a 64.92 per cent majority-stake in Hindustan Zinc, the Ministry holds around 29.54 per cent. The proposal previously rejected included creating three separate legal entities — one for zinc and lead, another for silver, and ultimately a third for recycling business — to unlock shareholder value. The objections came on the grounds that the “timing of the demerger was not appropriate”. It was also pointed out that creation of multiple entities will lead to confusion in the mind of the investor at the time of disinvestment.
Hindustan Zinc, the third largest producer of silver globally, and amongst the top zinc producers, is on the Centre’s disinvestment radar.
“We are re-engaging with the Centre, as we believe that the demerger will be beneficial. There is no new proposal. But we re-worked the existing one. There will be two separate companies now, zinc and lead, and silver,” Misra said.
Better Market Cap
According to him, zinc prices are witnessing a ‘good rally’ while metal stocks are up. Demand for silver continues to be strong. Under such a circumstance, the company expected demerger to add another $3-4 billion to its market-cap.
“Our market capitalisation is now at $20 billion. And, had the demerger been cleared, the combined market cap across the zinc and silver entities would now be somewhere be in $24 billion range,” Misra said.
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“The apprehensions around the OFS or investor interest have been raised by the Ministry, but considering the rally in metal stocks now, it could have been a good time for push for disinvestment too,” he added.
A recent road-show on disinvestment was carried out in Mumbai.
Ministry approval, a must
“Either way, the demerger or any proposal surrounding Hindustan Zinc needs to take place keeping the Mines Ministry on-board,” a Ministry official said. The demerger proposal requires approval of shareholders.
The Hindustan Zinc board comprise Priya Agarwal Hebbar – Anil Agarwal’s daughter – who is currently the Chairman; Arun Misra, the CEO; and Navin Agrawal. Other board members include Akhilesh Joshi – former CEO of Hindustan Zinc (2012-15) ; Kannan Ramamirtham and Pallavi Joshi Bakhru.
Government officials, on-board, include bureaucrats from the Ministry of Mines - Veena Kumari Dermal and Farida M Naik; apart from Joint Secretary and Financial Advisor Ministry of Coal and Ministry of Mines, Nirupama Kotru.