The Government may initiate a roadshow for divesting its residual stake in Hindustan Zinc Limited (HZL) as early as December end. As on date, Vedanta is the owner of the erstwhile Central Public Sector Undertaking.
Presently, the Government owns 29.53 per cent in HZL. And the proposal is to disinvest the entire residual shareholding through SEBI-approved methods in the open market in tranches. It is yet to be finalise what will be the size of each tranche. However, going by the last closing price of ₹281 on BSE, the Government could get over ₹35000 crore, if entire stake is sold in one go. This is over 53 per cent of disinvestment target of ₹65000 crore for FY23.
Sources confirmed businessline that preparation for the roadshow is on. Government officials and company officials met recently. Accordingly, the company is working on business plans, which will be presented before potential investors during roadshows that will start after the festive season. “Hopefully, sometime by December-end, the roadshows should begin,” a source said when asked specifically about dates. The Government has already appointed five merchant bankers for the disinvestment, which include ICICI Securities, Axis Capital, Citigroup Global Markets, HDFC Bank, and IIFL Securities.
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HZL was a CPSE under the administrative control of Ministry of Mines and was privatized in the year 2002. The Government divested 26 per cent of its equity holding in HZL along with the transfer of control to strategic partners namely, Sterlite Opportunities and Ventures Ltd. Later, the Government transferred another 18.92 per cent to Sterlite, which is now known as Vedanta. However, further sale process was affected due to litigations.
First, the matter reached the Supreme Court (SC), which ruled in selling the stake, still there were some issues. As per terms of the shareholding agreement, the Strategic Partner (SP) i.e., Sterlite was entitled to a second Call Option, which was exercised in July, 2009. The Centre repudiated the Call Option on August 24, 2009 based on the opinion of Attorney General (AG). This triggered a dispute and the SP invoked a dispute resolution mechanism and went into arbitration. Later, in line with the decision of SC, the SP withdrew the application and paved the way for residual stake sell.
HZL has been a listed company since its privatization in 2002 and that will help in finding its value in the open market conveniently. At the same time, going by the balance sheet of the company, sources are bullish on the prospect of residual stake sale. “There is a fair bit of interest from the market on participation. In fact, there is a lot of interest on the stake sale,” one source said.
The latest financial results show Hindustan Zinc reported a consolidated net profitof ₹2,680 crore during Q2 FY23, which is 33 per cent higher as compared to ₹2,017 crore in the corresponding quarter of the previous fiscal.