HZL’s board in a September 29 meeting 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.
The government has a 29.54% stake in HZL that is 64.92% owned by Anil Agarwal-controlled Vedanta Ltd.
The board asked a committee of directors to evaluate the suggestion and recommend options and alternatives. “The government wrote the letter last month, through its nominee (from mines ministry) on HZL board, after the September board meet,” said the person.
“The company has been clearly told that any move to create different entities will require government approval,” the person said.
Importantly, government nominees weren’t present in the HZL board meeting where it took the decision, the person pointed out.
HZL didn’t inform the agenda of the meeting to the government well in advance for a careful consideration of the need for any such demerger, he said. Responding to the Centre’s letter, the company said it is only exploring a corporate restructuring proposal and that it will seek the government’s clearance before any such move, the person added.
An HZL spokesperson declined to respond to ET’s queries.
Interestingly, Vedanta is also planning a broad overhaul that will create separately listed entities for aluminium, oil and gas, iron ore and steel. HZL shares on the BSE shed 0.3% on Thursday to ₹303.4 a piece, when the Sensex rose 0.5%. The share is trading way below its 52-week high of ₹383. Earlier this year, HZL was forced to scrap a proposal to buy Vedanta’s international zinc assets in a $2.98 billion cash deal after the government opposed the acquisition.