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Hindustan Zinc news: Hindustan Zinc plans corporate rejig, to spin off businesses into separate companies

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Hindustan Zinc’s board has authorised a committee of directors to evaluate the appropriate corporate restructuring exercise to unlock shareholder value, the company said in a stock exchange filing on Friday.

The company is looking to evaluate distinct investment profiles to attract deeper and broader investor bases. The company, which is valued at Rs 1.2 lakh crore ($14.45 billion), wants to broaden its investor bases and sharpen its focus on its core businesses, the company said in a filing with exchanges.

Its parent company Vedanta Ltd is also planning to separate its commodities businesses into four companies to get better valuations. “The idea is to create separate legal entities for undertaking the zinc & lead, silver, and recycling business of the company,” it said.

The objectives include creating businesses which are positioned to better capitalize on their distinct market positions, deliver long-term growth. The company will evaluate appropriate capital structure and capital allocation policies.

To this extent, the company will appoint external advisors who will assist it in evaluation options. The company is looking to sharpen focus on core competencies and appropriate realignment of the company’s resources, it said.

Vedanta Chairman Anil Agarwal last month said the company will consider separately listing all or some of its businesses.Shares of Hindustan Zinc surged as much as 6.6% after the announcement, while parent Vedanta Ltd jumped as much as 7.8%. The benchmark indices were up roughly 0.95 per cent.Vedanta Resources, the UK-based parent of Vedanta Ltd, has been struggling to raise funds due to rating downgrades and concerns about meeting its debt obligations.

Agarwal sought to trim the group’s debt by getting Hindustan Zinc, a unit of Vedanta Ltd, to buy some of the parent group’s zinc assets in a $2.98 billion deal. However, the Indian government, which owns nearly 30% stake in Hindustan Zinc, opposed the move.

The Indian government is the largest minority shareholder in Hindustan Zinc with a 29.54% stake, while Vedanta owns 64.9%.

(With inputs from Reuters)

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