hzl: Govt’s HZL stake sale only after clarity on proposed global asset transfer; unlikely this fiscal

The sale of the remaining 29.54 per cent government stake in Hindustan Zinc is likely only after a finality reached on Vedanta’s planned sale of global zinc assets to the erstwhile PSU, according to an official. With the government’s offer for sale plans in HZL in limbo, it is unlikely that the disinvestment would happen by March, and hence it could miss its revised asset sale target of Rs 50,000 crore for the current fiscal.

So far in the current fiscal, the government has mopped up Rs 31,107 crore from stake sales in CPSEs. It was planning to sell its 29.54 per cent in HZL to meet the revised target.

The stake sale in HZL is likely only after clarity is received on whether the overseas zinc asset transfer is happening and whether minority stakeholder concerns have been addressed, the official said.

“Investors are asking us whether the foreign asset transfer is happening. We want to sell stake only when there is clarity on the issue. We don’t want to rush into selling the stake,” the official added.

Since it is a related party transaction, it should be a cashless asset transfer, the officer said.

Last month, the government said it will explore all legal options in the matters related to the plans of Anil Agarwal-promoted Vedanta to sell its global zinc assets to HZL.

The mines ministry has urged Vedanta to explore other cashless methods of acquisition of these assets. Valuation of the assets is among several concerns flagged by the government.

Vedanta had in January said it will sell its global zinc assets to HZL for cash consideration of USD 2,981 million. Vedanta holds a 64.92 per cent equity share of HZL. Hindustan Zinc is an integrated producer of zinc, lead and silver.

The government had in 2002 sold its 26 per cent shareholding along with management control to Sterlite, which is part of Agarwal’s Vedanta group, for Rs 40.5 per share — thereby giving Vedanta group management control in HZL.

Vedanta group later bought a 20 per cent stake from the market and another 18.92 per cent from the government in November 2003, raising its ownership in HZL to 64.92 per cent.

The Cabinet Committee on Economic Affairs (CCEA) last year approved the sale of 124.79 crore shares or 29.54 per cent stake government holds in the zinc producer.

At the current price of Rs 304.65 a share, The government’s 29.54 per cent stake is valued at about Rs 37,000 crore.

The official said since public float is only about 5 per cent, it would not be feasible for big investors who put in lump-sum funds in the company as share availability in the market is limited.

The government currently holds a 29.54 per cent stake in HZL, while a 5.54 per cent stake is with public shareholders. Mining mogul Agarwal’s Vedanta Ltd is the promoter, holding a 64.92 per cent stake in HZL.