Indian Government Rejects Hindustan Zinc's Split Proposal

22 Mar 2024 , 12:40 PM

India has declined a proposal put forth by Hindustan Zinc, a mining company, to divide the company into separate units, according to multiple reports.

Despite being the largest minority shareholder in Hindustan Zinc with a stake of 29.54%, the Indian government was not consulted by the company regarding its decision to split into different entities for its zinc, lead, silver, and recycling operations. The source, who requested anonymity, revealed that the government does not support the proposal as it is unlikely to generate value for shareholders.

While Hindustan Zinc argued that the plan would unlock the company’s potential value, the government official expressed skepticism about its effectiveness.

The Ministry of Mines, which oversees Hindustan Zinc, has conveyed its objection to the company regarding the proposed split.

This development follows the government’s opposition in March to another proposal by Hindustan Zinc to acquire two Vedanta entities. The government had communicated its objection to the market regulator, leading to the abandonment of the plan.

Vedanta currently holds a 64.9% stake in Hindustan Zinc.