## Hindustan Zinc's Demerger Proposal Faces Setback
Hindustan Zinc, a Vedanta group company, will continue to engage with the Indian government regarding its proposal to split the company into separate entities, despite the mines ministry's initial rejection of the plan. This information was shared by Hindustan Zinc CEO Arun Misra.
The demerger plan was discussed during the company's board meeting on Friday. Misra explained the situation to the board and assured them of continued engagement with the government to clarify the rationale behind the proposal.
The Indian government, holding a 29.54% stake, is the largest minority shareholder in Hindustan Zinc. Misra acknowledged the government's ongoing disinvestment efforts and their concern that the demerger might hinder those plans.
Hindustan Zinc remains in talks with the mines ministry, attempting to address their concerns. The company believes that separating its silver business could significantly increase its market capitalization, benefiting all stakeholders, including the government.
Hindustan Zinc's earlier announcement regarding the demerger plan aimed to unlock potential value by creating separate entities for its zinc and silver businesses. However, the mines secretary, V L Kantha Rao, expressed reservations, stating that the government was not convinced as a shareholder.
Prior to the proposal, Hindustan Zinc engaged a leading advisory firm to analyze the potential benefits of the demerger. The company's board also decided to conduct a comprehensive review of its corporate structure to explore value-unlocking opportunities.
Hindustan Zinc operates in the zinc, lead, and silver sectors. During the last fiscal year's fourth quarter, the company's consolidated sales were Rs 4,858 crore from the zinc vertical, Rs 1360 crore from the silver vertical, and Rs 961 crore from the lead segment.