Hindustan Zinc, a Vedanta-owned firm, has updated its demerger strategy, proposing the establishment of two distinct entities: one for silver and another for zinc and lead. This revision, which the company has submitted to the Mines Ministry—its largest minority shareholder—aims to streamline operations compared to the initial plan of creating three separate entities.
Under the revised plan, the company will consolidate its zinc and lead operations into one unit, while establishing a separate unit for silver. The recycling operations will be maintained as a subsidiary. According to Arun Misra, CEO of Hindustan Zinc, the separation of the silver unit could potentially enhance the company’s market capitalization by $3-4 billion.
Previously, Hindustan Zinc’s proposal included forming three separate entities: one each for zinc and lead, silver, and recycling, with plans for individual listings. However, this approach was rejected by the Mines Ministry due to concerns over the profitability of the individual units and the implications for disinvestment.
Approval from shareholders, particularly the Mines Ministry—which holds a 29.54% stake in the company—is required for any demerger. The Ministry also has three representatives on Vedanta’s board. Hindustan Zinc is led by Priya Agarwal Hebbar, daughter of Vedanta Chairman Anil Agarwal.
Misra indicated that there have been no new developments on the proposal but noted that the company is revising the existing plan. The firm is also preparing to significantly boost its silver production, aiming to increase output from 746 tonnes in 2023 to 800 tonnes, and eventually to 1,000 and 2,000 tonnes in the future.
The silver segment of Hindustan Zinc reported revenues of ₹1,427 crore for the quarter ending June 30, 2024, reflecting a 10% year-on-year growth. The company believes that separating the recycling unit into a subsidiary will add considerable value, given the current high silver prices.
