Govt may delay selling its stake in Hindustan Zinc for now: Report

The Centre may postpone its plans to sell its stake in Hindustan Zinc Ltd, which is controlled by mining mogul Anil Agarwal, until there is a turnaround in the industry's fortunes, Reuters reported on Wednesday. The Centre is still hopeful to complete the long-delayed sale this financial year, government sources quoted in the report said.

The government plans to sell its over 29 per cent stake in tranches, starting with the sale of about 5 per cent stake. Vedanta Group holds a 64.9 per cent stake.

Hindustan Zinc's stock price has declined over 16 per cent from the highs touched in January due to a sharp drop in zinc prices and as Vedanta tried to sell two units to the miner.

On Wednesday, shares of Hindustan Zinc were trading at Rs 321 apiece, after rising by 0.35 per cent, at 1.30 PM.  

Earlier, the government had planned to sell about 5 per cent in Hindustan Zinc in FY2023. But the plans got delayed as prices dropped after the miner said it would buy two of Vedanta's zinc subsidiaries.

The government is waiting for the share price to recover, the sources quoted in the report said. The government's residual stake in HZL is close to Rs 41,000 crore at current market prices, according to market estimates.

"Merchant bankers have advised against a sale offer at the moment as institutional investors are presently not keen to invest in the metals sector," the official said. The advice came after road shows were conducted in June.

International zinc prices have corrected 30 per cent in the last six months due to global macroeconomic uncertainties and weak demand recovery in China, rating agency ICRA said last month.

The global consumption growth of aluminium, copper and zinc is expected to remain muted this year, it added.

Last week, the Supreme Court had turned down Vedanta's plea to direct the Centre to divest its 29.54 per cent residual stake in Hindustan Zinc in the open market. The apex court observed that it cannot interfere with a "policy decision". A Bench led by Chief Justice DY Chandrachud, while rejecting Vedanta's application, said the company giving up on its call option was not conditional on the government having agreed to sell its stake in the open market.

The Vedanta Group had argued that its offer to buy at the fair market value was based on the premise that the government would be selling its residual stake in HZL through "Offer For Sale" under the Sebi guidelines or any other agreed mode of dilution through a fair and transparent bidding process, and it was willing to participate in the same like any other eligible bidder.

The SC had on November 18, 2021 allowed the Centre to offload its residual 29.5 per cent stake in HZL in the open market as HZL ceased to remain a government company after the sale of its majority stake in 2002.

Hindustan Zinc has declared an interim dividend of Rs 7 per equity share to its eligible shareholders at a board meeting held on Saturday. The dividend announcement will result in an overall payout of Rs 2,957.72 crore for the company. The record date for the purpose of payment of the interim dividend has been fixed on July 15, 2023.

This is the first dividend payout by the Vedanta subsidiary in fiscal FY2024. This is also the lowest interim dividend announcement that the company has made in the last three years.

Earlier this month, Hindustan Zinc declared an interim dividend of Rs 7 per equity share to its eligible shareholders, which was the first dividend payout by the Vedanta subsidiary in fiscal FY2024. 

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