Hindustan Zinc plans separate entities for its commodities to unlock 'potential value'; shares zoom

Hindustan Zinc Ltd (HZL) on Friday said it plans to create separate entities for its zinc, lead, silver and recycling business to unlock "potential value" and will appoint external advisors for "comprehensive review" of its corporate structure.

Parent Vedanta Ltd is also planning to separate its commodities businesses into four companies to get better valuations.

Vedanta Chairman Anil Agarwal last month said the company will consider separately listing all or some of its businesses.

HZL's Board of Directors have authorised a committee of directors to evaluate and recommend options and alternatives to them. Shares of Hindustan Zinc surged as much as 5.5% after the announcement and closed Friday trading 3% higher at Rs 308.25 apiece.

In a stock exchange filing, HZL listed the strategic objectives outlined by the Board of Directors for undertaking such an exercise:

• Unlocking value for all stakeholders
• Creation of businesses which are positioned to better capitalize on their distinct market positions,
deliver long-term growth
• Distinct investment profiles to attract deeper and broader investor bases
• Accelerate towards sustainability goals focused on waste to wealth, emissions reduction and strong
ESG practices
• Appropriate capital structure and capital allocation policies based on business specific dynamics
• Sharpen focus on core competencies and appropriate realignment of the Company’s resources

Vedanta Resources, the UK-based parent of Vedanta Ltd, has been struggling to raise funds due to rating downgrades and concerns about meeting its debt obligations.

Agarwal sought to trim the group's debt by getting Hindustan Zinc, a unit of Vedanta Ltd, to buy some of the parent group's zinc assets in a $2.98 billion deal. However, the Central government, which owns nearly 30% stake in Hindustan Zinc, opposed the move.

The Indian government is the largest minority shareholder in Hindustan Zinc with a 29.54% stake, while Vedanta owns 64.9%.

With inputs from Reuters