HZL to persuade Center on global zinc asset deal

According to the Union Mines Ministry, the HZL board’s decision to acquire these assets in January violates minority shareholder rights. Vedanta holds 64.9% in HZL and the Government of India holds 29.5%.

“What is the strategic content? The objective (of this deal) is undoubted and undeniable. Mechanism may be the problem. So, it is mechanism we are talking about, and we will see mechanism,” Mishra said in an interview. . Mishra said he has not yet discussed the issue with government officials, but will do so soon.” Issue – The government wants to sell its remaining stake in the company, and we want to expand… Direct me Need to find out after talking to them.”

Being a related-party transaction, the proposal requires majority approval from minority shareholders, including the government, whose shareholding is classified as public shareholding.

According to Mishra, a company like HZL cannot afford to limit its size and potential to where it is today; It should go a long way and tap other mineral sources around the world. “If you look at global mining companies, they have mining properties in multiple countries and continents. HZL has potential – it is a cash-rich company and it has the knowledge and executive ability. The potential needs to be unleashed. India’s annual zinc consumption is 650,000-680,000 tonnes and is expected to grow by 3-4%. HZL produces around 800,000 tonnes annually. This will be for export only. And beyond a point, Our export market in South East Asia will also be saturated… So, I will have to export to Europe or America. Being in India and exporting to those countries will not be profitable and worthwhile” said Mishra.

HZL Board on January 19 received approval for the acquisition of Zinc International assets of THL Zinc Ventures Limited (Mauritius), a wholly owned subsidiary of Vedanta, through THL Zinc Limited (Mauritius). THL Zinc Limited will become a wholly owned subsidiary of Hindustan Zinc. Government officials have been quoted as saying that its representative on the board opposed the proposal at the meeting.

“We will oppose the transaction through the Ministry of Mines at the AGM/EGM, and reject the proposal as it is not in the interest of the minority shareholders. This is a related party transaction that requires a lot of due diligence, but till then, no plan to sell our shareholding can move forward, said a top government official on condition of anonymity.

The government plans to sell residual stake in HZL in tranches of around 5-10% to begin with, but this move is unlikely to materialize in the near term, and disinvestment itself may hang in the balance for some time. .

Mishra said he could not comment on the board’s discussions. “Every decision has board approval. And we don’t comment on what happened at the board meeting. “I am looking for properties in Europe, Latin America and South Africa, and we need a foothold somewhere to cater to the western world. These decisions or any other decision to invest will always come under equal scrutiny Angle. As a CEO, I believe that HZL should…there is no point in limiting ourselves to current capabilities,” Mishra said.

A January 19 report by JM Financial Institutional Securities titled ‘Much-needed growth alternative, albeit at expensive valuation’, said: “The company will seek shareholder approval in February while other approvals are expected within 18 months.”