In a strategic move aimed at optimizing its valuable assets and alleviating the Vedanta group’s substantial debt burden, billionaire Anil Agarwal’s Hindustan Zinc is contemplating a significant transformation. This transformation could see the establishment of distinct legal entities for its core businesses: zinc & lead, silver, recycling, and separate entities for commodities. The objective is to leverage their “distinct market positions” and attract potential investors. A committee of directors, in conjunction with external advisors, will evaluate these options.
Following this news, Vedanta Ltd., the entity overseeing the zinc business, witnessed a remarkable surge of up to 7.9% in Mumbai, while Hindustan Zinc experienced a substantial increase of up to 6.6%.
This development aligns with the broader restructuring strategy at Vedanta Ltd., as reported by Bloomberg News earlier this week. This overhaul aims to create separate listings for various businesses within the group, including aluminum, oil and gas, iron ore, and steel.
Independent analyst Prashanth Kumar Kota, who has closely tracked the industry for 15 years, sees promising potential in this move. He suggests that by operating as separate entities, the silver and recycling businesses may command higher market valuations. This strategic decision could prove to be mutually beneficial for all stakeholders and may pave the way for consolidating all zinc assets under a single umbrella, encompassing Vedanta’s international holdings.
While discussions about streamlining the intricate financial structure and reducing the conglomerate discount have surfaced in the past, they have not materialized until now. However, the urgency has escalated due to the substantial debt burden facing Vedanta Resources Ltd., the parent company of Vedanta Ltd., with $2 billion in bond repayments due in 2024 and an additional $1.2 billion in 2025.
About Hindustan Zinc:
Hindustan Zinc Limited is an integrated mining and resource producer based in India, specializing in zinc, lead, silver, and cadmium. This company operates as a subsidiary of Vedanta Limited.
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