"Hindustan Zinc Proposes Two New Units in Revised Demerger Plan, Targets $4 Billion Market Boost"

Hindustan Zinc, a subsidiary of Vedanta, has updated its demerger plan by proposing the creation of two distinct entities: one focused on zinc and lead, and the other dedicated to silver. This new strategy aims to enhance market capitalization by $3-4 billion, according to Arun Misra, CEO of Hindustan Zinc.

Under the revised plan, the zinc and lead operations will be merged into a single unit, while a new subsidiary will handle the recycling segment. The decision to establish a separate silver unit is driven by the expectation that it will significantly boost the company's market value.

Previously, Hindustan Zinc had suggested forming three separate entities—one each for zinc and lead, silver, and recycling—with plans for independent listings. However, this proposal was rejected by the Mines Ministry due to concerns over profitability and potential impacts on disinvestment. The Mines Ministry is Hindustan Zinc's largest minority shareholder, holding a 29.54% stake and having three representatives on Vedanta’s board.

Hindustan Zinc, one of the top global silver producers, is also planning to increase its silver production from 746 tonnes in 2023 to 800 tonnes, with future targets of 1,000 and 2,000 tonnes. The company reported a 10% year-on-year increase in silver revenue, reaching ₹1,427 crore for the quarter ending June 30 (Q1FY25).

Misra emphasized that the restructured plan, which includes a dedicated recycling subsidiary, is expected to add significant value and align with the current high silver prices. He stated that while there are no new proposals, the revised plan aims to maximize shareholder and government benefits, including enhancing the market capitalization by $3-4 billion.

HBL