Hindustan Zinc: Offer-for-sale announcement from Centre on the cards, says CEO Arun Misra – Business Today

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Hindustan Zinc Limited (HZL) Chief Executive Officer Arun Misra on Friday said an offer-for-sale announcement for the company will be announced by the government in the next three months.

The company proposed a corporate restructuring in September 2023, aiming to establish three distinct verticles for zinc and lead, silver, and recycling operations. This strategic move aligns with our commitment to optimising operational efficiency and enhancing focus on key business segments.

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On Friday, Misra said: “We are hopeful the government will go ahead with the proposed OFS in the current quarter.” When asked what happens to the proposed demerger in the absence of the OFS, he said, “It will be a missed opportunity as metal prices currently present a golden opportunity.”

An Offer for Sale is a mechanism where promoters in a listed company sell their shares directly to the public in a transparent manner.

Hindustan, owned by Vedanta, is the country’s largest producer of zinc. Vedanta has a 64.92% stake in it, while the government has a 29.54% stake. Therefore, restructuring would require government’s go ahead.

The government rejected the miner’s proposal to split into different units, as it doubted it would enhance shareholder value. According to Reuters, this decision was made last month.

“The market is completely ready for divestment and the government should completed its divestment now. We expect the government to complete the divestment process because we have been waiting for such a long time,” Misra said .

The Union Cabinet approved selling the government’s entire stake in 2022. Shareholders retain rights up to 26%; below that, they lose several rights. The government plans to sell only 3.5% of its stake in the company.

Hindustan Zinc (HZL) on Friday reported a 21 per cent decline in its profit after tax (PAT) for the March 2024 quarter (Q4FY24). Lower zinc prices, as traded on the London Metal Exchange (LME), impacted profits for the firm.

For the quarter under review, HZL reported a PAT of Rs 2,038 crore, down from Rs 2,583 crore reported a year ago. Net sales was down 12 per cent to Rs 7,285 crore from the corresponding period in the last financial year.

In the FY2025, the company aims to invest $270-325 million in capital expenditure. Company executives mentioned that part of this funding might come from debt to leverage favorable financing costs. HZL anticipates increased production of both mined metal and refined metal in FY25 compared to FY24 due to project ramp-ups and improved capacity utilisation.

The company revealed on April 18 that it is now ranked as the third largest silver producer worldwide according to the 2024 World Silver Survey conducted by The Silver Institute in the United States.

Disclaimer: Business Today provides stock market news for informational purposes only and should not be construed as investment advice. Readers are encouraged to consult with a qualified financial advisor before making any investment decisions.

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