HZL Decides Not to Pursue Acquisition of Vedanta’s Zinc Business


Hindustan Zinc Ltd (HZL), the government-owned mining firm, is unlikely to act on the proposal to buy its parent company, Vedanta’s global zinc business in a $2.98 billion cash deal due to strong opposition from the government. This decision was taken by those aware of the matter and was reported by ET. If a decision to pursue this plan is not taken by their shareholders by the next board meeting on April 21, the proposal will lapse.

The government has a 29.54% stake in HZL, and per the regulations related-party transactions need a majority approval from minority shareholders. This deal was supposed to free up Vedanta Resources and reduce its debt burden. However, it led to a decrease in the stock price and caused the government to defer a sale of its stake in HZL.

The government then proceeded to write a letter to the Securities and Exchange Board of India (SEBI) to express its opposition to the HZL’s board proposal. On the day of the meeting, HZL closed at Rs 297.95 on the BSE, up 1.6%. The share price has been steadily declining compared to a 3% fall in the BSE Sensex.

This whole affair has caused S&P Global ratings to express concern about Vedanta Resources’ credit ratings. It had mentioned that Cedanta would need to raise around $2 billion and sell its overseas assets to keep their ratings good. The company declared a Rs 26 per share dividend, entailing a Rs 10,985.83 crore cash outgo. S&P has mentioned that the company needs to secure additional funds worth around $3 billion for liquidity until March 2024.

Vedanta is one of the largest diversified natural resources companies in the world. It is a part of the Vedanta Group and focuses on producing copper, zinc, lead, aluminum, and iron ore, primarily in India and Africa. The Vedanta Group also operates in oil and gas and energy which is corralled under its diversified conglomerate India.

Anil Agarwal is the chairperson of Vedanta Resources. He founded the company in 2003 and, in 2020, was listed as one of the world’s billionaires by Forbes. He was also on the board of the Commonwealth Development Corporation and created a network of charitable organizations named Volans through his philanthropic work. He has also received the Padma Bhushan (India’s third highest civilian award) for his work in the areas of Trade, Commerce, and Industry for the year 2016.