 "Hindustan Zinc plans to create separate entities for its commodities")
By Swansy Afonso
Billionaire Anil Agarwal is exploring an overhaul of his lucrative Indian zinc unit that could split out its three core businesses, as part of the wider Vedanta group’s efforts to reduce a multibillion dollar debt load.
Hindustan Zinc Ltd. said in a statement that it could create separate legal entities for its zinc & lead, silver, and recycling businesses to help capitalize on “distinct market positions” and attract investors. A committee of directors will evaluate the options and advise the board, along with external advisers.
Shares of Vedanta Ltd., which controls the zinc business, jumped as much as 7.9 per cent in Mumbai after the news, while Hindustan Zinc climbed as much as 6.6 per cent.
Bloomberg News reported earlier this week that Agarwal’s Vedanta Ltd. was preparing a broad overhaul, with businesses including aluminum, oil and gas, iron ore and steel to be separately listed.
As separate entities, the silver and recycling businesses may fetch better market valuations and as such it could be a win-win for all the stakeholders,” said independent analyst Prashanth Kumar Kota, who has followed the industry for 15 years. “It may also pave the way in future to have all the zinc assets under one umbrella, including Vedanta’s international assets.”
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Efforts to simplify a complex financial structure and to reduce a deep conglomerate discount have been floated by the group in the past, including in a video posted in August, but have not previously come to fruition. A heavy debt load has increased the urgency of those plans, though. Vedanta Resources Ltd., the parent of Vedanta Ltd., has $2 billion of bond repayments due in 2024 and another $1.2 billion in 2025.