Arun Misra, the chief executive officer of Hindustan Zinc Ltd, said the company has strong justifications for its intended acquisition of parent Vedanta Ltd's global zinc assets and that he will soon talk with government officials to address their opposition to the deal. The HZL board's decision to purchase these properties in January allegedly violated the rights of minority shareholders, according to the Union Mines Ministry. HZL is owned 64.9% by Vedanta and 29.5% by the Indian government.
How strategic is the content? The goal of the transaction is clear and unquestionable. The mechanism itself can be the issue. Hence, the method is what we are discussing, and we will see the mechanism "During an interview, Misra remarked. Misra that he had not yet spoken with government representatives about the matter but would do so shortly. The government wants to sell the remaining portion of its ownership in the company, but we want to grow, so there is a scheduling issue. After I speak with them directly, we need to figure it out "Said he. The proposal requires majority approval from minority shareholders, including the government, whose participation is categorised as a public shareholding, because it is a related-party transaction.
Misra contends that a business like HZL must expand well beyond its current size and capabilities in order to access more mineral resources around the globe. "Global mining firms
have mining properties throughout several continents and nations, if you look at them. HZL has potential because it is a cash-rich corporation with the necessary expertise and executive might. The company's potential must be fully realised. Misra, India consumes 650,000–680,000 tonnes of zinc annually and is projected to increase by 3-4%. Each year, HZL produces roughly 800,000 tonnes. "We will exclusively expand things for export in India. After a certain point, the Southeast Asian export market will also become saturated. I must therefore export to either Europe or the US. Exporting from India to other nations won't be viable or worthwhile, according to Misra.
On January 19, the HZL board received clearance for the purchase of the Zinc International assets from THL Zinc Investments Ltd (Mauritius), a fully-owned Vedanta subsidiary (Mauritius). Hindustan Zinc will acquire full ownership of THL Zinc Limited. According to government sources who have been mentioned, the plan was rejected at the meeting by the government's board representative.
"Because the proposed deal is not in the best interests of minority shareholders, we will oppose it at the AGM/EGM through the ministry of mining. Any plans to sell our shares cannot proceed until that time since it is a related party transaction that requires far more due diligence, a top government source said on the condition of anonymity. Although the move is unlikely to occur in the near future and the disinvestment itself may be delayed for some time, the government intends to sell the remaining interest in HZL in batches of approximately 5–10% to begin with.
Misra asserted that he was unable to remark on board discussions. "The board has final say on every choice. We also decline to comment on what transpired during the board meeting "said he. According to Misra, these big investments would be closely examined, and he would strive to enlist minority owners (the government) as supporters because doing so is essential for the company's expansion. We need to have a presence somewhere to serve the Western world, so I've been shopping at assets in Europe, Latin America, and South Africa.
Any investment decision, including these ones, will always be subject to close examination from the same perspective. There is no sense in limiting HZL to its current capabilities, in my opinion as CEO "explained Misra. According to a 19 January analysis by JM Financial Institutional Securities titled "Much needed expansion optionality, albeit at pricey values," the company would ask shareholders for approval in February, and further permissions are anticipated to be granted within 18 months."
