Government rejects Hindustan Zinc’s plan to split company


New Delhi: Central Government, Hindustan ZincThe largest minority shareholder has rejected the miner's proposal. split in separate units That's because he's not sure such a move would enhance shareholder value, a government official said Friday.
“We are not convinced by whatever report is before us,” said VL Kantha Rao, secretary of the mines ministry, which manages Hindustan Zinc.
Last September, the company said it planned to create separate units for its zinc, lead, silver and recycling businesses to uncover prospects shareholders price.
But another government official told Reuters on condition of anonymity that it did not consult the government, which holds a 29.54% stake in the company, on the planned move.
The official also said the government does not agree with Hindustan Zinc's rationale for the split and the mines ministry has lodged its objection with the company.
Hindustan Zinc CEO Arun Mishra told Reuters the company had received the letter from the ministry, which would be discussed with the board along with management's comments.
However, based on a consultant's report, Mishra said he believed spinning off the company to create a separate silver and zinc unit would help improve its market capitalization.
A year ago, the government had opposed Hindustan Zinc's proposal to buy two units of Vedanta – which holds a 64.9% stake in Hindustan Zinc – and forced the company to abandon the plan.

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