Government likely to delay Hindustan Zinc share sale: Report
By India Today Business Desk: The government is likely to postpone its plans to sell its stake in Hindustan Zinc until there is a turnaround in the industry’s fortunes, reported Reuters.
Citing government sources, the news agency reported that merchant bankers have advised against proceeding with the sale at the moment, as institutional investors are currently not keen on investing in the metals sector.
The government still aims to complete the long-delayed sale within this financial year.
Hindustan Zinc’s stock price has witnessed a decline of over 16 per cent since January due to a sharp drop in zinc prices and Vedanta’s attempt to sell two units to the miner.
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The government is awaiting a recovery in the share price before proceeding with the sale. It plans to sell its over 29 per cent stake in Hindustan Zinc in tranches, starting with about 5 per cent stake. Vedanta Group currently holds a 64.9 per cent stake in the company.
Global macroeconomic uncertainties and weak demand recovery in China have led to a 30 per cent correction in international zinc prices in the last six months, as highlighted by rating agency ICRA.
This has added to the challenges faced by the industry.
In December, during roadshows, institutional and large investors had expressed reluctance to pick up significant stakes in Hindustan Zinc, further complicating the share sale plans.
Last week, the Supreme Court dismissed Vedanta’s plea to direct the government to divest its stake in Hindustan Zinc.
The government had initially planned to sell about 5 per cent of its stake in the company in the last financial year, but the plans were delayed as prices dropped following Vedanta’s announcement to purchase two of Vedanta’s zinc subsidiaries.
The deal was opposed by the government and ultimately lapsed a few months later.
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