Hindustan Zinc has informed stock exchanges that its board of directors, at their meeting held today, has authorized the CoD (Committee of Directors) to evaluate an appropriate corporate restructuring exercise. This strategic move aims to unlock shareholder value and enhance overall performance.
Shares of Vedanta Ltd and Hindustan Zinc Ltd (Hind Zinc) saw a significant increase of up to 8 per cent in Friday’s trade, accompanied by strong trading volumes. This surge came amidst reports of Vedanta considering a demerger of its businesses into multiple listed entities. In response, Hindustan Zinc informed the stock exchanges that its board of directors has authorized a committee of directors (CoD) to assess a suitable corporate restructuring exercise, aimed at unlocking value for shareholders. It is worth mentioning that Vedanta currently holds a 64.92 per cent stake in Hindustan Zinc.
Vedanta’s shares surged by 7.97% to reach a peak of Rs 224.85 on BSE. Meanwhile, Hindustan Zinc saw a significant jump of 5% to reach Rs 313.90.
The board of directors of Hindustan Zinc has made the strategic decision to conduct a thorough evaluation of the company’s corporate structure in order to unlock its potential value. Recognizing the scale, nature, and potential opportunities within various business verticals, the company intends to establish separate legal entities for its zinc & lead, silver, and recycling businesses. This initiative will be carried out after a meticulous evaluation process.
The strategic objectives for undertaking such an exercise include unlocking value for stakeholders, creating businesses that are better positioned to capitalize on their distinct market positions, and delivering long-term growth. Additionally, this exercise aims to create distinct investment profiles to attract a wider range of investors.
Hindustan Zinc has announced its intention to enhance its capital structure and capital allocation policies, taking into account the specific dynamics of its business. The company aims to strengthen its focus on core competencies and optimize the allocation of its resources accordingly.
“The management will engage external advisors to evaluate the available options and collaborate with them to provide an updated plan to the Board of Directors. All necessary announcements and public disclosures, in compliance with SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 and other relevant laws, will be made as and when necessary.” the company said.