Revising its demerger plan, Hindustan Zinc has now proposed to create two separate entities - a silver unit and one for zinc and lead - instead of the earlier three and has taken up the matter with the Mines Ministry, its largest minority shareholder.

The Vedanta-owned company, as part of its revised demerger plan is proposing a two-company-structure wherein the zinc and lead units will be clubbed together, while the recycling unit will function as a subsidiary. The decision to create a second unit for silver is riding on the belief that separating the silver unit will add $3-4 billion to market capitalisation, Arun Misra, CEO, Hindustan Zinc, told businessline.

“Our demerger proposal proposes creating two companies – one for zinc and lead; and the second for silver.... and it will unlock another $3 -4 billion in market cap,” he said.

Previously, Hindustan Zinc had proposed to create three separate entities, namely for zinc and lead, silver and a recycling unit and have them listed individually. This was shot down by the Mines Ministry citing profitability concerns of individual companies and the impact that such a demerger can have on disinvestment , officials in the know said.

Any such demerger proposal of the zincminer requires shareholder approval, especially from the Mines Ministry that holds 29.54 per cent in Hindustan Zinc. The Ministry has three of its representatives on Vedanta’s board .

Vedanta Chairman Anil Agarwal’s daughter, Priya Agarwal Hebbar, heads Hindustan Zinc.

“There is no further update on this matter. We continue to engage with them. There is no new proposal. But we re-worked the existing one,” Misra said.

Plan to ramp up silver production

It is to be noted that the zinc miner is also among the top three global silver producers.

According to the CEO, there are plans to ramp up silver production to 800 tonnes (it produced 746 tonnes in 2023) and subsequently to 1,000 tonnes and 2,000 tonnes “in the coming future”.

“We have consultants working on the proposal plan.... we are ramping up capacities,” Misra said, adding that given the current high prices of silver having a separate company made sense.

“....Add $3 -4 billion market to our market cap and everyone will gain including the Government of India,” he said. The silver vertical of Hindustan Zinc reported a revenue of ₹1,427 crore for the quarter ended June 30 (Q1FY25), indicating a 10 per cent year-on-year increase.

“For the recycling segment we don’t have a separate revenue stream and we believe that a subsidiary for recycling will add significant value,” Misra said.

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