Government to divest residual stake in HZL by March 2023

In a bid to boost its disinvestment revenues in the FY23 financial year, the government has finally decided to sell part of its residual stake in Hindustan Zinc Ltd (HZL) before end of March 2023. In the latest budget, the divestment target for FY23 was revised lower from Rs 65,000 crore to Rs 50,000 crore and this divestment will take them past that mark.

The divestment target for FY24 has been set at a more conservative at Rs 51,000 crore. For the FY24 fiscal year, the government plans to sell strategic stake sales in HLL Lifecare, PDIL, Shipping Corporation of India and Bharat Earth Movers Ltd (BEML). The HZL stake sale would be done on a priority basis since Vedanta has expressed interesting of buying out the residual stake.

With regards to Hindustan Zinc Ltd (HZL), government currently holds 29.54% stake while Vedanta holds 64.92% and the public holds the balance 5.54%. There is an interesting background to how Vedanta acquired 64.92% stake in HZL. In 2002, government had sold 26% stake in Hindustan Zinc Ltd (HZL) to the Sterlite group (later Vedanta), belonging to Anil Agarwal. Later, Vedanta bought 20% the open market and another 18.92% from the centre in 2003.

In FY23 so far, the government has managed to divest Rs 31,100 crore as minority stake sale in CPSE or via share buybacks. That leaves just about Rs 19,000 crore to cover and the Hindustan Zinc Ltd (HZL) stake itself is worth more than Rs 42,000 crore. The Cabinet Committee on Economic Affairs (CCEA) had approved the sale of 124.79 crore shares or 29.54% of HZL in May 2022 itself and now only the timing and price have to be fixed. 

The Disinvestment Secretary, Tuhin Kant Pandey, has underlined that it would depend on market conditions, meaning government may be sceptical of selling a stake in Hindustan Zinc Ltd (HZL) if the commodity cycle is under pressure.