Hindustan Zinc recently made headlines for its decision to acquire Vedanta's international zinc assets. The move aims to enable the company expand its global presence and diversify its product offerings.
The Indian government has also expressed support for the acquisition, with officials indicating that they expect Vedanta to focus on non-cash assets to strengthen its overall balance sheet. This is in line with the government's broader efforts to promote responsible corporate governance and sustainable business practices.
In an interview with CNBC-TV18, Arun Misra, CEO of Hindustan Zinc said that buying Vedanta’s international zinc assets is a good move. However, cannot provide a timeline for the deal.
He said, “This was a good proposal, and it gives an immediate boost to Hindustan Zinc’s access to minerals. It is still there, and we are talking to all shareholders. The Government of India expects us to explore the non-cash mode of acquisition. So, nothing is out of our consideration. We are studying all that and I am sure we will be able to convince our shareholders and whenever everybody is on board, we will go for the regulatory approval.”
Also Read | Hindustan Zinc has drained all its cash in paying dividend to Vedanta - What happens next
Of course, any major acquisition comes with risks, and Hindustan Zinc will need to work hard to convince its shareholders and stakeholders that the deal is a viable one. Yet, there have been no discussions regarding the financial valuations of the Zinc International assets, and there is no timeline for when the deal will be completed.
Despite these uncertainties, the overall outlook for zinc prices and demand is positive. Experts predict that zinc prices could reach $2,800-3,000 per tonne in FY24 and that global demand for zinc will grow by around 2-2.5 percent. In India specifically, demand for zinc is expected to rise by 4-5 percent, driven in part by the country's rapidly expanding construction and infrastructure sectors.
The company, on April 21, reported a 12 percent year-on-year (YoY) decline in consolidated net profit at Rs 2,583 crore for the fourth quarter that ended March 31, 2023. In the corresponding quarter last year, the company posted a net profit of Rs 2,928 crore. CNBC-TV18 Polls had predicted a profit of Rs 2,465 crore for the quarter under review.
For more details, watch the accompanying video