The Indian government is considering postponing the sale of its stake in Hindustan Zinc until the industry’s fortunes improve, according to two government sources. However, the government still aims to proceed with the long-awaited sale this financial year. The government plans to sell its stake in tranches, starting with about 5% of its shares. Currently, Vedanta Group holds a majority stake of 64.9%. Hindustan Zinc’s stock price has declined by over 16% due to a drop in zinc prices and Vedanta’s attempt to sell two units to the miner. The government is waiting for the share price to recover before proceeding with the sale, according to one of the sources. Merchant bankers have advised against the sale offer at present as institutional investors are not showing interest in the metals sector. This advice came after road shows were conducted in June. International zinc prices have corrected 30% in the last six months due to global macroeconomic uncertainties and weak demand recovery, as stated by rating agency ICRA. The agency also predicts that the global consumption growth of aluminium, copper, and zinc will remain muted this year. Furthermore, the country’s top court dismissed Vedanta’s plea to push the government to divest its stake in Hindustan Zinc. The government had planned to sell about 5% of its shares last financial year but delayed the move due to price drops caused by Vedanta’s announcement to acquire two of its zinc subsidiaries. During roadshows in December, institutional or large investors expressed their lack of interest in acquiring significant stakes in Hindustan Zinc.
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