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Vedanta plans zinc business time as debt payment system

9/29/20232 min read

Vedanta plans zinc business shake-up as debt payment looms

Vedanta Resources, the parent company of Hindustan Zinc, is exploring a shake-up of its zinc business in an effort to reduce its debt load. The company has a $2 billion bond repayment due in 2024 and another $1.2 billion due in 2025.

One option under consideration is to split out Hindustan Zinc's three core businesses of zinc and lead, silver, and recycling into separate legal entities. This would allow each business to focus on its own strengths and attract its own investors.

Another option is to merge Hindustan Zinc with Vedanta's international zinc assets, creating a single global zinc business. This would give Vedanta more scale and clout in the global zinc market.

The shake-up of the zinc business is part of a wider effort by Vedanta to simplify its complex financial structure and reduce its conglomerate discount. The company has been criticized in the past for its opaque financial structure and its high debt levels.

The shake-up of the zinc business is likely to be welcomed by investors. Hindustan Zinc is a highly profitable business and is one of the world's largest zinc producers. However, the company's shares have been underperforming in recent months due to concerns about Vedanta's debt load.

If Vedanta is able to successfully reduce its debt and simplify its financial structure, the zinc business shake-up could be a positive catalyst for the company's share price.

Potential impact of the zinc business shake-up

The zinc business shake-up could have a number of potential impacts, both on Vedanta and on the global zinc industry.

For Vedanta, the shake-up could help to reduce its debt load and improve its financial performance. It could also help to unlock the value of Hindustan Zinc and Vedanta's international zinc assets.

For the global zinc industry, the shake-up could lead to increased competition and consolidation. If Vedanta is able to create a single global zinc business, this could give it more power in the market and could lead to higher zinc prices.

However, it is important to note that the zinc business shake-up is still in its early stages and there is no guarantee that it will be successful. Vedanta will need to carefully consider all of the options and choose the best course of action for the company and its shareholders.