DIPAM’s hasty moves to disinvest the government’s residual share in HZL highly imprudent and against the public interest


Smt Nirmala Sitharaman

Union Finance Minister

Dear Smt Sitharaman,

It is reported  that Department of Investment and Public Asset Management (DIPAM) plans to conduct roadshows this month for disinvesting the government’s residual equity share of 29.54% in HZL. It is a matter of serious concern that DIPAM should display such undue haste to sell the government equity in HZL at a time when the Ministry of Finance has proactively encouraged HZL’s promoter, the Vedanta Group to force HZL to declare unduly high dividends, far in excess of its profits, in violation of Section 123 of the Companies Act and thus reduced a debt-free company to one heavily indebted, eroding its intrinsic value.

In this connection, I invite your attention to my earlier letter dated 28-4-2023 (https://countercurrents.org/2023/04/hindustan-zinc-ltd-made-debt-ridden-helping-the-vedanta-group/) in which I had cautioned the government not to sell its share in HZL, primarily in view of the critical importance of zinc for the economy and in view of the desirability of retaining public control over the operations of HZL. In addition, I also pointed out the transition of HZL from a debt-free entity to a heAvily indebted company, literally forcing the company to borrow to pay unduly excessive dividends to its promoter, the Vedanta Group, which in turn has considerably eroded the value of the company.

This is a time when global zinc prices have been on a decline (https://tradingeconomics.com/commodity/zinc) and any attempt to disinvest the government’s equity in HZL at this moment will result in its being undersold, to the detriment of the public interest.

In any case, zinc resources in India, assessed in terms of the UNFC classification, may not last more than 15 years, unless HZL, its primary producer, invests adequately in exploration and development (E&D) to add additional resources to compensate for the present rate of extraction of zinc. As a result of the imprudent dividend pay-out policy encouraged by the Finance Ministry, the ability of HZL to step up its E&D effort has got severely eroded. From this point of view, there is a strong case for the government to continue exercising public control over HZL’s activities so as to ensure that its mining activity remains sustainable.

I hope that the government will keep in view these circumstances and desist from disinvesting its equity in HZL. Failing to do so would imply underselling the equity against the public interest.


Yours sincerely,

E A S Sarma
Former Secretary to the Government of India

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