Hin­dus­tan Zinc raises ~3.5k-cr NCDS

Business Standard - - THE SMART INVESTOR - ADITI DIVEKAR

Hin­dus­tan Zinc, a sub­sidiary of Vedanta, has raised ~3,520 crore through the is­suance of non-con­vert­ible deben­tures (NCDS) which an­a­lysts feel could in­di­rectly fund the delist­ing of Anil Agar­wal-led me­tal and min­ing com­pany.

“HZL be­ing a listed en­tity can­not raise funds and use it for its par­ent. It is against reg­u­la­tions. More­over, since the gov­ern­ment has a stake in Hin­dus­tan Zinc, the com­pany board will also have a gov­ern­ment of­fi­cial, which will not al­low such trans­ac­tions,” a se­nior an­a­lyst with a rat­ings agency said.

Vedanta owns 64.9 per­cent stake in HZL, while the gov­ern­ment has the resid­ual stake of 29.54 per cent. “How­ever, what HZL could do is route the funds via div­i­dends to the pro­moter and sep­a­rately raise from the mar­ket to en­hance its cash and cash equiv­a­lent. That is a pos­si­bil­ity,” the an­a­lyst said.

This will be first bor­row­ing by the zinc pro­ducer in over a decade. HZL has his­tor­i­cally been a debt-free firm. It gen­er­ated free cash flows of around ~5,100 crore in FY20 net of nearly ~2600 crore worth of in­vest­ment and capex.

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