The government had planned to sell part of it in the 2022/23 fiscal year ending March 31, which would help it to achieve its 500 billion rupees ($6.10 billion) divestment target for the year.
In January, HZL's board approved buying Vedanta Group's zinc businesses for $2.98 billion.
"Investors need certainty about the deal and till a finality is reached, the government may not go ahead with its planned offer for sale," the source said on condition of anonymity. An email sent to a finance ministry spokesperson outside business hours did not immediately elicit a response. The government has only garnered 311 billion rupees from stake sales in public sector companies so far in 2022/23 and deferring the HZL share sale may lead to it missing its divestment target.
To underscore its opposition to the deal, the government wrote a letter to the Securities and Exchange Board of India saying that despite being the largest minority stakeholder in the company, it was "kept in the dark" about the related-party transaction. In a separate letter addressed to HZL, a copy of which was sent to the exchanges, the government had threatened legal action if the company proceeds with the all-cash deal. The proposed deal between HZL and Vedanta has also spooked investors, leading to a drop in HZL's share price. From its 2023 high of 383 rupees, the shares have dropped around 20% to 304.4 rupees as of Friday. ($1 = 81.9600 Indian rupees) (Reporting by Nikunj Ohri; Editing by Swati Bhat and Jamie Freed)
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