The Modi government, the largest minority shareholder in Hindustan Zinc, has rejected the miner’s proposal to split into different units as it was not convinced such a move would boost shareholders’ value.

The government is the largest minority shareholder in Hindustan Zinc, owning a 29.54 per cent stake in the company.

“We have not agreed to the proposal…Whatever report we have in front of us we are not convinced as a shareholder,” mines secretary V.L. Kantha Rao told reporters on the sidelines of a function here.

Hindustan Zinc had earlier announced its plans to spin off its business into separate entities, including zinc and silver, to increase its market capitalisation.

The company had earlier said that it has engaged a leading advisory firm to study its plans to spin off the business.

Last September, the company said it plans to create separate entities for its zinc, lead, silver and recycling businesses to unlock potential shareholder value. But it did not consult the government on the planned move. The government was not convinced by Hindustan Zinc’s rationale for the split and that the ministry of mines has lodged its objection with the company.

Earlier, Hindustan Zinc had said the company’s board has decided to undertake a “comprehensive review of its corporate structure for unlocking potential value”.

According to a regulatory filing, the move is aimed at creating separate legal entities for zinc, lead, silver and the recycling businesses.

The strategic objectives outlined by the company’s board for undertaking such an exercise included unlocking value for all stakeholders and creating businesses that are positioned to better capitalise their distinct market positions and deliver long-term growth.