Arun Misra, the CEO of Hindustan Zinc, told to News Agency, “We always believe in and act in the best ways of corporate governance, so there is no deviation on that count.” Reuters asked the company and Vedanta Ltd for their thoughts, but neither of them replied.

The news comes a week after Vedanta Resources said it had cut its net debt by $2 billion in the last 11 months, bringing it down to $7.7 billion. The company said this to calm fears after S&P Global Ratings raised questions about the financial health of the group owned by billionaire Anil Agarwal.

S&P Global had said that the group’s ability to pay its bills after September would depend on its ability to raise $2 billion and sell THL Zinc Ltd, a unit of Vedanta Ltd that owns zinc assets in Africa.

This deal, which was announced on January 19, is now in doubt because the government-appointed directors on Hindustan Zinc’s board were against the purchase and said in a letter that they would vote against any other resolutions that went forward.

In its letter, the Ministry of Mines asked Hindustan Zinc to “look into other ways to do the deal without cash.” As part of its plan to fill up state coffers, the government wants to sell all of its shares in Hindustan Zinc.
Analysts have said that the deal is bad for Hindustan Zinc’s minority shareholders, who have to sign off on any board decisions about related party deals at a meeting that Hindustan Zinc has to call within three months of announcing the deal.

In a filing with the stock exchange, Hindustan Zinc said that it had not yet called for the meeting, but that its board would think about the position of the government.

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Even though commodity prices have gone down, Vedanta Ltd., a mining company, has been hurt. However, Vedanta Resources is betting that its associate companies’ investments in semiconductors, display glass, renewables, optical fibre, and transmission will help the company grow.

Since the deal was announced a month ago, the shares of Hindustan Zinc have dropped by nearly 14.5%, while the shares of Vedanta Ltd. have dropped by about 5%. Both stocks didn’t change much during the day.

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