The Indian government has reportedly declined Hindustan Zinc's proposal to split the company into separate units, a decision revealed by a government source familiar with the situation on Friday.

Despite being the largest minority shareholder with a 29.54% stake, the government was not consulted when the company decided to divide its operations, including zinc, lead, silver, and recycling businesses.

While Hindustan Zinc argued that the move would unlock potential value, the government source expressed scepticism, suggesting it might not benefit shareholders.

The Ministry of Mines, overseeing Hindustan Zinc, has conveyed its objections to the company.

Both the government's mines and finance ministries, along with Hindustan Zinc, have yet to respond to requests for comment.

This development follows the government's previous opposition to Hindustan Zinc's bid to acquire two Vedanta entities, prompting the company to abandon the plan. Vedanta currently holds a 64.9% stake in Hindustan Zinc.

The lack of consultation with the government despite its significant minority stake in Hindustan Zinc raises questions about corporate governance and shareholder relations within the company.

The decision to split the firm into separate entities for various businesses could have far-reaching implications for both shareholders and the broader market.

The Indian government's rejection of Hindustan Zinc's proposal underscores its active role in regulating major corporate decisions that could impact national interests and the economy.

By communicating its objections to the company, the government asserts its authority and ensures that corporate actions align with broader policy objectives.

The Ministry of Mines' involvement in this matter highlights the significance of the mining sector in India's economy and the government's keen interest in overseeing its operations.

With Hindustan Zinc being a prominent player in the industry, the government's scrutiny of its proposals reflects the importance of ensuring responsible and sustainable practices.

In the wake of these developments, stakeholders, including investors and industry analysts, await further clarity on the implications of the government's decision for Hindustan Zinc's future strategy and performance.

The company may need to reconsider its approach and engage more closely with stakeholders, including the government, to navigate regulatory challenges and unlock value for its shareholders in a complex operating environment.