The Mines Ministry has rejected a proposal by Vedanta group’s firm Hindustan Zinc Ltd to split the company into different entities, a top official on Friday said.

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,” Mines Secretary V L Kantha Rao told reporters on the sidelines of a function here.

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

When asked about the reason for the rejection of the proposal, the Secretary said “Whatever report we have in front of us we are not convinced as a shareholder.”

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

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 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.

Besides, the move aims at forming appropriate capital structure and capital allocation policies based on business-specific dynamics and sharpen focus on core competencies and appropriate realignment of the company’s resources.