Hindustan Foods Limited , a prominent player in the Indian consumer goods sector, has made a strategic move to expand its footprint in the footwear manufacturing industry. The company's wholly-owned subsidiary, KNS Shoetech Private Limited, has executed a Business Transfer Agreement to acquire manufacturing facilities from SSIPL Retail Limited for a cash consideration of ₹76.92 crores.

Acquisition Details

The agreement, signed on March 31, 2024, involves the acquisition of manufacturing facilities located in Himachal Pradesh and Haryana. These facilities are currently engaged in the production of shoes and open footwear. The final purchase price is subject to customary adjustments, as per standard business practices.

Strategic Expansion

This acquisition aligns with Hindustan Foods' previously announced strategy to enter the contract manufacturing sector and expand into the footwear business. The company had earlier expressed its intention to invest up to ₹100.00 crores in shoe manufacturing, and this move appears to be a significant step towards realizing that goal.

Transaction Structure and Timeline

The deal is structured as a slump sale, meaning the transfer of the entire business operation on a going concern basis. This approach often allows for a smoother transition of assets and operations. The transaction is expected to be completed by the first quarter of the financial year 2024-25, subject to customary approvals and conditions.

Implications for Hindustan Foods

This strategic acquisition positions Hindustan Foods to capitalize on the growing footwear market in India. By acquiring established manufacturing facilities, the company can potentially accelerate its entry into this sector, leveraging existing infrastructure and expertise.

The move also diversifies Hindustan Foods' portfolio, potentially opening up new revenue streams and business opportunities in the contract manufacturing space for footwear.

As the transaction progresses, stakeholders will be keen to observe how Hindustan Foods integrates these new assets into its operations and the impact on the company's financial performance in the coming quarters.

Hindustan Zinc , a subsidiary of Vedanta and one of the world's top five silver producers, saw its shares climb up to 5% on the stock market, breaking a three-day losing streak. The surge positioned the company as one of the top gainers on the Nifty 500 index, coinciding with silver prices reaching unprecedented levels globally.

Silver Price Rally

The rally in Hindustan Zinc shares comes against the backdrop of a remarkable performance in silver prices:

• Silver has gained over 35% in the past year
• In the last month alone, silver prices have surged by more than 5%
• Global silver prices are currently trading around $40.00 per ounce
• Domestic MCX silver prices have also hit record highs

Adding to the bullish sentiment, the US Geological Survey has proposed including silver in the Critical Minerals list, potentially boosting its strategic importance.

Hindustan Zinc's Silver Production

As India's only listed silver play, Hindustan Zinc's performance is closely tied to silver prices. However, the company faces some challenges:

• Silver production declined recently
• Management has guided for a recovery to 700 tonnes in the future
• The company expects silver prices to reach $41.00-$42.00 per ounce in the coming years

Stock Performance and Ownership

The positive sentiment around silver prices has had a notable impact on Hindustan Zinc's stock:

• Shares closed 3.90% higher at ₹435.80
• The stock broke above its 50-day moving average of ₹433.00
• Trading volumes surged to 40 lakh shares, compared to the 20-day average of 6 lakh shares

Ownership structure of Hindustan Zinc:

• Vedanta holds a 61.84% stake
• The government maintains over 25% ownership

Future Outlook

Hindustan Zinc's management is considering value unlocking plans for the future, which could potentially drive further interest in the stock. As global demand for silver continues to rise, particularly in industries such as renewable energy and electronics, Hindustan Zinc's position as a major producer could prove advantageous.

Investors will likely keep a close eye on the company's ability to meet its production recovery targets and capitalize on the favorable silver price environment in the coming years.