Hindustan Zinc declares nearly Rs 11,000-cr dividend; Vedanta to receive Rs 7,132 crore payout

Mumbai: Hindustan Zinc Ltd (HZL) on Tuesday announced a dividend of ₹26 per share - for an unprecedented fourth time this financial year - at a time when its parent, London-headquartered Vedanta Resources, is rallying for funds to meet its upcoming debt obligations.

With the latest interim dividend of ₹10,983 crore, the company has now declared dividends of ₹75.5 apiece for FY23, amounting to ₹32,000 crore, the highest in its history.

This comes as Anil Agarwal-led Vedanta Group's bid to raise capital - by selling its international zinc assets to HZL (a stepdown subsidiary) for nearly $3 billion - has been stalled.


Also Read: Is Hindustan Zinc taking the bullet for cash-starved parent Vedanta?

Opposition from the Indian government, the largest minority shareholder in Hindustan Zinc, is over the related-party nature of the transaction.

HZL was privatised more than two decades ago.

According to analysts, Vedanta Ltd, which has a 64.92% stake in Hindustan Zinc, will receive Rs 7,132 crore as its share of the latest dividend payout. If the entire amount is redistributed to shareholders of Vedanta Ltd, Vedanta Resources will get Rs 4,970 crore. These numbers exclude dividend taxes. Vedanta Resources has 69.68% in Vedanta Ltd.

Vedanta Resources needs to service about $2 billion (Rs 16,510 crore) of debt between April and June this year, according to a recent report by S&P.

It has upcoming bond repayments of $400 million in April, followed by another $500 million in May.

The rating agency had warned that if Vedanta Resources does not manage to raise new debt or conclude the sale of assets to Hindustan Zinc, its rating would come under pressure. While Vedanta Resources will be able to meet its obligations from internal accruals, it could face a liquidity crunch if it fails to raise funds, S&P had noted.

Vedanta Group has been in discussions with domestic and foreign lenders - including overseas credit funds - to raise money, but discussions have remained largely inconclusive over the proposed debt structure.

"Few lenders have proposed that the group raise the funds at the Indian entity level - backed by cash flows and assets," said a person aware of the discussions. "Alternatively, the promoters have the option to sell a part of their stake in Vedanta Ltd, which is currently valued at around Rs 73,000 crore at the current market value."

Alternatively, the promoters can sell a part of their stake in Vedanta Ltd, which is currently valued at around Rs 73,000 crore at the current market value."

The stock of Hindustan Zinc ended marginally lower on the BSE on Tuesday at Rs 310.45. It has lost 4.5% since the beginning of the year.