Hindustan Zinc dividend largesse
The board of Hindustan Zinc on Tuesday declared an interim dividend of Rs 21.30 per share amounting to Rs 9,000 crore, the bulk of which will go to debt-laden Vedanta Limited which holds 64.92 per cent in the company.
The payout has brought the focus again on Vedanta Ltd which was in the news for its botched delisting attempt that led to speculation that the Anil Agarwal-led company may also come out with a high dividend payout.
Vedanta Resources Ltd (VRL), the group holding company, had raised $1.4 billion (around Rs 10,500 crore) through bonds, to primarily fund the de-listing of Vedanta Ltd. Prior to the bond offer, it had taken a three-month term loan, taking the total amount of debt to $3.15 billion.
On Tuesday, the board of Hindustan Zinc approved an interim dividend of Rs 21.30 per share — 1065 per cent on face value of Rs 2 per share. This means that Vedanta
will get close to Rs 5,840 crore because of its 65 per cent stake, though 23 per cent of this is pledged.
Hindustan Zinc reported a 7 per cent fall in net profit for the quarter ended September 3 to Rs 1,940 crore compared with Rs 2,081 crore in the same period of the previous year. Sales, however, showed a growth of 25 per cent to Rs 5,660 crore against Rs 4,511 crore in the year ago period.
“On the back of streamlined operations, we continue to deliver record volumes despite the challenges posed by the pandemic. We are setting up Hindustan Zinc for its next phase of growth and are confident to deliver superior value to our stakeholders in a sustainable manner,” CEO Arun Misra said while commenting on the results.
During the quarter, total expenses of the company increased to Rs 3,428 crore from Rs 3,014 crore in the year-ago period.
The company''s CFO Swayam Saurabh said HZL’s operational discipline and focused cost optimisation programmes leveraging technology and digitalisation are driving down its cost.
Shares of HZL closed with gains of nearly one per cent, while the Vedanta Ltd scrip rose almost 2.53 per cent to settle at Rs 99.20.
Brokerage CLSA had flagged off concerns over the high leverage of Vedanta Resources following the failed delisting of Vedanta.
Vedanta could either declare a high dividend payout, an increase its inter-company loans to VRL which would be negative for the minority shareholders of Vedanta.