Vedanta Could Get Up To Rs 6,741 Crore Dividend Windfall From Hindustan Zinc

Hindustan Zinc Ltd. could announce special dividend of up to Rs 24.5 per share after the Jaipur bench of National Company Law Tribunal approved transfer of the general reserve to retained earnings.

HZL will transfer Rs 10,383.15 crore held in general reserve to the retained earnings thereby enabling the company to distribute the amount to all its shareholders proportionately.

Vedanta Ltd. held 64.9% in the zinc maker while government of India held 29.54% in the company, as of June.

Anil Agarwal owns 59.32% in Vedanta Ltd., is also expected to announce dividend that will allow the dividends to be repatriated to Vedanta Resources Plc. and which will be used to reduce debt further.

Vedanta Resources has reduced its debt by $650 million since the beginning of the current fiscal. The promoters have also sold stake in the India listed arm Vedanta Ltd. in an effort to deleverage the balance sheet of their holding company. It also recently undertook Qualified Institutional Placement of $1.02 billion, or around Rs 8,300 crore, for its capital expenditure.

As per calculations by NDTV Profit, Vedanta could get up to Rs 6,741 crore in dividend, which is nearly Rs 16 per share for the mining major. The Government of India could get Rs 3,066.67 crore. These payouts are subject to board and shareholders' approval.

Minority shareholders, i.e. the general public, hold little over 5.5% in the company with the rest being held by Anil Agarwal's Vedanta as promoter, and Government of India as public shareholder.

The NCLT order paves the way for distribution of unutilised profits held in the General Reserves in the company's book.

According to the Companies Act, dividends can only be paid from the retained earnings. HZL had retained earnings of Rs 4,032 crore at the end of March 2024 which has largely been distributed as the final dividend of Rs10 per share declared in May this year.