Hindustan Zinc on July 8 announced an interim dividend of Rs 7, amounting to a total outgo Rs 2,957.72 crore. Vedanta Limited, which has a 64.92 percent stake in the zinc producer, will get Rs 1,920 crore in dividend.
The record date for the payment of the first interim dividend of the current financial year is July 15, 2023 and will be paid within the timeline prescribed by law, the company said.
Hindustan Zinc had declared dividend of Rs 75.5 in FY23, implying a cash outflow of $3.9 billion (close to Rs 32,000 crore). The FY23 dividend outgo turned the company from "net cash to net debt", CLSA analysts had said in a note.
Hindustan Zinc's FY23 dividend payment was over three times its full-year net profit of Rs 10,520 crore.
As is the norm, a bulk of Hindustan Zinc's dividend goes to Vedanta Ltd and most of Vedanta Ltd's dividend goes to the promoter Vedanta Resources (VRL).
Much of these dividends are used for servicing debt, analysts have said.
In FY23, Vedanta Ltd's total dividend outgo was of Rs 37,700 crore, more than double the company's net profit of Rs 14,503 crore.
On May 31, the London-headquartered VRL said in a statement it has repaid $400 million of loans, cutting gross debt to $6.4 billion. The company said it has paid all its maturing loans and bonds due in May and June 2023. Its gross debt stood at $9.7 billion at the end of March 2022.
Also Read: CreditSights 'watchful' of $4.2 billion term debt refinancing risk of Vedanta Resources
Earlier, the promoter group had pledged 4.4 percent of its holding in Vedanta Ltd for a $250 million loan from Switzerland-headquartered mining and natural resources rival Glencore International AG. It raised $200 million in finance from commodities trading company Trafigura Group.
The entire promoter holding in Vedanta Ltd is pledged, while 87.59 percent of the promoter holding in Hindustan Zinc is pledged.
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