Hindustan Zinc has announced an interim dividend payment of Rs 7. Consider the following Vedanta payout:

On July 8, Hindustan Zinc made an announcement regarding an interim dividend of Rs 7. This resulted in a total expense of Rs 2,957.72 crore. A dividend payment in the amount of Rs 1,920 crore would be made to Vedanta Limited, which has a 64.92 percent interest in the zinc producer.

According to the statement made by the company, the record date for the payment of the first interim dividend of the current financial year is on July 15, 2023. The dividend will be paid within the timeframe that is specified by the legislation.

In FY23, Hindustan Zinc issued a dividend amounting to Rs 75.5, which resulted in a cash outflow of around $3.9 billion (or approximately Rs 32,000 crore). According to statements made by CLSA analysts in a note, the company went from having “net cash” to having “net debt” when the dividend payment for FY23 was made.

The dividend payout that Hindustan Zinc made for the fiscal year 23 was greater than three times the company’s full-year net profit of Rs 10,520 crore.

The majority of Hindustan Zinc’s dividend, as is customary, is distributed to Vedanta Ltd., while the majority of Vedanta Ltd.’s payout is distributed to the company’s promoter, Vedanta Resources (VRL).

According to the findings of some researchers, a significant portion of these dividends is applied toward the payment of debt.

The entire dividend payment made by Vedanta Ltd. for the fiscal year 23 was Rs 37,700 crore, which is more than twice as much as the company’s net profit of Rs 14,503 crore.

The company VRL, with headquarters in London, announced in a statement that it had returned $400 million in loans on May 31, bringing the total gross debt to $6.4 billion. According to the company’s statement, all of its maturing loans and bonds that were due in May and June 2023 have been paid in full. At the end of March 2022, the total amount of its gross debt was $9.7 billion.

Earlier, the promoter group had agreed to collateralize 4.4 percent of its holdings in Vedanta Ltd. in exchange for a loan of $250 million from Glencore International AG, a competitor in the mining and natural resources industry headquartered in Switzerland. Finance in the amount of two hundred million dollars was provided by the commodities trading corporation Trafigura Group.

In the case of Vedanta Ltd., the promoters have promised their entire share, while in the case of Hindustan Zinc, they have pledged 87.59 percent of their holding.