Hindustan Zinc Ltd (HZL), a company under the Vedanta Group, is set to distribute a special dividend of ₹8,000 crore to its shareholders in the current fiscal year. The company’s board is scheduled to meet on Tuesday to discuss and potentially approve this significant payout, as reported by PTI.
Government Share of the Dividend
According to sources, approximately 30% of this special dividend, or ₹2,400 crore, is expected to be allocated to the central government, contributing to its non-tax revenue for the year.
Financial Background
This decision follows the National Company Law Tribunal’s (NCLT) approval to shift ₹10,383 crore from HZL’s general reserves to its retained earnings. The special dividend will be an addition to HZL’s regular annual dividend of about ₹6,000 crore.
Benefit to Vedanta Ltd
The promoter company, Vedanta Ltd, which owns a 65% stake in HZL, will receive around ₹5,100 crore from the special dividend. This infusion of funds could help Vedanta reduce its debt.
Vedanta’s Stake Sale
Vedanta is also planning to sell up to a 3.31% stake in HZL through an Offer for Sale, scheduled between August 16 and 19, with a floor price of ₹486 per share.
HZL’s Growth and Financial Performance
HZL has shown consistent growth in sales volume and has managed its capital expenditure efficiently, contributing to a strong cash flow record. In a statement filed with the NCLT, HZL expressed confidence in maintaining this growth and generating more cash flow in the future.
For the financial year ending March 2024, HZL paid a total dividend of ₹5,493 crore, with the government receiving ₹1,622 crore for its 29.5% stake. In the previous fiscal year (FY22-23), HZL set a record by paying out approximately ₹32,000 crore in dividends, with the government’s share being ₹9,500 crore.
During the June quarter, HZL’s market capitalization more than doubled, adding nearly ₹1.6 lakh crore, and reached its highest-ever market cap of ₹3.4 lakh crore during this period.
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