Rs 8k-cr spl dividend likely from Hindustan Zinc

Payout

♦ Centre may get 30% or Rs2,400 cr as its non-tax revenues

♦ Decision comes after NCLT’s nod to transfer Rs10,383 cr of general reserves to its retained earnings

♦ This special dividend will be over and above regular dividend of Rs6,000 cr

♦ Promoter Vedanta Ltd, which holds 65% in HZL, will receive Rs5,100 cr

New Delhi: Vedanta group firm Hindustan Zinc Ltd (HZL) plans to dole out a special dividend payout of Rs8,000 crore to its shareholders in the current fiscal, according to sources. HZL’s board is likely to meet on Tuesday to consider and approve the special dividend payment for this fiscal, they said.

“Of this, around 30 per cent or Rs2,400 crore may go to the Centre contributing to its non-tax revenues for the fiscal,” sources in the know of the development said. The move follows the National Company Law Tribunal’s (NCLT) approval to transfer Rs10,383 crore of general reserves to its retained earnings. This special dividend will be over and above the regular dividend of around Rs6,000 crore, which HZL doles out every year. Apart from the government, this will also benefit promoter Vedanta Ltd, which holds around 65 per cent stake in HZL, and will receive around Rs5,100 crore, which it may use to further de-leverage its balance sheet. Vedanta will also be selling up to a 3.31 per cent stake in HZL through the Offer for Sale issue from August 16 to 19. It has set the floor price at Rs486 per share.

HZL has benefitted from steady growth in sales volume and balanced capital expenditure for continuing operations, creating a strong track record of generating cash flows. The company said in its scheme of arrangement filed with the NCLT that it expects the growth trajectory to continue and its business operations will keep generating incremental cash flow over the coming years. In the last financial year ended March 2024, Hindustan Zinc had paid a total dividend of Rs5,493 crore, of which the government received Rs 1,622 crore against its 29.5 per cent stake in the company. In FY22-23, the company made a record dividend payout of around Rs32,000 crore, with the government getting a whopping Rs9,500 crore. During the June quarter, Hindustan Zinc’s market capitalisation more than doubled as it added almost Rs1.6 lakh crore. In fact, the company touched its highest-ever market cap of Rs3.4 lakh crore during the quarter.