After announcing that it will pay a fifth dividend for the fiscal 2022-23 period that begins on Friday, Vedanta Ltd., run by billionaire Anil Agarwal, saw its shares rise nearly 3% in trade on Wednesday.
According to Tuesday’s exchange filing, the company will pay a dividend of 7,621 crore, or 20.50 percent of the face value of one share. The statement stated that the record date for the dividend payment is Friday, April 7, 2023.
CRISIL downgraded the outlook on Vedanta’s non-convertible debentures and long-term bank facilities from “stable” following the announcement, joining the club of global rating agencies.
The reduction in the cash surplus ratio for one-year maturities for FY23 and FY24 reflects the possibility of higher-than-expected financial leverage and lower financial flexibility.
“This is due to increased cash outflow from Vedanta in the form of dividends to its parent company’s larger maturing debt obligations in Vedanta Resources Ltd (VRL).” Crisil stated
The resignation of Vedanta’s acting chief financial officer, Ajay Goel, which took effect on April 9 and comes at a time when questions are being raised regarding the group’s growing debt, also served as a counterbalance to the announcement of the dividend payment.
The successor, according to the company, will be announced at a later date.
Since the Indian government strongly opposes Vedanta Resources’ plans to raise $3 billion by selling a zinc manufacturing unit to Hindustan Zinc, the company is heavily relying on dividends from its units to help reduce its $7.7 billion net debt.
Concerned about the high valuations of related party transactions, the government, which owns about 30% of Hindustan Zinc, has threatened legal action to prevent the sale.
Including earlier dividends, Vedanta’s annual payout will be approximately According to Bloomberg’s calculations, 37,700 crores. Hindustan Zinc, a Vedanta unit, declares a fourth dividend of approximately 11,000 crores the week before.
About 70% of the Mumbai-listed company that mines and exports commodities like zinc, iron ore, and aluminum is owned by London-based Vedanta Resources.
On Wednesday, Vedanta shares were up 2.83 percent. 282 on the NSE per share.
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