Hindustan Zinc, a Vedanta group firm, is planning to distribute a special dividend of ₹8,000 crore to its shareholders this fiscal year. The company’s board is expected to convene soon to formalize this decision.
Approximately 30% of the special dividend amount, equaling ₹2,400 crore, is anticipated to be directed towards the government as non-tax revenue for the fiscal year. This move comes after the National Company Law Tribunal’s nod to transfer ₹10,383 crore of general reserves to retained earnings.
In addition to the regular dividend payout of around ₹6,000 crore that Hindustan Zinc typically offers annually, this special dividend will provide a significant boost to its stakeholders. The prominent beneficiary of this move is Vedanta Ltd, which holds a 65% stake in Hindustan Zinc and is set to receive around ₹5,100 crore. Vedanta may utilize these funds to further strengthen its balance sheet by reducing debt.
Moreover, Vedanta is also planning to sell up to a 3.31% stake in Hindustan Zinc through an Offer for Sale issue scheduled from August 16 to 19. The floor price for this sale has been set at ₹486 per share.
Hindustan Zinc has experienced consistent growth in sales volume and maintained a balanced capital expenditure approach for operational sustainability, leading to a robust cash flow generation track record. The company foresees this growth trend continuing, with a positive outlook on cash flow generation in the upcoming years.
In the previous fiscal year, Hindustan Zinc disbursed a total dividend of ₹5,493 crore, with the government receiving ₹1,622 crore based on its 29.5% stake in the company. A record dividend payout of around ₹32,000 crore was made in FY22-23, with the government receiving a substantial ₹9,500 crore.
During the June quarter, Hindustan Zinc’s market capitalization more than doubled, adding nearly ₹1.6 lakh crore. The company achieved its highest-ever market capitalization of ₹3.4 lakh crore during that quarter, emphasizing its strong performance and investor confidence in the market.
