Hindustan Zinc's dividend payments may ease Vedanta's debt repayment challenges

23 Mar 2023 , 09:39 AM

Hindustan Zinc Ltd’s dividend payments may ease some of the debt repayment challenges of Vedanta.

The largest private miner in India, according to Agarwal-owned Vedanta Resources, positions itself as essential to the country’s economic development. Although diversifying into other companies, including constructing a semiconductor facility with Apple’s partner Foxconn, the group has been frantically seeking to deleverage.

Hindustan Zinc has now announced dividends of Rs 32,000 crore, or Rs 75.5 per share, for the fiscal year that ends on March 31. In contrast, Hindustan Zinc paid out just one dividend in the previous fiscal year and two the year before.

The ultimate parent company, Vedanta Resources, owes $7.7 billion in net debt. It has been making efforts to reduce its debt load in order to allay investor worries about its liquidity and capacity to pay off future obligations. The business reported last month that it has already reduced its net debt by $2 billion this year, or 50% of its anticipated three-year reduction pledge.

According to a recent S&P report, the parent business must pay roughly $2 billion (Rs16,510 crore) in debt servicing between April and June of this year. In April and May, respectively, it will be making bond repayments of $400 million and $500 million.

Agarwal will feel some relief from the dividend money, but Hindustan Zinc may have cash utilization issues as a result.