The company’s dividend distribution policy says normal dividend received from Hindustan Zinc shall be passed on to its shareholders in entirety. An email query sent to Vedanta went unanswered.
If the dividend was passed on, investors would have received Rs 12.18 per share as against the current market price of Rs 139.
Vedanta in its annual report has cited “the need for financial flexibility at the group” as the reason for holding back the dividend. It owns almost 65% in Hindustan Zinc.
Can the Vedanta board decide dividend payout across the group when the financial position of the companies differs and also its shareholders are different across group entities?” asked J N Gupta, MD & CEO, Stakeholder Empowerment Services (SES), a proxy advisor. “Given that voluntary delisting is pending, the board helped the promoter to effectively reduce delisting price by the amount of HZL dividend not paid and indirectly adding an additional Rs 2,250 crore to promoters’ kitty.”
Hindustan Zinc has paid interim dividend of Rs 6,972 crore for FY20. The share of Vedanta as a shareholder of HZL amounts to Rs 4,526 crore. Corporate governance experts said if the dividend is not paid now, it will never happen if the delisting goes through.
“The board must strictly adhere to the terms of the DDP and ensure that the dividend must be paid to the shareholders, else sanctity of the policy goes away,” said Shriram Subramanian, MD, InGovern Research Services, a proxy advisor.
Sebi’s listing rules require the top 500 listed entities to have a dividend distribution policy.
Vedanta’s annual report for FY20 has stated a strong financial position of the company with cash, liquid and structured investments of 37,914 crore. Also, in FY20, the company has reduced overall debt by 10.63% on a consolidated basis, with significant reduction in short-term borrowings by 43%. The company has posted a net loss or 6,664 crore for FY20 mainly on account of 17,386 crore impairment charge relating to property, plant and equipment and exploration assets, and claims and receivables.
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6 Comments on this Story
Vimala Catherine22 days ago
What a forgery!. Mr. Anil Agarwal's son, Mr.Agnivesh Agarwal having one Scan center in Chennai, named Primex Healthcare and Research Pvt Ltd., In this company they have not even paid salaries to their employees because of COVID-Lockdown. But I came to know that Vedanta donated Rs.200 crores to 'PM CARES' fund. One side they are holding dividends and salaries, but another side they are donating. Hypocrite Persons!
Snrj Investment Academy26 days ago
Dears it's a psychological game.If you bid your shares below Institutional investors price then it will give promoters a chance to get 90% shares below Institutional bids.Since we are not sure about the price quoted by Institutional investors it will be safe to quote higher price like 1000 per share.It will help to increase the RBB price as promoter need to provide maximum amount to reach 90% .Anyway you will get the de listing price.do not offer at low level without knowing the true value of the company.Visit YouTube channel "snrj investment academy "for analysis of fundamentally strong shares and good mutual funds
Snrj Investment Academy26 days ago
Bid for Rs.1000 per share in RBB. It will help to improve de listing price. If de listing happens anyway you will get de listing price.Visit YouTube channel "snrj investment academy for analysis "of fundamentally strong shares and good mutual funds