Record Dividend Won’t Hurt Hindustan Zinc’s Financials, CEO Says

A record dividend payout will not impact financials of Vedanta Ltd.-promoted Hindustan Zinc Ltd. as the company still has more than Rs 15,000 crore cash, Managing Director and Chief Executive Officer Sunil Duggal told BloombergQuint in an interview.

The company declared a special one-time interim dividend of Rs 27.5 per share leading to an outflow of Rs 13,985 crore. It paid shareholders Rs 27,157 crore this financial year, more than its combined net profit in the last four years.

India’s biggest zinc producer considered a share buyback but went ahead with the dividend as the government, its second largest shareholder, was yet to respond, said Duggal.

Vedanta owns nearly 65 percent in the company and the government holds nearly 30 percent.

Companies in India have to pay a 20.3 percent tax on the total dividend amount before distributing it to shareholders. More than 41 companies have bought back shares worth over Rs 29,000 crore so far this financial year.

The dividend payout comes as zinc prices jumped 55 percent over the past year and Duggal expects them to rise more.

Duggal said the company, which has 23 mining licences, might consider ramping up production and opening new mines. The company has plans to produce 1.2 million tonnes of zinc by 2019.