Hindustan Zinc Declares Highest Interim Dividend In 12 Years
ZInc ingots (Photographer: SeongJoon Cho/Bloomberg)

Hindustan Zinc Declares Highest Interim Dividend In 12 Years

Hindustan Zinc Ltd. has declared its highest interim dividend in 12 years, days after the failed delisting offer of its parent, Vedanta Ltd..

The subsidiary announced a dividend of Rs 21.3 per share—implying a dividend yield of 9.5% to its closing price as on Oct. 20, according to a company filing with the stock exchange. The record date for paying the dividend is Oct. 28.

Hindustan Zinc had paid a higher dividend of Rs 30 per share in July 2008.

Vedanta Ltd., which holds 64.92% stake in Hindustan Zinc, is expected to get nearly Rs 5,842.8 crore of the total interim dividend of Rs 9,000 crore, but it’s not clear if the same will be passed through to Vedanta’s shareholders. The metal major has yet to distribute the dividend it received from its subsidiary in the quarter ended March.

Despite being a cash-rich company, Hindustan Zinc has some debt on its books. In a post-earnings conference on Tuesday the company said it would strike a balance between preserving its balance sheet and giving out dividends to maximise return to its shareholders.

This policy is to ensure expansion and maximise returns for our stakeholders, Chief Executive Officer Arun Misra said. “Any excess cash should be distributed to its shareholders.”

In a report dated Oct. 15, governance advisory firm IiAS pointed out Vedanta deviated from its dividend policy and instead of redistributing the HZL dividend to its shareholders used the money to fund debt for the London-based parent Vedanta Resources Ltd.

Meanwhile, Moody’s Investor Service placed Vedanta Resources’ ratings under review for downgrade after its failure to acquire the remaining shareholding as the delisting of the Indian unit failed.

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