News

Published: Mar 29, 2023
Updated: Mar 29, 2023

Vedanta Announces Record Interim Dividend; Looks to Refinance Old Loans

Vedanta, led by Anil Agarwal, has declared a fifth interim dividend of Rs 20.50 per equity share, or 2050% of the face value of Rs 1 per share, for the fiscal year ending March 31, totaling Rs 7,621 crore. This brings the company's total dividend payout for the year to its highest ever at Rs 37,730 crore. The Agarwal family's Vedanta Resources will use the proceeds to repay a consolidated debt of $11.8 billion. Meanwhile, the company is in talks with international banks, including Barclays, JP Morgan, and StanChart, to refinance old loans.

Vedanta's Financials and Share Value

Vedanta had a consolidated debt of Rs 53,581 crore and cash and cash equivalents of Rs 32,612 crore for FY22. The company's shares closed at Rs 274 apiece, with a total market valuation of Rs 1.01 trillion. However, Vedanta has lost 13% of its market value since January this year.

Earlier Hindustan Zinc ,it's subsidiary announced record dividend

Earlier this year, Hindustan Zinc, a subsidiary of Vedanta, announced a record dividend payout of Rs 32,000 crore for the ongoing fiscal year. However, a plan by the Vedanta group to merge its international zinc business with HZL was blocked by the Indian government, which argued that the deal was not in the best interest of minority shareholders. The Indian government owns 29.5% stake in Hindustan Zinc.

Resignation of Vedanta's CFO

In other news, the CFO of Vedanta, Ajay Goel, has resigned to pursue a career outside of the group, effective April 9, 2023. However, a spokesperson for Vedanta said the company was confident of meeting its upcoming maturities in the quarter ending June 2023 and has multiple options for refinancing and repayment through internal accruals.

Moody's Downgrades Vedanta's Ratings

Moody's recently downgraded Vedanta Resources' rating, citing increasing refinancing risks surrounding the holding company. The rating firm revised the outlook on Vedanta Resources as negative. It warned that ongoing delays in holdco VRL's refinancing efforts and its continued reliance on dividend receipts are depleting liquidity at its operating subsidiaries. The rating firm expected Vedanta Resources to find sufficient funds through loans and dividends to address its debt maturities until June 2023. However, VRL faces ongoing delays in obtaining funds relative to earlier expectations amid a funding environment that remains challenging with high interest rates, scarce market liquidity, and tight credit availability.

Move comes at a time when company is facing downgrade of its ratings for its refinancing efforts

Vedanta's announcement of its highest ever dividend payout and plans to refinance old loans come at a time when the company is facing Moody's downgrade of its rating and ongoing delays in refinancing efforts. Nevertheless, Vedanta remains confident of meeting its upcoming maturities and has multiple options for refinancing and repayment through internal accruals.