Hindustan Zinc to pay special dividend of ₹8,000 crore to shareholders this fiscal: Report

Vedanta group company Hindustan Zinc Ltd (HZL) is planning a special dividend payout of ₹8,000 crore to its shareholders in the current fiscal year. HZL's board is expected to meet on Tuesday to discuss and approve this special dividend payment, according to PTI report.

"Of this, around 30 per cent or ₹2,400 crore may go to the Centre contributing to its non-tax revenues for the fiscal," sources were quoted as saying by PTI.

The decision comes after the National Company Law Tribunal (NCLT) approved the transfer of ₹10,383 crore from general reserves to retained earnings.

This special dividend will be in addition to the regular dividend of approximately ₹6,000 crore that HZL distributes annually.

Besides the government, the special dividend will benefit the promoter Vedanta Ltd, which holds about a 65% stake in HZL and will receive around ₹5,100 crore, potentially to further reduce its debt.

Vedanta to offload 3.31% stake in HZL

Vedanta is also planning to sell up to a 3.31% stake in HZL through an Offer for Sale from August 16 to 19, with a floor price set at ₹486 per share.

HZL has enjoyed consistent sales volume growth and balanced capital expenditure, which have contributed to a strong track record of generating cash flows. In its scheme of arrangement filed with the NCLT, the company expressed confidence that this growth trajectory will continue, and its operations will keep generating incremental cash flow in the coming years.

For the financial year ended March 2024, Hindustan Zinc paid a total dividend of ₹5,493 crore, with the government receiving ₹1,622 crore for its 29.5% stake in the company.

In FY22-23, the company set a record by paying out a dividend of around ₹32,000 crore, with the government receiving a substantial ₹9,500 crore.

During the June quarter, Hindustan Zinc's market capitalization more than doubled, adding nearly ₹1.6 lakh crore. The company even reached its highest-ever market cap of ₹3.4 lakh crore during this period.