91% of Vedanta's holding in Hindustan Zinc is now pledged
By Sudarshan Kumar Apr 20, 2023 2:25:46 PM IST (Published)
The parent company of Vedanta and Hindustan Zinc - Vedanta Resources Plc is relying heavily on dividend payouts from its Indian units as it looks to reduce debt on its books.
Vedanta has pledged an additional 10 crore shares or 2.44 percent of its equity holding in Hindustan Zinc on Thursday. With this, 91 percent of Vedanta's 64.92 percent stake is now pledged.
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Majority of these shares or 56.87 percent to be precise, are pledged with the Union Bank of India. This latest 2.44 percent pledge has been created in favour of Axis Trustee Services.
Vedanta has entered into a term loan agreement under which one of the security cover includes pledging shares of Hindustan Zinc. The funds raised through this pledge will be used for general business purposes like repaying existinng debt, capex, and operating expenditures.
Also Read: Hindustan Zinc has drained all its cash in paying dividend to Vedanta - What happens next
Last month, both Vedanta and Hindustan Zinc, entities controlled by billionaire Anil Agarwal declared dividends worth Rs 69,300 crore for financial year 2023. The figure is nearly triple their combined profitability.
A sum of the trailing 12-month profitability of Hindustan Zinc and Vedanta comes up to Rs 25,348 crore.
The parent company of Vedanta and Hindustan Zinc - Vedanta Resources Plc is relying heavily on dividend payouts from its Indian units as it looks to reduce debt on its books. Vedanta Resources has debt maturities worth nearly $7 billion lined up for the next few years. Maturities worth nearly $900 million are due for the first half of this financial year (FY24).
Vedanta had earlier proposed to sell its global zinc assets to Hindustan Zinc for nearly $3 billion. However, the Indian government, who owns 30 percent of Hindustan Zinc, has opposed the move. There is no clarity on the status of this proposed deal yet.
Shares of Vedanta are trading 0.9 percent lower at Rs 279.25. The stock is down nearly 12 percent this year.
(Edited by : Hormaz Fatakia)
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