Hindustan Zinc Limited won't borrow to keep paying dividends, says CEO

economictimes.indiatimes.com:

HZL) won't borrow to keep paying dividends and its financial heft hasn't been undermined by a series of generous payouts over the past one year or so, the company's chief executive Arun Misra said. The government is keeping an eye on HZL's dividends, a senior official had told ET last month, adding it would raise a red flag when it feels the company is using its borrowing proceeds to extend dividend to parent Vedanta and other shareholders. In an interview to ET, Misra also made it clear that HZL doesn't intend to revive its now-lapsed January proposal to buy parent Vedanta's global zinc business.

The $2.98-billion cash deal proposal had rattled the government, the most important minority shareholder in HZL with a 29.54% stake. The Centre had also questioned the deal valuation. «The LME (London Metal Exchange) prices for metals are low and let's first figure out ways to protect profitability.

We have distributed dividends and our cash positions have to be much healthier if we have to (plan to) buy it (Vedanta's global zinc assets) again,» Misra said.Dividend payouts Refuting criticism that HZL has been extending large dividends to bail out parent Vedanta at the expense of its own interest, Misra said the payouts have benefitted all stakeholders, including minority ones. Moreover, HZL's current financial strength remains robust enough to fund any growth strategy or acquisition plans, he said, adding the company is on the look-out for new mine auctions. HZL has announced dividends five times since July 2022 totalling Rs 34,859 crore.