Sebi order on Cairn UK dividends may cloud Vedanta's prospects as debt pressure mounts
Vedanta which faces a regulatory order on the non-payment of dividends to Cairn UK Holdings whose exploration business it bought. The market regulator is set to pronounce its ruling on the direction of the Supreme Court that followed a suit by Cairn UK Holdings.
«The Securities and Exchange Board of India is investigating the non-payment of dividends by Cairn India to Cairn UK Holdings after Cairn India's merger with Vedanta in 2017,» said a source.
"Sebi is likely to give an order by October 14, 2023, as per Supreme Court's order, which could lead to an additional payment burden for Vedanta."
Vedanta Resources Limited (VRL), the UK-based global mining and metals conglomerate, is likely to explore a potential extension of dollar bonds to alleviate its mounting debt pressures as it faces large funding requirements including $1.3 billion in FY24 and $4.3 billion in FY25, according to a Standard Chartered Bank recent note.
The group, which is reeling under the pressure of debt repayments, could see another blow due to the order. In October 2022, the Supreme Court granted six months to SEBI to complete the enquiry into the issue and further extended it by six months until October 14, 2023.
The matter was filed by Cairn UK Holdings in April 2017, which had approached Sebi over Cairn India's non-payment of dividends of over ₹660 crore.
Cairn UK Holdings sought Sebi's intervention to make Cairn India settle the dividend dues along with an 18% annual interest. While the principal amount has been released the interest is in dispute, the source said.
However, Sebi dismissed the complaint on the grounds that the unpaid dividend had been paid to income tax authorities and thus it would be inappropriate for the regulator to take
