Vedanta will pay investors a dividend of Rs.31.50 per share, it said in a stock exchange filing filed on Thursday. That will bring some relief to parent company Vedanta Resources Ltd., which is facing a wall of maturities, starting with a $1 billion bond issue maturing in July.
Separately, Vedanta Resources announced a tender offer to buy back up to $500 million of its July-due dollar bills, an exchange notice in Singapore said. The company said it will use about half of the $1 billion it receives from the Indian unit as dividends.
The parent company’s dollar-denominated bonds rose at their highest rate in six weeks on Friday, with July debt maturing at the highest level since October, according to data compiled by Bloomberg.
The Mumbai-listed company owned by billionaire Anil Agarwal paid out around US$2.2 billion to shareholders in March of the year-ending. S&P Global Ratings warned last month that dividends from Vedanta Ltd., which is 70% owned by its London-based parent company, are likely to contribute a large part of Vedanta Resources’ debt service as the refinancing proceeds in the next few years six months becomes more difficult .
“If history is any indication of profitability, expect the dividend to remain high,” Ajay Goel, acting chief financial officer, said in a post-earnings call. It will help the parent company reduce debt by $4 billion over the next three years, he said.
The parent company’s debt reduction is being brought forward, with at least $1 billion expected this fiscal year, Vedanta Ltd. chief executive officer Sunil Duggal said in another post-earnings call on Thursday.
Net income goes down
Meanwhile, the group’s net profit fell nearly 10% year-on-year in the January-March period, the Indian entity said. That would be the first year-over-year earnings decline since the quarter ended September 2020. It also missed the analyst estimate.
Industries around the world are grappling with higher energy and commodity costs, exacerbated by Russia’s war in Ukraine, which has turned supply chains upside down. Locally, Indian mills are finding it difficult to secure supplies of thermal coal, particularly aluminum producers, as the government diverts fuel to the power sector.
Shares of Vedanta rose 1.6% in Mumbai on Friday, lifting full-year gains by nearly 23%. Analysts have 13 buy recommendations for the company, 3 holds and 2 sells, according to data compiled by Bloomberg.