Vedanta board to consider third interim dividend on March 2

Mining major Vedanta Ltd on Thursday announced that its board of directors will consider a third interim dividend for the fiscal year 2021-22 on March 2, 2022.

Vedanta in a regulatory filing at the exchanges said, "The Board of Directors of the Company (the "Board") on Wednesday, March 02, 2022, will consider and approve Third Interim Dividend on equity shares, if any, for the Financial Year 2021-22. The record date for the purpose of determining the entitlement of the equity shareholders for the said dividend, if declared, is being fixed as Thursday, March 10, 2022."

Vedanta further said that pursuant to the provisions of the Securities & Exchange Board of India (Prohibition of Insider Trading) Regulations, 2015 and Insider Trading Prohibition Code of the Company, the Trading Window shall remain closed for dealing in securities of the Company for all Designated Persons from Thursday, February 24, 2022, to Friday, March 04, 2022 (both days inclusive).

The statement from the company came after it scrapped the plans to rejig its corporate structure. Vedanta announced the dismissal of the plans to demerge or spin-off its existing businesses on February 8, 2022.

In a regulatory filing on February 8, 2022, said, "Company has concluded this comprehensive review with inputs from various experts and advisors. The Board of Directors concludes that the current structure is optimal and is commensurate with the current scale and its diversified lines of businesses. Therefore, the Company will not undertake any corporate restructure including demerger/spin-off etc. and will continue with its existing structure."

On the day, the company also announced a Capital Allocation policy which read:

Following are the guiding principles of the company's capital allocation policy:

A consistent, disciplined, and balanced allocation of capital with long term Balance Sheet management

Maintain optimal leverage ratio (Net Debt / EBITDA) at the consolidated level. Vedanta Limited's December 2021 consolidated leverage ratio is 0.7x, which is amongst the best compared to the peer group. During normal business cycles, the Company will maintain this ratio below 1.5x at the consolidated level.

Overall capital allocation will maximize Total Shareholders Returns (TSR)

Capital allocation outlay across three large streams will be as under:

a) Capital Expenditure: Capital expenditure includes both growth and sustaining CapEx and substantive amount of this outlay will be around:

i) In existing lines of operations with a focus on volume augmentation, cost reduction, ESG and moving to value-added products, which command higher margins

ii) Growth projects will follow guidelines of minimum IRR of c. 18%

iii) Sustaining CapEx will be tracked on a per ton basis and managed through an annual operating plan exercise.

b) Dividend policy: Our dividend policy is both succinct and elaborate at the same time. In summary:

i) Minimum 30% of Attributable Profit after Tax (before exceptional items) of Company (excluding profits of HZL) will be distributed as dividends

Dividend from Hindustan Zinc Limited will be passed through, within 6 months

iii) This is subject to the Board's evaluation of various factors such as robustness of cash flows, economic situation, commodity price cycles, natural calamities, etc. for overall optimal cash management.

c) Inorganic Growth: Company will selectively invest in acquisitions, which are accretive to existing businesses or that have synergies with its core businesses.