Anil Agarwal-led Vedanta group gets shareholder nod to rejig capital

Anil Agarwal-led Vedanta group on Wednesday said that the firm’s shareholders had approved a proposal to transfer Rs 12,857 crore from its general reserve to its profit and loss (P&L) account.

The special resolution was put to vote at an extraordinary general meeting (EGM) on Tuesday, with 99.96 per cent shareholders voting in its favour, Vedanta said. The money will be utilised to create further value of shareholders, the company said. 

Analysts tracking Vedanta expect the firm to announce a special dividend in the coming months. Executives at the company were not immediately available for comment on this issue.

The development acquires significance since Vedanta's holding company, Vedanta Resources, will receive nearly 70 per cent of the dividend to be distributed.

Experts said the transfer of the balance from the general reserve to the P&L account was made possible by changes introduced by the Companies Act, 2013. Earlier, companies had to transfer a certain percentage of profits to their general reserves before the declaration of dividend.

The Mumbai bench of the National Company Law Tribunal in August had directed the company to hold the EGM to approve the scheme of arrangement. In its notice in September, when calling for the EGM, Vedanta said that the funds represented by the general reserve were in excess of the company’s anticipated operational and business needs for the foreseeable future.

According to data compiled by the BS Research Bureau, Vedanta paid the most dividend in FY22, giving out Rs 16,740 crore to shareholders. In FY23, the company has so far announced two interim dividends, amounting to an outflow of Rs 18,960 crore, data shows.

Much of this dividend, according to ratings agency Moody's, will go towards servicing debt obligations of Vedanta Resources, which holds nearly 70 per cent stake in Vedanta.