Vedanta Group Led By Anil Agarwal Receives Shareholders’ Recapitalization Approval

Vedanta Group Led By Anil Agarwal Receives Shareholders’ Recapitalization Approval

October 14, 2022: Development gains momentum as Vedanta’s holding company, Vedanta Resources, receives nearly 70% of dividends paid

Vedanta Group, headed by Anil Agarwal, said Wednesday that the company’s shareholders have approved a proposal to transfer his Rs 12,857 crore from the general reserve to the profit and loss account (P&L).

Vedanta said the special resolution was put to a vote at Tuesday’s Extraordinary General Meeting (EGM), with 99.96% of shareholders voting in favor.

The company said the funds will be used to create additional value for its shareholders. Analysts who follow Vedanta expect the company to announce a special dividend in the coming months.

Company executives were not immediately available for comment on the matter. The development is gaining momentum as Vedanta’s holding company, Vedanta Resources, will receive nearly 70% of the dividends paid. Experts said the move of balances from the general reserve to the income statement was made possible by changes introduced by the Companies Act 2013.

Previously, companies were required to transfer a certain percentage of their profits to the general reserve before declaring dividends.

A jury at the National Corporate Law Tribunal in Mumbai in August ordered the company to hold an extraordinary general meeting to approve the scheme of arrangement.

In his September statement calling for EGM, Vedanta said the funds represented by the general reserve would exceed the company’s anticipated operational and business needs for the foreseeable future.

According to data compiled by BS Research Bureau, Vedanta paid its highest dividend in FY22, issuing Rs 16,740 crore to its shareholders.

In the previous fiscal year of 23, the company announced two interim dividends with a total outflow of Rs 18,960 crore, data shows.

Much of the dividend will be used to pay down the debt of Vedanta Resources, which owns about 70% of Vedanta, according to rating agency Moody’s.

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