VEDANTA DIVIDEND UPDATE

Late last night again after 10 pm, Vedanta informed the Stock exchange that their Board is meeting on 24th October 2020 to consider first  Interim Dividend.  The calculation shows that Vedanta received Rs. 4526 in May and  Rs. 5843 crores it will get in October total Rs.10369 crores divided by  37 1.72 crores issued number of shares, the dividend per share from Vedanta  can be as high as 27.90  just on distribution of Hindustan Zinc dividend.

VEDANTA: MASSIVE DIVIDEND COMING

 AA has started milching the cash cow—Hindustan zinc Ltd.

Yesterday (15.10.20) night at 2215 hours, Hindustan zinc (HZL) informed stock exchanges that it was modifying its agenda for Oct 20 board meeting to include interim dividend.  This is a typical AA style. First on 13.10.20  at around 10.12 he simply informs about the Board meeting keeping us guessing DIVIDEND NAHI DEGA?  After making our palpitations go high, now is the time for Vedanta shareholders to rejoice. Fortunately the pipeline to the London HQ of the parent passes through us. My calculations show a minimum dividend of 50 from Vedanta. 

1. In June this year, HZL took credit rating from Crisil for Rs 16,000 Cr borrowings via CPs and NCDs. Added with its recently enhanced bank borrowing limits (fund  & non-fund based) of Rs 2900 Cr AND its June 30 Cash & equivalents balance of Rs 15,480 Cr, gives an aggregate firepower of Rs 34,380 Cr. Theoretically, it can easily translate to a massive dividend of Rs 30,000 Cr or Rs 71 per share. At 64.9% holding in HZL, Vedanta could get cash inflow of Rs 19,470 Cr.

2. In May earlier this year, HZL had given an interim dividend of Rs 16.50 per share or Rs 6971 Cr of which Vedanta received Rs 4524 Cr (64.9% holding). This was not passed on to Vedanta shareholders despite a clear dividend policy and Anil Agarwal has been facing shareholder ire from Vedanta shareholders.

3. The aggregate of items 1 and 2 work out to Rs 23,994 Cr potential dividend from Vedanta to its shareholders i.e. Rs. 64.50 per share (371.7 Cr shares outstanding in vedanta).

4. With the failure of de-listing and with egg on his face of shareholders massively losing out (share price fell from Rs 140 levels to Rs 95 levels in a matter of days in last one week), Anil Agarwal faces an uneasy bond with his own shareholders with whom he now has to live on. There is an urgent need to appease his fellow shareholders and Vedanta’s dividend policy explicitly states that HZL dividend received will be passed on to Vedanta shareholders. This is also to help the cash starved parent facing default.

5. Against the calculation of a potential Rs 64.50 per share dividend as per item 4 above, one should definitely expect a Vedanta board meeting shortly to declare Rs 50 per share dividend to Vedanta shareholders.

Delisting Counter Offer- should be fair to investors as well-Vedanta

Re. VERY URGENT AND IMMEDIATE PLEASE. Delisting Regulation- Vedanta

The apprehensions as expressed in my letters dated 4^th July and 2^nd July 2020, all came true. The massive delisting exercise, the biggest ever in the country is failing. This I feel also a failure of the SEBI Regulations to keep pace with the evolving situation.

Majority of the investors in the share market do not have such a long term vision or appetite as LIC . Many small investors are staring at a massive loss of their wealth. The share price of Vedanta has already slipped down from 140 to 112 and it's likely to go down further.

The counter offer process as it stands now, is unfair to the small shareholders. While the promoters get the second chance to revise their offer upwards, the shareholders do not get the chance to revise their bid downwards. A fair second chance should be given to both.

SEBI should allow counter offer to the Vedanta  promoter in case they are  willing to do so. The Delisting exercise was just a touch and go affair with numbers showing under 137 crores shares received, yet with confirmed bids the book  fell short of 134 crs. While you should investigate the reason for this mismatch and take appropriate action, you should permit the promoters to make a counter offer.

I have, in the past also, suggested that for allowing the counter offer, the crossing of threshold of 90% should not be made compulsory. As a matter of fact, the “discovered price” is not defined anywhere in the regulation and in the past it was taken as the price at which highest number of shares were offered(Alfa Laval delisting). It is against the interest of the small shareholders who are not given a second chance to revise their bids  lower.  The counter  offer  will give them this much demanded second chance.

VEDANTA DELISTING- Ground check

Now that the investors have got all kinds of GYAN about valuation and the likely exit price, it is time to do some ground check.  The price of 150 or 200 or 300 investors will be able to get only if the promoters are able to cross the  threshold of 90% i.e. they get a minimum of 134.78 Crs. shares in the offer. Every investor must ensure that he participates in the offer at whatever price he feels he deserves, be it 100 or 1000, but participate he must. What are the hurdles? Just ensure that:

1.       All your shares are free- if they had been pledged, get them unpledged immediately.

2.       Check with your broker; the cut-off time. Some brokers do not accept the tendering requests on the last date. Some others have a cut-off time of 10.30 am on the last date.

3.       The success of the offer depends upon LIC. If you want to be aware of LIC’s bidding, check for the bid size of 23.66 crs.

4.       The bidding details can be viewed on the link given below:   

https://www.bseindia.com/markets/publicIssues/BSEBidDetails_ACQ.aspx?flag=ec&Scripcode=5255

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ACCELYA OFFER OPENING ON 5 OCTOBER 2020, CASE FILED

Further to my post of Saturday, September 26, 2020, I am happy to inform that I have filed an appeal in SAT on 28 September 2020 seeking  additional interest of Rs. Rs.63.21 being further Interest @10% per annum for the additional  period of delay of 224  days.  There is a delay of 270 days in the offer but the acquirer is paying interest for only 46 days.  All investors should pray and hope for justice from SAT.

 It is clarified that the offer will not be delayed. Investors will be able to tender their shares, they will either get Rs.1042.99 the original offered price; in case we are successful and  SAT sets to correct the mistake of SEBI and directs for payment of additional interest, investors will get RS.1106.20 per share