Inside story of the National Stock Exchange’s amazing success, leading to hubris, regulatory capture and algo scam
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30-day online access to the magazine articles published during the subscription period.
Access is given for all articles published during the week (starting Monday) your subscription starts. For example, if you subscribe on Wednesday, you will have access to articles uploaded from Monday of that week.
This means access to other articles (outside the subscription period) are not included.
Articles outside the subscription period can be bought separately for a small price per article.
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Distributable profits has been at such levels that they have supported dividends payouts to GOI as well as Vedanta and other investors.
GOI may have got back many times its original investment in HZL, by way of dividends under VEDL leadership. Ultimately, GOI, as a stake holder with veto power, knows that it needs recurring dividends from HZL. Instead if fixating on some future rainbow.
Regarding, potash fertilizer raw material Mines. GOI should fix clear rules on development of the Mines, with timelines. India is in dire need of potash and Vedanta has to be monitored to deliver.
Shareholder Rights: Dividends are a lawful distribution of profits to shareholders, as permitted under Section 123 of the Companies Act. The allegation that this violates corporate law is baseless—dividend payouts are approved by HZL’s board and shareholders, including the Government of India (29.54% stakeholder).
Efficient Capital Allocation: If HZL has no immediate need for surplus cash (e.g., lack of viable exploration projects or expansion plans), returning capital to shareholders is economically rational. Retaining unutilized cash erodes shareholder value due to inflation and opportunity costs.
2. Vedanta’s Debt Management is Prudent
Healthy Debt-to-Equity Ratio (0.85): This ratio indicates a balanced capital structure. Vedanta Resources Ltd (VRL) is leveraging HZL’s dividends to service debt—a standard practice for holding companies. There is no "siphoning"; dividends are legitimate returns to a majority shareholder.
Global Precedent: Multinational corporations routinely use dividends from subsidiaries to service parent-level debt (e.g., Unilever, Tata Group). This is neither illegal nor unethical.
3. Zinc Reserves Depletion: A Misleading Narrative
Mining Efficiency ? Mismanagement: The reduction in reserve timelines (11 years to 7 years) reflects higher production efficiency, not reckless exploitation. HZL has consistently invested in mining technology to maximize output—a positive for India’s industrial growth.
Exploration Investments: Vedanta has allocated funds for exploration, but viable zinc deposits are finite. Blaming Vedanta for geological constraints ignores market realities.
4. Potash Block Allocation: A Strategic Opportunity
Reducing Import Dependence: India imports 100% of its potash (2MT/year). Allocating the Jhandawali–Satipura block to HZL—a company with mining expertise—could cut import bills and boost domestic fertilizer production.
Hypothecation Claims Are Speculative: The article assumes Vedanta will misuse the block for loans without evidence. HZL’s track record in Rajasthan (e.g., Sindesar Khurd Mine) proves its capability to develop mineral assets.
5. Government Oversight Exists
SEBI & MCA Compliance: As a listed company, HZL’s financial decisions are scrutinized by regulators. The Government of India, as a minority shareholder, has voting rights to oppose unfair dividends if warranted. Its silence implies consent.
Dividend Policy Transparency: HZL’s dividend history is publicly disclosed. High payouts reflect strong cash flows, not exploitation.
6. Public Sector Alternatives Are Not Superior
CPSEs’ Track Record: Central public sector enterprises (CPSEs) like Coal India have faced criticism for inefficiency and stagnation. Private sector participation drives competition and productivity.
FDI and Growth: Vedanta’s investments in HZL have made India the world’s 2nd-largest zinc producer. Nationalizing resources would deter foreign investment.