Dividend Policy of

“VEDANTA LTD.”

Submitted by:
Vivek Rathod
(21F102)

Submitted to:
Prof. P.K. Priyan

POST GRADUATE DEPARTMENT OF BUSSINESS

MANAGEMENT
(SARDAR PATEL UNIVERSITY)
VALLABH VIDYANAGAR.

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Introduction to company:
Vedanta Resources Limited is an Indian diversified mining company headquartered in London,
United Kingdom. It is the largest mining and non-ferrous metals company in India and has
mining operations in Australia and Zambia and oil and gas operations in three countries. Its main
products are Zinc, Lead, Silver, Oil & Gas, Iron Ore, Steel, Aluminium and Power. It has also
developed commercial power stations in India in Odisha (2,400 MW) and Punjab (1,980 MW).
The company with 20,000 employees is primarily owned by the family of Anil Agarwal through
Volcan Investments, a holding vehicle with a 61.7% stake in the business. Vedanta limited
(formerly Sesa Goa / Sterlite) is one of the many Indian subsidiaries of Vedanta resources and
operates iron ore mines in Goa.Vedanta was listed on the London Stock Exchange and was a
constituent of the FTSE 250 Index until chairman, Anil Agarwal's offer to take the company
private went unconditional in September 2018.
The company was founded in Bombay (now Mumbai) in 1976 by Anil Agarwal, as a scrap-metal
dealership. In 1979, he acquired the Shamsher Sterling Corporation (subsequently renamed
Sterlite Industries), a manufacturer of power and control cables. The company acquired a
majority stake in Balco, the Indian state aluminium business, in 2001. It was first listed on the
London Stock Exchange in 2003 when, as Vedanta Resources, it raised US$876 million through
an initial public offering.
In 2006, Vedanta acquired Sterlite Gold, a gold mining business, and in 2007, Vedanta
Resources bought a 51% stake in Sesa Goa, India's largest producer-exporter of iron ore, and the
company became listed on NYSE with a US$2 billion ADS issue.
In 2008, Vedanta bought certain of the assets of Asarco, a copper mining business, for US$2.6
billion. and in 2010, it acquired Anglo-American's portfolio of Zinc assets in South Africa,
Namibia and Ireland.
In 2011, Vedanta acquired 58.5% controlling stake in Cairn India, the India's largest private
sector Oil & Gas company and in 2013, Sterlite Industries and Sesa Goa announced a merger.
The merger took place in August 2013 and the consolidated group was then called Sesa Sterlite
Ltd (now Vedanta Limited).
In June 2018, Vedanta acquired 90% stake in Electrosteel Steels, a steel producer. In September
2018, the company announced that Anil Agarwal would be taking Vedanta Resources private on
1 October 2018.
VEDANTA LTD goal is to create long-term value for all our stakeholders through research,
discovery, acquisition, sustainable development and utilisation of diversified natural resources.
For accomplishing that, we empower our people to drive excellence and innovation. We
demonstrate world-class standards of governance, safety, sustainability and social responsibility.
Mission Of the company is To create a leading global natural resources company.

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MINING INDUSTRY IN INDIA:
India holds a fair advantage in production and conversion costs in steel and alumina. Its strategic
location enables export opportunities to develop as well as fast-developing Asian markets. As of
FY22, the number of reporting mines in India were estimated at 1,425, of which reporting mines
for metallic minerals were estimated at 525 and non-metallic minerals at 720. Minerals are
precious natural resources that serve as essential raw materials for fundamental industries, so the
growth of the mining industry is essential for the overall industrial development of a nation. The
vast resources of numerous metallic and non-metallic minerals that India is endowed with serve
as a foundation for the expansion and advancement of the nation's mining industry. India is
largely self-sufficient in metallic minerals including bauxite, chromites, iron ore, and lignite as
well as mineral fuels like coal and lignite. The industry has the potential to significantly impact
GDP growth, foreign exchange earnings, and give end-use industries like building,
infrastructure, automotive, and electricity, among others, a competitive edge by obtaining
essential raw materials at reasonable rates. Rise in infrastructure development and automotive
production are driving growth.
MARKET SIZE:
In FY 2021-22, coal production in India stood at 777.31 MT (provisional) with a growth of
8.55%. Coal production in India stood at 380.082 MT in FY 2022-23 (April-October 2022). In
FY22, mineral production is estimated at Rs.190,392 crore (US$ 24.95 billion). India ranks
fourth globally in terms of iron ore production. Production of iron ore in FY21 stood at 204.48
million tonnes. From April 2021- January 2022, iron ore production in India stood at 204 million
tonnes (MT). In FY20, India had a total number of 878 steel plants producing crude steel. India’s
crude steel production stood at 71.3 MT in FY23 (until October 2022). The steel production in
India is projected to increase by 18% to reach 120 million tonnes (MT) by FY22. In Q3 FY22,
production of hot metal, crude steel and saleable steel by SAIL stood at 1.55 MT, 1.44 MT and
1.46 MT, respectively.

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Combined Aluminium production (primary and secondary) in India stood at 4.1 MT per annum
in FY21 becoming the 2nd largest in the world. Aluminium production stood at 3,285,186 tonnes
between April 2020 and January 2021. India is the world's second-largest coal producer as of
2021.
Road to ahead:
There is a significant scope for new mining capacities in iron ore, bauxite and coal and
considerable opportunities for future discoveries of sub-surface deposits. Infrastructure projects
continue to provide lucrative business opportunities for steel, zinc, and aluminium producers.
Iron and steel make up a core component for the real estate sector. Demand for these metals is
set to continue given strong growth expectations for the residential and commercial building
industry.
The Government of India has also helped in the development of the metals and mining sector in
India by launching key policy initiatives. The National Mineral Policy, which was approved by
the government in February 2019, has ensured improved regulation and enforcement, more
transparency, balanced social and economic growth, and sustainable mining techniques. The
policy grants industry status to the mining activities and boost private sector funding.
Additionally, it aims to facilitate the merger and acquisition of mining companies, entice private
sector involvement in exploration, and permit the transfer of mineral corridors created
specifically for metals and mining leases. In the future, both increased domestic demand and
exports are projected to play significant roles in driving the industry's expansion and its
contribution to GDP growth in a post-covid environment.

VEDANTA LTD SHARE HOLDING PATTERNS:

Holder's Name No of Shares % Share Holding

No Of Shares 3717199039 100%

Promoters 160656 0%

Foreign Institutions 322734952 8.68%

NBanks Mutual Funds 78179907 2.1%

Others 96994554 2.61%

General Public 268856796 7.23%

Financial Institutions 351733818 9.46%

Foreign Promoter 2590189293 69.68%

GDR 8349063 0.22%

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DIVIDEND PRATICES OF VEDANTA LTD.
What is a Dividend Policy?
A company’s dividend policy dictates the amount of dividends paid out by the company to its
shareholders and the frequency with which the dividends are paid out. When a company makes a
profit, they need to make a decision on what to do with it. They can either retain the profits in the
company (retained earnings on the balance sheet), or they can distribute the money to
shareholders in the form of dividends.

What is a Dividend?
A dividend is the share of profits that is distributed to shareholders in the company and the return
that shareholders receive for their investment in the company. The company’s management must
use the profits to satisfy its various stakeholders, but equity shareholders are given first
preference as they face the highest amount of risk in the company. A few examples of dividends
include:

1. Cash dividend
A dividend that is paid out in cash and will reduce the cash reserves of a company.

2. Bonus shares
Bonus shares refer to shares in the company are distributed to shareholders at no cost. It is
usually done in addition to a cash dividend, not in place of it.

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Examples of Dividend Policies
The dividend policy used by a company can affect the value of the enterprise. The policy chosen
must align with the company’s goals and maximize its value for its shareholders. While the
shareholders are the owners of the company, it is the board of directors who make the call on
whether profits will be distributed or retained. The directors need to take a lot of factors into
consideration when making this decision, such as the growth prospects of the company and
future projects. There are various dividend policies a company can follow such as:
1. Regular dividend policy
Under the regular dividend policy, the company pays out dividends to its shareholders every
year. If the company makes abnormal profits (very high profits), the excess profits will not be
distributed to the shareholders but are withheld by the company as retained earnings. If the
company makes a loss, the shareholders will still be paid a dividend under the policy. The
regular dividend policy is used by companies with a steady cash flow and stable earnings.
Companies that pay out dividends this way are considered low-risk investments because while
the dividend payments are regular, they may not be very high.
2. Stable dividend policy
Under the stable dividend policy, the percentage of profits paid out as dividends is fixed. For
example, if a company sets the payout rate at 6%, it is the percentage of profits that will be paid
out regardless of the amount of profits earned for the financial year. Whether a company makes
$1 million or $100,000, a fixed dividend will be paid out. Investing in a company that follows
such a policy is risky for investors as the amount of dividends fluctuates with the level of profits.
Shareholders face a lot of uncertainty as they are not sure of the exact dividend they will receive.
3. Irregular dividend policy
Under the irregular dividend policy, the company is under no obligation to pay its shareholders
and the board of directors can decide what to do with the profits. If they a make an abnormal
profit in a certain year, they can decide to distribute it to the shareholders or not pay out any
dividends at all and instead keep the profits for business expansion and future projects. The
irregular dividend policy is used by companies that do not enjoy a steady cash flow or lack
liquidity. Investors who invest in a company that follows the policy face very high risks as there
is a possibility of not receiving any dividends during the financial year.
4. No dividend policy
Under the no dividend policy, the company doesn’t distribute dividends to shareholders. It is
because any profits earned is retained and reinvested into the business for future growth.
Companies that don’t give out dividends are constantly growing and expanding, and
shareholders invest in them because the value of the company stock appreciates. For the investor,
the share price appreciation is more valuable than a dividend payout.

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Dividend Practices:
Some Important Dividend Practices
1. A Fixed Rupee Amount of Dividend:
This policy emphasises the significance of regularity in dividends of a given size above
everything else. Under this policy, there is no connection between dividends paid and current
profits earned. This policy tends to treat ordinary shareholders somewhat like preference
shareholders and gives no particular consideration to the role played by the investment of
retained earnings. The danger in using this policy is that if the dividend payments are too large
and it takes a large portion of accumulated working capital, the company may not be able to
withstand the shock of operating losses.
2. Minimum Rupee amount with a step-up Feature:
This policy is based on the proposal that the present shareholders want a regular rupee amount as
dividend, however small it may be. But corporate profits are given more consideration in
determining the dividends in this policy as compared to the policy mentioned above.
The small amount of the fixed dividend aims at reducing the chance of ever missing a dividend.
This policy sets the dividend low enough so that there is little chance of a default but at the same
time it allows a great deal of flexibility for paying higher dividends and does commit the
business to adopt the larger dividend may or may not be distributed depending on the capital
growth plans of the management.
The emphasis is placed on internal financing and on establishing a broad foundation of equity
capital for future borrowing. This is a popular policy for companies with fluctuating incomes
because it provides managers with a policy guide without seriously restricting their freedom of
decision-making.
Certain shareholders also like it because it allows them to plan on fixed amounts of cash and at
the same time there is possibility of getting a reward by way of internal growth of their
investment and possibly by higher market values for their shares when profits increase.
3. Fixed Percentage of Net Profit:
This is the most flexible dividend policy as it is related directly to net profits. Under this policy,
dividends are a fixed percentage of profits which is called as the payout ratio and will fluctuate at
exactly the same rate as profits. The first impulse may be to start a policy of this type because it
is related to the ability to pay, measured by profits. But this policy leaves management with
limited freedom for decision- making.
Internal financing with retained earnings becomes automatic and inverse to the payout ratio. For
example, a 60% payout is a 40% pay in ratio and a 30% payout is a 70% pay in ratio. At any
given payout ratio, the rupee amount of dividends and the rupee additions to retained earnings
will both increase with the increasing rupee profits and decrease with decreasing rupee profits.

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Policy requiring the distribution of dividend as a fixed percentage of net profits will provide a
good amount of retained earnings in a profitable and growing business and make it easier to
finance in the future as creditors and preference shareholders will be willing to extend funds on
the prospect of an increase in equity.
But the picture will be different if the profits are declining. Therefore, it may be better in the
interests of shareholders in the long run that corporate management increases the percentage of
dividends when profits decline and decrease it as profits increase.
4. Dividends as a Fixed Percentage of Market Value:
As shareholders often translate their dividend income into the percentage returns of market price
of their shares, financial managers, should relate dividends to the value of company’s shares
rather than to its profits. This requires first determining a typical rate of dividend return as a
target rate.
The target may be the average dividend for the industry or it may be the rate paid by a closely
competitive company. This policy singles out the market as the ideal valuation mechanism. No
consideration is given here to the effect of dividends on internal investment conditions, or on
prospects for future financing. It is based on the belief that management owned an obligation to
the shareholders to adjust dividend payment with the rates paid by competitors and by the
industry as a whole on their market investment values.

Factors affecting the dividend practices:

Dividend decision relates to how much of the company's net profit is to be distributed to the
shareholders and how much of it should be retained in the business for meeting the investment
requirements.
This decision should be taken keeping in mind the overall objective of maximising shareholders'
wealth.
The main factors affecting dividend decisions are discussed below:

i. Amount of Earnings: Dividends are paid out of current and past earnings. Thus,
earnings are a major determinant of dividend decision.
ii. Stability in Earnings: A company having higher and stable earnings can declare
higher dividends than a company with lower and unstable earnings.
iii. Stability of Dividends: Generally, companies try to stabilise dividends per share. A
steady dividend is given each year. A change is only made if the company's earning
potential has gone up and not just the earnings of the current year.
iv. Growth Opportunities: Companies having good growth opportunities retain more
money out of their earnings so as to finance the required investment. Therefore the

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 dividend declared in growth companies is smaller than that in the non-growth
companies.
v. Cash Flow Position: Dividend involves an outflow of cash. Availability of enough
case is necessary for payment or declaration of dividends.
vi. Shareholders' Preference: While declaring dividends, the management must keep in
mind the preferences of the shareholders. Some shareholders in general desire that at
least a certain amount is paid as dividend. The companies should consider the
preferences of such shareholders.
vii. Taxation Policy: If the tax on dividends is higher, it is better to pay less by way of
dividends. But if the tax rates are lower, higher dividends may be declared. This is
because as per the current taxation policy, a dividend distribution tax is levied on
companies. However, shareholders prefer higher dividends, as dividends are tax-free
in the hands of shareholders.
viii. Stock Market Reaction: Generally, an increase in dividends has a positive impact on
the stock market and vice-versa. Thus, while deciding on dividends, this should be
kept in mind.
ix. Access to Capital Market: Large and reputed companies generally have easy access
to the capital market and, therefore, may depend less on retained earnings to finance
their growth. These companies tend to pay higher dividends than smaller companies.
x. Legal Constraints: Certain provisions of the Companies Act place restrictions on
payouts as the dividend. Such provisions must be adhered to while declaring the
dividend.
xi. Contractual Constraints: While granting loans to a company, sometimes, the lender
may impose certain restrictions on the payment of dividends in the future. The
companies are required to ensure that the dividend payout does not violate the terms
of the loan agreement in this regard.

VEDANTA LIMITED
DIVIDEND DISTRIBUTION POLICY FOR EQUITY SHAREHOLDERS
As per the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015,
as amended, the Company is required to formulate and disclose its Dividend Distribution
Policy. Accordingly, the Board of Directors of the Company (‘the Board’) has approved
this Dividend Distribution Policy for the Company at its meeting held on May 15, 2017.
The Board of Directors shall recommend dividend in compliance with this policy, the
provisions of the Companies Act, 2013 and Rules made thereunder and other applicable
legal provisions.

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 1. Dividend Payout
In every financial year, the Board aimsto distribute to its equity shareholders:
1.1. The entire dividend income (net of taxes) it receives from its subsidiary,
Hindustan Zinc Limited (this does not apply to any one‐time special dividends received
from Hindustan Zinc Limited which will be at the discretion of the Board). Dividend
from Hindustan
Zinc Limited will be pass through, within 6 months; and

1.2. Minimum 30% (including taxes, cess, and levies, if any relating to the dividend)
of Attributable Profit after Tax (before exceptional items) of the Company excluding its
share of profits in HindustanZinc Limited for the year. Such profits will be net of
dividend payout to preference shareholders, if any.

2. While considering a dividend, the following financial parameters, and internal and
external factors shall also be evaluated by the Board:
a. Current financial year’s profits and retained earnings;
b. Availability of cash and liquid investments to pay dividend;
c. Deleveraging plans of the Company;
d. Capital expenditures and organic/inorganic plans of the Company;
e. Contingency plans;
f. Company’s future prospects including its continued ability to sustain its profits; and
g. External factors like uncertain or recessionary economic and business conditions,
regulatory environment, prevailing and expected commodity prices in the market etc.

3. Circumstances under which the shareholders of the Company may or may not
expect dividend:
Generally, it would be the Company’s policy to pay dividend in the manner specified in
above. However, the Board may not approve a dividend in situations such as:
a. When the Company does not have any profits;
b. When there are prolonged strikes or lockouts, natural calamities, regulatory
c. actions, major accidents, or other events significantly impacting production volumes;
d. When prices of the company’s products have fallen suddenly, impacting future profits
in substantial manner; or
e. When Company’s liquidity is jeopardized for any reason, impairing its ability to pay
the dividend.

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 4. How the retained earningsshall be utilized:
The retained earnings may be utilized either for business purposes mentioned in its
Memorandum and Articles of Association or shall be distributed to the equity
shareholders.
5. Adoption of parametersfor dividend payout with respect to various classes ofshares:

a. Presently, the authorised share capital of the Company is divided into equity shares
of Re.1 each and preference shares of Rs.10 each.
b. As and when the Company issues other kind of shares, the Board may suitably amend
this Policy.

6. Review of Policy
This policy will be reviewed periodically by the Board and if revised, the Company will
announce such changes.
This Policy will come into effect from the Financial Year 2018. The Policy has been
reviewed and updated by the Board at its meeting held on February 08, 2022.

Dividend history for VEDANTA LTD.

Vedanta Ltd. has declared 38 dividends since July 23, 2001. In the past 12 months, Vedanta Ltd.
has declared an equity dividend amounting to Rs 81.50 per share. At the current share price of Rs
319.75, this results in a dividend yield of 25.49%.

Ex-Date Dividend Amount Dividend Type Record Date Instrument

Type
Feb. 3, 2023 12.5 INTERIM Feb. 4, 2023 Equity Share
Nov. 29, 2022 17.5 INTERIM Nov.30,2022 Equity Share
26-Jul-22 19.5 INTERIM 27-Jul-22 Equity Share
6-May-22 31.5 INTERIM 9-May-22 Equity Share
9-Mar-22 13 INTERIM - Equity Share
Dec. 17, 2021 13.5 INTERIM Dec.20,2021 Equity Share
Sept. 8, 2021 18.5 INTERIM Sept. 9, 2021 Equity Share

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Oct. 28, 2020 9.5 INTERIM Oct.31, 2020 Equity Share
5-Mar-20 3.9 INTERIM 7-Mar-20 Equity Share
13-Mar-19 1.85 INTERIM - Equity Share
Nov. 6, 2018 17 INTERIM Nov.10,2018 Equity Share
20-Mar-18 21.2 INTERIM - Equity Share
11-Apr-17 17.7 INTERIM 12-Apr-17 Equity Share
Nov. 7, 2016 1.75 INTERIM Nov. 8, 2016 Equity Share
Oct. 30, 2015 3.5 INTERIM Nov. 2, 2015 Equity Share
6-Jul-15 2.35 FINAL - Equity Share
Nov. 3, 2014 1.75 INTERIM Nov. 5, 2014 Equity Share
4-Jul-14 1.75 FINAL - Equity Share
Nov. 6, 2013 1.5 INTERIM Nov. 7, 2013 Equity Share
31-May-13 0.1 FINAL - Equity Share
8-Jun-12 2 FINAL - Equity Share
Feb. 1, 2012 2 INTERIM Feb. 2, 2012 Equity Share

Dividend Amount
35
30
25
DIVIDEND AMOUNT

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YEAR

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 year vedanta coal hindalco nmdc Ucoil gmdcl average
2023 12.5 0 0 0 4 0 2.75
2022 81.5 23 4 5.73 10 4.3 21.42167
2021 32 17.5 3 16.77 6 0.2 12.57833
2020 13.4 19.5 1 5.29 6.6 2 7.965
2019 1.85 5.85 1.2 5.52 8.55 2 4.161667
2018 38.2 23.75 1.2 4.3 13.35 3.5 14.05
2017 17.7 19.9 1.1 4.15 17.1 3 10.49167
2016 1.75 27.4 1 11 13.5 3 9.608333
2015 5.85 20.7 1 5.55 13.4 3 8.25
2014 85 29 1 8.5 12.3 3 23.13333
2013 2.1 14 1.4 8 17.5 3 7.666667
2012 2 10 1 5.5 11 3 5.416667

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 Chart Title
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vedanta coal hindalco nmdc ucoil gmdcl average

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