To
Shri V. L. Kantha Rao
Union Mines Secretary
Dear Shri Kantha Rao,
I have come across a news report that the Hindustan Zin Limited’s (HZL) Board would be shortly considering raising of funds from the market to finance its activities
It is strange that HZL, on the one hand, should choose to pay unconscionably excessive dividends to its shareholders, far in excess of what Section 123 of the Companies Act permits but, at the same time, raise funds from outside to finance its own expansion programme.
For example, HZL paid Rs12,253 Crores to its shareholders in the first half of fiscal 2025, far in excess of its profits. The company is thus depleting its own internal resources to be able to pay such huge dividends, with the lion’s share of 63.4% going to the majority shareholder, the Vedanta Group, which in turn is struggling to repay its own debt. In other words, the Ministry of Finance and the Ministry of Mines are collectively allowing the Vedanta Group to transfer its heavy debt liability indirectly to HZL by forcing HZL to pay unduly large dividends to the Vedanta Group at the cost of weakening its own finances.
In their rating report on HZL issued in March, 2025 , CRISIL has made the following observation which corroborates the above position.“CRISIL Ratings has taken note of the dividend announced by HZL in fiscal 2025 (dividend of ~Rs 12,253 crore in the first half of the fiscal, as against Rs 5,493 crore in full fiscal 2024), including the second interim dividend announced in August 2024. CRISIL Ratings understands that majority of the dividend ….. will be funded by internal accrual in fiscal 2025.“
Should not your Ministry take up this matter with the Finance Ministry and put an end to such appropriation of funds drawn out of HZL’s internal resources to fill the coffers of the heavily indebted promoter group, thereby driving HZL itself into debt? Instead of allowing HZL to pay heavy dividends to the promoters, your Ministry should ask HZL to step up investments in optimising its own exploration and development activity and invest in activities that promotes the nation’s elf-reliance in minerals such as recovering critical minerals such as gallium from the waste materials generated in its processing units (https://countercurrents.org/2023/08/chinas-ban-on-export-of-two-critical-minerals-gallium-and-germanium-indias-response/)
Regards,
Yours sincerely,
E A S Sarma
Former Secretary to the Government of India
Visakhapatnam
