Moody's: Cairn India's dividend payout crucial for beleaguered Vedanta Resources
- PM Modi discusses GST bill with Manmohan, Sonia at 7 RCR; Cong says demands non-political
- Withdraw convocation invite to Narendra Modi: Jamia Millia alumni to VC
- PoK will remain with Pakistan, J&K will remain with India: Farooq Abdullah
- Liquor ban in Bihar: Nitish Kumar's poll promise to women comes at a high cost
- Amarinder Singh appointed as new Punjab Cong President
Cairn India's dividend payouts are crucial for Vedanta Group to service debt it had raised to acquire the oil company, credit rating agency Moody's Investors Service said today.
Cairn this week announced a final dividend of Rs 6.5 per share, taking total dividend declared for 2012-13 to Rs 11.5 per share or about USD 407 million.
Moody's Investors Service said the dividend payout was on expected lines and "there is no immediate impact on Vedanta Resources Plc's Ba1 corporate family rating."
"The rating remains under review for possible downgrade," it said.
"Cairn's payment of dividends is crucial for Vedanta given its reliance on the up-streamed dividend to service the debt raised to acquire its stake in Cairn," said Alan Greene, a Moody's Senior Credit Officer in a note.
The dividend was more important for its co-shareholder, Sesa Goa Ltd, which is currently losing money on its core iron ore operations due to the mining restrictions imposed in Goa and Karnataka, and which has its own debt to service.
Vedanta owns a 38.7 per cent stake in Cairn through a Mauritius holding company, and 20.1 per cent indirectly through Sesa Goa.
"Absent an improvement in base metal prices and the continuing mining ban in Goa, we expect Cairn to remain as Vedanta's main EBITDA contributor over the next 12 months," Greene said.
Cairn will invest over USD 3 billion over the next three years in development and exploration activities, aiming at unlocking further potential within the Rajasthan block and potentially outside Rajasthan.
"Moody's expects both this level of capex and dividend to be funded without reducing the USD 3 billion of cash and cash equivalents reported by Cairn," the note said.
Cairn's reported cash flow from operations was USD 2.034 billion in 2012-13.
Moody's Investors Service said the January-March quarter was weaker for Cairn as compared to same period the previous year as the increase in the cess rate and lower realised prices per barrel offset the volume gains.
- Why every patriot should be worried, and, yes, ashamed
- Douglass North emphasised institutions when markets were the focus
- ‘Bovine Divine’ controversy lurched between the horrific and the comic
- PM Modi’s achievements abroad appear to cut little ice back home
- Post 13/11 sloganeering at Antalya and Kuala Lumpur won’t be enough
- Can Parliament be insulated from the vagaries of the political climate?