In a recent interview, Anil Agarwal, the chairman of Vedanta Ltd, revealed that the company is on track to finalize its steel assets sale by the end of the current financial year. This strategic move follows the comprehensive review of its steel and steel raw material business, which was established through the acquisition of ESL Steel in 2018 for Rs 5,230 crore. The objective is to refocus on the core mining businesses.
Last week, Vedanta made a significant announcement regarding the approval of a pure-play, asset-owner business model. This initiative is projected to result in the creation of six distinct listed entities. The comprehensive restructuring process is anticipated to be concluded within the next 12-15 months.
Vedanta Resources, the parent company, recently experienced a series of rating downgrades, primarily attributed to concerns regarding its outstanding debt of $6.4 billion.
Under the proposed plan, five new listed firms will emerge, namely Vedanta Aluminium, Vedanta Oil & Gas, Vedanta Power, Vedanta Steel and Ferrous Materials, and Vedanta Base Metals, in addition to the existing Vedanta Ltd. Anil Agarwal emphasized, “We believe the demerger will unlock value and potential for faster growth in each vertical.”
During an interview with CNBC-TV18, Agarwal highlighted that the response to the steel and iron business will play a crucial role in debt reduction. The steel business portfolio of Vedanta will encompass the domestic iron ore business, Liberia assets, and ESL Steel Ltd.
Vedanta Resources has faced challenges in raising funds due to rating downgrades and concerns surrounding debt obligations. Earlier attempts to alleviate the group’s debt burden involved Hindustan Zinc’s potential acquisition of certain zinc assets from the parent group in a $2.98 billion transaction. Hindustan Zinc operates as a subsidiary of Vedanta Ltd.
However, this plan faced opposition from the Indian government, which holds a nearly 30 percent stake in Hindustan Zinc.
As of FY25, Vedanta has approximately $4 billion in pending payments. Agarwal assured that Vedanta Resources is committed to meeting all payment obligations in 2024. He further disclosed that Vedanta has secured finances amounting to about $1 billion in January, with an additional $500-$600 million expected in August. The company is also engaged in discussions with bondholders to fortify its financial position.
In the 1980s, Vedanta had its origins when the founder, D.P. Agarwal, established Sterlite Industries (India) Limited in Mumbai. The company then embarked on acquiring mining concessions across various states in India. Today, Vedanta Limited stands as a prominent Indian multinational mining corporation, with its headquarters situated in Mumbai, India. Its primary operations revolve around iron ore, gold, and aluminum mines located in Goa, Karnataka, Rajasthan, and Odisha.
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