- Wednesday, February 26, 2025
Vedanta Resources, the conglomerate’s parent, is fighting several rating downgrades caused by worries over outstanding dues.
By: Shubham Ghosh
INDIAN metals-to-oil conglomerate Vedanta Ltd’s decision to split into six separate units over the next 15 months may do little in providing its UK-based parent an immediate relief in meeting an approaching deadline for about debt worth billions, at least four brokerages said.
Last week, the company led by billionaire Anil Agarwal changed an earlier strategy of taking the entire unit private. Instead, it decided to spin off into various commodity-focused entities looking to shore up financials.
Vedanta Resources, the conglomerate’s parent, is fighting several rating downgrades caused by worries over outstanding dues — $6.4 billion (£5.3 billion) as of May — as per the company.
“The demerger does not solve the debt concern of parent company Vedanta Resources, which must repay about $4.2 billion (£3.4 billion) in debt by FY25,” Nuvama analysts said in a research note, adding that the split would not better Vedanta’s credit profile, Reuters reported.
Three years ago, Agarwal’s efforts to privatise Vedanta did not succeed as investors found the de-listing price to be too low. His latest attempt to trim down the holding company’s dues by getting its unit Hindustan Zinc to buy some of the firm’s zinc assets did not materialise either as the Indian government, which is a minority shareholder, opposed.
“As it will take time to complete demerger, (the process) won’t be helpful for the parent company to meet debt obligation. It has insufficient revenues, and hence the likely course of action is refinancing or a stake-sale in subsidiaries,” Centrum Broking said in a note, Reuters added.
The analysts also predicted that some of the company’s non-core businesses that are not generating enough cash were likely to be sold after the demerger.
