Vedanta Group Head Optimistic About The Group; Says $1 Billion Is Peanuts For Them!

Anil Agarwal, chairman of mining conglomerate Vedanta, has refused the tensions revolving around the payment of $900 million in approaching debt maturities by June of this year. $1 billion is nothing for them, he said sources, referring to the firm’s June dues. He stated that the company’s commodities divisions are building fair cash and that he expects the group to earn $9 billion in profit this year. Agarwal, 69, brushed off the bond market fluctuations mentioning them due to the “geopolitical environment“.

In an interview, Agarwal stated that everyone wants to fund Vedanta. However, he did not mention the name of any bank or money. According to the mining magnate, Vedanta is in negotiations with JPMorgan and other banks over a $1 billion loan with an interest rate of 8-10%. Mr. Agarwal argued that Vedanta has less than $13 billion overall debt, and establishing a ‘zero-debt’ corporation is “not a daydream, whereas a medium-term, possible ambition.

Vedanta Resources, the parent company of Mumbai-based Vedanta Ltd, announced in February that it had pre-paid all maturities due through March of this year and had deleveraged by $2 billion in the earlier 11 months. The business assured that it was optimistic and would fulfill its upcoming maturities in the quarter ending June 23. They have several possibilities for refinancing and repayment through internal accruals, and the corporation is in the progressive stages of assuring critical funding through a $1 billion new loan from a syndicate of banks.

As of March 31, 2022, the corporation headquartered in London has a net debt of $9.66 billion. Following repayments and borrowings, it has around $7.7 billion in outstanding debt, $3 billion of which is scheduled for repayment in the fiscal year beginning April 2023. The firm recently announced that it has deleveraged by USD 2 billion in the earlier 11 months, completing half of its USD 4 billion three-year debt reduction pledge in the first year alone.

In a recent statement, Vedanta stated that over fiscal years 24 and 25, it will move to deleverage from net debt of $7.7 billion, with intentions to fund 50% of FY24 liquidity requirements internally and the rest through refinancing.

Why the Vedanta group witnessed massive debts?

In recent days, Vedanta has made news for its massive debts, which were one of the issues that shook Gautam Adani’s business following a damning report by US short-seller Hindenburg Research. With the publishing of Hindenburg Research’s research against Adani Group on January 24, 2023, the Indian equities market experienced a gloomy sight. At its lowest point, the market failure brushed around $145 billion from Adani Group’s market worth.

According to sources, Vedanta Resources’ ability to pay its financial adherence beyond September will be dependent on a planned $2 billion fundraising and the expected sale of Vedanta’s zinc holdings in Africa. This observation alarmed investors and markets, resulting in notable stock sell-offs. Vedanta’s shares have dropped over 10% in the earlier month. Vedanta Resources bond rates due in 2026 have spiked by roughly 23% in the earlier month.

The subject of Hindustan Zinc.

Anil Agarwal proposed that the government sell its current holding in Hindustan Zinc since they had pledged to sell a 100% stake in the business 20 years ago. Agarwal went on to say that the government must speed up the process and that it has agreed to dispose of the remaining share to Vedanta under a certain formula. Agarwal went on to say that the government may profit Rs 40,000-50,000 crore from the purchase. He went on to say that the company, not the government, must govern the company.

The corporation recently encountered a stumbling block when the central government objected to the sale of its Africa zinc business to Hindustan Zinc Ltd for over $3 billion. Hindustan Zinc is roughly 30% owned by the government. The government thinks that if the deal is approved, it will meet its divestment targets. The Ministry of Mines ordered Hindustan Zinc to “consider other cashless options” to buy the Vedanta assets in a letter to the state-owned miner.

The last line.

Vedanta Resources, India’s largest private miner, has been struggling to reduce its debt load while expanding into new business areas. Vedanta Group, in collaboration with Apple supplier Foxconn, is constructing a large semiconductor factory in Gujarat. According to Abhishek Jain, the head of research at Arihant Capital, the commodities cycle has recovered in recent months, which would help Vedanta’s cash flows and profitability. Yet, refinancing debt will be difficult in the current market, and their financing costs will rise.

edited and proofread by nikita sharma