Vedanta Ltd will complete the sale of its steel assets by the end of this financial year, its chairman Anil Agarwal said in an interview on Tuesday. The company began the review of its steel and steel raw material business – formed through the acquisition of ESL Steel in 2018 for Rs 5,230 crore – in June, looking to sell the company to focus on its core mining businesses.
Last week, Vedanta announced its board had approved a pure-play, asset-owner business model that would ultimately result in six separate listed firms. The restructuring is expected to be completed in 12-15 months.
Its parent Vedanta Resources saw a slate of rating downgrades triggered by worries over its $6.4 billion outstanding debt.
The proposed plan entails five new listed firms — Vedanta Aluminium, Vedanta Oil & Gas, Vedanta Power, Vedanta Steel and Ferrous Materials, and Vedanta Base Metals — in addition to Vedanta Ltd. “We believe the demerger will unlock value and potential for faster growth in each vertical,” said Agarwal.
In an interview with CNBC-TV18, Agarwal said the response to the steel and iron business will help the company reduce debt. Vedanta’s steel business will include the domestic iron ore business, Liberia assets, and ESL Steel Ltd.
Vedanta Resources has been struggling to raise funds due to rating downgrades and concerns about meeting its debt obligations. Earlier, the company sought to reduce the group’s debt by getting Hindustan Zinc to buy some of the parent group’s zinc assets in a $2.98 billion deal. Hindustan Zinc is a unit of Vedanta Ltd.
However, the plan was opposed by the Indian government, which owns a nearly 30 per cent stake in Hindustan Zinc.
Vedanta has total pending payments of around $4 billion until FY25. Agarwal today said Vedanta Resources will honour all payments due in 2024. He added that Vedanta has lined up finances of about $1 billion in January and $500-$600 million due in August and is also talking to bond holders.
On Tuesday, Vedanta’s shares closed 3.7 per cent in the green at Rs 230.8 per share on BSE.