Corporate Grapevine     

Published: August 15, 2024
Updated: August 15, 2024

Vedanta group’s funding woes

Despite the sale of assets and stakes in listed companies, analysts expect the Vedanta group to face funding shortfalls of $ 850 million and $ 1.4 billion in FY25 and FY26 respectively, which appears manageable for FY25 in light of equity fundraising plans, but more difficult for FY26.

Potential funding avenues that Vedanta could tap into include dividend upstreaming and brand fees from Vedanta Ltd and its opcos, asset and equity stake sales (such as the recent 2.6 per cent promoter stake sale in Vedanta Ltd), fresh equity raise, bonds and/or loans. Progress in the demerger of Vedanta Ltd into 6 companies could act as a modest credit positive for Vedanta bonds. The sale of the group’s steel unit stalled as there are no takers, and bidders say unless they get the steel company at a rock bottom price, they won’t bid for it.

Vedanta Resources Plc, which has an 80 per cent stake in Zambia’s Konkola Copper Mines, will remain the majority shareholder in Konkola and is exploring various options for the best corporate structure to raise financing without losing control of its stake in the asset. At the same time, Vedanta plans to spend $ 1.27 billion to expand and modernize the mine, which will raise annual integrated production of copper to 300,000 tonnes in the medium term from 70,000 tonnes now.

Anil Agarwal will have to think out of the box to reduce the parent’s debt.