Shares of Vedanta Ltd are grabbing attention due to reports of a potential demerger of its business segments into multiple listed entities under the leadership of Anil Agarwal’s unit. This strategic restructuring aims to alleviate the group’s debt burden, provided it succeeds.
According to a report from Bloomberg, Vedanta Ltd has already communicated this restructuring plan to its lenders and may make an official announcement in the near future. The plan involves separate listings for key business segments such as aluminum, oil and gas, and iron and steel. This demerger could serve as a crucial step in assisting Vedanta’s parent company, Vedanta Resources, in managing its debt load, while Vedanta Resources will continue to act as the holding company for the newly formed units.
Vedanta Chairman Anil Agarwal had hinted at the possibility of individually listing some or all of the group’s businesses, which encompass metals, mining, and oil and gas, during the past month.
Vedanta shares experienced a significant drop to a one-year low on September 27, following a corporate family rating downgrade by Moody’s Investor Service from Caa1 to Caa2. Over the last three months, Vedanta’s stock has seen a decline of 24 percent, while the benchmark Sensex managed to gain 5 percent.
In a recent development on September 21, the Vedanta board approved plans to raise Rs 2,500 crore through private placement of non-convertible debentures (NCDs), part of their routine refinancing activities.
Back in March, Crisil had downgraded Vedanta’s outlook to negative, citing concerns about increased financial leverage and reduced financial flexibility. India Ratings had also revised its outlook to negative, pointing to a higher risk of refinancing at elevated borrowing costs.