Vedanta may sell stake in Indian group firms to Sterlite for reducing debt

Suresh P. Iyengar Mumbai | Updated on March 12, 2018


The UK-based Vedanta Resources may sell stake in its Indian group companies to Sterlite Industries for reducing debt of about $9 billion on its books.

The London Stock Exchange-listed Vedanta Resources holds 55 per cent stake in Sesa Goa, 70 per cent in Vedanta Aluminium and 94.8 per cent in Madras Aluminium Company (Malco).

As of December quarter, Sterlite Industries, on consolidated basis, has cash and cash equivalent of Rs 21,546 crore and debt of Rs 11,728 crore.

Sesa Goa and Sterlite Industries' board of directors will meet on Saturday to consider a restructuring proposal.

The move, if approved by shareholders, will make Sterlite Industries and Vedanta Resources the two holding companies for Indian and overseas operations respectively.

Vedanta Resources owns 55 per cent in Sterlite Industries which is listed on BSE, NSE and the New York Stock Exchange.

“It would be interesting to see if Vedanta Resources will offload its 39 per cent stake in Cairn India as much of the debt on Vedanta's books are for the acquisition,” said an analyst.

Last year, Vedanta acquired 58.5 per cent stake in Cairn India, along with Sesa Goa owning 20 per cent, in a deal worth about Rs 45,000 crore.

Without any premium consideration, Vedanta can mop up about Rs 10,800 crore on sale of its entire stake in Sesa Goa, he said. Valuation of stake in Vedanta Aluminium and Malco has to be done independently as they are unlisted entities.

The sharp fall in metal prices in the last few months has raised concern over Vedanta Resources' debt rating.

“The company has made a wise move to reduce debt as a further downgrade on debt concern will make it difficult for them to complete the acquisition of Government stake in Balco,” said a merchant banker.

In 2008, Vedanta Resources made an attempt to re-align its corporate structure but called off due to unfavourable investor response.

Sterlite's board is also meeting on February 25 to consider the restructuring proposals.


Published on February 24, 2012

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