Vedanta Could Diversify Its Zinc Business In Order To Tackle Its Debt Load (image: x.com/@AnilAgarwal_Ved)
Billionaire industrialist, known as the metal king, Anil Agarwal is trying to restructure the Vedanta Ltd., and to find options to reduce the multibillion-dollar debt of the company. This could affect an overhaul of his lucrative Indian zinc unit, with a split of its three core businesses. In a statement, the Hindustan Zinc Ltd. said, to capitalise on “distinct market positions” and to attract investors, the company could form separate legal entities for its zinc, lead and silver, and recycling businesses, Bloomberg reported.
As the news hit the markets, the shares of Vedanta, which is the controller of the zinc businesses, went up by 7.9% and Hindustan Zinc went up by 6.6%. Earlier, this week, Bloomberg had reported that Vedanta Ltd.’s aluminium, oil and gas, iron ore and steel was getting ready to be listed separately as part of the broad overhaul in the loop. An evaluation of the options would be undertaken by a committee of directors and will in turn advise the board on this, along with external advisors.
“My dream, my vision is in a few years, I will have a zero debt company,” Anil Agarwal had said in an interaction given to cnbctv18 in May 2023 on his vision for his mining conglomerate.
“As separate entities, the silver and recycling businesses may fetch better market valuations and as such it could be a win-win for all the stakeholders,” independent analyst Prashanth Kumar Kota commented on this move which could be carried out, he further said, “it may also pave the way in future to have all the zinc assets under one umbrella, including Vedanta’s international assets.”
A heavy debt burden has brought in an urgency in these matters. The parent company of Vedanta Ltd., the Vedanta Resources Ltd., has payments due – $2 billion of bond repayments in 2024 and another $1.2 billion in 2025.
The company had earlier floated efforts to simplify its complex financial structure and to reduce a deep conglomerate discount, which also included the posting of a video in August, but these have not brought in the desired results.
Anil Agarwal, is the founder and Chairman of Vedanta Resources Ltd., and the company is headed by him and controlled through his Volcan investments. “Vedanta Limited is one of the world’s foremost natural resources conglomerates, with primary interests in aluminium, zinc-lead-silver, oil and gas, iron ore, steel, copper, power, ferro alloys, nickel, semiconductor and glass.” It has “world-class strategic assets based across India, South Africa, Namibia and Liberia,” its website said. Its parent company is Vedanta Resources and this is controlled by Volcan Investments. There are other companies also which is controlled by Volcan Investments.
