Vedanta Resources, the London-listed holding company for India's largest copper producer, Sterlite Industries, raised $883 million (Rs 4,000 crore) through issue of convertible bonds in Europe.
This was the largest issue of convertible bonds in Europe till date in this calendar year, despite investors such as the Church of England and Norway's state pension fund selling their stakes on concerns that its subsidiary, Vedanta Aluminium, had not respected human rights enough in the process of establishing an integrated aluminium smalter in Orissa.
Vedanta, which today fell 4.1 per cent in London trading to 2,534 pence, gained 384 percent in the past 12 months.
"With this, the group has brought in close to $4.7 billion (Rs 23,000 crore) of foreign direct investment in the country in the current financial year," said a person familiar with the development.
Vedanta Resources raised $1.25 billion through convertible bonds in May, followed by a $1.6-billion fund raising through American Depository Receipts by Sterlite. Then, Sterlite again raised $500 million through foreign currency convertible bonds in July, followed by $500 million of FCCBs by group firm Sesa Goa. And now, $883 million has been raised by Vedanta Resources.
"Part of the fund raised will be used for the ongoing projects of Vedanta Aluminium in Orissa," said the person. JPMorgan Cazenove and Morgan Stanley were bankers to the issue. The notes were issued at coupon of four per cent and have a 37.5 per cent premium for conversion at today's market price.
Vedanta Aluminium has a Rs 36,000-crore investment plan to increase its fully integrated aluminium smelting capacity (in Orissa) to nearly 2.6 million tonnes per annum (mtpa) by 2012. Upon completion, the company is expected to become Asia’s largest integrated producer of aluminium. It will also become one of the top five producers worldwide.
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The company is expected to commission the second phase of a 500,000 tonne-per-annum aluminium smelter, with a 1,215-Mw captive power plant, at Jharsuguda in Orissa by the end of the current financial year. Earlier, it commissioned a 1.4-mtpa greenfield alumina refinery project and an associate 90-Mw captive power plant at Lanjigarh in Orissa in 2007.
Vedanta Resources also has its aluminum business under Bharat Aluminum Company (Balco) and Madras Aluminium Company (Malco). Group company Sterlite Industries acquired a controlling stake of 51 per cent in Balco from the Union government in March 2001. The company is in arbitration talks with the government for the buy-out of the residual government stake in the company. Malco was taken over by the group in 1995.
The group had planned its primary expansion for the base metal under Vedanta Aluminum, in which the group holding company has 70.5 per cent stake. Its subsidiary, Sterlite Industries, owns the other 29.5 per cent.