 "Has Vedanta put its steel business sale on hold after $1 bn share boost?")
Vedanta Ltd might have paused its plans to sell its steel business following a successful $1 billion share sale that provided it with greater financial flexibility, suggested a report by Bloomberg. The decision to delay the sale, according to the report citing sources, also stems from environmental and regulatory hurdles that have discouraged potential bidders.
The company, however, clarified in a statement that it had not put the sale on hold.
The Mumbai-based conglomerate, led by Anil Agarwal, had been collaborating with advisors to sell the steel business, which includes iron-ore and manganese mines, with the goal of raising about $2.5 billion to reduce the group’s debt. The recent capital infusion alleviated some of this financial pressure, reducing the immediate need for a sale, said Bloomberg. While specific details about the environmental and regulatory challenges were not disclosed, the sources cited in the report noted that the company might revisit the sale in the future.
The Mumbai-based conglomerate, led by Anil Agarwal, had been collaborating with advisors to sell the steel business, which includes iron-ore and manganese mines, with the goal of raising about $2.5 billion to reduce the group’s debt. The recent capital infusion alleviated some of this financial pressure, reducing the immediate need for a sale, said Bloomberg. While specific details about the environmental and regulatory challenges were not disclosed, the sources cited in the report noted that the company might revisit the sale in the future.
India’s industrial sector frequently encounters challenges related to environmental degradation, community displacement, and wildlife conservation. Last year, the Organized Crime and Corruption Reporting Project revealed that Vedanta had lobbied the Indian government to dilute environmental regulations during the Covid-19 pandemic, further complicating the company’s reputation in this space.
Vedanta considers steel asset sale
A Vedanta representative told Bloomberg that the company remains open to selling its steel assets, but only at an appropriate price.
Vedanta ventured into the steel industry in 2018 by acquiring a 90 per cent stake in ESL Steel Ltd, which operates in Bokaro, Jharkhand. ESL Steel produces a range of products, including pig iron, billets, TMT bars, wire rods, and ductile iron pipes.
The potential sale of the steel business was part of a broader plan approved by Vedanta’s board last year to split the conglomerate into six separate entities. The company aims to complete this demerger by the end of the financial year in March 2025, and as of July 31, 75 per cent of its secured creditors had approved the proposal.
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Vedanta shifts focus to electronics
Despite mandating advisers for the potential sale, Vedanta has indicated that it will prioritise investments in sectors such as electronics and semiconductors.
As of the end of June, Vedanta reported a net debt of Rs 613.2 billion ($7.3 billion), an 8.8 per cent increase from the previous quarter. Meanwhile, the company’s steel division saw a 10 per cent year-on-year increase in saleable production, reaching 356 kilotons due to improved efficiency. The company’s overall net profit exceeded expectations.
Ajay Goel, Vedanta’s Chief Financial Officer, noted in the earnings statement that the response to the $1 billion qualified institutional placement was “overwhelming” and that the proceeds would be used to deleverage the balance sheet and reduce financing costs.
'Never said the sale of steel business on hold': Vedanta issues clarification
Denying the Bloomberg report, a Vedanta Limited spokesperson said in statement: "We would like to clarify that the company has never said that the sale of our Steel business is on hold. This is factually and completely incorrect."
The spokesperson further added: "Vedanta’s is strongly committed and is already ahead of its deleveraging targets through operating free cashflows and the recent successful equity raise of $1bn through the QIP process. We are confident of securing a fair and attractive outcome for all our stakeholders."
The spokesperson further added: "Vedanta’s is strongly committed and is already ahead of its deleveraging targets through operating free cashflows and the recent successful equity raise of $1bn through the QIP process. We are confident of securing a fair and attractive outcome for all our stakeholders."