Mumbai, New Delhi :Two bankers said banks were wary of their exposure to Vedanta Ltd, worried that dividends to ease the parent’s debt could strain the balance sheet of the domestic firm they lent to.
Mumbai,New Delhi :Two bankers said banks were wary of their exposure to Vedanta Ltd, worried that dividends to ease the parent’s debt could strain the balance sheet of the domestic firm they lent to.
Bankers said a group of lenders were discussing their stance on Vedanta and were upset by higher dividends to help London-based Vedanta Resources deleverage. They said they are closely monitoring their exposures but the company is repaying loans on time.
Bankers said a group of lenders were discussing their stance on Vedanta and were upset by higher dividends to help London-based Vedanta Resources deleverage. They said they are closely monitoring their exposures but the company is repaying loans on time.
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“Perception of the company is not very good now. Many of us are not ready to take new exposure with the company. “Although there is no repayment pressure now, we are worried as most of us have exposure to the Indian subsidiary,” said one of the two bankers quoted above, requesting anonymity.
Vedanta Resources Plc owns 68.1% stake in Vedanta Limited, which owns 64.92% in Hindustan Zinc Limited. The government has a 29.54% stake in Hindustan Sink. Vedanta declared dividend for FY23 ₹37,730 crore as compared to Rs ₹Last financial year it was Rs 16,728 crore. Also, its subsidiary Hindustan Zinc declared dividend ₹32,000 crore in FY23.
On March 28, Crisil Ratings revised its outlook on Vedanta from stable to negative, citing “higher-than-expected financial leverage, lower financial flexibility and reduced ratio of one-year maturities in fiscal 2023 and 2024”. Relationships at parent company Vedanta Resources.
The consolidated gross and net debt of Vedanta Ltd. stood ₹66,182 crores ₹45,260 crore as on March 31 respectively. According to the CRISIL rating, lenders include State Bank of India, Axis Bank, Canara Bank, Punjab National Bank, Indian Bank, IDBI Bank, ICICI Bank, Bank of Baroda and Union Bank of India.
“I really don’t understand why they are doing this, we are cautious at Vedanta as a lender, lending decisions are made by individual banks. “Indian businesses are strong cash generators and there is no reason to stress them too much,” said a second banker.
Sonal Srivastava, Vedanta’s chief financial officer, said concerns around the balance sheet were unfounded as the company was going through a tough time due to falling metal prices, but did not expect it to last.
As far as the delivery of Vedanta Resources is concerned, she said various projects are underway which the parent firm will announce as soon as something is tied up.
“If you look at the past track record, we have always delivered on our commitments and we are confident that we will,” Srivastava said by phone. “The current London Metal Exchange (prices) are holding up and if there is a surge, it benefits (us).
An email to Vedanta’s spokesperson went unanswered.
The company was also trying to enter semiconductor manufacturing, but initial plans fell through when Taiwanese electronics maker Foxconn (Hon Hai Precision Industry Co Ltd) pulled out of the 60:40 (majority-owned by Vedanta) joint venture on July 10. Two days later Vedanta Chairman Anil Aggarwal announced at the annual general meeting that the company has partners and is awaiting government approval to enter the semiconductor sector.
mint It was reported on July 19 that Vedanta is looking to sell ESL Steel Ltd, formerly known as Electrosteel Steels Ltd, after acquiring it. ₹5,320 crore through the bankruptcy resolution process five years ago, cited two people familiar with the development. The order to liquidate assets will also include iron ore mines in Goa and Karnataka, the report added.