Vedanta puts plans to sell steel business on hold

Vedanta, the Indian resource conglomerate headquartered in Mumbai, has temporarily halted its plans to sell the steel business. Recent developments in the financial sector, through a stock sale amounting to one billion dollars, have provided the company with more financial leeway while simultaneously deterring potential buyers due to environmental and regulatory concerns. Vedanta, controlled by Anil Agarwal, had originally considered selling the steel business, including the iron ore and manganese mines, to raise approximately 2.5 billion dollars for debt reduction. However, these plans were reconsidered following successful capital raising through a stock placement last month. Environmental and regulatory hurdles posed additional challenges. Industrial projects in India often face issues such as pollution, protests due to displacements, and the destruction of habitats. It was reported last year that Vedanta attempted to ease environmental regulations through lobbying during the Covid pandemic. A company spokesperson emphasized that Vedanta could still put the steel business up for sale if a suitable offer is made. Vedanta entered the steel business in 2018 when it acquired a 90% stake in ESL Steel, which operates in Bokaro, in the eastern state of Jharkhand. The company's products include pig iron, billets, TMT bars, wire rods, and ductile iron pipe. The contemplation of the sale followed the Vedanta board’s decision to split the conglomerate into six different companies, a measure expected to be completed by March 2025. It was announced on July 31 that 75 percent of the secured creditors had agreed to the proposal. Vedanta stated in an announcement that the company's net debt level at the end of June was 613.2 billion rupees (about 7.3 billion dollars), an 8.8 percent increase from the previous quarter. Production in the steel business rose by 10 percent year-over-year to 356 kilotonnes, thanks to improved efficiency. Additionally, the net profit significantly exceeded expectations. Ajay Goel, Chief Financial Officer of Vedanta, declared in the earnings release that the response to the qualified institutional placement had been "overwhelming," and the proceeds would contribute to debt reduction and lowering financing costs.