Vedanta Limited expects to monetize its steel and steel raw materials business in the first half of the current financial year, amid a focus on deleveraging and shoring up the cash flow of the company.
Jun 30, 2024
Vedanta Limited expects to monetize its steel and steel raw materials business in the first half of the current financial year, amid a focus on deleveraging and shoring up the cash flow of the company.
As per media reports, one of the major players in India’s steel sector, Vedanta, had initiated a strategic review of its steel assets in June last year to focus on its core mining businesses. The move was part of a broader strategy that included a significant capital expenditure of USD 1.9 billion.
Vedanta forayed into the steel business in 2018, following the acquisition of ESL Steel, making an upfront payment of INR 5,320 crore.
As per Mr. Arun Misra, Executive Director of Vedanta, the divestment of the steel plant was under consideration. Buyers were ready and the company expected the regulatory clearances to be over between Q1 and Q2 of this year.
Vedanta was expecting the demerger of five of its key businesses, including aluminium, oil and gas and steel into separate listed entities, to be completed by December 2024.
In a post-earnings call, the company said that it awaited No Objection Certificates (NOCs) from the lenders to move forward with the demerger process. Mr. Misra said that they have started receiving NOCs from private lenders. Public Sector Units (PSUs) will also start sending it soon, he added.
JSW Steel, ArcelorMittal and a few private equity funds have reportedly shown interest in bidding for the iron ore mines and a steel plant.
The mining conglomerate had earlier announced that the demerger of this business would be completed by March 2024. However, in May 2024, the Founder and Non-Executive Chairman of Vedanta, Mr. Anil Agarwal, said that they would sell the business only at the right price.
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Mr. Agarwal said that he valued the company’s steel assets at USD 1.2 billion per million tonne. In a recent interview to a financial news channel, Mr. Agarwal said that they had one of the best prime locations for a steel asset as their plant in Bokaro, Jharkhand had the proximity of raw material, iron ore and coal, railways, as well as gas. This was the best location for anybody to start the production of steel, he added.
Mr. Agarwal further said that they were already producing almost 2 million tonnes of steel in Goa, while the Bokaro steel plant was producing 3.5 million tonnes. The Vedanta Chairman said that they were getting very good responses internationally and nationally. However, if they could not get the right price, Vedanta would continue to expand its Bokaro plant, he added.
