A unit of billionaire Anil Agarwal-led Vedanta Group is going to raise ₹135 billion (around $1.4 billion) through a syndicated loan, the first major local-currency borrowing since the conglomerate completed its landmark business demerger. The financing will help the newly independent company to shore up its balance sheet and support its long-term capital structure.
Vedanta Aluminium to raise ₹13,500 Crore.
Vedanta Aluminium Metal Ltd. is also going to borrow about ₹13,500 crore from a consortium of leading Indian banks as per the reports.
The proposed lenders include:
Axis Bank – approximately ₹5,500 crore. HDFC Bank and ICICI Bank – together expected to contribute ₹8,000 crore.
Axis Bank is leading the transaction with some of the loan syndicated to other lenders. The loan term is 6.5 to 7 years, which is 7.9 percent to 8 percent.
Funds to Refinance Existing Debt
The proceeds of the borrowing will primarily be used to refinance debt inherited by Vedanta Aluminium after the group’s demerger.
Earlier this year Vedanta completed a major corporate restructuring and split its businesses into separate listed companies that focused on:
Aluminium. Power. Oil & Gas. Iron Ore. Base Metals.
The restructuring is to provide each business more operational independence and financial flexibility and for each of them to raise capital on their own.
Positive Outlook After Demerger
The fundraising comes soon after rating agency CRISIL upgraded the credit ratings of several Vedanta entities. Vedanta Aluminium was rated AA+ with a Stable Outlook, which reflected the improvement in financial flexibility after the demerger.
Analysts believe the independent capital structure will also allow each business to move more aggressively into growth opportunities and make capital allocation more transparent for investors. Strong operating cash flows will also help the aluminium business reduce its debt in the years to come.
What It Means for Investors
The loan is aimed at Vedanta’s strategy to create independent, financially independent businesses after one of India’s biggest corporate restructurings. With refinancing existing borrowings and securing long-term funding, Vedanta Aluminium is positioning itself to strengthen its balance sheet while growing in the future.
Investors will now closely monitor the company’s debt reduction plans, capital allocation, and execution as the newly separated Vedanta businesses start to make their own independent market presence.
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