There are no plans to merge Vedanta Limited with its London-based indebted parent Vedanta Resources, billionaire Anil Agarwal said on Wednesday, a day after his company scrapped its proposed restructuring plans that had envisaged independent listings for three separate businesses.
“I want to make it very clear to the market,” the Vedanta chairman told ET in an interview. “We are not going to do that.”
Agarwal stressed that while the company plans to bid for state-run Bharat Petroleum (BPCL) as and when it goes on the block, the funds won’t come from Vedanta but private equity partners. There were several equity investors willing to partner with Vedanta and the company would only offer management expertise and “the management fee will be a very big income for Vedanta shareholders,” he said.
Agarwal expressed disappointment over the bankruptcy tribunal overturning the winning bid of Twin Star, a company backed by him, for bankrupt Videocon Industries. This happened after the bid was approved by the Committee of Creditors (CoC) and the bankruptcy court.
Some lenders had approached the bankruptcy tribunal with concerns regarding a 95% haircut that creditors would have to take following Twin Star’s Rs 2,692-crore resolution plan against the Videocon Group’s total dues of Rs 64,638 crore.
“Videocon was sealed, signed and delivered. It was very clear that the CoC was the final authority,” Agarwal said. “We had made a very lucrative offer. I believe we were the highest bidder.”
He termed the move by creditors to approach the bankruptcy tribunal against the law and said that Twin Star has moved the Supreme Court on the matter.
Speaking about Vedanta dropping its plans to spin-off its aluminium, iron and steel, and oil and gas businesses, Agarwal said: “We realised it was very important that we keep one company which is very strong.” Management costs would be saved, and the management would be able to focus better if there was one company rather than several, he said.
The proposed restructuring was widely seen by many as a manoeuvre to unlock value from the cash-rich Vedanta Limited. London-based parent Vedanta Resources and its holding company Volcan have a debt of $10 billion. The group’s total debt comes to the tune of around $13 billion.
In fact, Vedanta Limited issued a separate, short and cryptic statement on Tuesday stating that against its dues of $10 billion, Volcan had stakes in various assets which amounted to around $17 billion. Agarwal maintained in his interview with ET that the debt of the holding companies was not a concern.
“Dividend flow (from Vedanta Limited) is very high, interest rates are very low, we have never defaulted,” he said. “In fact, we have a surplus. We have 3-4 more companies (other than Vedanta Limited). These are very good, cash-throwing companies.”
The other companies include Konkola Copper Mines, Sterlite Technologies and Sterlite Power Transmission. The group is negotiating with the Zambian government to restart the Konkola mines, he said.
Vedanta said on Tuesday that it will drive at least 30% of its profits toward dividends. About 70% of these go to the promoters.
