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Indian tycoon Adani.
Highly leveraged Indian tycoons are having a rough time. Gautam Adani’s $236 billion infrastructure empire has shrunk by more than three-fifths in a month. But while his relentless rise and spectacular fall hog headlines, a smaller storm may be brewing for another well-known magnate. Anil Agarwal’s once-London-listed Vedanta Resources Ltd. has a pile of debt, including a $1 billion bond due January.
Indian tycoons who have taken on a substantial amount of debt are floundering. In just one month, Gautam Adani’s $236 billion infrastructure company has decreased by more than three-fifths. But a smaller storm may be brewing for another well-known entrepreneur as his unrelenting rise and catastrophic fall dominate headlines.
Another storm
 Vedanta Resources Ltd., which was originally listed on the London Stock Exchange, has a mountain of debt, including a $1 billion bond due in January. Yet his most recent effort to reduce his workload has offended the one employee he can’t afford to irritate.
Agarwal was dabbling with the idea of merging debt-ridden Vedanta Resources with its cash-rich, Mumbai-listed unit, Vedanta Ltd., around this time last year, when the US Federal Reserve was still to start raising interest rates to stoke inflation and Russia’s war in Ukraine had started to send merchandise surging to their best quarter in more than three decades.
Nonetheless, Vedanta Resources made progress in reducing its net debt load from almost $10 billion in March of last year to just under $8 billion. S&P Global Inc. predicts that the parent company and majority shareholder of the listed unit will “very likely” fulfil its obligations until September 2024 as a result of the listed unit declaring a dividend last month. So far though, so good.
Agarwal ran into trouble, however, when he endeavored to raise the funds for the $1.5 billion in loan and bond repayments that are due between September 2018 and January 2024.
Vedanta Resources bondholders have made what was intended to be a fast run to the ATM into a risky enough excursion to lower the price of the August 2024 note below 70 cents on the dollar.
The coming weeks will be essential for raising money. If it collapses, S&P stated last month that the issuer’s B- credit rating, which is already at the bottom of the junk-bond category, could be threatened.
Despite Adani has a $24 billion net debt load, which is three times that of Agarwal, his bonds are nevertheless given a rating of.
Everyone became apprehensive when they learned that Hindustan Zinc Ltd., which Agarwal had initiated purchasing from the Indian government in a privatization deal two decades prior, now has a financial cushion of $2 billion, albeit far less than it did in the past. Also, every quarter, the miner creates Ebitda of $300 million to $600 million.
Vedanta Ltd., who now owns 65% of the company, opted to sell THL Zinc Ltd. Mauritius to Hindustan Zinc in January. The value of that cash transaction, which reflected mining interests in Namibia and South Africa, was phased in over an 18-month period and was around $3 billion. Vedanta Resources owns a 70% stake in Vedanta Ltd., therefore that company would have met the latter’s cash requirements.
One issue, unfortunately, remained. Almost 30% of Hindustan Zinc is still owned by New Delhi, which resisted the sale. The Indian government threatened to undertake legal options in a letter sent to Hindustan Zinc on February 17 and stated, “We would urge the company to explore other cashless methods for acquisition of these assets.” If Hindustan Zinc still decided to move forward with the purchase, the Indian government would take legal action.
