
What is your first take on Vedanta because the stock has been reeling under pressure very near to its 52-week low on the concerns of the debt level? Do you believe the restructuring and demerger into six different separate listed entities will help Vedanta garner investor interest of investors, how are you looking at it?
Let us look at it from different perspectives; the first perspective is from the creditors who have lent to this group. At the current level, they probably want to see the securitization of assets, currently in the existing structure because all the assets are merged into one and because the resultant structure which is a pyramid structure, is getting created. It becomes impossible for the creditors to take a view on the subject and as a result, more comfortable when the individual vertical is demerged.
The verticals which are getting demerged now would provide opportunity to the lenders to take control of such verticals immediately, as a result of which, further unlocking of values can happen including sale of some of the verticals, which would probably satisfy the creditors or the lenders who have given money to them.
This is from the simplification point of view as we call it. Earlier, maybe they wanted to have a great amount of cash flows particularly from Hindustan Zinc and Cairns flow into the oil and gas business which they wanted to use for different businesses which they had nurtured. Now with individual businesses coming up separately, it would be easier for the group to sell off some of the businesses including inviting some specific investors into those businesses and managing it better. So, in a way it is a simple clean structure which should help to achieve the purpose as far as the repayment of debt is concerned.
The largest of the lot would be Hindustan Zinc. The second cash generating power is Cairns which is the oil and gas production business and thereafter comes aluminium and rest of the businesses will follow in my understanding. But more importantly, this structure will probably help the group to come out of whatever net position they have created because individually, they will be in a position to invite the outside investors or financial investors into respective companies who would not have come because of the pyramid structure.
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