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Vedanta CEO Agarwal Promises “Zero Debt” After Investor Sell-Off

Indian mining billionaire Anil Agarwal has said his Vedanta group has adequate finance options and that it intends to become a “zero debt firm”, as criticism of highly indebted Indian conglomerates rises following the Adani Group short-seller onslaught.

The biggest private miner in India, Agarwal’s natural resources firm, which positions itself as essential to the country’s economic development, now has bonds with a junk rating. Even as it diversifies into new business ventures and builds an ambitious semiconductor facility in collaboration with Apple supplier Foxconn, it has been working to reduce its debt load.

“Everybody wants to finance us,” Agarwal told the Financial Times in an interview, citing Indian banks and “American funds”, which he declined to name. He said Vedanta was in talks with JPMorgan and other banks for a $1bn loan, with an interest rate of 8 to 10 per cent. Vedanta borrowed $400mn from Howard Marks’ Oaktree Capital Group in 2020. Vedanta had “less than $13bn total debt” and becoming “a zero-debt company is not a distant dream, but a medium-term, achievable goal,” he said.

The former scrap metal trader from Bombay who is now an industrialist made his remarks during a difficult moment for Vedanta Limited’s share price, which has down 13% over the previous month. Vedanta Resources’ 2026 bond yields have increased by about 23% during the previous month. Agarwal dismissed the changes in the bond market by blaming the “geopolitical scenario”.

This year’s attack by short seller Hindenburg Research on billionaire tycoon Gautam Adani’s infrastructure conglomerate rattled India’s financial markets, setting off a stock market meltdown that at its worst had destroyed roughly $145 billion from his group’s market worth.

Concerns about paying about $900 million in looming debt maturities by June were rejected by Agarwal. He emphasized that his commodities businesses were “blowing off enough cash” and said he anticipated the firm as a whole making $9 billion in profit in the upcoming year, adding, “$1 billion is peanuts for us.”

The current financial year will be “important for Vedanta Resources,” according to a recent research note from JPMorgan, as it dealt with debt maturities and interest totaling $4.1 billion at the holding-company level.

“We have seen a recovery of the commodity cycle in recent months, which will improve Vedanta’s cash flows and profitability,” said Abhishek Jain, head of research with Arihant Capital. “But refinancing debt will be challenging in the current environment, and their financing costs will increase.”

In order to expand his oil-to-aluminum empire, Agarwal tried to take his Mumbai-listed business private in 2020. He did this by borrowing money to buy distressed assets and forming a number of subsidiaries. Vedanta’s resulting network of enterprises was referred to by Moody’s as a “complex structure” that has “long been a credit issue” in a recent research note.

Agarwal also argued that uniting his South African and Indian zinc mining operations was the “correct thing to do”, less than two months after India’s government indicated it rejected the proposal, delaying a merger that would have freed up $2bn in cash to Vedanta’s parent company through a special dividend.

The majority 64.9 percent ownership of the formerly state-owned Hindustan Zinc is held by Agarwal’s Vedanta Limited. He intended for Hindustan Zinc to purchase THL Zinc, a South African enterprise, from another Vedanta group subsidiary in a deal valued at $2.9 billion.

“We have a very large company with similar size resources in South Africa, and both are under two different managements,” Agarwal said. “Through consolidation, there is scope for significant improvement from a structure and business strategy perspective

.” He added: “It was natural to put this before the government to bring them together [in order] to run it efficiently and create the world’s largest zinc company.”

However the Indian government, which holds a 29.5 per cent share in Hindustan Zinc, protested the related party transaction and “urge[d] the business to pursue other cashless methods of acquisition of these assets”. Credit analysts claimed that the government had likely reacted defensively to THL Zinc’s high cost.

Agarwal stated that talks were ongoing and that he would not proceed without the government’s consent. We will coordinate with the government and then carry it through, he assured them.

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