No bigger plan with Glencore, semi-conductor business on track: Vedanta's Anil Agarwal

Vedanta founder and chairperson Anil Agarwal

In Vedanta’s first-ever townhall with shareholders on May 31, promoter Anil Agarwal assured that plans for the semiconductor project are on track, assuaged debt-related concerns at the group level and denied any plans to off-load stake in the India-listed company.

“We are fully equipped to make semiconductors. Have selected Gujarat as the site for the semi-conductor project, the government is with us shoulder to shoulder,” said Agarwal, non-executive chairman of Vedanta Ltd in the townhall address. A  Bloomberg News report earlier in the day said the central government is poised to deny crucial funding for Agarwal’s chip venture.

However, Agarwal dismissed the concerns as routine hurdles.

In September, Vedanta signed a Memorandum of Understanding (MoU) with the Gujarat government to set up a semiconductor unit in the state. Vedanta  then said it is setting up this plant in a joint venture (JV) with Taiwan-based Foxconn. Vedanta earlier said the company will hold 60 percent of the equity in the JV while Foxconn will own 40 percent. The company has not reported any further development on the project since.

The group chairman also denied any plans for the sale of promoter stake in Vedanta or any ‘bigger plan’ with Glencore. In a May 25 development, the promoter group pledged 4.4 percent of their holding in Vedanta for a $250 million loan from Glencore International AG.  Vedanta's latest disclosure shows promoter holding at 68.1 percent, all of which are now pledged.

Rating agencies have raised doubts over Vedanta group's capabilities to service debt. The billionaire, however, remains confident on the debt side. In February, Vedanta Ltd's attempt to sell its Zinc International assets to it subsidiary Hindustan Zinc also failed owing to resistance from the Indian government, which holds a stake in the zinc company.  Inability to release funds of close to $2.98 billion through this deal further added to concerns over the group's ability to service debt.

Agarwal said the group’s debt-to-equity ratio and its lenders remain comfortable. He added that the vision is to turn zero debt in the next few years. “There is a business plan for debt repayment,” Agarwal added. In April, Vedanta Resources said it has paid all its maturing loans and bonds due in April 2023, leading to a gross debt reduction of $ 1 billion. With this, the company then said gross debt stood at $6.8 billion.

Responding to a query on the ten-year vision for the conglomerate, Agarwal said, he aims for a $ 1 trillion company.

Agarwal also denied any interest in investing in the Indian Premier League (IPL). A question Vedanta’s shareholders repeatedly posed, arising out of Agarwal’s viewer interest in the cricket series. “Bollywood and cricket are my entertainment,” he said, adding there were no plans to invest in that sports segment.

Replying to a query on the company’s shut copper smelter at Thoothukudi in Tamil Nadu, Agarwal said, “I have no doubt, it is a question of one or two months, this plant will open.” The smelter was shut down in 2018 owing to local protests and unrest over pollution-related issues. The Supreme Court in April allowed the company to carry out maintenance work at the facility.