Mining conglomerate Vedanta Ltd expects to complete the divestment of its steel assets anytime between the first and the second quarter of this fiscal, amid focus on deleveraging and shore up the cash flow of the debt-ridden company.
"Divestment of steel plant is under consideration.. buyers are ready and we expect the regulatory clearances to be over between Q1 and Q2 of this year," said Vedanta executive director Arun Misra, in a post earnings call with analysts.
The company initiated an evaluation of its steel and steel raw material business in June last year amid plans to to focus on its core mining businesses. Vedanta forayed into the steel business in 2018, following the acquisition of ESL Steel, making an upfront payment of Rs 5,320 crore.
JSW Steel, ArcelorMittal and a few private equity funds are reportedly interested in bidding for the iron ore mines and a steel plant. Vedanta executives declined to comment when one of the analyst asked about the valuation set for the entity.
In Q4FY24, the steel unit posted negative EBITDA of Rs 16 crore versus Rs 300 crore recorded in Q4FY23. The company cited lower net sales realisation (NSR) for the gloomy numbers in the unit. In contrary, quarterly EBITDA from its iron ore business rose 56 percent YOY to Rs 558 crore.
As of March 31, 2024, ESL's net debt stands at Rs 1,524 crore.
Vedanta posted a 27 percent decline in fiscal fourth-quarter profit, driven by surging finance costs and weak prices of metals such as zinc, copper, and aluminium. However, the company is now banking on the recent upswing in commodity prices coupled with restrictions on Russian metal on LME, to boost growth in medium term.
Demerger
The mining conglomerate expects the demerger of five of its key businesses, including aluminium, oil and gas, and steel, into separate listed entities to be completed by December 2024.
In the post earnings call, the company said it is awaiting No Objection Certificates (NOCs) from the lenders to move forward with the demerger process. "We have started to receive NOCs from private lenders, Public Sector Units (PSUs) will also start sending it soon," said Misra.
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