Vedanta to put $2.5 billion steel business sale on hold after share sale eases debt pressure: Report

The Anil Agarwal-led Vedanta had been working with advisors to sell its steel business to raise around $2.5 billion for reducing the company's debt load

Vedanta Ltd has put plans to sell its steel business on hold because a $1 billion share sale gave the company increased breathing room for managing its debt, the Bloomberg reported, citing unnamed sources. HT couldn't independently verify the information. The company may look to sell the steel business later, the report added.

A man walks past the logo of Vedanta outside its headquarters in Mumbai, India, January 31, 2018. (Reuters)

Why did Vedanta plan to sell its steel business?

The Anil Agarwal-led Vedanta had been working with advisors to sell its steel business, which includes iron-ore and manganese mines, to raise around $2.5 billion for reducing the company's debt load, according to the report.

However, Vedanta's fundraise through a share placement last month ended up cooling some debt pressure and thus, reduced the need to sell the steel business, according to the report.

A Vedanta spokesperson denied that the steel business sale is on hold. “Electro Steel Limited (ESL) is a trophy asset for both Vedanta Limited and for India. There are no other brownfield sites in the country that have the opportunity to grow to a 20MTPA manufacturing plant. ESL has the land, railways, infrastructure, mines – both iron ore and coal – and a gas pipeline running beside the plant that helps us to produce high quality green steel. Additionally, we are on track to complete our proposed capacity expansion to 3.5MPTA by the end of the year. If Vedanta receives the right price, we will consider selling ESL,” the spokesperson said in an email to HT.

"Vedanta is strongly committed and is already ahead of its deleveraging targets through operating free cashflows and the recent successful equity raise of $1bn through the QIP process," the spokesperson added.

Vedanta entered the steel business by purchasing a 90% stake in ESL Steel Ltd in 2018. The company had operations in Bokaro, Jharkhand. The plan to sell it came after Vedanta’s board approved a plan last year to split the conglomerate into six different companies.

How much debt does Vedanta have?

Vedanta's net debt was ₹61,320 crore at the end of the first quarter of the financial year 2024-25, which was up by 8.8% from the previous quarter, according to the report.

Environmental and regulatory concerns acted as a deterrent to potential buyers of the steel business, the report added. The Organized Crime and Corruption Reporting Project published an investigation report last year, claiming that Vedanta lobbied the government for weakening important environmental regulations during the Covid pandemic.