Vedanta Rating Downgrade: Already facing debt crisis, the problems of Vedanta Resources Ltd, a giant in the metal and mining sector, are not taking the name of abatement. Now the rating agency Crisil has given a blow to Vedanta. The agency has downgraded the credit rating of the company (Vedanta Rating Downgrade). Crisil has taken this step regarding the recently announced dividend.
The company announced dividend
Vedanta announced an interim dividend of Rs 20.50 per share on Tuesday. Announced, which is the fifth dividend of this year. With this, the total outflow of the company in the form of dividend will reach Rs 37,733 crore. If this is combined with the dividend of Hindustan Zinc subsidiary, the total dividend payout will exceed Rs 40,000 crore.
The rating downgraded because of this
CRISIL For this reason, the credit rating of Vedanta has been reduced from stable to negative. Crisil believes that the higher dividend payout could have a negative impact on Vedanta’s financials and limit its resources. The rating agency is also apprehensive that Vedanta Resources Ltd’s parent company Vedanta Resources Ltd may depend more on dividends from associate companies to meet its debt obligations in the times to come.
Such is Vedanta’s plan
Crisil’s concern is not baseless either, as this time’s higher dividend payment is directly related to the parent company’s liabilities. Vedanta Resources Limited is currently facing a serious debt crisis. The company has to pay about $ 02 billion in the form of loan installments by the end of June. The company is looking at various funding options to pay the loan installments (Vedanta Debt Repayment). These options also include raising maximum dividend payments from associate companies.
These liabilities in front of Vedanta
Crisil has mentioned these things while downgrading the rating. According to the agency, Vedanta Resources has to pay around $3-3 billion during both the financial years 2023-24 and 2024-25. The company’s bonds worth $1.7 billion are maturing in the first quarter of the fiscal year starting in April. Vedanta Resources is constantly trying to raise funds for the payment of these loan installments. Crisil, however, believes that the ongoing talks for Vedanta Resources’ efforts to raise funds are slower than expected. It was told that Vedanta Limited has sought approval from the Reserve Bank to guarantee a loan of $ 01 billion. Vedanta plans to raise funds in the form of debt through an overseas subsidiary, for which Vedanta Limited will guarantee. The funds would later be sent to Vedanta Resources Limited, a London-headquartered holding company, by way of dividends. It was also claimed in the news that Vedanta Group is in talks with JP Morgan, Barclays, Standard Chartered, Deutsche Bank for this proposed loan of $ 01 billion, which is stuck due to interest rate.
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