Shares of Vedanta Ltd plunged 6 per cent in Tuesday’s trade, taking their losing run to the eight straight session. The stock fell amid a Business Today Television report that suggested the Centre was upset about Vedanta’s proposal to sell international zinc assets. This is, as the government feels the move would hinder and distort its plan to dispose its 29.54 per cent residual stake in Hindustan Zinc, the report suggested.
On Tuesday, the scrip fell 6.12 per cent to hit a low of Rs 269.75. This was the eighth straight day of fall for Vedanta shares. The scrip has fallen 14 per cent in during the period.
Hindustan Zinc Ltd fell 4.14 per cent to Rs 296.10. It was down 3.4 per cent on Monday.
The Centre, last week, opposed Vedanta’s proposal to sell its international zinc assets to subsidiary Hindustan Zinc for $2.98 billion over concerns about valuation. Vedanta held 64.92 per cent stake in Hindustan Zinc as of December 31.
Vedanta group’s net debt, after adjusting the cash component of $ 3.5 billion, stands at $11.8 billion. In terms of the repayments of long-term debt of $13.9 billion, the group has $1.2 billion due by the second half of 2022-23, $4.1 billion by 2023-24, $3.9 billion by 2024-25 and $4.7 billion by 2025-26 and beyond.
The Business Today Television report suggested that the government was planning to take legal action to stop the sale of the Africa-based assets to Hindustan Zinc.
“The first cause of concern is that it is a related party transaction, and not coming from a third party. Vedanta is the promoter and decision-maker for HZL, and Vedanta is also the decision-maker and owner of the zinc asset. Why does Vedanta want to part with it if it is such a good asset? The shareholders deserve to understand why and where there is a need to do this,” the report quoted a government official as saying.
“The other big cause of concern is the valuation. If the buyer and seller are one, how will an understanding of the value of assets be achieved? As far as the residual stake sale is concerned, the probable investors will not be attracted to a deal like this. There needs to be better transparency since the valuation is not clear to the shareholders or market,” added the official.
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