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CRISIL downgrades Vedanta Ltd. NCDs, Moody's placed Vedanta Resources Ltd. under review for rating downgrade.

CRISIL downgrades Vedanta Ltd. NCDs, Moody's placed Vedanta Resources Ltd. under review for rating downgrade.

Last updated: 05 Dec, 2020 | 01:59 pm

CRISIL downgrades Vedanta Ltd. NCDs, Moody's placed Vedanta Resources Ltd. under review for rating downgrade.

Vedanta Ltd. failure to delist has made rating agencies question its risk appetite, with CRISIL downgrading its NCDs and long-term bank facilities from AA Negative to AA- Stable. This downgrade reflects higher financial leverage on the books and reduced cash surplus over the medium term.  

Vedanta limited is a subsidiary of Vedanta resources. Vedanta has declared an interim dividend of ₹ 9.5 per share with total payout amounting to ₹ 3,500 crore. Hindustan Zinc had declared an interim dividend of Rs 21.3 per share. Vedanta Ltd. holds 64.92% stake in Hindustan Zinc and is supposed to receive a sum of Rs 5,842 crore from Hindustan Zinc, in the form of dividend. This affirms Vedanta’s willingness and ability to pay its short term debt, confirmed by CRISIL, which reaffirmed its rating on the commercial paper and short-term bank facilities.

The delisting was viewed as a step forward in simplifying the complex shareholding structure of the Vedanta Resources, which would have allowed for better access to consolidated group cash, had Vedanta resources acquired the balance shareholding in key subsidiary Vedanta Ltd as a result of delisting.

Vedanta Resources, the holding company, with a failed delisting of Vedanta Ltd., has an increased liquidity risk, with around $2.9 billion in debt maturities between April 2020 and March 2022, which includes $120 million in revolving credit facility repayable in February 2021. The annual interest payment for the holding company is at $470 million.

While CRISIL has actioned on Vedanta Ltd. as per below table, Moody's probable action on Vedanta Resources will focus on the holding company's ability to refinance its upcoming debt maturities in the fiscal year ending March 2021 and 2022.

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