Companies & Sectors
S&P places Vedanta Resources on negative watch due to delay in debt refinancing

Vedanta's ability to tie-up funding to refinance its sizable maturities will continue to be tested in the next 18 months, even if the company can refinance its April and June 2013 maturities, according to the ratings agency

Ratings agency Standard & Poor's (S&P) said it placed its 'BB' foreign currency long-term corporate credit rating on Vedanta Resources PLC on CreditWatch with Negative Implications, due to the delay by the company in refinancing its large maturing debt obligations.


“Vedanta's ability to tie-up sizable funding to refinance its maturities will continue to be tested in the next 18 months, even if the company can refinance its April and June 2013 maturities,” S&P said.


It said Vedanta is expected to eventually garner funding for the debt maturities. “However, Vedanta's inability to plan and execute a strategy to diversify funding sources, lengthen maturities, and improve its less than adequate liquidity could pressurize the rating further,” the ratings agency added.


The company has, however, tied up the majority of the funds for its $809-million debt maturing on 29 April 2013 and is tying up the rest. Vedanta is also in the process of securing funding for its $1,350 million debt due 6 June 2013.


Since acquiring India-based oil company Cairn India Ltd in December 2011, dividends received by Vedanta has formed only a small part of its large debt servicing needs. The holding company does not maintain any credit lines and, therefore, needs to rely on external sources of funding for refinancing, adds S&P.


S&P also placed its 'BB' rating on Vedanta's outstanding issuances on CreditWatch with Negative Implications.


S&P said it could even lower the rating for Vedanta (a) in the unlikely event that it does not tie up all the funding for its April 2013 maturities by 12 April 2013; (b) if Vedanta fails to finalise funding for its June 2013 maturity at least one month before the maturity date; or (c) if Vedanta's refinancing framework and financial management strategy are not conducive to lengthen the maturities, diversify funding sources, strengthen liquidity at the holding company, and improve access to cash at the subsidiaries.


Vedanta has been in the news often over the past one year and its difficulties have been covered in the following Moneylife articles:


Vedanta gave ‘illegal’ political donations in India?


Vedanta’s Millions: Which political party benefited from it? By Sucheta Dalal


Vedanta’s ‘happiness’ backfires; celebrities pull out of PR campaign


Exempt vehicles below Rs10 lakh from SUV tax, says Patel

According to Praful Patel, it is wrong to levy the SUV tax on cheaper SUVs such as Tata Sumo and Mahindra Bolero, which transport people in rural areas

Praful Patel, minister for heavy industries and public enterprises, said on Thursday that vehicles priced below Rs10 lakh should be exempted from the sport utility vehicle (SUV) tax announced in the Budget.


Supporting the automobile industry's demand for a second look at the increase in excise duty on SUVs to 30% from 27% , he said, "I certainly feel there is a need to look at the excise duty on SUV. To begin with, there is no classification of SUV to be found in the Motor Vehicles Act."


Last week, the Standing Committee on Finance headed by Yashwant Sinha had called the government’s move to impose additional tax on SUVs discriminatory. Following the Budget on 28th March, certain long cars normally referred to as sedans have come under the government’s definition of SUV and have ended up paying higher taxes.


Chidambaram, in his Budget proposal, said that any vehicles over and above the 4-metre length, having a 1500cc engine, and 170mm ground clearance would pay 30% tax while sedans would continue to pay the regular 24-27% tax, depending on their classification. However, this has also affected popular sedans like Maruti SX4, Toyota Corolla Altis and Honda Civic.


Speaking on the sidelines of the Hero Mindmine Summit, Patel said the SUV tax has hurt vehicles like “Sumo and Bolero, which are used in rural areas to transport people.”


Stating that he has taken up the matter with finance minister P Chidambaram, Patel said, "I suggested that any vehicle below Rs10 lakh may be brought out of the definition.”


He said the objective must be to "dis-incentivise people who use high-end cars" and for them "not to be subsidised by cheap diesel."


Patel said the automobile industry has 'merit and justification' in seeking a re-look at the higher tax on SUVs.




4 years ago

He forgot to mention that Bolero is also used in convoys of VVIPs

BHEL partners with Mitsubishi for FGD system technology

BHEL will receive FGD system technology, used to remove sulphur dioxide from exhaust flue gases of fossil-fuel power plants, from Mitsubishi Heavy Industries

India's state-run power equipment maker Bharat Heavy Electricals Limited said on Thursday that it has tied up with Japan-based Mitsubishi Heavy Industries, for environment-friendly technology for its manufacturing units.


An official statement said, "BHEL has geared up for the manufacture and supply of pollution control equipment to meet the emerging requirement of thermal power plants."


BHEL has entered into a license agreement with Mitsubishi Heavy Industries for acquiring flue-gas desulfurization (FGD) system technology. FGD is a set of technologies used to remove sulphur dioxide (SO2) from exhaust flue gases of fossil-fuel power plants, and from the emissions of other sulphur oxide emitting processes.


The new systems will be engineered and manufactured at the Ranipet unit of BHEL in Tamil Nadu. It is expected that some of the upcoming power projects, including ultra mega power projects, may utilise this new technology.


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