JAL May Leave Vedanta Stretched

Vedanta Ltd's shares lost about 3% after reports that it emerged as the highest bidder to acquire insolvent Jaiprakash Associates Ltd (JAL).

- Ashish Agrawal

Vedanta has acquired several companies through the Insolvency and Bankruptcy Code (IBC) such as Electrosteel Steels Ltd, Ferro Alloys Corporation Ltd, Nicomet Industries Ltd, and has experience in turning around loss-making units. While JAL may be an attractive proposition, Vedanta could face pressure on its finances considering the ongoing expansion, raising investor concerns.

Vedanta's bid for JAL would need approval from the committee of creditors and then the National Company Law Tribunal, which may take 10-12 months. As per various estimates, it would be required to make an upfront payment of about ₹4,000 crore of a total of ₹17,000 crore on receiving the final approval, and the rest within five years. Financial creditors had total claims of over ₹57,000 crore against JAL, which means Vedanta could be receiving the asset at an attractive price.