Vedanta Share Price Falls After Becoming Top Bidder For Jaiprakash Associates

Vedanta Ltd.'s shares traded lower during early trade on Monday after reports said the Anil Agarwal-led conglomerate has won the bid for debt-laden Jaiprakash Associates Ltd.

The bid is worth over Rs 17,000 crore, with a net present value of over Rs 12,500 crore. The net present value of a bid takes into account the time value of money, as deals for distressed assets have longer repayment schedules.

The company has offered an Rs 4,000 crore payment post approval by the National Company Law Tribunal and the balance amount over the next 5-6 years, news agency PTI reported, quoting sources.

JAL is undergoing insolvency under the IBC law, and the Resolution Professional invited Resolution Plans on June 24. As a part of the same process, a challenge process was conducted among the five bidders (Vedanta, Adani, Dalmia, Jindal Power and PNC Infratech), wherein Vedanta emerged as the H1 bidder at the NPV value.

The PTI report said that given that the entire payout is staggered over 5-6 years, it will be funded by Vedanta's balance sheet and supported by JAL's internal accruals, without any overdependence on Vedanta's balance sheet alone, which generates free cash flows.

Vedanta's deleveraging plan could take a back seat due to this deal, as the company stands on a net debt of Rs 58,200 crore, while London-listed parent Vedanta Resources Plc owes $4.7 billion. The management has aimed to bring down leverage for Vedanta to 1x from 1.3x debt-to-equity.

Though Vedanta has been identified as H1, the CoC is yet to conclude the process and vote on the successful resolution plan, which is estimated to take another four to eight weeks. After this, implementation of the plan will take another three to four months.

Jaiprakash Associates has outstanding unpaid dues of Rs 55,371 crore as of Aug. 15, according to a stock exchange filing.

The company, which has five key verticals (power, real estate, cement, hotels and EPC), complements Vedanta's businesses such as power (already present and has a sizable portfolio including Talwandi Sabo and Meenakshi Energy).