Anil Agarwal just bought himself more time

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Editor's note: It’s not the kind of faux pas that you would expect from Anil Agarwal, chairman of Vedanta Resources. Agarwal proposed the sale of the global zinc assets of Vedanta Resources to the locally listed Hindustan Zinc, in which the government of India holds a 29.5% stake, for $2.9 billion. On 19 January, despite reservations expressed by the three government nominees, Hindustan Zinc’s nine-member board ratified his proposal. This was only to be expected given that Vedanta Ltd owns 65% of Hindustan Zinc. Vedanta Ltd, in turn, is owned by Vedanta Resources. On the face of it, there appear to be two fundamental reasons why Agarwal wanted this deal to happen. For starters, his privately held Vedanta Resources is cash-strapped. In October last year, ratings agency Moody’s downgraded Vedanta Resources’s corporate family rating, citing “rising refinancing pressure” and its “persistently weak liquidity profile and our concerns over the elevated refinancing risk arising from its looming debt maturities”. Vedanta Resources has $7.7 billion of debt on its books. This, after repaying $2 billion in the last 11 months.  The deal, to be …