Home / Companies / News /  No immediate impact on Vedanta credit profile after $20 bn chip project: Moody’s

NEW DELHI: Moody’s Investors Service on Friday said that Vedanta Resources’ proposed $20 billion investment in Gujarat to set up a chip manufacturing plant will have no immediate impact on the company’s credit profile.

Earlier this week, billionaire Anil Agarwal-led Vedanta and Taiwan‘s Foxconn said they have joined hands to set up India’s first semiconductor plant in Gujarat at an estimated investment of 1.54 trillion, or nearly $20 billion. The 60:40 joint venture of Vedanta-Foxconn plans to set up a semiconductor fab unit, a display fab unit, and a semiconductor assembling and testing unit in Gujarat’s Ahmedabad.

“We do not expect Volcan to extract any cash from Vedanta to fund this investment. Any deviation from this expectation, such that Vedanta is used as a financing vehicle for Volcan, will weigh on the company’s weak liquidity profile and pressure its B2 negative corporate family rating," said Kaustubh Chaubal, senior vice president, Moody’s Investors Service.

Vedanta Ltd. on Thursday clarified that the proposed Gujarat investment will not be under the listed Indian entity but will be undertaken by the holding company Volcan Investments Ltd.

“We reiterate that the proposed business of manufacturing semiconductors is not under Vedanta Limited and we understand that it will be undertaken by the ultimate holding company of Vedanta Limited, Volcan Investments Limited," the Indian entity said.

Vedanta Ltd. is majority-held by Vedanta Resources, while Anil Agarwal’s family trust Volcan is the ultimate parent of both the entities.

Following the clarification on the proposed investment, shares of the company slumped 8.7% on Friday.

Volcan Investment is incorporated in the Bahamas. The company is wholly owned by Conclave PTC Limited, a private trust company, which is ultimately beneficially owned by Anil Agarwal Discretionary Trust.

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