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Gandhinagar: Vedanta will invest $5 billion in the first phase of setting up its semiconductor fab, packaging testing unit and display fab unit, for which capital allocation will be done through a mix of debt and equity, the group’s chairman Anil Agarwal said in an interaction with Mint.
“The first phase will be $5 billion. We will take will the structuring because it will be now the main company, and Vedanta has a good cash flow. We will make a capital allocation in the Vedanta. There is a queue of people to give us equity and debt,” Agarwal said.
The chairman of the mines-to-metals conglomerate said that the group was in discussions with three technology providers for each of the manufacturing units which are likely to fructify in coming months. The chairman also assured that the first chip will be produced from the semiconductor fabrication unit in 2.5 years.
"We're talking to three companies for separate tie ups for foundry, chips and packaging and testing. They should happen in a few months. The first chip will be produced in two and a half years," Agarwal said.
The total investment for the project will be in the range of $19 billion to $20 billion.
Noting that relations with the Taiwanese contract manufacturer were cordial, Agarwal said that the group's partnership with Foxconn will continue in other areas of the semiconductor ecosystem, despite dissolving the joint venture. Foxconn and Vendata had earlier tied up to set up the semiconductor fab, packaging testing unit and display fab units.
“Our association with the Foxconn will be there as ecosystem, so whatever is their strength, we'll bring him in, but on the foundry they don't have a license,” he said, adding that Foxconn was not in the semiconductor business and that they were more into downstream manufacturing.
He also said that the group was well positioned to address its debt situation, which stood at $6.5 billion as of May 2023. “We have a $7 billion profit and there’s no company that works without debt. There hasn’t been a default till date, so we’re very comfortable to address our debt. In fact, we have the lowest debt in our peer group,” he said. Vedanta's debt ballooned to $16 billion as of March 2022, post which it embarked on a debt reduction drive with the aim to become a zero-debt company in two to three years.
The chairman also confirmed that the group was evaluating the sale of its iron ore and steel assets, as reported by Mint earlier this month.
"We've taken the view that we will take a review on this asset because, unless we are number one, two or three, in any of my business we can look at an exit. We have started the process, and this is also in the pipeline, we can look at it," Agarwal said.
Mint reported on 19 July that the group plans to sell ESL Steel which it acquired for ₹5,320 crore through bankruptcy resolution five years ago, for which bankers have been mandated. The sale would also include iron ore mines in Goa and Karnataka, which combined with steel assets could be priced at $2-3 billion.
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