Vedanta’s CFO Turmoil, Likely To Quit Amid Restructuring Challenges; Vedanta’s Woes Continue

Vedanta’s Ongoing CFO Turmoil Amid Restructuring Challenges

In the midst of a significant overhaul of its operations, Vedanta Ltd. faces another potential setback as its Chief Financial Officer, Sonal Shrivastava, is reportedly contemplating an exit just months after joining the company.

If the plans come to fruition, this marks the third CFO departure in as many years for the mining conglomerate owned by billionaire Anil Agarwal.

Sources familiar with the matter revealed that Shrivastava informed Agarwal of her decision to step down last month; however, the identities of these sources remain confidential due to the non-public nature of this information.

Agarwal is currently in discussions with finance professionals who previously worked within the group to find a suitable replacement, with a decision expected as early as this week.

The Never Ending Chaos
Shrivastava’s resignation, if accepted, compounds Agarwal’s challenges, especially considering that Vedanta Resources Ltd., his holding company, faces the daunting task of repaying approximately $3 billion in bonds over the next two years. The group has been actively engaged in discussions with bondholders regarding potential terms restructuring for these upcoming maturities.

Shrivastava’s departure follows that of G. R. Arun Kumar, who left in 2021 after Agarwal’s unsuccessful attempt to privatize the Mumbai-listed company, and Ajay Goel, who resigned earlier this year.

Trying To Build Up
In a strategic move last month, Vedanta Ltd. approved a plan to divide itself into six separate listed companies; Agarwal envisions that this restructuring will attract direct investment in key businesses and improve the valuation of each component.

Additionally, the reorganization will help facilitate the sale of certain assets to reduce the parent company’s debt, a step that Agarwal has previously been hesitant to take.

However, it’s worth noting that Vedanta Ltd.’s demerger plan may face delays, as experts anticipate heightened scrutiny from lenders and complexities tied to the proposed value-unlocking strategy, which involves listing each revenue stream of the conglomerate separately.

The distribution of debt across these new entities will be a focal point, as it is expected to impact the flexibility of cash flows among the businesses. Moreover, approvals from the National Company Law Tribunal (NCLT) and the Government of India are required, with the latter potentially facing challenges given the upcoming federal elections.

In the financial year 2022-23 (April-March), Vedanta deployed a significant portion of cash generated across its businesses, including Hindustan Zinc, for dividends, resulting in a substantial dividend payout of nearly ₹38,000 crore; the move aimed to provide financial support to the parent company, Vedanta Resources.

The Debt Issue
Vedanta Resources continues to grapple with debt obligations of more than $3 billion in 2024-25 and over $1 billion in the next six months; this debt burden at the parent level remains a persistent concern for Vedanta.

Anil Agarwal, who began his journey in the 1970s by making aluminum conductors and later expanded into scrap metal trading, transformed Vedanta Ltd. into a natural resources conglomerate through a series of ambitious acquisitions.

However, the need to address the holding company’s debt and pursue new ventures, such as semiconductor manufacturing, has led Agarwal to divest a stake in the company and revisit the group’s corporate structure to attract fresh capital.

The Last Bit,
Vedanta’s ongoing CFO turbulence, particularly Sonal Shrivastava’s impending departure, adds another layer of complexity to the company’s ambitious restructuring plans.

As Vedanta seeks to unlock the value in its diversified businesses, it must also grapple with substantial debt obligations and regulatory hurdles and Anil Agarwal’s strategic vision, from aluminium conductors to a natural resources conglomerate, now demands careful financial management and a revamped corporate structure to secure fresh capital and chart a sustainable path forward.

For now, Vedanta’s future, with all its challenges and opportunities, remains a story to watch as it struggles to find a strong footing and a new CFO, perhaps.