Shares of the Anil Agarwal-led company fell as much as 9% today after rising 14% over the past two days. This came after the company clarified that the proposed semiconductor manufacturing would be carried out by the holding company Volcan Investments and not the said Vedanta.
Volcan Investments is a holding company wholly owned by the Agarwal family trust, which is not listed on stock exchanges.
Vedanta shares have been on the rise in recent days as investors have been excited about the company’s investment in semiconductor manufacturing. In addition, news of Vedanta’s foray into Apple iPhones and electric vehicles added to the rally.
“We reiterate that the proposed semiconductor manufacturing business does not fall under Vedanta Limited and we understand that it will be carried out by the main holding company of Vedanta Limited, Volcan Investments Limited,” the company said in a BSE statement.
Oil-to-metals conglomerate Vedanta and Taiwanese electronics giant Foxconn have formed a joint venture to invest over ₹1.54 crore to set up a semiconductor manufacturing plant in Gujarat. The proposed facility will come up within the next two years in Gujarat.
Chairman Anil Agarwal shared the news on Twitter, saying that an investment of ₹1.54 crore will be made in Gujarat and will “help make India’s #Atmanirbhar Silicon Valley a reality”.
History is being made! 🇮🇳 We are pleased to announce that the new Vedanta-Foxconn semiconductor plant will be established in #Gujarat. Vedanta’s significant investment of ₹ 1.54 crore will help drive investment into India #Atmanirbhar Silicon Valley reality. (1/4)
— Anil Agarwal (@AnilAgarwal_Ved) September 13, 2022
Reports say the huge investment in Gujarat is coming ahead of crucial local elections. There is also a political twist as some reports say Maharashtra Chief Minister Eknath Shinde has invited the company to sign a Memorandum of Understanding (MoU) to set up a facility at Talegaon near Pune in Maharashtra.
This makes India join the list of very few countries like Taiwan that are leaders in manufacturing such chips.
Ratings agency Moody’s says Vedanta is not expected to be a financier in the proposed investment, but if it gets involved in the future it will hurt its finances.
“Volcan’s proposed $20 billion semiconductor project has no immediate impact on the credit profile of Vedanta Resources Limited. We do not expect Volcan to extract any cash from Vedanta to fund this investment. Any deviation from this expectation, such as Vedanta being used as a financing vehicle for Volcan, will impact the company’s weak liquidity profile and push its B2 negative corporate rating,” said Kaustubh Chaubal, senior vice president at Moody’s Investors Service.
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