Std

By Staff
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Google Oneindia News

Singapore, Nov 20 (UNI) Standard&Poor's Ratings Services today expressed its concerns on Vedanta Resources PLC's proposed entry in the commercial energy sector in India.

The company has proposed investment of 1.9 billion dollars for constructing a 2,400 megawatt power plant and its plans to grow further in this sector with 2.9-billion-dollar expansion in the metals business.

According to the agency, the company's plans point toward ''greater-than-expected'' dependence on debt, which could weaken its credit profile. ''It increases the company's exposure to risks associated with greenfield investments.'' However, the impact of potentially higher debt is mitigated by favorable price environment and higher output, resulting in improved cash flows from the core metals business of the company, it noted.

The negative outlook given by Standard&Poor's took into account the persisting uncertainty in obtaining the licenses for mining bauxite in Orissa -- a key component of its ''ambitious expansion'' in the aluminum segment.

It also considered the impact of the proposed power sector investments, including the means of financing.

Vedanta is a diversified integrated metals and mining group headquartered in London. The majority of its production facilities and 48 per cent of its sales are in India. The company is involved in the production of zinc, lead, aluminum and mining and refining copper.

UNI XC PKS HT1600

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