Vedanta- Transferring General Reserve Is A Strategic Move

Vedanta is transferring Rs. 12,587 crore from General Reserve to Retained Earnings, which is seen a strategic move, having wide range implications. General Reserve use by any company has its limitations, as it cannot be used for all purposes, while mandatory creation of General Reserve no more exist in Companies Act now.

This move is being taken up by Vedanta, largely to enable the company to use funds for Acquisition of PSUs like BPCL, NALCO, SCI, Hind Zinc (29.5% residual stake held by the Govt) etc. Infact this amount of Rs. 12,587 can be leveraged by debt of an equal amount atleast, giving a fund availability of Rs. 25k crore,  which theoretically can acquire SCI & Hind Copper.

Cairn having submitted Undertaking, as also, withdrew all cases and claims in Retro Tax matter, will also see Govt refunding Rs. 7,900 cr to Cairn. Market sources says that Cairn is indirectly owned by Vedanta promoters, who will receive this money, which will eventually get used for PSU acquisitions.

As we are in 3rd quarter of FY 22, with about Four and Half months remaining, it is expected to see stake sale process getting initiated faster by Government.

Remain prepared to see Action Revival of buying in these few stocks, capable to rise by 25% to 75%, in the next 4-6 months.

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