Moody's flags Vedanta Resources' failure to take full ownership of unit

Failure may result in weakened liquidity for the group, says Moody's.

Vedanta Resources Ltd’s (VRL) failure to take full ownership of its profitable subsidiary Vedanta Ltd. (VDL) will weaken liquidity, said a report by Moody’s Investors Service. Moody’s had on October 20 placed VRL’s ratings under review for downgrade.

“Without operations of its own, VRL--as the holding company--needs to refinance debt maturities at a time of tight capital market liquidity, putting undue pressure on key subsidiaries to upstream cash,” the report quoted Kaustubh Chaubal, vice president and senior credit officer at Moody’s, as saying.

“Governance risk also remains high, with share pledges, persistently weak liquidity and large imminent refinancing needs reflecting an aggressive