InvestorQ : How will the huge loss reported by Vedanta impact its delisting proposal?
Mahima Roy made post

How will the huge loss reported by Vedanta impact its delisting proposal?

Answer
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Mahima Roy answered.
3 months ago


More than the loss, it is the massive impairment that Vedanta has taken on its books in the Mar-20 quarter that is actually putting pressure on the Vedanta stock. This impairment is likely to significantly bring down the book value of the company and will indirectly impact the valuation of Vedanta too. It may be recollected that last week Vedanta had reported a massive loss of Rs.12,083 crore for the Mar-20 quarter and this loss was largely driven by the Rs.17,132 crore write off on account of the impairment of assets in oil and gas, copper and iron ore businesses. In the normal accounting parlance, an asset is impaired and its value written down when its projected future cash flows are lower than current carrying value. Vedanta also proposes to delist from the Indian bourses by offering a price of Rs.87.50/share to delist the company. Most institutional shareholders have been unwilling to tender the shares of Vedanta at this price as they expect the business for Vedanta to pick up once the Chinese led recovery takes roots globally.