Moody's may cut Vedanta

Moody's Investors Service said its continuing its review for possible downgrade of Vedanta Resources plc's Baa3 corporate family rating and the Ba1 long-term senior unsecured rating.

The review was initiated following the company's announcement that it will enter into the commercial power generating business and build a 2,400 mega watts power plant in India at a total cost of about $1.9 billion.

Moody's said it also will consider Vedanta's recently announced acquisition of a 51% controlling stake in Sesa Goa Ltd. from Mitsui & Co Ltd. and an additional 20% of Sesa in the open market.

The agency said it recognizes the incremental benefits that such acquisition will yield to Vedanta upon successful completion. The review will focus on the power project and the inherent impact on the capital structure of Vedanta, Moody's said and the company's ability to manage the business risks associated with the setting up of such commercial power generation business.

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