The year-old joint-venture (JV) that Foxconn had formed with billionaire Anil Agarwal-led Vedanta Group to set up a semiconductor fabrication unit at Dholera in Gujarat may be on the rocks as differences have appeared between the two partners, the sources added.
“There are differences between the two partners. We have been in touch with both, but we have suggested Foxconn to take on board a different partner,” a senior government official told ET. The government is concerned about the “financial stability” of the Vedanta group, the person added.
Vedanta Resources Ltd (VRL), the parent entity of vedanta limited recently raised $450 million from two of its principal rivals — Trafigura and Glencore to repay debt via pledging of equity, which analysts maintained underlines the dire financial situation of the promoters and their inability to tap more traditional sources of funding such as banks and private credit among others.
VRL has raised $200 million in finance from commodities trading company Trafigura Group and $250 million from mining and natural resources company Glencore International AG. “Foxconn has held informal discussions to explore a potential partnership including two large domestic corporate groups, but the talks are at a very early stage,” said a person aware of the development. Who they partner with is “ultimately their (Foxconn) call,” and the government will “evaluate the proposal” and then decide, the government official said. The Vedanta group, however, maintained that its partnership with Foxconn is intact.
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“There is no change in the status of our JV. Vedanta is in a very comfortable position in meeting its debt obligations,” a spokesperson for the company told ET in an email response. The two had applied to avail government incentives under the $10 billion Indian Semiconductor Mission in early 2022, however, the government is yet to approve their application and has opened another round earlier this month. “We have asked them to re-apply but it seems there are some issues between the partners,” the first official quoted above added. Vedanta Group, which is the lead partner in Vedanta Foxconn Semiconductors Limited (VFSL) holds a 67% stake in the JV with Foxconn holding the rest.
Apart from the worries on the financial obligations, the two JV partners are also in disagreement on the changes to be made in their application to reapply for incentives under the India Semiconductor Mission (ISM), another source said.
“There has not been much contact between the two partners in some time,” added the person. ET had reported earlier that the government had asked VedantaFoxconn to onboard a technology partner which has licence grade semiconductor technology in order to comply.
The company had claimed that it has already partnered with some companies and submitted details to the government without naming the companies.
ET had also reported that the government had asked Foxconn to take the lead in the joint venture. Earlier this year on May 31, the government re-opened the window for applicants, both new and existing, to reapply for setting up of semiconductor and display fabrication units and to seek incentives from the Centre under the ISM.
