On Tuesday, Standard&Poor's reduced the rating for Vedanta and placed it on 'BB' in long term credit ratings.

It has also placed almost all the other company issues in the negative implications zone. Vedanta is London-based mining and metal company and has announced that it will be acquiring majority stake in Cairn India Ltd.

Cairn is an India-based oil and gas company. S&P says that by going for acquisition Vedanta will be increasing debt on itself and will then weaken its financial risk profile.

As per the announcement, Vedanta and its Indian subsidiary, Sesa Goa will be taking over 40 per cent and 20 per cent stake in Cairn India respectively.

And it also assumed that Vedanta will be funding the takeover through debt and it is going to cost it $5.2 billion or $6.7 billion.

Vedanta is going ahead with its Cairn India plan so that it can have a foot-hold on the Indian gas and oil sector. It said that the same will help it in diversification of its asset base.

Vedanta already has a strong portfolio in the metal and mining segment.