Vedanta’s Agarwal Targets’ Net Zero Debt’ In 2-3 Years

Vedanta’s Agarwal Targets’ Net Zero Debt’ In 2-3 Years

Against $30 billion in revenue next year, Vedanta will make $9 billion in profits, which is sufficient to cover all obligations, Agarwal said. Earlier this year, a US short seller attacked the Adani group’s highly leveraged Indian conglomerates, which prompted the former scrap metal trader to make his remarks.

As the country’s largest private company, Vedanta Resources has the lowest debt in its size category, according to Agarwal. He said the debt results from investing billions of dollars across different businesses. 

Across the company, there is a total debt of $13 billion, and we have a profit of $7 billion this year. Next year, the group’s revenue will be $30 billion, and profits will be $9 billion. In addition to meeting debt service obligations, cash flows are more than adequate.

‘It’s very comfortable here for us,’ he said. As the parent company of Mumbai-listed mining giant Vedanta Ltd, Vedanta Resources Ltd, stated earlier this week, ‘We have never defaulted on payments. We always have a plan to pay.’ To reduce its gross debt further by $1 billion, Vedanta Resources Ltd said it paid off all maturing loans and bonds due this month. 

Vedanta has reduced debt by $3 billion since it announced in February 2022 that it would accelerate debt reduction. With 14 months left in fiscal year 2014, it has already achieved 75% of its commitment to reduce debt by $4 billion within three years.

To discuss the group’s ability to pay its debt is irrelevant, said Agarwal. He said that his company borrows the bare minimum, and they have enough cash flow to service the debt. He said the group will reach net zero debt within 2-3 years. 

He added that his company’s aggressive expansion plans might require borrowing for 2-3 years to reach net zero debt. Since it plans to build capacities in zinc, oil and gas, and aluminium businesses, it believes supply will remain challenging.

Vedanta’s Debt Repayment

The company had cut its debt by $2 billion in February after releasing the Hindenburg Research report, which led to investor concerns over Adani Group’s steep fall. In March 2022, the company had a net debt of $9.66 billion, according to its website.

Current debts to the company amount to $7.7 billion, of which $3 billion must be repaid in April 2023. During the past 11 months, the company deleveraged by $2 billion, achieving half its commitment to reduce debt by $4 billion over three years.

According to a statement, Vedanta plans to absorb 50% of FY24 liquidity requirements internally and cover the remainder through refinancing during 2023-24 (FY24) and 2024-25 (FY25). Anil Agarwal’s firm reportedly plans to sell less than 5 per cent of the business.

The company’s representatives, however, denied this. Vedanta Ltd. representative said that any speculation over stake sales is untrue and baseless. There are debt obligations of up to $2 billion due by June 2023 for Vedanta Resources Ltd. 

It quoted sources familiar with the matter saying that Vedanta had approached investors about selling a 10% stake in the India-listed company. Also approached by the company are Gulf sovereign wealth funds (SWFs), including Mubadala, ADQ, Bahrainian Investcorp, and Saudi Arabia’s Public Investment Fund (PIF), which may dilute their shareholding up to 10 per cent. 

Sheikh Tahnoon bin Zayed al-Nahyan leads the International Holding Company of Abu Dhabi. During the past month, Vedanta Ltd’s share price has fallen 6.12 per cent. 

During its board meeting on March 28, the company will consider the fifth interim dividend for the current financial year 2022-2023. Hindustan Zinc Ltd. is negotiating with Vedanta Resources to purchase its zinc assets for $2,981 million to reduce debt. 

In February, an official from the Ministry of Mines told the market regulator Sebi that despite being the largest minority shareholder (29.54 per cent) of Hindustan Zinc Ltd., the government was kept in the dark about the deal. It indicated that the government had sent a letter to Vedanta Resources and a copy to stock exchanges, warning them not to proceed with the all-cash deal.

Edited By, Naveenika Chauhan