Vedanta meets its three-year debt-reduction commitment

According to Vedanta Resources Ltd., owned by billionaire Anil Agarwal, corporations borrow money while considering their growth prospects and repayment capacity. In an effort to persuade the investing community that its debt is manageable, Vedanta claimed in a post on Linkedin that it has always made its repayment obligations on schedule and has the financial wherewithal to do so. The corporation, which owns a majority stake in the mining, oil, and gas company Vedanta Ltd., which is listed on the Bombay Stock Exchange, stated earlier this week that it is close to finalising plans to secure USD 1.75 billion through a combination of syndicate loan and bilateral bank facilities. Vedanta,has deleveraged by USD 2 billion over the last 11 months, it has paid off all of its debt that was due for repayment until March 2023. Furthermore, it is certain that it will be able to meet its liquidity needs for the quarter ending in June 2023. Capital is necessary for growth and nation-building. All, including sovereign, individuals and companies borrow keeping in view growth prospects and, therefore, the ability to repay, the company said. Vedanta has a proven track record of successfully raising over USD 35 billion in capital and has never missed a payment deadline. We have a tremendous asset base which delivers high cash flows. There is full capability to repay. With the ongoing expansions, we expect our revenue to be USD 30 billion in the near term, the company said in the post. All Vedanta's companies are professionally run by top CEOs and the best international experts. The company operates at the lowest costs and is on a high growth trajectory. We will continue to be a partner in and contributor to India's remarkable economic rise, it said. Earlier this month, S&P Global Ratings stated that the company's credit ratings may come under pressure if it is unable to raise USD 2 billion and/or sell its international zinc assets. Vedanta Ltd., in which Vedanta Resources owns a 70% stake, has offered to sell Hindustan Zinc Ltd., in which Vedanta Ltd. owns a 65% stake, the international zinc business for close to USD 3 billion. As a related party transaction that will interfere with the government's own share sale plan, the agreement is unpopular with the government. The government, which has a 29.54 percent ownership in HZL, which was privatised more than two decades ago, has raised a number of concerns, including the valuation of the assets. Vedanta Resources Limited has pre-paid all of its maturities due till March 2023 and has deleveraged by USD 2 billion in the past 11 months. Thus, it has achieved half of its USD 4 billion 3-year debt reduction commitment in the first year, ahead of its plans for this fiscal, the company had said in a statement earlier this week. We would like the investors to note that Vedanta group operating companies, underpinned by strong operating profitability from diversified and low-cost tier-1 assets, are delivering healthy cash flows whilst maintaining disciplined capital allocation. Vedanta Limited produced free cash flow (pre-capex) of USD 3.6 billion and EBITDA of USD 6.1 billion during FY22. Vedanta Resources is fully confident of meeting its upcoming maturities in quarter ending June 23. We have multiple options for both refinancing as well as repayment through internal accruals. We are in advance stage to tie up required financing through a USD 1 billion fresh loan from a syndicate of banks. We are also close to finalise USD 750 million bilateral facilities with various relationship banks. The remaining liquidity requirements can be addressed internally, it said. Just 6.8% of the shares of Hindustan Zinc Ltd are pledged by Vedanta Limited, a Vedanta Resources subsidiary. Over the past 20 years, Vedanta Resources has raised more than USD 35 billion and has an excellent track record of debt servicing. Vedanta remains confident of servicing its debt obligations through multiple options including capability to make payments through internal accruals at all times, the statement added. Vedanta Resources is fully funded until March 2023, according to S&P, as a result of a dividend declared by Vedanta Ltd. in January. We estimate further dividends from Vedanta Ltd, together with management fees, can be used to meet about USD 1.5 billion of the USD 2 billion the parent requires between April and June, including inter-company loans and interest expenses, it had said. The quarter ending December 31, 2023 will see USD 500 million in loan repayments, while January 20, 2024 will see the maturity of a USD 1 billion bond. Vedanta's portfolio includes zinc, the largest integrated producer in the world, aluminium, the largest private producer of crude oil in India, oil and gas, silver, the sixth-largest producer in the world, nickel, the only producer of nickel in India, cobalt, copper, iron ore, steel, and commercial energy. As a company, Vedanta is purpose-driven. Just like how India achieved self-sufficiency in agriculture and food several decades ago, it must now achieve atma nirbharta in minerals and oil & gas that occur below the ground. Vedanta is committed to helping India achieve this objective, it said. The corporation asserted that it has always prioritised all stakeholders and that it is one of the top tax payers, having paid USD 34 billion in taxes to the exchequer over the past seven years. It has rewarded stockholders with the greatest dividend yield in the past ten years, paying out almost USD 9 billion. Most of all, we are committed to the environment, to our communities and transparency in our functioning. We ranked second in the global Dow Jones Sustainability Index, a recognition of our ESG priorities. Soon, we plan to meet 25 per cent of our energy requirements through renewables with a 4GW installed capacity, it added. See also: Gaurs Group redcues its debt by 35% in last three years Tata Steel prioritises over $2 bn gross debt reduction in FY22