Vedanta plans $ 3 bn debt reduction in 3 years

06 Mar 2024 CW Team

He further mentioned that the financial year 2025 maturities of $ 1,100 million and nearly $ 750 million of interest servicing would be handled through brand fees, dividends from operating companies, asset monetization, and other strategic initiatives.

According to Agarwal, Vedanta is a dynamic organization that continuously evaluates its capital structure, and the recent dilution was part of a broader strategy to achieve optimal capital allocation. He emphasised that the upcoming commissioning of growth projects would enhance earnings potential, leading to a natural reduction in the cost of capital.

Market participants, especially foreign institutional investors (FIIs), domestic institutional investors (DIIs), and retail investors, have shown considerable interest in the transaction, viewing it as a precursor to Vedanta's upcoming demerger announcement. The company recently divested a significant portion of its shares through its promoter entity Finsider International, reducing the promoter group's ownership stake to 61.95%.

Agarwal explained that the demerger aims to simplify the Group's corporate structure with sector-focused independent businesses, allowing each business to chart its growth trajectory. He stated, "The demerger will give global investors, including sovereign wealth funds, retail investors, and strategic investors, direct investment opportunities in dedicated pure-play companies. With listed equity and self-driven management teams, the demerger would also provide individual units a platform to pursue strategic agendas more freely and better align with customers, investment cycles, and end markets," as announced in Vedanta's demerger announcement.

Vedanta Resources, the parent company of Mumbai-based mining conglomerate Vedanta, announced during an analyst meeting that it does not anticipate a rollover of its loans and aims to reduce its debt by up to $ 3 billion over the next three years, as stated by a senior official. According to Navin Agarwal, Vice Chairman of Vedanta and a member of the Promoter Group, who spoke at the recently concluded analysts' meet, Deleveraging is our priority. We would be deleveraging the debt of Vedanta Resources by $ 3 billion over the next three years. Vedanta's cash flow pre-growth capex is estimated to be $ 3.5-4 billion for the financial year 2025, sufficient for secured debt maturities of $ 1.5 billion. He further mentioned that the financial year 2025 maturities of $ 1,100 million and nearly $ 750 million of interest servicing would be handled through brand fees, dividends from operating companies, asset monetization, and other strategic initiatives. According to Agarwal, Vedanta is a dynamic organization that continuously evaluates its capital structure, and the recent dilution was part of a broader strategy to achieve optimal capital allocation. He emphasised that the upcoming commissioning of growth projects would enhance earnings potential, leading to a natural reduction in the cost of capital. Market participants, especially foreign institutional investors (FIIs), domestic institutional investors (DIIs), and retail investors, have shown considerable interest in the transaction, viewing it as a precursor to Vedanta's upcoming demerger announcement. The company recently divested a significant portion of its shares through its promoter entity Finsider International, reducing the promoter group's ownership stake to 61.95%. Agarwal explained that the demerger aims to simplify the Group's corporate structure with sector-focused independent businesses, allowing each business to chart its growth trajectory. He stated, The demerger will give global investors, including sovereign wealth funds, retail investors, and strategic investors, direct investment opportunities in dedicated pure-play companies. With listed equity and self-driven management teams, the demerger would also provide individual units a platform to pursue strategic agendas more freely and better align with customers, investment cycles, and end markets, as announced in Vedanta's demerger announcement.

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