Vedanta Resources Limited (Vedanta), the parent company of Mumbai-listed mining giant Vedanta Ltd, on Wednesday said it has further repaid USD 400 million of loans, cutting gross debt to USD 6.4 billion.
In a statement, the firm helmed by billionaire Anil Agarwal said it "has paid all its maturing loans and bonds due in May and June 2023.
"As such, gross debt has further reduced to USD 6.4 billion, a USD 3.3 billion reduction since Vedanta announced its deleveraging ambition in March 2022," it said.
CreditSights, a Fitch Group firm, had last week stated that it saw lower refinancing risk for Vedanta Resources Ltd's (VRL) near-term debt maturities on a new USD 850 million loan refinancing.
"Looking ahead, while we estimate more funds need to be raised to fully fund VRL's estimated USD 2.1 billion of FY24 (April 2023 to March 2024 fiscal year) debt refinancing needs (USD 850 million covered, implying a gap of USD 1.25 billion), we think VRL still has multiple funding avenues to tap onto. These include share pledges and dividend upstreaming," it had said.
The firm had last on April 24 stated that it had cut gross debt to USD 6.8 billion after repayments.
"Vedanta is targeting further debt reduction during the balance of FY24, and ultimately intends to lower gross debt towards zero," the company statement said Wednesday. "This will be aided by our expectations of robust demand, particularly in India, coupled with strong operational performance from our world-class asset base..
Vedanta's gross debt as of today stands at USD 6.4 billion, down from USD 6.8 billion at the end of April 2023, USD 7.8 billion at the end of March 2023, and USD 9.7 billion at the end of March 2022.
It however did not indicate a timeline for reaching zero gross debt.
"We remain aware of refinancing risk on VRL's USD 4.1 billion debts due in FY24, for which VRL will likely have to rely heavily on external fundraising for a USD 2.1 billion refinancing and an additional USD 950 million to plug a funding gap.
"At this point, we would still lean towards VRL being successful at tying up its USD 2.1 billion of fundraising, given VRL's track record of 'going to the brink and succeeding', recent debt reductions, recent fresh fundraising efforts and that we think various alternative funding channels remain open for VRL, despite the tighter bank funding conditions," CreditSight had said.
These avenues include pledging of promoter stake in the main operating company Vedanta Ltd and further dividend upstreaming from operating companies.
"We also think VRL's timely debt repayments thus far and recent refinancing progress could support lending sentiment," it had said. "We caution of execution risk: VRL's refinancing of the USD 1-1.25 billion loan is not finalised yet and a lack of progress, a failure of refinancing talks, or its inability to tie up the loan for late-FY24 pose downside risks to our recommendation."
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