Vedanta Resources, the parent firm of Mumbai-based mining conglomerate Vedanta Ltd, does not foresee a rollover of its loans and plans to deleverage as much as USD 3 billion debt over the next three years, a senior official said at an analyst meeting.
"Deleveraging is our priority. We would be deleveraging the debt of Vedanta Resources by USD 3 billion over the next three years. Vedanta Ltd's cash flow pre-growth capex is estimated to be USD 3.5-4 billion for the financial year 2025, sufficient for secured debt maturities of USD 1.5 billion," said Navin Agarwal, Vice Chairman, Vedanta Ltd and member of Promoter Group, at a recently concluded analysts' meet, according to analysts who attended the meeting.
The financial year 2025 maturities of USD 1,100 million and close to USD 750 million of interest servicing would be managed through brand fees, dividends from operating companies, asset monetisation and other strategic initiatives.
"Vedanta is a dynamic organisation that continuously evaluates its capital structure. The parent company has multiple avenues to meet its debt obligation. Hence, we are not considering a stake sale actively in the near term.
"The recent dilution was part of a broader strategy to achieve optimal capital allocation. We believe the upcoming commissioning of growth projects will significantly enhance earnings potential, leading to a natural reduction in the cost of capital," he said.
This transaction has sparked considerable interest among market participants, particularly foreign institutional investors (FIIs), domestic institutional investors (DIIs), and retail investors, who view it as a precursor to Vedanta's forthcoming demerger announcement.
The company recently divested a significant portion of its shares through its promoter entity Finsider International, and set the stage for strategic manoeuvring within the company.
Finsider International sold 1.76 per cent of its shares at an average price of Rs 265 per share, raising a substantial sum of Rs 1,737 crore. As a result, the promoter group's ownership stake has been reduced to 61.95 per cent.
"The demerger is expected to simplify the Group's corporate structure with sector-focused independent businesses. Each of our businesses is at a global scale, hence, the board decided to go for a demerger. We intend to build an asset ownership and entrepreneurship mindset where each company would chart out its growth trajectory.
"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," Vedanta had said in its demerger announcement.
Vedanta has a unique portfolio of assets among Indian and global companies with metals and minerals – zinc, silver, lead, aluminium, chromium, copper, nickel; oil and gas; a traditional ferrous vertical, including iron ore and steel; and power, including coal and renewable energy; and is now foraying into the manufacturing of semiconductors and display glass.
It recently restructured its debt and is completing the payments due to its bondholders, as it looks to complete the demerger and deleveraging exercise.
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