London-headquartered Vedanta Resources (VRL), the parent company of mining major Vedanta, has reduced its gross debt by another $1 billion. The company said it has paid all its maturing loans and bonds that were due in April.
Following the initiative, the Anil Agarwal-controlled company’s gross debt has now fallen to $6.8 billion as of Monday, down from $7.8 billion as of March-end. The debt is lower by $2.9 billion from $9.7 billion recorded as of March-end 2022, VRL said in a statement.
The company has reduced debt by $3 billion since February 2022, when it announced plans to reduce debt by $4 billion in three years. Vedanta has achieved 75% of its committed reduction in 14 months, it said.
“During the balance of FY24, we believe that strong operational performance from our world-class asset base coupled with robust commodity prices will lead to further deleveraging at Vedanta,” it added.
VRL, which has operations in India, Zambia, Namibia and South Africa, has been trying to reduce debt by using cash flows from operating companies – Hindustan Zinc (HZL) and Vedanta – and by streamlining operations of group companies. It had also started repaying debt.
VRL has annual debt maturities of about $3 billion each in FY24 and FY25, with high near-term maturities of $1.7 billion in the first quarter of FY24. The company was in discussion with lenders for refinancing upcoming maturities of Q1FY24 and the same is expected to be completed by end of March 2023 or early April 2023, Crisil Ratings had said in March.
Earlier, in March, Crisil Ratings revised the outlook of Vedanta’s non-convertible debentures (NCDs) and long-term bank facilities to negative from stable. The revision reflects possibility of a higher-than-expected financial leverage and lower financial flexibility with reducing ratio of cash surplus to one-year maturities for FY23 and FY24.
“This was due to increased cash outflow from Vedanta, in the form of dividends, towards large maturing debt obligations at VRL, its parent company,” Crisil Ratings had said.
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Also, in February, S&P Global Ratings said in a report that the liquidity of VRL hinges on its fund-raising abilities and the next few weeks would be “crucial”. The company was “highly likely” to meet its obligations until September 2023, it said, adding that sustaining liquidity beyond that would depend on the completion of at least one of two key ongoing transactions. These include a targeted $2-billion fundraising exercise and the proposed sale of international zinc assets by Vedanta, in which Vedanta Resources has 70% stake, to HZL.
