Vedanta eyes 70% topline growth in 3 yrs on Rs 55,000-cr capex programme

Resources major Vedanta is expecting 60-70 percent revenue growth over next three years when its Rs 55,000-crore capex programme gets completed, according to a top company official.

The company has completed a Rs 10,000 capital expenditure in the just concluded year.

"We had a strong year of performance. We have a capex programme of Rs 55,000 crore for the next three years. Of this, Rs 25,000 crore are for base metal (primarily zinc) expansion, Rs 20,000 crore will be spent in the oil and gas sector and the remaining Rs 10,000 crore in aluminium.

"As we complete this capex programme we expect our revenue to grow 60-70 percent from where we are currently and once this capex is over, we expect our volumes to grow by 50 percent," chairman Navin Agarwal told reporters on the sidelines of the 54th annual general meeting.

He said majority of the capex funds will be met through internal accruals and the company will go for any external debt for this.

Whether they are planning any production cuts due to the falling commodity prices, he said, "commodity prices will go up and down. We follow a very strict capital allocation policy which is based on very conservative commodity price forecast and our minimum hurdle rate, which is a 20 percent return on investment. And due to this,we don't see any risks."

He said following this expansion and the projected growth plans, Vedanta will be the largest zinc producer and one among the top three silver producers globally.

The company commissioned the Gamsberg mining complex in South Africa earlier this year, which has the world's largest zinc deposits, Agarwal said.

The country's largest primary producer of aluminium is expecting 50 percent volume growth to 3 million tonne spread over the next three years from the current 2 million tonne.

During FY19, Vedanta had revenue of Rs 93,373 crore with an operating margin of 31 percent at Rs 24,961 crore, giving a free cash-flow of Rs 11,553 crore, which an increase of 47 percent year-on-year.

Vedantat had paid Rs 18.85 a share dividend, aggregating to a total payout of Rs 7,005 crore during the year," he said.

Talking about uptake from the Barmer fields in Rajasthan, group chief executive S Venkatakrishnan said, the company is investing around USD 3 billion for expansion, largely focused on increased recoveries.

"You will start to see oil production go up from this year, while we saw just 2 percent increase in production in FY19. We expect 2,00,000-2,20,000 barrels of oil and gas per day. You will see that stretch to around 450,000 barrels from our existing block next year," he said.

About the crisis-hit Tuticorin copper plant, he said, it is one of the best environmentally compliant plants which is even better than some of the smelters in Germany.

"The National Green Tribunal has given us a favourable order, which was confirmed by the Supreme Court as well. Now we are awaiting the state process to be completed," he said, adding the company hopes to reopen the plant at the earliest.