Vedanta to roll over part of its debt

Vedanta Ltd, part of the Anil Agarwal-promoted Vedanta Resources, will roll over part of its $1.4-billion (Rs 9,576 crore) short-term debt while refinancing another $0.5 billion (Rs 3,420 crore) of term loan in 2016-17. It is also likely to extend some loans maturing in 2018.

Speaking to Business Standard, Tom Albanese, chief executive officer, Vedanta Resources and Vedanta Ltd, said the London Stock Exchange-listed group has $2-billion plus loan maturities in 2017-18, of which some would be extended.

Vedanta Ltd has a total consolidated debt of $11.3 billion (Rs 77,292 crore) and net debt of $3.6 billion (Rs 24,654 crore).

Of this, the highest amount of $1.9 billion (Rs 12,996 crore) is scheduled to mature this year. Years 2017-18 and 2018-19 will see $1.6 billion maturing every year.

In the current year, maturities of $1.9 billion are a combination of $1.4 billion short-term debt and $0.5 billion of term debt. The focus would be on de-leveraging the balance sheet during the year through internal accruals and working capital release.

“We have sufficient cash. Our ramp-up of aluminium itself is enough to give cash flow,” Albanese said.

Part of the $1.4-billion short-term debt is planned to be repaid out of internal accruals and the remaining to be rolled over or replaced with term debt. External debt of $0.5 billion maturing this year would be refinanced.  

Reacting to the revised merger terms between Vedanta Ltd and Cairn, India Ratings on July 27 said the redeemable preference shares issued as part of the offer will add Rs 3,000 crore to the outstanding debt.

“Vedanta Ltd will also assume contingent liabilities estimated at Rs 20,500 crore, relating to Cairn India’s tax dispute,” it said. Cairn’s cash balance and future cash flows, however, would ease refinancing requirements. The agency expects Cairn to generate operating profits of Rs 3,400 crore in FY17 compared to Rs 3,500 crore in FY16, assuming Brent at $45 a barrel.

Vedanta had repaid $0.9 billion of an inter-company loan during the quarter through dividends received from Hindustan Zinc. In a presentation to analysts recently, Vedanta said it had strong liquidity with cash and liquid investment of $7.7 billion and undrawn committed lines of $1 billion.

In the first quarter ended June 30, 2016, Vedanta had Rs 3,346 crore of cash flow from operations.

The Vedanta group has a capital expenditure plan of $1 billion of which Cairn India, its oil and gas subsidiary which is in the process of merging with the parent, will spend $100 million. “Like every other oil and gas company, Cairn India will also cut its capital expenditure,” said Albanese.