Vedanta prunes FY 2016 capex plan by half to plans USD 1 bn

Metal and mining major Vedanta Group has decided to prune its capex plan for the next fiscal by half to USD 1 billion dollar in the face of subdued commodity prices.
The same for the current fiscal has also been cut by 26.6 per cent to USD 1.5 billion
Billionaire NRI Anil Agarwal-led firm, which mulls saving at least USD 1.3 billion over the next four years.
"The group has revised its capital expenditure plans in order to optimise free cash flow against the backdrop of the recent downturn in commodity prices.
Capital expenditure for FY 2015 has been revised from USD 1.9 billion to USD 1.5 billion, while FY 2016 capital expenditure has been reduced from USD 2 billion to USD 1 billion," it said in a presentation to analysts and investors here today.

Vedanta said it would continue to carry out productivity improvements, reduce operating costs and undertake an exercise to drive significant savings and efficiencies in procurement and marketing spend.

"This includes over USD 800 million of underlying savings in procurement and more than USD 500 million of additional value from marketing the products to a broader selection of customers and markets over the next four years," it said.
"Our focus on operational excellence, reduction of costs and optimisation of capex will help generate strong free cash flow deliver and maintain a progressive dividend policy," said company's CEO Tom Albanese.
The reduction in capital expenditure combined with cost reductions reflects the Group's target of achieving gearing of 25 per cent in the medium term and maintaining a progressive dividend policy, the company said.

Metal prices have remained subdued in the international market in the face of a skewed supply-demand scenario. Vedanta, which is also into oil production through Cairn India, is now feeling the pinch of tumbling crude prices.
"Vedanta's diversified and well-invested asset base, low cost of production and exposure to the fast-growing Indian market puts us in a strong position to manage the volatility in the commodity markets," Albanese said.