Vedanta Resources, under the leadership of Anil Agarwal, has successfully repaid $400 million of loans, resulting in a significant reduction of its gross debt to $6.4 billion.
The company released a statement confirming the full repayment of its maturing loans and bonds scheduled for May and June 2023. As a result, the overall debt burden has decreased to $6.4 billion. Since announcing its deleveraging plan in March 2022, Vedanta Resources has managed to reduce its debt by $3.3 billion.
Recently, CreditSights, a Fitch Group firm, expressed confidence in Vedanta Resources’ ability to refinance its near-term debt obligations with a new $850 million loan. The firm highlighted the lower refinancing risk associated with the company’s upcoming debt maturities.
Looking ahead, the analysts at CreditSights estimate that Vedanta Resources will need additional funds to fully cover its estimated $2.1 billion debt refinancing requirements for 2023-24. While $850 million has already been secured, an approximate funding gap of $1.25 billion remains. CreditSights suggested that Vedanta Resources can explore various funding avenues, including share pledges and dividend upstreaming, to bridge this gap.
Vedanta Resources has expressed its commitment to further reduce its debt during the 2023-24 period and aims to eventually bring its gross debt down to zero. The company believes that the combination of strong operational performance and robust demand, particularly in India, will support its debt reduction efforts.
As of April 2023, Vedanta’s gross debt stood at $6.8 billion, down from $7.8 billion in March 2023 and $9.7 billion in March 2022.
While acknowledging the refinancing risk associated with Vedanta Resources’ $4.1 billion debt due in 2023-24, CreditSights still maintains optimism about the company’s ability to secure the necessary funds. The firm considers Vedanta Resources’ track record of overcoming financial challenges and expects it to successfully raise the required $2.1 billion, supplemented by an additional $950 million to address the funding gap.
Overall, Vedanta Resources’ ongoing efforts to reduce its debt burden, combined with its operational strength and funding prospects, position the company favorably as it continues its deleveraging journey.