Mining mogul Anil Agarwal has stated that the current fiscal year, which began on April 1, will be a revolutionary year for his conglomerate Vedanta as it prioritizes controlled expansion while the parent plans a $3 billion deleveraging over the following three years.
In a message to shareholders, Vedanta Ltd Chairman Agarwal stated that the company will pursue long-term expansion while maintaining a solid balance sheet.
"These include further deleveraging (parent) Vedanta Resources by $3 billion in the next 3 years and achieving an annual group EBITDA of $7.5 billion within 2 years," added Mr. Singh.
"FY25 will be a transformative year for us on many fronts as we prioritize disciplined growth, operational excellence, and exploring opportunities along the value chain," he told reporters.
Vedanta previously stated that it will invest $6 billion in businesses ranging from aluminum and zinc to iron ore, steel, and oil and gas, which is expected to generate additional revenue of more than $6 billion and increase EBITDA from $5 billion in the fiscal year ended March 31 to $6 billion in 2024-25 (FY25) and up to $7.5 billion by FY26.
"Our strategy is clear, our foundation is solid, and our team is energized to achieve the targets we have set for ourselves," Agarwal said in a statement.
Reflecting on Vedanta's operational success in the fiscal year ended March 31, he stated that the company achieved its highest-ever annual aluminum production of 2.37 million tonnes of aluminum while lowering production costs and increasing profitability.
"This success is underpinned by our ongoing vertical integration efforts, solidified by the expansion of the Lanjigarh refinery (now 3.5 million tonnes per annum capacity) and ramp up of captive coal mines," stated the company's CEO.
The Lanjigarh refinery is being enlarged to 5 million tons.
Hindustan Zinc achieved its greatest yearly mined metal production of 1.07 million tonnes. He added that operational efficiency resulted in a 15% cost decrease over the last six quarters.
On oil and gas, he stated that Vedanta has effectively overcome natural production declines by drilling more infill wells and bringing new fields online. "Moving forward, we remain committed to maximizing resource recovery and discovering resources for future growth by focused development and exploration."
He stated that synchronizing unit-1 of the 150 MW Meenakshi power plant, as well as getting financing for Athena, moves the company closer to meeting its target of supplying 5 GW of commercial power within two years.
"This year (FY24), the iron ore business produced its highest-ever volume of 5.9 million tons. We also started up the Bicholim mine in Goa, which has a capacity of 3 million tonnes per year, marking the region's first mining operation in nearly five years," he said.
ESL Steel recorded its highest-ever yearly crude steel production of 1.38 million tonnes, owing to debottlenecking and better operating efficiency.
"The ESL Steel expansion to 3.5 million tonnes is expected to be completed within the next year. "With this expansion, we will be able to produce 4.5 million tonnes of steel and pig iron at our facilities each year," he stated.
Last year, the Vedanta board approved $320 million in growth capital expenditures to increase ferrochrome production to 450,000 tonnes. "This will make us India's largest ferrochrome production by FY27." Recognizing the potential of its captive manganese mine, Vedanta is considering expanding into ferromanganese alloy production, he said.
"On a parent company level, Vedanta Resources has delivered on its commitment by deleveraging the balance sheet by over $3.5 billion in the last two years," he said.
While Vedanta Ltd's net debt is expected to fall to $9 billion by FY27 from $13 billion today, parent Vedanta Resources has de-leveraged its balance sheet by $3.5 billion over the last two years, reducing net debt to $6 billion.
On September 29, 2023, Vedanta Ltd announced the development of independent verticals through the demerger of underlying firms, including its metals, electricity, aluminum, and oil and gas operations, in order to unleash potential value.
Vedanta Ltd's vertical split will provide shareholders with one share of each of the five newly listed entities for every Vedanta share they own.
Following the demerger, Hindustan Zinc's businesses, as well as the display and semiconductor production plants, will continue with Vedanta Limited.
"The demerger will promote each company to leverage its own independent strengths and attract targeted investments, ultimately driving sustainable growth and long-term stakeholder value creation," Agarwal said. The demerger is anticipated to be completed by December 2024.
