'$1 bn is peanuts for us': Anil Agarwal on Vedanta's dues by June 2023

Mining giant Vedanta's chairman Anil Agarwal has dismissed concerns about the payment for upcoming debt maturities worth $900 million by June this year. "$1 billion is peanuts for us," he told Financial Times while speaking on the firm's dues by June. He said the company's commodities businesses are throwing off enough cash and that he expects $9 billion of profit across the group for the coming year, according to FT.

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In the last few days, Vedanta has made headlines for its high debts - one of the factors that shook the empire of Gautam Adani following a damaging report by US short-seller Hindenburg Research.

Rating agency S&P Global recently said that Vedanta Resources' ability to meet its financial obligations beyond September would depend on a planned $2 billion fundraising as well as the proposed sale of Vedanta's zinc assets in Africa.

This observation unnerved the investors and markets, which saw massive sell-offs in the company stock. In the last one month, shares of Vedanta have crashed nearly 10 per cent.

In an interview with FT, Agarwal said everybody wants to finance Vedanta. He, however, did not name any banks or funds. The mining mogul said Vedanta was in talks with JPMorgan and other banks for a $1 billion loan, with an interest rate of 8-10 per cent. Vedanta, he said, had less than $13 billion total debt, and becoming a 'zero-debt' company is "not a distant dream, but a medium-term, achievable goal".

Last month, Vedanta Resources, the parent firm of Mumbai-based Vedanta Ltd, said it pre-paid all of its maturities due till March this year and deleveraged by $2 billion in the past 11 months. The company said it was fully confident of meeting its upcoming maturities in the quarter ending June 23.

"We have multiple options for both refinancing as well as repayment through internal accruals," it said, adding that the company was in the advanced stage to tie up required financing through a $1 billion fresh loan from a syndicate of banks.

The London-headquartered company had a net debt of $9.66 billion as of March 31, 2022. After repayments and borrowings, it has about $7.7 billion outstanding, of which $3 billion is due for repayment in the fiscal year starting April 2023.

The company recently said that it "deleveraged by USD 2 billion in the past 11 months, thus achieving half of its USD 4 billion 3-year debt reduction commitment in the first year alone."

Vedanta in a statement recently said that during FY 24 and FY 25, it will continue to deleverage from net debt of $7.7 billion and plans to cover 50 per cent of FY24 liquidity requirements internally and the balance through refinancing.

However, the company recently hit a roadblock when the central government objected to selling its Africa zinc business to Hindustan Zinc Ltd for nearly $3 billion. The government owns a nearly 30 per cent stake in Hindustan Zinc.

The government believes if the deal goes through, it will hit its divestment plan. In a letter to the state-run miner, the Ministry of Mines urged Hindustan Zinc to "explore other cashless methods" to acquire the Vedanta assets.

"At current valuations, this deal would wipe out the entire cash on the books at Hindustan Zinc, which is why the government is opposing it," said Heet Vora, an analyst at brokerage JM Financial.

(With inputs from agencies)