Enough Cash Flow To Cover Debt, Aiming To Become Net Zero Debt Company: Vedanta Chairman Anil Agarwal

The Chairman of Vedanta Resources said that questions regarding Vedanta's capacity to service its debt obligations are 'completely irrelevant' as it has enough cash flow to cover all debt commitments

Anil Agarwal, the mining tycoon, said that Vedanta group has enough cash flow to cover all of its debt repayment commitments and is aiming to become a "net zero debt company" within the next two to three years. In an interview with news agency PTI, Agarwal said that questions regarding Vedanta's capacity to service its debt obligations are 'completely irrelevant' since the group is projected to earn $9 billion in profits next year on revenue of $30 billion, which would be more than enough to fulfill all obligations. The comments from the chairman of Vedanta Resources come at a time when Indian conglomerates with high levels of debt are facing increased scrutiny. 

Anil Agarwal told PTI, "We have the lowest debt in the world for a group of our size." Adding that, "Total debt in the company is $13 billion. And we have a profit this year of $7 billion. Next year our revenue would be $30 billion and we will have a $9 billion profit. We are very comfortable. We have never defaulted to make any payment. We always have a plan to make the payments."

"Yes 100 per cent within a maximum of two to three years time, we will be zero debt company. But we have to do a lot in India. We have to create semiconductors (factory), we have to create display glass (factory), we have to expand our copper (business), we have to expand our aluminum (business), we have to expand oil and gas (operations), this is important. At that point, we might have to take debt (but) we have no plan (as of now)," Agarwal said.

Earlier this week, Vedanta Resources Ltd, the parent company of Mumbai-listed mining giant Vedanta Ltd, announced that it has paid off all its maturing loans and bonds due this month, reducing its gross debt by $1 billion. Vedanta decreased its debt by a total of $3 billion since it announced in February 2022 its intention to accelerate deleveraging. It had initially aimed to cut debt by $4 billion within three years, of which it has achieved 75 per cent of the committed reduction in just 14 months, according to the PTI report. 

Vedanta Group's business spans across various industries, including zinc, silver, iron ore, aluminum, and oil and gas. Agarwal said it is "absolutely irrelevant" to talk about the debt payment capability of the group.

"We have enough cash flow to service that debt," he said. "At the moment the plan is that in 2-3 years we will be a net zero debt company," he added.  

The report also said that the natural resources conglomerate is also planning to expand its capacities in zinc, oil and gas, and aluminum businesses as it anticipates supply challenges in the commodities market in the medium term. The group has already invested $35 billion in India and aims to become a $100 billion company by 2030.

On April 3, S&P Ratings said that Vedanta will likely have enough liquidity until December.

Vedanta also won an initial partnership with Apple supplier Foxconn to establish a manufacturing facility in Gujarat as part of its expansion into the production of semiconductor and display fabs. India is completely dependent on imports for fabs and semiconductors, and domestic consumption is anticipated to reach $110 billion by 2030.