Vedanta Ltd will issue secured, rated, listed non-redeemable non-convertible debentures (NCDs) worth ₹1,000 crore later this week. The 15-month tenure NCDs will have a floating rate linked to MIBOR.
Proceeds will be used for general corporate purposes, including debt repayment and capital expenditure. The NCDs will be raised on July 11 and pay 3.75%over one month overnight indexed swap (OIS) rate.
As of March 2024, Vedanta’s gross debt was ₹71,759 crore, with net debt at ₹56,338 crore. The company held cash and equivalents of ₹15,421 crore. FY24 finance costs rose to ₹9,465 crore from ₹6,225 crore, driven by increased borrowings and higher interest rates.
Vedanta plans to demerge its aluminium, oil and gas, power, base metals, and iron and steel businesses into separate listed entities. This demerger aims to reduce refinancing risks and reliance on dividends from Vedanta Resources Ltd (VRL).
Despite these measures, VRL’s debt maturities and interest obligations for FY25 and FY26 remain substantial, necessitating refinancing, according to Crisil Ratings. Crisil noted a shortfall between expected dividend payouts and VRL’s debt obligations, highlighting liquidity risks.
Earlier this year, Vedanta Resources extended $3.2 billion in debt maturities but still faces $900 million in annual external debt maturities over the next two fiscal years. Crisil emphasized VRL’s ongoing dependence on refinancing and significant dividend payouts from Vedanta.
“Large dividend payouts during fiscal 2023 have significantly reduced cash balances at Vedanta, increasing VRL’s reliance on timely refinancing of upcoming debt maturities,” Crisil said.
