Vedanta Ltd expects to monetise its steel and raw materials business in the first half of the current financial year, chairman Anil Agarwal said.
The company had initiated a strategic review of these businesses in June last year, and had said that the demerger of this business would be completed by March 2024. Last month, though, Agarwal said that they would sell the business only at the “right” price.
The company had acquired Electrosteel Steels Ltd through the insolvency process in 2018.
The plan to divest the steel business is a part of the company’s efforts to cut debt, Agarwal said in the company’s annual report for 2023-24 (Apr-Mar). At holding company Vedanta Resources, debt has been cut by $3.7 billion in two years, as against the company’s commitment of bringing it down by $4 billion.
“We seek to further deleverage Vedanta Resources by US$ 3 billion over the next three years,” he reiterated.
Vedanta Resources had a debt of $6 billion as on March 31, 2024. It also restructured bonds worth $3.2 billion last year, extending the maturity of these bonds up to 2028-29 (Apr-Mar).
“This newfound liquidity flexibility allows us to channel cash flows to important capex projects,” Agarwal said.
Vedanta plans on spending $1.9 billion on capital expenditure this year, up from the $1.4 billion spent last year.
At its aluminium operations, the company is working on raising its alumina refinery capacity to 6 million tonne each year by FY26, while targeting a smelting capacity of 3 million tonne in the second half of this year.
“We anticipate a multi-fold increase in our EBITDA margin and at 3 MTPA capacity, the Aluminium business would alone generate more than US$ 4 billion EBITDA,” executive director Arun Misra and chief financial officer Ajay Goel were quoted in the management discussion section.
Apart from capacity expansion in its aluminium business which is expected to be the “cornerstone” of the company’s growth, the company is looking to expand the capacity at its zinc operations in India, its oil and gas business as well as its iron ore business.
Production capacity will also be enhanced at its ferrochrome operations to 450 KTPA from 150 KTPA currently, making it the country’s largest producer of ferrochrome by FY27.
Vedanta generated an operating profit of Rs 36,455 crore in FY24, while its free cash flow stood at Rs 11,427 crore.
