They revealed a pipeline comprising over 50 active projects and expansions aimed at fueling growth. These initiatives are projected to yield incremental revenue exceeding $6 billion. Additionally, they anticipate a surge in EBITDA from an estimated $5 billion in the current fiscal year ending March 31 to $6 billion in the following fiscal year, and potentially up to $7.5 billion by FY27.
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Anil Agarwal, the Chairman of Vedanta, during the meeting expressed that the company is poised to reach new heights over the next 25 years. Naveen Agarwal, the Vice Chairman and Anil’s brother, elaborated on the company’s strategic plans during the presentation.
“Projects (are) under execution to deliver USD 7.5 billion yearly EBITDA,” he said, adding USD 6 billion is being invested across business verticals that will potentially yield incremental revenues of USD 6 billion and “incremental yearly EBITDA potential of USD 2.5-3 billion”.
“We continuously explore options to create additional value at all our sites. We currently have several high-impact projects in execution mode across all our businesses. These will further contribute to our cost leadership while substantially increasing our operating capacities. These levers will help drive our EBITDA towards the stated target of $7.5 billion annually,” he said.
According to PTI, several significant projects slated for immediate commissioning include expanding the Lanjigarh Aluminium facility’s refinery from 2 million tonnes per annum to 5 million tonnes, enlarging BALCO’s capacity to 1 million tonnes, launching the Athena and Meenakshi power plants to nearly double the commercial power portfolio to 5 GW, increasing the capacity at the Gamsberg Zinc facility to elevate Zinc International’s capacity to 500,000 tonnes from the current 273,000 tonnes, ramping up iron ore production from 5.3 million tonnes to 13 million tonnes, and achieving the status of India’s largest ferro-alloys producer with an annual capacity of 500,000 tonnes.
“40 ongoing growth projects with a plan to spend USD 6 billion in capex” will help boost EBITDA from an estimated USD 5 billion in the current fiscal ending March 31 to USD 7.5 billion in FY26 (April 2025 to March 2025),” Vedanta said in the presentations.
Emphasizing its commitment to deleveraging, the company affirmed that it has solidified a plan to reduce its debt by $3 billion over the next three years through its parent company, Vedanta Resources, while maintaining stable debt levels at the India-listed firm.
According to CFO Ajay Goel, the aim is to decrease net debt to $9 billion by FY27 from its current level of $13 billion. He further noted that Vedanta Resources has successfully reduced the balance sheet debt by USD 3.5 billion over the past two years, bringing the net debt down to $6 billion. Additionally, the company has strategically managed near-term bond maturities of approximately $4 billion to ensure a smoother debt profile.
“Vedanta Limited cash flow pre-growth capex is estimated to be USD 3.5-4.0 billion for FY25, sufficient for secured debt maturities of USD 1.5 billion with refinancing as an additional option,” he said. Parent “Vedanta Resources’ maturities of USD 1.1 billion in FY25 will be addressed partially by internal accrual and partly by other key strategic actions, such as asset monetisation.”
The presentation positioned Vedanta as an enticing investment opportunity, highlighting its impressive track record. Over the past two decades, the company has consistently achieved a remarkable 15% Compound Annual Growth Rate (CAGR) in EBITDA, with a noteworthy 30% EBITDA margin over the last five years.
Furthermore, the proposed demerger of its businesses is emphasized as a pivotal move, promising substantial value unlocking for shareholders.
Vedanta Limited, owned by billionaire Anil Agarwal, boasts a distinctive portfolio of assets unrivaled among both Indian and global companies. Its diverse holdings encompass metals and minerals such as zinc, silver, lead, aluminium, chromium, copper, and nickel, alongside ventures in oil and gas. Additionally, it operates within the traditional ferrous vertical, encompassing iron ore and steel production, as well as in the power sector, spanning coal and renewable energy sources. Notably, the company is also venturing into the burgeoning fields of semiconductor manufacturing and display glass production.
On September 29, 2023, the company unveiled plans to enhance value by demerging its core entities, principally its metals, power, aluminium, and oil and gas operations, forming independent verticals.
Under the restructuring of Vedanta Ltd, shareholders will receive 1 share in each of the five newly established entities for every 1 share held in Vedanta. Following the demerger, Hindustan Zinc’s operations, along with the display and semiconductor manufacturing units, will continue under Vedanta Limited.
“The demerger is expected to simplify the Group’s corporate structure with sector-focused independent businesses. Each of our businesses is at a global scale hence, the board decided to go for a demerger. We intend to build an asset ownership and entrepreneurship mindset where each company would chart out its growth trajectory.
“The demerger will give global investors, including sovereign wealth funds, retail investors, and strategic investors, direct investment opportunities in dedicated pure-play companies,” Vedanta had said in its demerger announcement.
Chris Griffith, CEO of Vedanta Base Metal, outlined plans for Zinc International to ramp up production to 1 million tonnes by 2030, up from the current 220,000 tonnes. This growth will be achieved through expansions at Black Mountain and Gamsberg mines in South Africa.
Meanwhile, Copper India aims to boost its copper and gold production capacity to 1 million tonnes per annum by 2030, up from the current 260,000 tonnes. This will involve debottlenecking the Silvassa refinery, enhancing units in UAE and Saudi Arabia, and restarting the Tuticorin unit.
During an investor meeting, Vibhav Agarwal, CEO of the company’s power business, highlighted a robust electricity generation portfolio totaling 4,780 megawatts. By FY27 (April 2026 to March 2027), this portfolio is projected to generate ₹15,000 crore in revenue and ₹3,500 crore in EBITDA annually, compared to ₹6,910 crore revenue and ₹1,050 crore EBITDA in the current fiscal year.
(With inputs from PTI)
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Published: 24 Mar 2024, 01:38 PM IST