Vedanta Resources Records Impressive $4.7 billion Ebitda In FY24

Vedanta Resources, the parent company of India-listed mining group, posted its second highest ever consolidated Ebitda of $4.7 billion for FY24, a year which its chairman Anil Agarwal described as 'pivotal year' that will result in 'a strong Vedanta.'

"Revenue (before special items) for the year at $17.1 billion was 6% lower than $18.1 billion of the previous year 'primarily driven by lower output commodity prices primarily of aluminium, zinc and brent, partially offset by higher volume at aluminium, copper and iron ore business," the conglomerate said in a statement on its website.

It posted the second highest ever consolidated Ebitda of $4.7 billion, 2% higher year-on-year (FY 2022-23: $4.6 billion). "This was mainly due to softening of input commodity prices coupled with strategic cost savings, one time arbitration award in oil and gas business which is partially offset by slip in commodity prices primarily of aluminium, zinc and brent and strategic hedging gain recognised in previous year."

The group posted an adjusted EBITDA margin of 32%, up 315 basis points.

Profit attributable to equity holders (before special items) however slipped marginally to $31 million.

Vedanta Resources, which is the parent firm of Vedanta Ltd, is not listed on any stock exchange and does not provide quarterly numbers.

Free cash flow post-capex of $0.7 billion was lower than $1.6 billion of 2022-23 mainly due to increased capex outflow and working capital investment.

Gross debt reduced to $14.3 billion in 2023-24 from $15.4 billion. "This reduction of $1.1 billion was mainly due to deleveraging of $1.6 billion at Vedanta Resources standalone and $0.4 billion at HZL partly offset by increase in debt of $0.9 billion at THL Zinc Ventures," the statement said.

Net debt reduced to $12.3 billion in FY 2023-24 from $12.7 billion in FY 2022-23, primarily due to strong cash flow from operations and working capital release which is partially offset by capex outflow and return to shareholders, it said adding the group had cash and cash equivalents of $2 billion.

In an accompanying message to stakeholders, chairman Anil Agarwal said, "FY 2024 is a pivotal year for Vedanta, characterised by transformative initiatives to unlock greater value for stakeholders, drive a sustainable tomorrow and strengthen the competitive edge."

"This transformation is leading to 'a stronger Vedanta'," he said.

As the economic growth engine gathers steam in India, the demand for commodities is set to surge, he said, adding equipped with a unique portfolio, ranging from oil and gas to essential metals, Vedanta is strategically positioned to seize the momentum.

"Our recent foray into electronics business exemplifies our commitment to India's vision of self-sufficiency. This exciting venture opens doors to the thriving Indian electronics market, predicted to grow at a staggering 43% CAGR between 2023 and 2026, reaching a monumental $300 billion," he said.

Agarwal reiterated commitment of $6 billion capex in expanding capacities across the businesses and integrating aluminium business.

"The commissioning of unit 1 at Lanjigarh refinery expansion project, adding 1.5 million tonnes per annum of capacity, marks a significant milestone, and other projects are steadily progressing. Furthermore, we are actively pursuing various strategic initiatives to unlock the immense value within our diversified conglomerate, positioning ourselves for continued success in evolving market landscapes," he said.

Agarwal said having built a $50 billion diversified conglomerate over the last four decades, the proposed demerger of Vedanta Limited into six independent, pure-play companies will propel this further.

"This strategic move will simplify the corporate structure, unlock greater value and attract targeted investment for the expansion and growth of each business," he said.

"The demerger will be a simple vertical split, with shareholders receiving one share in each demerged listed company for every share of Vedanta Ltd they hold. Each entity will have greater freedom to grow to its potential, led by independent management, capital allocation and niche strategies as per their customers, investment, and end markets."

The demerger is targeted for completion this year.

"We are committed to financial prudence and fortifying our capital management framework to proactively meet the expectations of our investor community. Over the past two years, we have deleveraged Vedanta Resources by $3.7 billion against our commitment of $4 billion in three years," he said.

"Vedanta Resources has successfully restructured its outstanding bonds totalling $3.2 billion, extending their maturity upto FY2029 and easing off the liquidity pressure. This newfound liquidity flexibility allows us to channel cash flows to important capex projects."

These moves demonstrate commitment to a debt-free and value-accretive future for stakeholders, he added.

On financial performance, he said with revenues reaching $17.1 billion and Ebitda at $4.7 billion, the group generated a healthy amount of free cash flow pre capex of $2.2 billion, indicating the strength of operations.