Vedanta's Anil Agarwal Is Hopeful Of FY25 Being A 'Transformative Year'

Mining tycoon Anil Agarwal has said the current financial year that started on April 1 will be a transformative year for his conglomerate Vedanta as it prioritises disciplined growth while parent eyes a USD 3 billion deleveraging in the next three years.

In a communication to shareholders, Vedanta Ltd Chairman Agarwal said the group will pursue sustainable growth while maintaining a healthy balance sheet.

''These include further deleveraging (parent) Vedanta Resources by USD 3 billion in the next 3 years and achieving an annual group EBITDA of USD 7.5 billion within 2 years,'' he said.

''FY25 will be a transformative year for us on many fronts as we prioritise disciplined growth, operational excellence, and exploring opportunities along the value chain,'' he said.

Vedanta had previously stated that it will invest USD 6 billion across businesses that span from aluminium and zinc to iron ore, steel and oil and gas, which is expected to generate incremental revenue of over USD 6 billion and boost EBITDA from an expected USD 5 billion in the fiscal year ended March 31 to USD 6 billion in 2024-25 (FY25) and up to USD 7.5 billion by FY26.

''Our strategy is clear, our foundation is solid, and our team is energised to achieve the targets we have set for ourselves,'' Agarwal said.

Reflecting on the operational performance in the fiscal year ended March 31, he said Vedanta achieved the highest-ever annual aluminium production of 2.37 million tonnes of aluminum with lower cost of production and increased margins.

'This success is underpinned by our ongoing vertical integration efforts, solidified by the expansion of the Lanjigarh refinery (now 3.5 million tonnes per annum capacity) and ramp up of captive coal mines,' he said.

Lanjigarh refinery is being expanded to 5 million tonnes.

"Hindustan Zinc delivered its highest-ever annual mined metal production of 1.07 million tonnes. Operational efficiencies led to a 15 per cent cost reduction in the last six quarters," he said.

On oil and gas, he said Vedanta has effectively countered natural decline in production by drilling more infill wells and bringing new fields online. 'Moving forward, we remain committed to maximising resource recovery and discovering resources for future growth by focused development and exploration.' He said synchronising unit-1 of the 150 MW Meenakshi power plant, along with securing financing for Athena, takes the firm closer to delivering the goal of supplying 5 GW of commercial power within two years.

''This year (FY24) saw the iron ore business deliver its highest-ever volume of 5.9 million tonnes. We also operationalised the Bicholim mine in Goa (3 million tonnes per annum capacity), marking the commencement of the first mining operation in the region in nearly five years,'' he said.

ESL Steel achieved its highest-ever annual crude steel production of 1.38 million tonnes driven by debottlenecking and improved operational efficiency.

''The ESL Steel expansion to 3.5 million tonnes is on track for completion in the coming year. With this expansion, we will be able to produce overall 4.5 million tonnes per annum of steel and pig iron at our facilities,'' he said.

Last year, Vedanta's board approved growth capex of USD 320 million for capacity expansion of ferrochrome to 450,000 tonnes. ''This will make us India's largest ferrochrome production by FY27.'' he added. Recognising the potential of its captive manganese mine, Vedanta is exploring the possibility of diversifying into ferromanganese alloy production, he said.

''On a parent company level, Vedanta Resources has delivered on its commitment by deleveraging the balance sheet by over USD 3.5 billion in the last two years,'' he added.

While Vedanta Ltd's net debt is being targeted to be cut to USD 9 billion by FY27 from USD 13 billion now, parent Vedanta Resources has de-leveraged its balance sheet by USD 3.5 billion in the last two years to bring down net debt to USD 6 billion.

Vedanta Ltd on September 29, 2023 announced the creation of independent verticals through the demerger of underlying companies, mainly its metals, power, aluminium, and oil and gas businesses to unlock potential value.

As part of the vertical split of Vedanta Ltd, shareholders will get 1 share of each of the five newly listed companies for every share of Vedanta.

After the demerger, the businesses of Hindustan Zinc as well as the display and semiconductor manufacturing units will remain with Vedanta Ltd.

''The demerger will promote each company to leverage its own independent strengths and attract targeted investments, ultimately driving sustainable growth and long-term stakeholder value creation,'' Agarwal said, adding that the demerger is expected to be completed by December 2024.