Source: Vedanta Aluminium
Vedanta Limited is one of India’s major conglomerates in mining and metals. Its forays into development have tilted over $1.5 billion to $1.7 billion in the capital expenditure for the financial year 2024-2025, which is a bit higher than $1.5 billion that went into investment in the previous financial year. Areas of interest in such investments include aluminium, power, zinc, oil & gas, and steel, where the company is consolidating its position through capacity implementation and operational efficiencies.
Strategic Capital Deployment Across Core Segments
The funds will be spent across the aluminium, power, zinc and oil and gas business, with up to $700 million earmarked for the aluminium and power business, and $400-450 million for the zinc business. “Many of the strategic projects, which will affect further volume in zinc and aluminium, cut down costs in both the businesses and increase volumes in ESL. They will all come to fruition between quarter three and four of this year and that will further boost our operational performances going into next year,” said Arun Misra, executive director, Vedanta.
Apart from the expansion of the smelter at Bharat Aluminium Company, Vedanta’s steel facility will complete expansion to have a capacity of 3 million tonnes, while the Lanjigarh alumina refinery will now be 5 million tonnes, Misra said.
Record Operational Performance in FY 2024-25
The company reported consolidated EBITDA of ₹43,541 crore in FY 2024-25, a rise of 37% as compared to the previous year’s number, its second-highest ever. Revenue reached an all-time high of ₹1.51 lakh crore buttressed by record production volumes in aluminium and zinc. This leads us to indicate that the company’s focus on efficiency, integration, and capacity scaling is yielding results.
Goel said “We are looking at 10% higher volume, and 10% lower cost in the current year,” he said. “So, that will be about 20% higher profitability driven by operations.”
The enhanced financial position was buttressed with a clear focus on deleveraging.
Again, there is improvement in Vedanta’s financial health. The company reduced net debt by the end of the March Quarter to ₹53,521 crore from last year’s ₹57,358 crore. Net debt to EBITDA report thus improved from 1.5 times to 1.2 times, resulting from lower earnings compared to fiscal discipline.
“With our augmented volume base, with our compressed cost base, our operating free cash flows will be sufficient to fund the growth and, at the same time, leave money for deleveraging both Vedanta India and Vedanta Resources,” Goel told ET.
Vedanta’s subsidiary, Hindustan Zinc, is planning to increase its production capacity from the current 1.15 million tonnes to 2 million tonnes.
Conclusion
Vedanta’s aggressive investments, operationally-driven enhancements, and debt reduction lead to a positive outlook towards FY 2024-25, thus determining the way forward for company growth and leadership in the industry.
