Vedanta Resources, the parent company of the India-listed mining conglomerate, reported its second highest ever consolidated EBITDA of $4.7 billion for the financial year 2023-24. Chairman Anil Agarwal described FY24 as a “pivotal year” for the company, predicting a “strong Vedanta” in the coming years.
The company’s revenue for the year stood at $17.1 billion, a 6% decline from $18.1 billion the previous year. This drop was primarily due to lower output commodity prices for aluminium, zinc, and brent crude oil, partially offset by higher volumes in the aluminium, copper, and iron ore sectors, according to a company statement.
Despite the revenue dip, the consolidated EBITDA of $4.7 billion represented a 2% increase year-on-year from $4.6 billion in FY23. This growth was attributed to reduced input commodity prices and strategic cost-saving measures, alongside a one-time arbitration award in the oil and gas sector. However, this was partially offset by a decline in commodity prices for aluminium, zinc, and brent, along with strategic hedging gains from the previous year.
Vedanta Resources posted an adjusted EBITDA margin of 32%, up 315 basis points from the prior year. Profit attributable to equity holders, before special items, slightly decreased to $31 million.
Free cash flow post-capex was $0.7 billion, lower than the $1.6 billion reported in FY23, mainly due to increased capital expenditure and working capital investments. The company’s gross debt was reduced to $14.3 billion from $15.4 billion, thanks to deleveraging efforts at Vedanta Resources standalone and Hindustan Zinc Limited (HZL). Net debt decreased to $12.3 billion from $12.7 billion, driven by strong operational cash flows and working capital releases, partially offset by capex outflows and shareholder returns. The group held cash and cash equivalents of $2 billion.
In a message to stakeholders, Chairman Anil Agarwal highlighted transformative initiatives undertaken during FY24 aimed at unlocking greater value for stakeholders and driving sustainability. “This transformation is leading to ‘a stronger Vedanta’,” Agarwal stated. He emphasized the strategic positioning of Vedanta to capitalize on the surging demand for commodities in India, propelled by the country’s economic growth.
Agarwal also discussed Vedanta’s recent entry into the electronics business, aligning with India’s vision of self-sufficiency. The Indian electronics market is projected to grow at a 43% compound annual growth rate (CAGR) between 2023 and 2026, reaching $300 billion.
Agarwal reiterated a commitment to $6 billion in capital expenditures to expand capacities across various businesses, including the integration of the aluminium business. Notable projects include the commissioning of unit 1 at the Lanjigarh refinery expansion, adding 1.5 million tonnes per annum of capacity.
A major strategic move announced was the proposed demerger of Vedanta Limited into six independent, pure-play companies. This demerger aims to simplify the corporate structure, unlock greater value, and attract targeted investments for each business unit. Shareholders will receive one share in each demerged listed company for every share held in Vedanta Ltd, with the demerger expected to be completed within the year.
Agarwal emphasized the company’s commitment to financial prudence and robust capital management. Over the past two years, Vedanta Resources has reduced its debt by $3.7 billion, nearing its three-year goal of $4 billion. The company also restructured $3.2 billion in outstanding bonds, extending their maturity up to FY2029 and easing liquidity pressures.
The strategic initiatives and financial prudence underscore Vedanta Resources’ commitment to a debt-free and value-accretive future for its stakeholders. “With revenues reaching $17.1 billion and EBITDA at $4.7 billion, the group generated a healthy free cash flow pre-capex of $2.2 billion, indicating the strength of our operations,” Agarwal concluded.
