Vedanta to Pocket ₹1,000 Crore Annually in Interest Savings

7 Aug 2024 , 01:02 PM

Vedanta would save ₹1,000 crore in interest charges per year after using the whole proceeds of its recent fund raising to settle debt, according to chief financial officer Ajay Goel. The company’s earnings during the June quarter increased by more than 50%, while margins reached a seven-quarter high.

“In the current fiscal, we will save around ₹750 crore in interest costs, and after that we will have the benefit of ₹1,000 each year,” Goel told ET.

The natural resources major collected ₹8,500 crore in its first-ever qualified institutional placement last month. Several significant investors participated in the fundraiser, including the Abu Dhabi Investment Authority, Goldman Sachs AMC, Nippon Mutual Fund, SBI Mutual Fund, UTI Mutual Fund, and ICICI Mutual Fund.

Vedanta has a gross debt of ₹78,016 crore and a net debt of ₹61,324 crore as of June 30. The corporation is also attempting to refinance some of its existing debt. “Our most recent borrowings are at less than 10% (interest rate). We feel our true cost of capital is 9% or less, so we will reduce it to 9% or less,” Goel added.

Meanwhile, parent company Vedanta Resources has reduced debt by $4.4 billion over the last two years, including a $650 million reduction in the June quarter. According to Goel, the parent entity’s credit rating has just improved, which will allow Vedanta to raise cash straight there.

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