Oct 28 (Reuters) - Vedanta is on track to eliminate net debt by the end of the year after lowering it sharply due to strong earnings and cash generation, CEO Arun Misra said on Wednesday.
The milestone would cap a years-long deleveraging drive at Vedanta. A net cash position could also boost financial flexibility and reduce borrowing costs as the company pursues growth projects.
The Indian metals-to-oil conglomerate reduced debt by 95.84 billion rupees (about $1 billion) in the three months ended September, helping bring its net debt-to-EBITDA ratio down to 0.1, Misra said in an interview with Reuters.
"With that cash trajectory, in the third quarter, Vedanta will be a net-zero debt company," he said.
Investors have kept a close eye on parent Vedanta Resources' debt levels after refinancing risks came under scrutiny in recent years, after which the group has lowered debt through a combination of repayments, refinancing and dividend flows from Vedanta.
Founded by billionaire Anil Agarwal, Vedanta has operations spanning zinc, lead, silver, aluminium, iron ore, steel, copper, oil and gas, and power, making it one of India's most diversified natural resources groups.
Vedanta's September-quarter net profit more than doubled to 36.50 billion rupees, driven by higher volumes and firm base metal prices.
Misra expects zinc prices to remain around $3,000 per ton over the next two to three quarters, citing favourable demand-supply dynamics and the absence of supply disruptions.
Vedanta has guided for about 65 billion rupees of capital expenditure in the fiscal year ending March, with a large portion earmarked for doubling unit Hindustan Zinc's capacity.
Capital expenditure could exceed 100 billion rupees in the next fiscal year as expansion gathers pace, with about 80% of the spending directed toward the Indian zinc business, Misra said.
Last week, Hindustan Zinc posted a more than twofold jump in quarterly profit.
($1 = 95.1875 Indian rupees)
Reporting by Anuran Sadhu and Saikeerthi in Bengaluru; Editing by Janane Venkatraman and Mrigank Dhaniwala
Source: Reuters