Vedanta to save Rs 1,000 crore in interest costs yearly on debt repayment
Vedanta will save Rs 1,000 crore in interest costs each year after utilising the entire proceeds from its recent fund raising to repay debt, chief financial officer Ajay Goel said. In its earnings for the June quarter, the company has seen profit surge by more than 50%, while margins are at 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 raised ₹8,500 crore through a qualified institutional placement-its first ever- ast month. The fundraising involved several prominent investors such as Abu Dhabi Investment Authority, Goldman Sachs AMC, Nippon Mutual Fund, SBI Mutual Fund, UTI Mutual Fund and ICICI Mutual Fund.
Vedanta had a gross debt of ₹78,016 crore, and net debt of ₹61,324 crore as on June-end. The company is also looking at refinancing some of its existing debt. «Our recent borrowings are at less than 10% (interest rates). We believe our rightful cost of funding is 9% or less than 9%, so we will bring down the cost of funding to 9% thereabouts,» Goel said.
Parent Vedanta Resources, meanwhile, has cut debt by $4.4 billion in two years, cutting debt by $650 million in the June quarter. A recent improvement in credit rating for the parent entity will also give Vedanta the option to directly raise funds there, Goel said.
Net Surges 54% in june quarter
The company announced its earnings for the June quarter on Tuesday, and its consolidated net profit has
