Vedanta to refinance loans worth $1.6 bn in Indian mkts

Minerals and mining major Vedanta is eyeing the expected low interest rates in India to refinance its short-term loans of up to $1.6 billion (about Rs 10,200 crore) with long-term options in this fiscal ending March 2016.

The London-based company has loans worth $2.5 billion maturing in 2015-16, of which $2.1 billion is with the subsidiaries and the remaining $0.4 billion is with the group firm Vedanta Resources Plc.

Vedanta Resources CFO D D Jalan has said that with Indian subsidiaries, half of the immediate total maturities of $2.5 billion relates to short-term loans taken out in these subsidiaries at a relatively low cost to drive finance costs down in the past, when <g data-gr-id="32">long term</g> project loans had higher rate of interest. 

“However, in today’s expected lower interest rate scenario and abundant liquidity conditions in India, we would be refinancing these through a longer tenure instruments during the year in the domestic market,” he said during an analysts conference call last week.

Vedanta Resources total gross debt, excluding working capital loans, stood at $16.2 billion at the end of March 2015. Of this, subsidiaries had a debt of $8.4 billion and the balance is in the holding company. Separately, the Group said at its earnings release: “Of the $2.1 billion debt maturing in subsidiaries during fiscal year 2016, almost $1.6 billion is in the Aluminium and Power businesses. “These maturities mainly relate to short-term loans which are expected to be refinanced from long-term sources in view of the softer interest rate regime in the Indian market.”

On loans, Jalan said: “Overall, we are targeting an increase in average maturity by a year on refinancing.” The liquidity for the Group remains strong with $8.2 billion of cash and cash equivalents, along with an additional $1.2 billion of undrawn committed lines of credit, he told analysts and investors. Vedanta Resources has also taken a $350 million loan from the State Bank of India of which “$25 million had been drawn as at March 31, 2015, to meet the upcoming debt maturities.”

The London Stock Exchange-listed company had reported a consolidated net loss of $1.8 billion in 2014-15 against a net loss of $196 million in 2013-14 on account of one-time non-cash impairment charge of $4.5 billion. Consolidated revenue was largely flat at $12.9 billion for 2014-15.