Vedanta Ltd., one of India’s largest diversified natural resources companies, has executed a key financial maneuver by raising ₹5,000 crore through unsecured non-convertible debentures (NCDs). The purpose? To significantly reduce its interest burden and enhance its long-term financial stability.
At the heart of this strategy is the repayment of a ₹3,400 crore private credit facility that carried a high interest cost. By retiring this expensive debt and replacing it with lower-cost funding through the NCDs, Vedanta expects to save ₹350 crore per year in interest payments—a meaningful impact on the company’s bottom line.
But the story isn’t just about numbers. It’s about timing, investor confidence, and financial clarity.
Strong Investor Demand
The NCD issuance received a strong thumbs-up from institutional investors. The issue was oversubscribed by 60%, receiving bids of ₹6,555 crore against the base issue size of ₹4,100 crore. This strong demand led Vedanta to exercise a greenshoe option of ₹900 crore, taking the final amount raised to ₹5,000 crore.
Participants in the issue included mutual funds, insurance companies, pension funds, and other large financial institutions, reflecting trust in Vedanta’s management and its balance sheet restructuring efforts.
Where the Funds Are Going
Of the ₹5,000 crore raised:
- ₹3,400 crore will be used to retire the high-interest private debt.
- The remaining ₹1,600 crore will be deployed for capital expenditure (capex) and other general corporate purposes, including funding new growth initiatives.
This use of proceeds shows a dual focus: cutting costs while also fueling future expansion.
Strengthening the Balance Sheet
This move is in line with Vedanta’s broader deleveraging strategy—an effort to reduce its debt levels and strengthen its credit profile.
In recent years, Vedanta and its holding company have faced scrutiny over debt-related risks, especially as global credit markets became more cautious. However, this NCD raise signals to markets and investors that Vedanta is proactively managing its liabilities.
Lowering interest expenses by ₹350 crore annually not only helps free up cash for operational use but also enhances investor sentiment—critical for a company that frequently taps both domestic and international capital markets.
A Long-Term View
For Vedanta, this is more than just a refinance. It reflects a shift toward sustainable financial discipline, allowing the company to navigate commodity cycles with more resilience.
Moreover, the move could also help stabilize its stock performance, reassure rating agencies, and provide flexibility to invest in future-facing sectors like green energy and value-added metals.
Conclusion
By raising ₹5,000 crore through a well-received NCD issue, Vedanta has sent a clear message: it’s focused on financial efficiency, cost savings, and long-term stability. At a time when interest rate dynamics remain uncertain, this step gives the company breathing room and positions it for stronger growth ahead.