Vedanta: Company has a big plan to reduce debt, eyes on credit rating upgrade

News Topical, Digital Desk : London-based Vedanta Resources Limited is working rapidly towards reducing its debt. According to the company's plan, it has planned to reduce the total debt to $3 billion by the financial year 2027. Actually, the company's goal is to improve its credit rating and get an investment grade credit rating. The company's plan to get a better rating includes continuous reduction in debt, proposed demerger plan of Indian subsidiary Vedanta Limited and maintaining strong financial performance. Getting an investment grade rating will make it easier for the company to obtain loans and will also reduce the cost of debt.

Currently, the total debt on the company is $5 billion, which will be gradually reduced to $3 billion. Along with this, the company is also working towards strengthening the critical minerals, transition metals, energy and tech portfolio. According to a source familiar with the matter in a report by Business Standard, in a recent investor conference held in Hong Kong and Singapore, the company shared the information that the company wants to get immediate BB level rating by refinancing and prepaying high-interest private credit loan of $550 million maturing in August 2026. In the medium term, the company wants to get investment grade rating on the basis of its improved credit profile and strong operational and financial performance, which is a sign of safe investment for institutional investors. With this, the company can get loans easily and at low interest rates, which will further benefit the health of the company. According to sources, the company is working with banks to refinance a $550 million credit facility, in which bank loans will be taken at a lower interest rate. This is expected to save the company $47 million in interest. In the last three years, the company has constantly focused on debt reduction and refinancing. Between March 2022 and March 2025, the company has reduced its debt from $8.9 billion to $5 billion, which is the lowest in a decade. Along with this, the company's net debt to EBITDA ratio has also seen positive improvement. And the ratio has come down from 3.3x in FY20 to 2x in FY25, and it is expected to come down to 1x in the coming years. 

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