Vedanta's Rs 5,000 Crore NCD Issue: A Move to Slash High-Cost Debt and Boost Growth
Vedanta Plans to Allocate Rs 5,000 Crore from Non-Convertible Debentures for Reducing High-Interest Debt, Anticipates Saving Rs 350 Crore in Interest Payments.
Y'all heard it! Mining titan Vedanta Ltd just raised a whopping Rs 5,000 crore through an unsecured non-convertible debenture (NCD) issue. This cash influx has some massive plans in store, including shedding high-cost debt and beefing up its growth capex, according to the spill from our trusted sources.
So, what's the beef with that high-cost debt? Well, it seems like Vedanta's got a costly private credit facility of Rs 3,400 crore that's been causing a bit of a headache. By retiring this behemoth debt, the company estimates it'll shave off a pretty sizeable chunks from its annual interest burden, to the tune of a cool Rs 350 crore. Nice savings, right?
But let's not forget about the other side of the coin. The rest of those funds will be earmarked for well, other things. Vedanta's looking to cover ongoing capex demands, handle general corporate shenanigans, and parlie-vous with existing debts, sources mentioned.
The NCD offering went off like a firework, raking in bids worth Rs 6,555 crore—a stunning 60% oversubscription over the base issue size of Rs 4,100 crore. Impressed with the response, Vedanta exercised its greenshoe option, wrangling an additional Rs 900 crore, bringing the total haul up to Rs 5,000 crore.
As for who grabbed a piece of that action, the list is a who's who of the investing world. You're looking at heavyweight names like ICICI Prudential MF, Aditya Birla Sun Life MF, Kotak Mahindra MF, HSBC MF, Axis MF, Star Health Insurance, Reliance Insurance, Aseem Infrastructure Finance, Alpha Alternatives, and Larsen & Toubro, to name a few.
This isn't Vedanta's first rodeo where unsecured NCDs are concerned. Back in February, the company scored Rs 2,600 crore through unsecured non-convertible debentures, clocking in a coupon rate of 9.40-9.50%.
Curious about Vedanta's financial health? As of March 31, 2025, its net debt stood tall at Rs 53,251 crore. The Vedanta Group, a global powerhouse in natural resources, critical minerals, energy, and technology, continues to expand its footprint across countries like India, South Africa, Namibia, Liberia, UAE, Saudi Arabia, Korea, Taiwan, and Japan, with significant operations in oil and gas, zinc, lead, silver, copper, iron ore, steel, nickel, aluminum, power, and glass substrate, all while exploring ventures into electronics and display glass manufacturing.
Dig a little deeper, and you'll find the company embarking on a major expansion plan, planned to splash some US$20 billion over the next three years across metals, mining, and hydrocarbons. As part of this radical shake-up, Vedanta's looking to break itself into four separately listed entities by September 2025[5].
- The funds raised by Vedanta Ltd through the NCD issue will not only help in reducing high-cost debt but also cater to ongoing capex demands, general corporate activities, managing existing debts, and potential business investments.
- Despite the massive Rs 5,000 crore NCD issue, Vedanta Ltd continues to grapple with a significant private credit facility of Rs 3,400 crore, which has been causing financial strain.
- The Defi (Decentralized Finance) sector might have an opportunity for growth as individual investors increasingly look for alternatives to traditional finance methods, with Vedanta's large-scale financial operations serving as an example.
- In the personal-finance arena, the success of Vedanta's NCD issue highlights the attractiveness of investment opportunities in the mining and metal industries, particularly for institutional investors.