Vedanta to save 1000 crore per year as company is planning early repayment of debt

Vedanta, the company of Anil Agarwal, a leading businessman who has businesses ranging from mining to metals, has prepared a plan to make huge savings. The company is going to pay its outstanding debt before time. This will help the company save a huge amount of Rs 1000 crore in interest every year.

750 crore savings this year

This information has been given in an ET report quoting Vedanta's Chief Financial Officer (CFO) Ajay Goyal. According to Goyal, by paying off the loan before time, Vedanta is going to save about Rs 750 crore on interest cost this financial year. He says that from the next financial year, this saving of interest will increase to Rs 1 thousand crore annually.

Vedanta raised funds last month

Vedanta has recently succeeded in raising funds on a large scale. The company had raised funds worth Rs 8,500 crore through Qualified Institutional Placement (QIP) last month. The company received funds from big investors like Abu Dhabi Investment Authority, Goldman Sachs AMC, Nippon Mutual Fund, SBI Mutual Fund, UTI Mutual Fund and ICICI Mutual Fund.

Vedanta has so much outstanding debt

Vedanta is going to use the funds raised from QIP last month to pay off old outstanding loans before time. Vedanta has been struggling with debt crisis for a long time and is constantly making every effort to reduce the debt pressure. According to the data till the end of June quarter, Vedanta has a gross debt of Rs 78,016 crore and net debt of Rs 61,324 crore.

The interest burden has reduced so much

The interest rate on the funds raised by the company through QIP last month is low. Whereas the company is paying huge interest on the old loan. Vedanta CFO says that the interest rates on the recently raised funds are less than 10 percent. The effective interest rate is expected to be around 9 percent. In such a situation, Vedanta is getting help in bringing down the cost of debt to 9 percent.

5 thousand crore profit in June quarter

Vedanta's improved financial performance has also helped it pay off its debt on time. The company released its June quarter financial results on Tuesday. Vedanta has earned a net profit of Rs 5,095 crore in the first quarter of the current financial year. This is 54% more than the same quarter a year ago. During this period, the company's sales have increased to more than double that of a year ago.

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