Indian conglomerate Vedanta has announced an increase in its capital expenditure (capex) for the current financial year, signaling a continued commitment to expansion and operational efficiency.
Chief Financial Officer Ajay Goel revealed plans to invest between $1.5 billion and $1.7 billion, a modest increase from the $1.5 billion spent in the previous fiscal year. This decision underscores Vedanta’s confidence in its future growth prospects, driven by increased production volumes and optimized cost structures.
The lion’s share of the investment, approximately $700 million, is earmarked for the aluminium and power businesses. Following this, the zinc division will receive between $400 million and $450 million. This strategic allocation aligns with Vedanta’s focus on expanding its presence in key sectors while simultaneously optimizing existing operations.
According to Goel, this increased capex will be funded by robust operating free cash flows. He anticipates a significant improvement in profitability, driven by a projected 10% increase in production volume and a 10% reduction in production costs. “With our augmented volume base, with our compressed cost base, our operating free cash flows will be sufficient to fund the growth and, at the same time, leave money for deleveraging both Vedanta India and Vedanta Resources,” Goel stated. 
This emphasis on financial discipline is further reflected in Vedanta’s improved financial performance. The company’s net debt has decreased from INR 57,358 crore to INR 53,521 crore year-on-year, while its net debt-to-EBITDA ratio has improved from 1.5 to 1.2. Vedanta expects its EBITDA to grow by 20% year-on-year in the current fiscal, driven by the aforementioned factors.
The company’s strong performance in FY 2024-25, which saw a 37% year-on-year increase in consolidated EBITDA to INR 43,541 crore and a record revenue of INR 1.51 lakh crore, provides a solid foundation for this increased investment. Furthermore, record production volumes in aluminium and zinc, coupled with a four-year low in zinc production costs, highlights the company’s operational prowess.
Executive Director Arun Misra highlighted the expected contributions from strategic projects currently nearing completion. These projects, designed to further increase volumes in zinc and aluminium, cut down costs, and increase volumes in ESL, are expected to significantly boost operational performance in the latter half of the year and beyond.
Vedanta’s commitment to expansion is evident across its diverse portfolio. The company is in the final stages of capacity expansion in several key areas, including the smelter at Bharat Aluminium Company, its steel plant (reaching a capacity of 3 million tonnes), and the Lanjigarh alumina refinery (scaling up to 5 million tonnes).
Vedanta’s increased capex plan, coupled with its focus on operational efficiency and financial discipline, positions the company for continued growth and success in the coming years. The strategic allocation of investments across its core divisions, particularly in aluminium and zinc, will likely solidify its market position and drive long-term value creation. The market will be watching closely to see if these investments deliver the projected returns.
Source: Vedanta with additional information added by GlassBalkan
