Vedanta Ltd Faces SEBI Warning: Action Required on Corporate Disclosure

The mining giant Vedanta Ltd is in focus on March 11, 2024, as it received a warning letter from the market regulator Securities and Exchange Board of India (SEBI) for publishing information related to its unlisted ultimate holding company. The letter asked the mining conglomerate to strengthen its internal control for corporate announcements and press releases.

Sebi found a violation of Sections 12A (a), (b), (c) of SEBI Act, 1992 r/w Regulations 3 (b), (c),(d), 4(1) & 4(2) (k) & (r) of SEBI (PFUTP) Regulations, 2013 in respect of Vedanta publishing information related to its unlisted ultimate holding company. Vedanta has been directed to place the letter before its Board of Directors and take necessary corrective steps to strengthen the internal control for corporate announcements/press releases.

The company responded to the warning letter and stated that it would not have any impact on the financial, operation, or other activities of the listed entity, which would be quantifiable in monetary terms. On March 11, 2024, the share price of Vedanta Ltd opened at ₹282.75 and touched a day low of ₹279.20 at 10:17 AM. Vedanta shares have delivered a return of ~20.51% in the past 6 months.

Focus on Deleveraging Balance Sheet

In Q3 FY 2024, the company achieved EBITDA of ₹8,677 crore, reflecting an impressive 21% growth quarter-on-quarter (QoQ). It recorded a substantial 112% QoQ surge in PAT before exceptional

items reached ₹2,868 crores in Q3. In addition, it witnessed an improvement in EBITDA margin to 29%, reflecting a significant enhancement of 438 basis points, mostly coming from its programs around cost compression across businesses, specifically in zinc and aluminium.

As of December 31, 2023, the company posted net debt amounting to ₹62,493 crore against ₹57,770 crore as of September 30, 2023. The increase is primarily attributed to the strategic allocation of funds for capex, partially offset by robust cash flows from operations and working capital release.

“Deleveraging is our priority. We would be deleveraging the debt of Vedanta Resources by $3 billion over the next three years. Vedanta Ltd’s cash flow pre-growth capex is estimated to be $3.5-4 billion for the financial year 2025, sufficient for secured debt maturities of $ 1.5 billion,” said Navin Agarwal, Vice Chairman, Vedanta Ltd and member of Promoter Group.

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