Vedanta generates Rs 11,000 crore free cash flow, reduces net debt

Panaji, June 29 (IANS) Amid falling prices of commodities, Vedanta Ltd generated a free cash flow of over Rs 11,000 crore in the last fiscal, which reduced the company's net debt by over Rs 6,000 crore, a top company official said on Wednesday.

"The year was challenging for the sector with falling commodity prices. During FY2016, driven by opex and capex optimisation, the company generated free cash flow of over Rs 11,000 crore, which is around three times higher than last year. This helped us reduce our net debt by over Rs 6,000 crore," said Company Chairman Naveen Agarwal.

"The liquidity for the group remains strong with over Rs 52,000 crore in cash and cash equivalents," he said while addressing the shareholders at the company's 51st Annual General Meeting.

Agarwal said cost discipline and improved productivity led to robust results in a volatile market. The company contributed Rs 20,600 crore to the exchequer in the last fiscal.

"In line with our focus on simplifying our corporate structure, the completion of the Vedanta Limited and Cairn India merger remains a strategic priority," he said.

For Cairn India, the enhanced oil recovery project at Mangala oil-field has been very successful, Agarwal said.

"We see significant potential to increase gas production from the upcoming Raageshwari deep gas project," the company chairman said.

During the last fiscal, the company started ramp-up of its aluminium smelting capacity at Jharsuguda and Balco.

"We also continue to work towards a phased ramp-up of the alumina refining capacity at the Lanjigarh refinery," he said.

The company's subsidiary Hindustan Zinc made progress towards the transition of Rampura Agucha mine from open pit to underground, which is the world's largest zinc mine.

The company continues to work on its next phase of growth, enhancing capacity of Zinc-Lead to 1.2 million tonnes per annum and silver capacity to 500 tonnes, he said.

Referring to Gamsberg Zinc project in South Africa, one of the world's largest undeveloped zinc deposit, he said: "Given the strong fundamentals for Zinc and our ramp-up plan, we expect the first ore production in 2018, at an optimized capex of $400 million."

With the resumption of iron ore mining last year in Goa after the lifting of the ban by the state government, the company expects iron ore business will contribute more.