Vedanta's loan outlook now negative: CRISIL

Rating agency CRISIL has revised the outlook on Vedanta Ltd's term loans and debantures from stable to negative.

As per the report, this change reflects the possibility of higher-than-expected financial leverage and lower financial flexibility with reducing ratio of cash surplus to one-year maturities for FY23 and FY24. This is due to increased cash flow from Vedanta towards large maturing debt obligations at its parent company Vedanta Resources Ltd. The cash flowed to the parent company in the form of dividents. 

However, CRISIL reaffirmed 'AA' rating for long term loans and debantures, 'A1+' rating for commercial paper and short-term bank facilities. 

As per CRISIL ratings, Vedanta Ltd's parent company is in discussion with the lenders to refinance the upcoming debt maturities of Q1FY24. Currently, Vedanta Resources Ltd, has annual debt maturities of around $3 billion each in FY24 and FY25 with high near-term maturities of about $1.7 billion in the Q1FY24.

CRISIL also mentioned that the divident payout by Anil Agarwal led Vedanta for FY23 will be more than Rs 40,000 crore, including dividend payout by Hindustan Zinc Ltd (HZL) to its minority shareholders. Vedanta currently has cash balances only to cover for VRL’s maturities for the H1 FY24.