In September 2015, Vedanta Resources -- the parent firm of Vedanta Ltd -- in a presentation made to investors said that the $1.25 billion loan was used to repay $800 million of principal and $450 million for interest on another inter-company loan.
Battling slump in commodity prices, Vedanta Resources reported a 15% rise in its net debt at $8.6 billion (Rs 58,523 crore) on a sequential basis in December quarter, while the miner's inter-company loan stood at $1.8 billion.
The London-listed firm, which reported a net debt of $7.5 billion in the July-September quarter 2014-15, attributed the rise to capex, rupee depreciation, dividend payments among other factors, it said in a statement on Friday.
In October 2015, the NRI billionaire Anil Agarwal firm had said its net debt at "end of quarter (October-December) is expected to be below $8 billion". Besides, the metals and mining conglomerate said its subsidiary Vedanta Ltd has paid $0.8 billion of its inter-company loan.
"Regarding the FY 2016-17 maturities at Vedanta plc, we have tied up term loans of $0.3 billion at Vedanta plc, and $0.8 billion of the inter-company loan has been repaid by Vedanta Ltd till date. The balance amount will be repaid by further term loans being tied up at Vedanta plc and/or further repayment of inter-company loan from Vedanta Ltd (inter-company loan outstanding as on date is $1.8 billion)," the firm said.
In the last two years, the issue of inter-company loan between Vedanta Resources subsidiaries has raised quite a few questions. In July 2014, Cairn India disclosed in an investor presentation that it had extended $1.25 billion of loan from its cash pile to Sesa Sterlite, which was later renamed Vedanta Ltd.
The move had at that time raised questions about related party transaction without proper disclosure and minority shareholder approval and led to Cairn stocks tanking by most in five years.
In September 2015, Vedanta Resources -- the parent firm of Vedanta Ltd -- in a presentation made to investors said that the $1.25 billion loan was used to repay $800 million of principal and $450 million for interest on another inter-company loan.
The $1.25 billion two-year inter-company loan was extended by Cairn India Ltd to "a wholly owned overseas subsidiary of Vedanta Ltd in Q1 FY2015...on arm's length terms and conditions with an annual interest rate of LIBOR+300 basis points," it had said.
Presenting production figures for the October-December quarter this fiscal, Vedanta Resources said its gross debt rose marginally by 2% to $16.8 billion from $16.5 billion during the same quarter in 2014-15.
The Anil Agarwal-led firm said the rise was "primarily on account of project capex, unwinding of working capital as guided earlier, payment of dividends by subsidiaries, and translation of Rupee-denominated cash balances at subsidiaries on account of rupee depreciation."
Vedanta Resources added that the net debt is expected to go back to September 30, 2015 levels in the current quarter (January-March), with further working capital initiatives.
"Our financial position remains robust, with total cash and liquid investments of about $8.9 billion and undrawn committed facilities of $0.8 billion as on December 31, 2015," it said. On debt repayment, it said as on December 31, 2015, debt maturities for 2015-16 at Vedanta plc are $0.3 billion, for which refinancing is in place.
2015-16 debt maturities at subsidiaries are $1.1 billion, which it intends to meet through committed term loans of around $0.6 billion and cash and liquid investments of $0.25 billion. The balance would be funded through a combination of undrawn committed facilities and further term loans that are in the process of being tied up, it added.
Last week, Vedanta plc completed the buyback of part of its outstanding convertible bonds issued by Vedanta Resources Jersey Limited maturing in July 2016, through a modified Dutch auction. The firm purchased outstanding convertible bonds of $227.4 million through tender offer at a price of $91,000 for the $100,000 par value of bonds paying a total purchase value of $201 million.
Following this buyback, the FY 2017 Vedanta plc debt maturities are $1.8 billion, it added. On production, it said average gross production for Q3 FY2016 was 202,668 barrels of oil equivalent per day (boepd), 1% lower, primarily due to lower volumes from offshore assets.
Mined Zinc metal production in October-December was 6% lower at 228,000 tonnes compared to the year-ago period, primarily on account of a change in mining mix with an increased contribution from the Sindesar Khurd and Kayad mines, resulting in lower average grades.
On Iron ore, Vedanta resources said at Goa mining and shipments commenced in October-December post receipt of approvals. "We produced 0.3 million tonnes and sold 0.6 million tonnes during the quarter. Production was impacted due to transportation issues and we are currently working on a resolution," it added.
Sales were higher as the firm participated in e-auction trading, wherein it dispatched 0.54 million tonnes ore purchased from the auction.
"We expect to achieve sales of about 3.5 million tonnes in FY 2016 from Goa. At Karnataka production was 1.1 million tonnes and sales were 0.9 million tonnes," it added. In Copper, its Tuticorin smelter produced 89,000 tonnes of cathodes during the December quarter. Production was lower due to flooding in the state and unplanned shutdowns.
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