Vedanta Group Sets Sights on $6 Billion EBITDA in FY25 Amidst Operational Excellence
In a strategic move to bolster its financial and operational performance, Vedanta Group, a leading global mining conglomerate, has announced its target to achieve a pre-tax profit (EBITDA) of USD 6 billion in the fiscal year 2025, aiming to further increase this figure to USD 7-7.5 billion in the subsequent year. This ambitious goal is underpinned by a comprehensive strategy focusing on operational efficiencies across its diverse business portfolio.
Ajay Goel, the Chief Financial Officer of Vedanta Limited, shared insights into the company's roadmap towards this significant financial milestone during a recent analyst meeting. According to Goel, Vedanta is on track to realize nearly USD 5 billion in EBITDA for the fiscal year 2024, with an operational EBITDA, adjusted for one-time gains such as the Cairn arbitration, expected to reach USD 4.4 billion.
The projected increase to USD 6 billion in EBITDA reflects a substantial growth of over 35 percent, driven primarily by meticulous cost optimization, advantageous price adjustments, and an uptick in production volumes across Vedanta's operations. "Cost optimization initiatives alone are poised to contribute approximately 15 percent to this growth," Goel elaborated, highlighting the significance of efficiency measures in achieving the group's financial objectives.
Vedanta Group has been proactive in implementing cost reduction strategies, notably within its aluminium and zinc production segments, achieving cost reductions of 35 percent and 15 percent, respectively, over the past six quarters. In addition to cost management, the group is actively expanding its capacity and further integrating its operations. Notably, Vedanta's aluminium production capacity is set to expand from 2.2 million tonnes per annum to 3.0 million tonnes in the upcoming quarters, alongside anticipated production increases in its international zinc business.
This strategic focus on cost efficiency and production enhancement forms the cornerstone of Vedanta's approach to reaching its $6 billion EBITDA target.
In a landmark decision made on September 29, 2023, Vedanta Limited, owned by billionaire Anil Agarwal, announced the demerger of its underlying companies into independent verticals. This restructuring, involving the metals, power, aluminium, and oil and gas businesses, is aimed at unlocking potential value and simplifying the group's corporate structure. Post-demerger, Vedanta Limited will retain the businesses of Hindustan Zinc as well as its display and semiconductor manufacturing units, offering shareholders direct investment opportunities in the newly listed, sector-focused companies.
This strategic realignment is anticipated to enhance corporate transparency, foster an asset ownership and entrepreneurship culture, and enable each business unit to independently chart its growth trajectory, aligning more closely with customer needs, investment cycles, and market demands.
