 "Vedanta needs to improve balance sheet to maintain rating: Moody's")
Rating agency Moody's today said that Vedanta will have to strengthen its balance sheet in FY16 to avoid further pressure on its ratings.
The results for the fiscal year ended 31 March 2015 (FY2015) were in line with Moody's estimates.
"While Vedanta Resources' operating performance may come under pressure, its FY16 results should register at the upper end of our estimates," said Kaustubh Chaubal, a Moody's vice president and senior analyst.
Vedanta's current rating is Ba1 negative. Moody's changed its outlook to negative in January 2015.
Moody's said Vedanta's revenue for FY15 totaled $12.9 billion, which was flat year-on-year.
Lower global commodity prices and lower volumes impacted the company negatively. This consequently led to higher unit costs across a number of Vedanta's businesses, principally its zinc operations, Cairn India and Copper Zambia, it said. The higher unit costs were due to a result of regulatory changes in the form of higher royalties and coal cess.
Vedanta Resources' net other operating income of $756 million in FY15 — which was included in Moody's calculation of EBITDA — was higher than what Moody's had anticipated. It was much higher than the $408 million recorded in FY14.
In addition, the company's gross debt of $16.7 billion in FY2015 was $200 million less than that recorded in FY14.