As companies across the Vedanta Group emerge as focused, independent businesses following the landmark demerger, an important part of the transformation is taking place away from the stock market: the optimisation of their debt through refinancing
This is particularly relevant as the operating companies move through their respective investment cycles, as the Group continues to benefit from strong operational performance and cash generation across businesses.
The latest example is Vedanta Aluminium Metal Limited (BSE: 544780 & NSE: VAML), which is reported to be raising around ₹13,500 crore through facilities from various banks. According to the reported transaction, the loans are intended to refinance debt inherited from the earlier integrated corporate structure. The reported interest rate of around 7.9 – 8% also illustrates the significance of the company’s improved access to domestic lenders. Vedanta Limited (BSE: 500295, NSE: VEDL) entered FY27 with an industry-leading Net Debt/EBITDA ratio of around 0.3x, while Vedanta Aluminium’s ratio stood at around 0.9x following its first quarter as an independent company.
This is precisely one of the intended benefits of the demerger: each business can now build a capital structure tailored to its own earnings profile, cash-generation capacity, investment requirements and growth aspirations.
The improving credit profile also provides an external indication of the shift in the Group’s financing position. Vedanta Limited, Vedanta Aluminium (NSE: VAML), and Vedanta Oil and Gas (NSE: VOGL) have since received AA+/Stable ratings from CRISIL and ICRA, while Vedanta Iron & Steel (NSE: VISL) has received an AA/Stable rating from CRISIL. This reflects greater visibility into their standalone businesses and financial profiles following the demerger. The stronger ratings support access to more competitive borrowing terms as the companies refinance existing debt.
At the parent level, Vedanta Resources has continued to deleverage, with its FY26 results showing a net debt reduction of $500 million, followed by a further $1.1 billion cut in Q1 FY27, taking net debt to $9.4 Billion. As a result, Group Net Debt/EBITDA improved substantially to 1.2x in Q1 FY27, from 2.0x in March 2025. The Group ended the year with US$3.3 billion of cash and cash equivalents, providing additional liquidity.
In its FY26 results, the Group reported that finance costs had fallen 31% year-on-year to US$1,485 million from 2,164 million in FY 25, primarily driven by refinancing at lower interest rates and repayment of high-cost debt. Vedanta Resources has repeatedly used liability management and refinancing to extend maturities and reduce funding costs. In December 2025, the company said Moody’s had noted that liability management and debt refinancing had reduced funding costs to below 10% in FY26 from 13% in the previous year. More recently, S&P stated that it estimates that if the refinancing proceeds as contemplated, it could reduce annual interest costs by approximately US$150 million, while lowering annual maturities and improving financial flexibility.
For shareholders, cash saved in interest costs increases the cash available for deleveraging, growth investments or shareholder distributions. Lower leverage also improves capital allocation capabilities, while stronger ratings are creating a virtuous cycle of better funding access, lower financing costs and further balance-sheet strengthening.
Vedanta’s leverage strategy increasingly points towards a more disciplined financial model: refinance smarter, reduce interest costs, generate more free cash flow, deleverage faster and create greater capacity for growth and shareholder returns.
