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5 Years : From Feb 2011 to Feb 2016
By Alex MacDonald
LONDON--U.K.-listed, India-focused natural resources company Vedanta Resources PLC (VED.LN) said Wednesday it expects to reap more free cashflow from its operations as its pares down a capital expenditure program that fueled its significant production growth over the past three years.
"We have crossed the inflection point where now free cashflow exceeds the capex requirements," Vedanta's Chief Executive MS Mehta told Dow Jones Newswires in an interview. "Our overall capex is tapering off" in coming years, he added.
The company has invested $18.7 billion in its operations over the last three years with $8.6 billion dedicated to growth projects and $10 billion spent on the purchase of a majority stake in oil and gas explorer Cairn India Ltd. (532792.BY), Zinc International from Anglo American PLC (AAL.LN) and its Liberia iron ore project.
In the last financial year, free cashflow exceeded capital expenditure for the first time since it began executing its major capital expenditure program. Free cashflow was $3.4 billion compared to $2.7 billion in capital expenditure.
The FTSE-100 miner now expects to spend $3.3 billion on growth projects in the fiscal year ending March 31, 2014 after spending an estimated $3.2 billion in this financial year. Capital expenditure will then drop to $1.3 billion in financial 2015.
Vedanta said it plans to invest a total of $2.1 billion on metals and mining projects up to 2015 and $1.2 billion on oil and gas exploration in the Indian state of Rajasthan until 2014.
It has alotted a further $2.6 billion in flexible capital expenditure, which is contingent on securing regulatory approvals. It has allotted $1.8 billion for aluminum, copper and iron ore projects until 2015 and a further $0.8 billion for oil and gas investment outside of Rajasthan until 2014.
MS Mehta declined to provide a figure on how much the free cash flow would grow in coming years during a call with journalists.
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