Vedanta will likely need to reconfigure such financing, including fresh local borrowings. However, it said, “Despite such headwinds, we expect the companys financial ratios will continue to improve.”The cash flows from Vedantas Indian copper smelting operations were marginal compared with gross cash flows, but they provided cash flow diversity,” S&P credit analyst Vishal Kulkarni said in a statement.The closure of Vedanta Resources PLCs Indian copper smelter is marginally negative for the company and will not materially affect its cash flows, S&P Global Ratings said today.”While we consider these arrangements as debt-like and thus add them our adjusted debt, we do not expect the reconfiguration to change our assessment of the companys leverage,” it said.The smelter operations have certain working capital arrangements ASTM Copper-Nickel Factory in place, such as bank-funded trade payables and customer advances. We expect the segment to improve in fiscal 2019 (year ending March 31, 2019), supported by better coal and bauxite supply linkages.S&P added: “We continue to anticipate that Vedantas aluminum operations in India will continue to ramp up this year and produce 2 million tons of metal.”.”On the copper smelter in southern India, S&P further said that while the company could pursue legal proceedings to restart existing smelter operations, this would likely be a lengthy process.
The Tamil Nadu government this week ordered the state Pollution Control Board to seal and “permanently” close the Vedanta groups copper plant in Tuticorin following last weeks violent protests over pollution concerns during which 13 people were killed in police firing.These issues could test Vedantas cash flow targets, if realised, it added.At the same time, S&P said, the diversified natural resources company faces a number of operational headwinds in India, including domestic coal-supply constraints and potentially higher taxes on crude oil producers.”We dont expect the closure to be materially negative for Vedantas cash flows because the smelting operations provided only about 5 per cent (roughly USD 200 million-USD 225 million) of Vedantas gross annual EBITDA,” the statement said
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