Cost discipline, improved productivity helped offset impact of falling commodity prices: Vedanta

New Delhi, June 29: While cost discipline and improved productivity helped Vedanta partially offset the impact of falling commodity prices last fiscal, the natural resources conglomerate on Wednesday said it would focus on disciplined capex spend and optimising cost to strengthen balance sheet.

Admitting the year as a challenging one, at the company’s annual general meeting (AGM) in Panaji, its chairman Naveen Agarwal said Vedanta in the last fiscal “continued to build upon its core strengths of low cost, scalable operations, development projects and superior growth options.”

“We believe that our focus on generating strong free cash flows driven by disciplined capex spend, increased output, optimising cost and deleveraging are the fundamental pillars around which we will continue to strengthen our balance sheet and give returns to shareholders,” he added.

During 2015-16, driven by opex and capex optimisation, Vedanta generated free cash flow of over R11,000 crore, nearly three times higher than last year. This helped the company to reduce its net debt by over R6,000 crore. The liquidity for the group remains strong with over R52,000 crore of cash and cash equivalents. It contributed R20,600 crore to the exchequer last fiscal.

Agarwal said in line with our focus on simplifying our corporate structure, the completion of the Vedanta and Cairn India merger remains a strategic priority.

For Cairn India, Vedanta sees “significant potential” to increase gas production from the upcoming Raageshwari deep gas project.

The company, first to resume iron ore mining in Goa last year after the mining ban was lifted, said it expects a much stronger contribution from its iron ore business going forward.