Vedanta Resources Ltd.

The stable outlook over the next 12-18 months reflects our expectation that Vedanta will allocate a substantial portion of its free cash flow to debt repayment. The outlook also reflects our expectation that the company will benefit from increasing volumes in zinc, an improving cost position in aluminum, and stable operations in its oil business. We project its FFO cash interest cover will trend toward 2.5x in the period. In addition, we expect the company and its parent to proactively refinance upcoming term debt maturities. We may downgrade Vedanta if the company's financial performance deteriorates, with its FFO cash interest cover falling and remaining below 2.0x. This would happen if EBITDA were fall below US$3.5 billion. We may also lower

...India regulatory regime on minerals expected to remain stable.India's regulations on mining, oilfield concessions and environmental impact of smelting operations are expected to remain stable given that the country is a large consumer of minerals and is targeting higher manufacturing activity within the country. While potential for negative surprises remains high, especially surrounding the social and environmental impact on local communities, the last 12 months have been stable, with the company managing to extend its soon-to-expire crude oil production sharing agreement with the government. Fiscal 2020 EBITDA now likely to be much lower than our expectations 12 months ago. Subdued zinc prices and persistent high costs in the aluminum business have dented the earnings potential from a disciplined volume performance. Our fiscal 2020 EBITDA expectation is now US$3.5 billion against US$4 billion 12 months ago. Aluminum business performance is critical to EBITDA ramp-up and headroom within...

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