Vedanta Limited · NSE:VEDL
Vedanta — Q3 FY2020 Earnings Presentation
41 slides from Vedanta's earnings presentation, Feb 13, 2020
Slide 1: February 2020
February 2020 Sensitivity: Internal (C3)
Slide 2: Cautionary Statement and Disclaimer
Cautionary Statement and Disclaimer The views expressed here may contain information derived from statement involves risk and uncertainties, and that, although we publicly available sources that have not been independently verified. believe that the assumption on which our forward-looking statements
Slide 3: Contents
Contents Section Presenter Page Q3 FY20 Review Venkat, CEO 4 Financial Update Arun Kumar, CFO 17 Appendix 22 VEDANTA LIMITED – INVESTOR PRESENTATION 3 Sensitivity: Internal (C3)
Slide 4: Q3 FY2020 Review
Q3 FY 2020 Q3 FY2020 Review Venkat Chief Executive Officer Sensitivity: Internal (C3)
Slide 5: Indian Economy: Many Factors are Expected to Drive Resurgence in Growth
Indian Economy: Many Factors are Expected to Drive Resurgence in Growth The Reforms Push: Many Big Steps in 2019 Corporate tax cut Real Estate Fund Bank Merger IBC Amendment RCEP Withdrawal FDI Rules Biggest corporate tax cut ₹ 25,000 crore fund for Capital infusion of Enforce a strict 330 day India
Slide 6: Key Highlights: Q3 FY2020
Key Highlights: Q3 FY2020 ▪ Zinc India Mined Metal production 235 kt, up 7% q-o-q, Silver production up 11% q-o-q at 149 tonnes ▪ Zinc International Gamsberg production up 28% q-o-q with cost lower by 4% ▪ O&G Early gas production facility ramped up to design capacity of 90 mmscfd ▪ Aluminum continu
Slide 7: Heading Towards – Zero Harm, Zero Waste, Zero Discharge
Heading Towards – Zero Harm, Zero Waste, Zero Discharge Safety Program Update Environment Update • Investigation completed; action-plan in place to prevent 1 fatality in Q3 Tailings • Continuous improvements as repeats Management per Golder recommendations • Toolkit to ease communication during VFL
Slide 8: Zinc India: Strong Foundation Driving Growth and Transformation
Zinc India: Strong Foundation Driving Growth and Transformation RAM UG Crusher Commissioned Fully integrated operations with matching mining and smelting capacities 1200 Hauling from RAM UG Shaft expected to start 1000 in Feb 2020 ‘000 tonnes 800 600 All major Projects under 1.2 Mtpa MIC Capacity 40
Slide 9: Zinc India: Production Grows as Projects Approach Completion
Zinc India: Production Grows as Projects Approach Completion Performance Update Mine Performance / Expansion Update Quarter Performance: Rampura Agucha ▪ Mine crosses 4.0 Mtpa Ore Production run rate ▪ MIC Production 235kt, up 7% q-o-q in Q3 ▪ Metal Production 219kt, up 4% q-o-q ▪ Set to achieve 4.5
Slide 10: Zinc International: Gamsberg Positioning for Long Term Value Creation
Zinc International: Gamsberg Positioning for Long Term Value Creation Performance Update Gamsberg Quarter Performance: ▪ Production at 31kt, up 28% q-o-q ▪ Q3 production at 60kt, 5% lower ▪ COP at $1,420 ($833/t excl. TCRCs), down 4% q-o-q ▪ COP of $1,580/t, slightly lower q-o-q ▪ Ore mining run rat
Slide 11: Oil & Gas: Portfolio being monetized to drive multi-fold growth
Oil & Gas: Portfolio being monetized to drive multi-fold growth Performance Update Production Ramp Up (kboepd) ▪ 193 wells drilled, 72 wells hooked up 225 ▪ Early gas production facility ramped up to 178 design capacity of 90 mmscfd. New Terminal construction progressing as per plan. ▪ All wells dri
Slide 12: Oil & Gas: Building for Future Growth
Oil & Gas: Building for Future Growth OALP Blocks PSC Blocks Well Diversified ~60,000 51 Acreage Work 40 Onshore sq km Investment Resources Drilling Program 11 Offshore ($mn) (mmboe) Status (Wells) Peak Production Resources (bnboe) 500 (kboepd) 5.5 Upside Scenario Rajasthan Upside Scenario EOI relea
Slide 13: Aluminium: Achieving Design Structure
Aluminium: Achieving Design Structure Structural Reduction in Cost 2,018 Performance Update 1,852 1,764 1,691 1,769 Quarter Performance: ▪ Aluminium COP at $1,691/t, down 9% q-o-q ▪ Highest ever Lanjigarh production 476 kt, up 16% q-o-q ▪ Lanjigarh COP at $269/t, down 8% q-o-q Q1 FY20 Q2 FY20 Q3 FY2
Slide 14: Aluminium: Significant progress on Strategic levers Continues
Aluminium: Significant progress on Strategic levers Continues 2,074 1,691 1,576 1,500 Coal Alumina Bauxite Initiatives Ramp Up Sourcing Others Q3 FY19 Q3 FY20 Dec 2019 Target Initiatives Action Plan ▪ Increase Linkages through participation in Tranche V & VI, Coal Block Auctions Coal ▪ Target coal s
Slide 15: Other Assets: Iron ore and Electrosteel Steels
Other Assets: Iron ore and Electrosteel Steels Iron Ore Electrosteel Steels Performance Update Performance Update Quarter Performance: Quarter Performance: ▪ Karnataka sales 1.5 Mnt, highest ever ▪ Production 317kt, up 18% q-o-q ▪ Pig Iron production 179kt, up 2% q-o-q ▪ Sales 317kt, up 12% q-o-q Ni
Slide 16: Strategy to Enhance Long Term Value
Strategy to Enhance Long Term Value Continue Focus on World Class ESG Performance Augment Our Reserves & Resources Base Delivering on Growth Opportunities Optimise Capital Allocation & Maintain Strong Balance Sheet Operational Excellence VEDANTA LIMITED – INVESTOR PRESENTATION 16 Sensitivity: Intern
Slide 17: Financial Update
Q3 FY 2020 Financial Update Arun Kumar Chief Financial Officer Sensitivity: Internal (C3)
Slide 18: Financial snapshot Q3
Financial snapshot Q3 EBITDA^ Attributable PAT ND/EBITDA ₹ 6,531 cr ₹ 2,348 cr 1.0x Up 45% q-o-q Up 9% q-o-q Lowest among Indian peers EBITDA Margin * ROCE # Cash & Cash Equivalents 34% 10.9% ₹ 35,205 cr Industry leading margin Remains strong Strong liquidity ^ Includes one off for past exploration
Slide 19: EBITDA Bridge (Q2 FY 2020 vs. Q3 FY 2020)
EBITDA Bridge (Q2 FY 2020 vs. Q3 FY 2020) (In ₹ crore) Oil & Gas 1435 HZL (42) Zinc, lead & Silver 52 Oil & Gas (98) RPO 517 1,327 6,531 Aluminium (76) Profit Petroleum (282) Electrosteel (65) 416 248 4,788 4,497 257 195 105 Al 261 ESL 130 Cairn (125) HZL 98 IOB 56 Market & Regulatory ₹ 291 crore Q2
Slide 20: Net Debt for Q3 FY 2020
Net Debt for Q3 FY 2020 (In ₹ crore) Creditors/Customer Advance (5,067) Debtor Movement (920) Inventory Built-up (180) 26,956 78 211 2,624 23,384 20,081 5,355 6,167 FCF Post Capex ₹ (3,436) Cr Net Debt 31st WC Capex ESL Translation Net Debt 31st Net Debt 30th CF from Mar’19 Movements Share & others
Slide 21: Balance Sheet
Balance Sheet Term Debt Maturities - ₹ 41,374 Crore ($5.8 bn) (as of Dec 31, 2019) ▪ Liquidity 12.7 – Cash and investments at ₹ 35,205 cr 3.8 9.8 rated Tier I by CRISIL; 8.4 – Undrawn line of credit c. ₹ 8,400 crore ₹ ‘000 Crore 3.0 5.4 4.3 5.3 ▪ Net Interest – 8.9 2.7 0.8 5.4 ▪ Interest Income – Re
Slide 22: Vedanta Group
Vedanta Group Sensitivity: Internal (C3)
Slide 23: Vedanta Group Debt – Parent & Op Co; One Group, One Vision
Vedanta Group Debt – Parent & Op Co; One Group, One Vision ($ bn) Vedanta (fully consol incl Volcan) 1H2020 EBITDA 3.1 Net Debt 10.3 Vedanta Resources (Consolidated) 1H2020 % EBITDA 3.1 100% Net Debt 9.5 86% Vedanta Resources (Standalone) Volcan 1H2020 % 1H2020 % EBITDA 0 - EBITDA 0 - Net Debt 6.6 6
Slide 24: Vedanta Group: Parent & Op Co; One Group, One Vision
Vedanta Group: Parent & Op Co; One Group, One Vision Vedanta; A 20 year track record of delivering growth, meeting all obligations to debt holders on schedule and industry leading dividend distribution Vedanta Resources a Driving Force Grow Existing Businesses Growth to De-lever Balance Sheet • Veda
Slide 25: Appendix
Q3 FY 2020 Appendix Sensitivity: Internal (C3)
Slide 26: Income Statement
Income Statement Depreciation & Amortization Q3 Q3 Q2 In ₹ Crore • Higher 4% y-o-y due to increased ore production at Zinc FY’20 FY’19 FY’20 India and commencement of Gamsberg operations Revenue from operations 21,126 23,435 21,739 partially offset by lower charge at Skorpion. Other operating income
Slide 27: Entity Wise Cash and Debt
Entity Wise Cash and Debt (In ₹ crore) Dec 31, 2019 Sep 30, 2019 Dec 31, 2018 Company Debt Cash & LI Net Debt Debt Cash & LI Net Debt Debt Cash & LI Net Debt Vedanta Limited Standalone 36,569 3,808 32,761 37,956 7,162 30,794 42,708 4,784 37,924 Cairn India Holdings 3,157 6,900 (3,743) 1,213 5,180 (3
Slide 28: EBITDA Bridge (Q3 FY2019 vs. Q3 FY2020)
EBITDA Bridge (Q3 FY2019 vs. Q3 FY2020) (In ₹ crore) Aluminum (767) Oil & Gas 1264 Oil & Gas (270) Aluminum (444) Steel (242) Others (98) Zinc, Lead & Silver (211) IOB (94) RPO 347 Profit Petroleum (55) 687 6,531 5,953 1,584 241 1,066 113 281 5,603 Al 441 IOB 162 ESL 89 HZL (329) Cairn (152) Market
Slide 29: Segment Summary – Zinc India
Segment Summary – Zinc India Q3 Q2 9M Production (in ’000 tonnes, or as stated) FY 2020 FY 2019 % change YoY FY2020 FY 2020 Mined metal content 235 247 (5)% 219 668 Integrated metal 219 242 (9)% 210 649 Refined Zinc – Integrated 178 188 (5)% 166 516 1 Refined Lead – Integrated 41 54 (24)% 44 132 Ref
Slide 30: Segment Summary – Zinc International
Segment Summary – Zinc International Q3 Q2 9M Production (in’000 tonnes, or as stated) FY 2020 FY 2019 % change YoY FY2020 FY 2020 Refined Zinc – Skorpion 11 20 (45)% 23 52 Mined metal content- BMM 18 18 2% 16 53 Mined metal content- Gamsberg* 31 3 - 24 78 Total 60 41 48% 63 183 Financials (In ₹ Cro
Slide 31: Segment Summary – Oil & Gas
Segment Summary – Oil & Gas Q3 Q2 9M Production (in boepd, or as stated) FY 2020 FY 2019 % change YoY FY2020 FY 2020 Average Daily Production Gross operated 172,189 187,191 (8)% 178,744 176,986 Oil 153,472 176,997 (13)% 160,991 160,127 Gas (Mmscfd) 112 61 84% 107 101 Non operated- Working interest 5
Slide 32: Segment Summary – Oil & Gas
Segment Summary – Oil & Gas Q3 Q2 9M Production (in boepd, or as stated) FY 2020 FY 2019 % change YoY FY2020 FY 2020 Average Daily Working Interest Production 110,656 117,521 (6)% 114,994 113,403 Rajasthan 101,553 106,102 (4)% 105,294 103,749 Ravva 3,006 3,774 (20)% 2,822 2,954 Cambay 5,501 7,537 (2
Slide 33: Segment Summary – Aluminium
Segment Summary – Aluminium Q3 Q2 9M Particulars (in’000 tonnes, or as stated) FY 2020 FY 2019 % change YoY FY2020 FY 2020 Alumina – Lanjigarh 476 404 18% 410 1,332 Total Aluminum Production 483 502 (4)% 476 1,429 Jharsuguda-I 139 137 - 137 409 Jharsuguda-II 1 203 221 (7)% 201 604 245kt Korba-I 65 6
Slide 34: Aluminium profitability
Aluminium profitability $/t Q2 ‘20 1,761 61 83 1,905 (697) (774) (381) (81) (28) - (28) - (133) (245) (406) 1,852 Q3 ‘20 1,691 67 1,879 1,752 59 625 698 368 132* 49* 138 90 230 247 98 (106) 245 LME Ingot Value Realisation Alumina Power Other Hot Conversion Underlying RPO Reported Exceptional Dep Int
Slide 35: Segment Summary – Power
Segment Summary – Power Q3 Q2 9M Particulars (in million units) FY 2020 FY 2019 % change YoY FY2020 FY 2020 Total Power Sales 2,282 3,165 (28)% 3,253 9,055 Jharsuguda 7 136 (94)% 20 294 BALCO1 387 438 (12)% 454 1,266 HZL Wind Power 68 48 41% 165 366 TSPL 1,820 2,543 (28)% 2,615 7,129 Financials (in
Slide 36: Segment Summary – Iron Ore and Steel
Segment Summary – Iron Ore Particulars (in million dry metric tonnes, or Q3 Q2 9M as stated) FY 2020 FY 2019 % change YoY FY2020 FY 2020 Sales 1.7 0.7 - 1.4 4.3 Goa 0.2 0.1 - 0.0 0.2 Karnataka 1.5 0.6 - 1.4 4.1 Production of Saleable Ore 1.2 0.7 75% 1.3 3.6 Goa - - - - - 1.2 Karnataka 0.7 75% 1.3 3.
Slide 37: Segment Summary – Copper India
Segment Summary – Copper India Q3 Q2 9M Production (in ’000 tonnes, or as stated) FY 2020 FY 2019 % change YoY FY 2020 FY 2020 Copper - Cathodes 20 23 (13)% 16 52 Financials (In ₹ crore, except as stated) Revenue 1,835 2,763 (34)% 3,185 6,797 EBITDA (61) (75) (18)% (105) (232) Copper LME Price ($/MT
Slide 38: Sales Summary
Sales Summary Sales volume Q3 FY2020 Q3 FY2019 Q2 FY2020 9M FY2020 Zinc-India Sales Refined Zinc (kt) 172 187 168 507 Refined Lead (kt) 41 54 44 132 Total Zinc-Lead (kt) 213 241 212 639 Silver (tonnes) 153 178 135 442 Zinc-International Sales Zinc Refined (kt) 6 16 23 46 Metal in Zinc Concentrate (k
Slide 39: Sales Summary
Sales Summary Q3 Q3 Q2 9M Sales volume Q3 Q3 Q2 9M Sales volume FY 2020 FY 2019 FY 2020 FY2020 Power Sales (mu) FY 2020 FY 2019 FY 2020 FY 2020 Iron-Ore Sales Jharsuguda 7 136 20 294 Goa (Mn DMT) 0.2 0.1 - 0.2 TSPL 1,820 2,543 2,615 7,129 BALCO 2 387 438 454 1,266 Karnataka (Mn DMT) 1.5 0.6 1.4 4.1
Slide 40: Currency and Commodity Sensitivities
Currency and Commodity Sensitivities Foreign Currency - Impact of ₹ 1 depreciation in FX Rate Currency Increase in EBITDA INR/USD ~ ₹ 600 crore / year Commodity prices – Impact of a 10% increase in Commodity Prices Q3 FY 2020 Full Year Impact on Commodity Average price EBITDA ($mn) Oil ($/bbl) 63 10
Slide 41: Group Structure
Group Structure Vedanta Resources Ltd Divisions of Vedanta Limited 79.4% 50.1% ⚫ Sesa Iron Ore ⚫ Sterlite Copper Konkola ⚫ Power (600 MW Jharsuguda) Copper Vedanta Ltd Mines (KCM) ⚫ Aluminium (Odisha aluminium and power assets) ⚫ Cairn Oil & Gas* Subsidiaries of Vedanta Ltd 64.9% 51% 100% 100% 96% Z