Vedanta Resources — H1 FY2022 Earnings Presentation
40 slides from Vedanta Resources's earnings presentation, Dec 1, 2021
Slide 1: H1 FY2022 Earnings Presentation
VEDANTA RESOURCES LIMITED INVESTOR PRESENTATION 1st Dec 2021 H1 FY2022 Earnings Presentation 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 H1 FY22 Review & Business Update Sunil Duggal, Group CEO 4 Financial Update Ajay Goel, Group Acting CFO 22 Appendix 27 VEDANTA RESOURCES LIMITED – H1 FY2022 INVESTOR PRESENTATION 3 Sensitivity: Internal (C3)
Slide 4: H1 FY2022 Review and Business Update
VEDANTA RESOURCES LIMITED INVESTOR PRESENTATION H1 FY2022 H1 FY2022 Review and Business Update Sunil Duggal Group CEO & Chief Safety Officer Sensitivity: Internal (C3)
Slide 5: Strong Growth Momentum Continues
Strong Growth Momentum Continues ▪ Commit towards becoming net zero carbon by 2050 ESG ▪ Embedding ESG to make Vedanta truly future-ready ▪ Strong volume performance across business segments Operational Performance ▪ Sustained margins on strong commodity prices ▪ Highest Revenue and EBITDA for Q2 an
Slide 6: Uniquely Positioned To Deliver Sustainable Value
Uniquely Positioned To Deliver Sustainable Value World-Class Natural Competitive position in Delivering growth by Contributing to a Resources Powerhouse Indian and Global market capacity expansion sustainable development ▪ Diverse portfolio, strong ▪ Well-placed to benefit ▪ Production ramp-up ▪ Net
Slide 7: Multiple Initiatives to Improve ESG Performance Over the Years
Multiple Initiatives to Improve ESG Performance Over the Years Themes Actions already taken Resulting into rating improvement in last few years Renewable RE adoption across BUs Energy (40 MW solar & 273 MW Wind at HZL) Fleet MoU signed up with Normet, Epiroc at HZL Electrification ESL adopted EVs fo
Slide 8: Multi-dimensional Approach to Redefine ESG Strategy
Multi-dimensional Approach to Redefine ESG Strategy 1 ▪ Partnered with world’s leading companies to develop a robust roadmap to be a Global leader in ESG space Tapping Global Expertise in ▪ Mentored by Mr. Kuldeep Kaura on ESG Vedanta’s DNA ▪ Onboarded Dr Raj Aseervatham and Mr. Peter Sinclair as ES
Slide 9: Redefining our ESG Strategy
Redefining our ESG Strategy ESG Transforming for good Purpose 1 2 3 Pillars Transforming Communities Transforming the Planet Transforming the Workplace ▪ Aim 1. Keep community ▪ Aim 4. Net-carbon ▪ Aim 7. Prioritizing safety Commitments welfare at the core of neutrality by 2050 or and health of all
Slide 10: Our 10 Commitments – On Net Zero we Commit to
Our 10 Commitments – On Net Zero we Commit to Net Zero Carbon by 2050 or sooner 2 Use 2.5 GW of Round-The-Clock RE and reduce absolute emissions by 25% by 2030 from 2021 baseline 3 Pledge US$ 5b over the next 10 years to accelerate transition to Net-Zero 4 No additional coal-based thermal power and
Slide 11: Heading Towards – Zero Harm, Zero Waste, Zero Discharge
Heading Towards – Zero Harm, Zero Waste, Zero Discharge Safety Update Environment Update Q2 Fatality ▪ 3 fatalities at ESL Steel ▪ Digitalization of tailing dam at HZL & VZI ▪ CEOs are driving critical risks across Vedanta. completed and in progress at Aluminum ▪ Expert for Critical Risk Management
Slide 12: Aluminium: Success Continues; Growing Value in Dynamic World
Aluminium: Success Continues; Growing Value in Dynamic World Highest Ever Aluminium Production Alumina Production & COP 282 270 1,647 1,588 258 1,526 227 222 1,288 1,278 1,104 1,030 951 477 418 462 482 511 938 993 473 549 570 941 1,118 Q2 FY21 Q1 FY22 Q2 FY22 H1 FY21 H1 FY22 Q2 FY21 Q1 FY22 Q2 FY22
Slide 13: Aluminium: Well-Poised to be among Global Leaders
Aluminium: Well-Poised to be among Global Leaders COP Reduction potential ~$150–200 /t 2.8 Capacity (Mtpa) Step towards Vertical Integration 2.2 1.9 Steps towards Vertical Integration ▪ Lanjigarh expansion by Q1 FY23 (EC received 6Mnt) FY21 FY22 e 1-2 years ▪ Lanjigarh ▪ Jharsuguda ▪ 100% JSG Ramp-u
Slide 14: Zinc India: Strong Foundation Driving Growth
Zinc India: Strong Foundation Driving Growth Key Highlights: Mined metal Production (kt) 440 470 ▪ Record-High# Q2 and H1 mined metal Production - higher 238 221 248 ore treatment and improved recovery ▪ Metal Production in Q2* down due to planned Q2 FY21 Q1 FY22 Q2 FY22 H1 FY21 H1 FY22 maintenance
Slide 15: Zinc International: Gamsberg Positioning for Long Term Value Creation
Zinc International: Gamsberg Positioning for Long Term Value Creation Consistently Achieving Better than Design Throughput Key Highlights: ▪ Highest excavation at Gamsberg in Q2 (5.9Mt per 817 833 782 month), post successful onboarding of business 684 partner in Q1 501 522 532 526 ▪ Q2 Production up
Slide 16: Oil & Gas: Stable Operations, Focus on Delivery of Growth Projects
Oil & Gas: Stable Operations, Focus on Delivery of Growth Projects Operations Development Projects ▪ Production: Maintained at Q4 FY21 levels of 165 ▪ Mangala Wells : 3 new wells drilled & complete, 7 new wells put on production kboepd in H1 FY22 ▪ Infill Drilling to start in Q3 FY22: ▪ Opex: Operat
Slide 17: Oil & Gas: Key Projects For Production Growth In Mid To Long Term
Oil & Gas: Key Projects For Production Growth In Mid To Long Term ASP Exploration (OALP + PSC) Shale >300 mmboe1 600 mmboe2 300 mmboe3 ▪ Modularized approach for ▪ Portfolio prioritization ▪ Partners engaged on studies accelerated volumes ▪ Investment partnerships ▪ Pilot program under planning ▪ Pi
Slide 18: Iron ore: Continued Performance Growth Trajectory
Iron ore: Continued Performance Growth Trajectory Highest Ever six months production at Karnataka Key Highlights Q2: 2.7 ▪ Record Hot metal production at VAB through 2.4 Production (Mnt) productivity improvement initiatives 1.5 1.4 1.3 ▪ VAB Margin up 50% y-o-y and down 32% q-o-q due to higher cokin
Slide 19: ESL Steel: Towards Long Term Organic Growth
ESL Steel: Towards Long Term Organic Growth Consistent Performance Key Highlights Q2: 71 ▪ Hot Metal production up 11% y-o-y and 1% q-o-q 115 67 94 ▪ Saleable Production up 12% y-o-y and 1% q-o-q 32 through improvement of furnaces post shutdown in Q2 FY22 260 289 293 528 582 ▪ Margin down 66% y-o-y
Slide 20: FACOR: Delivering Stronger Growth
FACOR: Delivering Stronger Growth Strong Performance Continues Key Highlights Q2: 655 ▪ Achieved highest quarterly Fe Chrome production; 537 424 plant productivity enhancement by ~10% 38 32 ▪ Highest quarterly EBITDA margin ~14x y-o-y and 17 18 19 54% q-o-q supported by increase in NSR 48 56 ▪ Ore p
Slide 21: Strategy to Enhance Long Term Value
Strategy to Enhance Long Term Value Continue Focus on World Class ESG Performance Augment Our Reserves & Resources Base Operational Excellence and Cost Leadership Optimise Capital Allocation & Maintain Strong Balance Sheet Delivering on Growth Opportunities VEDANTA RESOURCES LIMITED – H1 FY2022 INVE
Slide 22: Finance Update
VEDANTA RESOURCES LIMITED INVESTOR PRESENTATION H1 FY2022 Finance Update Ajay Goel Group Acting Chief Financial Officer Sensitivity: Internal (C3)
Slide 23: Financial snapshot
Financial snapshot EBITDA ROCE# EBTIDA Margin* Net Debt $ 2.9bn c.29% 42% $ 11.4 bn Up 99% y-o-y Improved double digit Industry leading margin *Excludes custom smelting at Copper Business. # ROCE is calculated as EBIT net of tax outflow divided by average capital employed. EBITDA Bridge (In $mn) Alu
Slide 24: Net Debt for H1 FY2022
Net Debt for H1 FY2022 (In $mn) Inventory, Debtors & Others (356) Creditors/ Customers Advance (16) 1,177 40 11,361 10,731 1,977 452 646 372 FCF Post Capex $ 959mn Net Debt CF from WC Movements Capex Dividend Stake increase Translation Net Debt 1st Apr’21 Operations (Incl Buyer’s in VEDL & Others* 3
Slide 25: Balance Sheet and Debt Breakdown
Balance Sheet and Debt Breakdown Net Debt / EBITDA Debt Breakdown 3.3 (as of 30th Sep 2021) 3.0 2.8 2.4 Debt breakdown as of 2.2 (in $bn) 30th Sep 2021 Term debt 15.2 Working capital 0.2 Short term borrowing 0.1 FY'18 FY'19 FY'20 FY'21 H1 FY'22 Total consolidated debt 15.5 ▪ Liquidity: Cash and Cash
Slide 26: Capex and Returns Profile
Capex and Returns Profile Growth CAPEX Profile, $bn Oil & Gas Zinc Al & Power Copper Other Optionality Full year Capex guidance 0.7 1.0 1.2 1.5 1.2 0.7 1.1 1.1 1.1 0.1 0.2 0.8 0.8 0.1 0.7 0.1 0.5 0.1 0.6 0.1 0.2 0.4 0.2 0.3 0.5 0.3 0.3 0.1 0.2 0.1 0.3 0.1 0.1 0.2 0.1 0.1 0.5 0.5 0.2 0.1 0.3 FY2016 F
Slide 27: Appendix
VEDANTA RESOURCES LIMITED INVESTOR PRESENTATION H1 FY2022 Appendix Sensitivity: Internal (C3)
Slide 28: FY 2022 Guidance
FY 2022 Guidance Segment Production and COP Revised Production and COP Mined Metal and Finished Metal: 1,025 – 1,050 Kt No change in Production Zinc India Silver: c. 720 tonnes COP: < $1,075/t excluding royalty COP: < $1,000/t excluding royalty BMM: ~70 – 80 Kt No Change in Production Zinc Internati
Slide 29: Income Statement
Income Statement Depreciation & Amortization In $mn H1 H1 FY’22 FY’21 ▪ Higher Y-o-Y majorly on account of project Revenue from operations 7,870 4,875 capitalization at Oil & Gas and Aluminium and higher EBITDA 2,868 1,440 ore production at Zinc business Depreciation & amortization (567) (529) Finan
Slide 30: Project Capex
Project Capex (In $mn) Spent up to Approved Spent in H1 Unspent as at Capex in Progress Status Capex3 31 Mar’214 FY20224 30 Sep 20215 Cairn India1 – Mangala Infill, Liquid handling, Bhagyam & Aishwariya EOR, Tight Oil & Gas, OALP etc 2,459 1,028 85 1,346 Aluminium Sector Line 3: Fully capitalised Li
Slide 31: Entity Wise Cash and Debt
Entity Wise Cash and Debt (In $ mn) Sep 30, 2021 Mar 31, 2021 Company Cash & Cash Cash & Cash Debt Net Debt4 Debt Net Debt4 Eq4 Eq4 Vedanta Limited Standalone 4,105 229 3,876 4,388 798 3,590 Cairn India Holdings Limited1 376 278 98 383 191 192 Zinc India 614 3,188 (2,574) 979 3,044 (2,064) Zinc Inte
Slide 32: Funding Sources and Term Debt Maturities
Funding Sources and Term Debt Maturities Diversified Funding Sources for Term Debt of $15.2bn Term Debt Maturities : $ 15.2 bn (as of 30th Sep 2021) (as at 30th Sep’21) 45% 6.8 24% 24% Term Loans-INR 3.7 3.6 3.4 Bonds-INR 37% 31% Term Loans- 1.3 1.1 USD/Foreign Currency Bonds-FC 7% 3.4 7% 1.1 2.5 2.
Slide 33: Segment-wise Summary
Segment-wise Summary Oil & Gas H1 FY22 H1 FY21 Zinc-India H1 FY22 H1 FY21 Average Daily Gross Operated Mined Metal Content (kt) 470 440 Production (boepd) 165,114 161,929 Refined Zinc – Integrated (kt) 350 338 Rajasthan 140,787 130,128 Refined Lead – Integrated (kt)1 95 101 Ravva 14,471 21,822 Salea
Slide 34: Segment-wise Summary (cont’d)
Segment-wise Summary (cont’d) Aluminium H1 FY22 H1 FY21 Copper H1 FY22 H1 FY21 Aluminium Production (kt) 1,118 941 Copper Cathodes– India (kt) 58 41 Jharsuguda I - 500kt Average Copper LME ($/t) 9,531 5,956 275 263 EBITDA ($mn) (19) (6) Jharsuguda II - 1,250kt* 553 399 Korba-I 245kt 133 131 Korba-II
Slide 35: Aluminium profitability
Aluminium profitability $/t Q1 FY22 2,400 73 69 2,542 (664) (499) (363) (64) 951 (132) (284) 535 1,526 Q2 FY22 1,647 98 2,848 2,648 102 688 554 406 97 1,104 134 285 684 245 LME Ingot Value Other Realisation Alumina Power Conversion EBITDA Dep Int PBT Premium addition Hot & Others Metal VEDANTA RESOU
Slide 36: Segment-wise Summary (cont’d)
Segment-wise Summary (cont’d) Iron Ore H1 FY22 H1 FY21 Steel H1 FY22 H1 FY21 Sales (dmt) 3.0 2.5 Total Production 582 528 Goa 0.5 0.7 Pig Iron 90 110 Karnataka 2.5 1.8 Billet 84 135 Production (mt) 2.7 2.4 TMT Bar 155 95 Wire Rod 183 140 Goa - - Ductile Iron Pipes 72 47 Karnataka 2.7 2.4 EBITDA ($/t
Slide 37: Sales Summary
Sales Summary Sales volume H1 FY22 H1 FY21 Sales volume H1 FY22 H1 FY21 Sales volume H1 FY22 H1 FY21 Power Sales (mu) Zinc-India Sales Iron-Ore Sales Jharsuguda 600 MW 1,305 1,493 Refined Zinc (kt) 352 344 Goa (mn DMT) 0.5 0.7 TSPL 3,418 3,310 Refined Lead (kt) 95 102 Karnataka (mn DMT) 2.5 1.8 Tota
Slide 38: Currency and Commodity Sensitivities
Currency and Commodity Sensitivities Foreign Currency - Impact of ₹ 1 depreciation in FX Rate Currency Increase in EBITDA INR/USD ~ $30-35 million/year Commodity prices – Impact of a 10% increase in Commodity Prices H1 FY 22 Impact on Commodity Average price EBITDA ($mn) Oil ($/bbl) 71 33 Zinc ($/t)
Slide 39: Awards & Recognition in H1 FY22
Awards & Recognition in H1 FY22 Name of Awards Category/ Recognition Recipient (Business Unit) Legal Team of the Year India Legal Awards 2021 Cairn Oil and Gas Gold and Silver award CII National Kaizen competition Vedanta Ltd., IOK Most Sustainable company in the Mining Industry 2021 World Finance –
Slide 40: Group Structure
Group Structure Vedanta Resources Ltd Divisions of Vedanta Limited 79.4% 65.2% ⚫ 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% 95.5%