Vedanta Resources — FY2019 Earnings Presentation
35 slides from Vedanta Resources's earnings presentation, May 21, 2019
Slide 1: Vedanta: Transforming Elements
oe vedanta transforming elements ER | ALUMINIUM & POWER | COPPER | IRON ORE-& STEEL .
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 FY19 Review Venkat, CEO 4 Financial Update Arun Kumar, CFO 17 Appendix 22 VEDANTA RESOURCES LIMITED – FY2019 INVESTOR PRESENTATION 3
Slide 4: FY2019 Review
FY2019 Review Venkat Chief Executive Officer
Slide 5: 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 RESOURCES LIMITED – FY2019 INVESTOR PRESENTATION 5
Slide 6: Heading Towards Zero Harm, Zero Waste, Zero Discharge
Heading Towards – Zero Harm, Zero Waste, Zero Discharge Safety Environment Sustainability • One fatality in Q4 (14 in FY2019) • 92% waste recycling in FY 2019 • Reusing 60% tailings as ‘paste- fills’ for void replacement at • Safety focus across business: • 14.5% reduction in GHG Zinc India undergro
Slide 7: Zinc India: On-track for 1.2Mtpa, planning for 1.35Mtpa underway
Zinc India: On-track for 1.2Mtpa, planning for 1.35Mtpa underway Record Underground Mine Performance FY2019 Record production of Underground (kt) OC (kt) ▪ Mined metal from UG mines, up 29% y-o-y 223 ▪ Silver at 21.8 million ounces, up 22% y-o-y 426 544 ▪ Lead metal at 198kt, up 18% y-o-y 638 936 72
Slide 8: Zinc International: Growth Plan for >500ktpa Zinc Production
Zinc International: Growth Plan for > 500ktpa Zinc Production Value Addition 148ktpa >370 ktpa 500 ktpa 650 ktpa Incl. Gamsberg Incl. Gamsberg Incl. Gamsberg Current Phase 1 Phase 2 Phase 3 FY20 +3 yrs +5 yrs BMM 70kt BMM 65kt BMM 60kt BMM 70kt Gamsberg Ph1 250kt Skorpion 66kt Skorpion 110kt Gamsber
Slide 9: Oil & Gas: Opportunities across life cycle
Oil & Gas: Opportunities across life cycle 10 Year PSC Extension $ 3.2bn Gross Capex Exploration 41 OALP Blocks Approval for Rajasthan & Ravva PSC Growth Capex driven through Integrated Rajasthan Extension as per GoI policy, subject to Partnership model with global oil field KG Offshore certain cond
Slide 10: Oil & Gas: Continuing to Execute on our Growth Strategy
Oil & Gas: Continuing to Execute on our Growth Strategy • Rich project portfolio comprising of enhanced oil recovery, tight oil and tight gas • Focus on cutting edge technology enabling world class recovery rates Development Projects • Projects generate IRR of > 20% at oil price of $ 40/bbl • Number
Slide 11: Oil & Gas: Solidifying Reputation of Adopting Cutting Edge Technology
Oil & Gas: Solidifying Long-Standing Reputation of Adopting Cutting Edge Technology for world class recovery rates Resources Reserves Production World Class Resource Base Production being ramped up – Increasing Gas Mix (As at March 2019) Gross Average Volume (kboepd) • Hydrocarbon Initially in Place
Slide 12: Aluminium: Significant progress on Strategic levers
Aluminium: Significant progress on Strategic levers Mar’19 COP at $ 1,700/t FY2019 2,018 2,025 • Structural Reduction in Aluminium Cost 1,934 1,776 • Achieved Alumina Peak run rate of 1.8 Mtpa during the year • Increased Local Bauxite supply met 30% of requirement • Ramped Up Lanjigarh volume and lo
Slide 13: Aluminium – Moving towards Structural Cost Reduction
Aluminium – Moving towards Structural Cost Reduction Local Bauxite Imported Alumina ~50% Alumina Aluminum Capacity 2 ✓ Mine capacity ✓ Index linked pricing MTPA FY20 requirement achieved: 3 MTPA; ✓ LTC signed of 4 Mtpa supplies as per ✓ Alumina price indices state policy have softened since ✓ Expect
Slide 14: Aluminium – Moving towards Structural Cost Reduction (cont.)
Aluminium – Moving towards Structural Cost Reduction (cont.) Secured Linkage 90% Coal Margin Improvement Initiatives ✓ 72% coal requirement secured from • Increase value added production E-Auction linkage & captive • Focus on higher domestic sale block ✓ Balance • Tranche V linkage • Long term contr
Slide 15: Electrosteel Turnaround Performance
Electrosteel Turnaround Performance FY2019 Asset turnaround strategy • Record production of 1,199kt; up 17% y-o-y • Ever highest sales of 1,185kt; up 15% y-o-y ▪ Achieved run rate • Industry leading margin at $115/t up 116% y-o-y Current of c1.5 Mtpa Hot Metal Production • VAP sale at 85%, up 8% y-o
Slide 16: Copper Zambia
Copper Zambia FY2019 KCM – One of the world’s Highest Grade Copper Mines • MIC Production at 91 kt, flat y-o-y Top 25 producing copper mines by contained copper (Mt) • FG production at 177 kt, down 9% y-o-y 140 Contained Cu in R&R (Mt) 120 • Cash cost c/lb 276, up 16% y-o-y 100 80 60 40 Konkola 20 K
Slide 17: Financial Update
Financial Update Arun Kumar Chief Financial Officer
Slide 18: Financial snapshot
Financial snapshot EBITDA FCF post capex EBTIDA Margin* Contribution to Exchequer $ 3.4 bn $ 1.2 bn 29% $ 6.2bn Down 14% y-o-y Up 29% y-o-y Industry leading margin Highest till date * Excludes custom smelting at Copper India, Copper Zambia and Zinc-India operations EBITDA Bridge ESL 113 (In $ mn) Al
Slide 19: Net Debt for FY2019
Net Debt for FY2019 (In $ mn) FCF Post capex $ 1,190 mn 1,302 115 10,292 9,588 2,269 707 1,391 312 Net debt CF from WC Capex ESL Acquisition Dividend Translation Net debt 1st Apr Operations Movements (net of cash) payment & others 31st Mar & BC/SC VEDANTA RESOURCES LIMITED – FY2019 INVESTOR PRESENTA
Slide 20: Strong Financial and Returns Profile
Strong Financial and Returns Profile Term Debt Maturities - $12.6 bn (as of 31 Mar 2019) ▪ Liquidity 3.5 – Cash and investments @ $ 5.7 billion 3.2 rated Tier I by CRISIL; 2.0 2.4 1.5 – Undrawn line of credit c. $ 1.0 billion 1.7 0.4 1.7 US$ billion ▪ Net Interest 1.2 2.0 1.3 1.8 ▪ Interest Income –
Slide 21: Self funded Capex Delivering Superior Returns
Self funded Capex Delivering Superior Returns Growth CAPEX Profile, $bn Oil & Gas Zinc Al & Power Copper Other Optionality Full year Capex guidance 0.7 1.0 1.2 1.5 1.4 0.2 1.1 0.1 0.1 0.1 0.8 0.7 0.1 0.5 0.4 0.6 0.01 0.1 0.2 0.3 0.5 0.2 0.3 0.2 0.1 0.1 0.5 0.6 FY2016 FY2017 FY2018 FY2019 FY2020e FCF
Slide 22: Appendix
RZ vedanta transforming elements Appendix PRESENTATION FY2019
Slide 23: FY 2020 Guidance
FY 2020 Guidance Segment FY20 Production FY20 CoP Mined Metal and Finished Metal: c 1.0 Mtpa Zinc India < $1,000/t excluding royalty Silver: 750 - 800 tonnes Skorpion and BMM: >170kt ZI COP (excl Gamsberg) : $1,400/t Zinc International Gamsberg: 180 - 200kt Gamsberg: c $1,000/t Oil & Gas Gross Volum
Slide 24: Income Statement
Income Statement Depreciation & Amortization In $ mn FY’19 FY’18 • Higher FY vs FY on account of non cash impairment reversal in Revenue from operations 14,031 15,294 Q4 FY 2018 at Oil and Gas business , higher ore production at EBITDA 3,393 3,963 Zinc businesses and acquisition of ESL partially off
Slide 25: Project Capex
Project Capex Capex3 Spent up to Spent in Unspent as at Capex in Progress Status ($mn) 31 Mar’184 FY20194 31 Mar’195 Cairn India1 – Mangala Infill, Liquid handling, 2,481 183 469 1,829 Bhagyam & Aishwariya EOR, Tight Oil & Gas etc Aluminium Sector Line 3: Fully capitalised Jharsuguda 1.25mtpa smelte
Slide 26: Entity Wise Cash and Debt
Entity Wise Cash and Debt 31 Mar 2019 ($mn) 31 Mar 2018 ($mn) Company Debt Cash & LI Net Debt Debt Cash & LI Net Debt Vedanta Limited Standalone 6,101 1,195 4,906 6,259 1,096 5,163 Cairn India Holdings Limited1 379 1,172 (793) 426 791 (365) Zinc India 367 2,821 (2,454) - 3,411 (3,411) Zinc Internati
Slide 27: Debt Breakdown & Funding Sources
Debt Breakdown & Funding Sources Diversified Funding Sources for Term Debt of $12.6bn Debt Breakdown (as of 31st Mar 2019) (as of 31 Mar 2019) Debt breakdown as of (in $bn) 31 March 2019 Term Loans-INR Term debt 12.6 25% 28% Bonds-INR Working capital 0.5 Term Loans-USD/Foreign Short term borrowing 2
Slide 28: Segment-wise Summary
Segment-wise Summary Oil & Gas FY19 FY18 Zinc-India FY19 FY18 Average Daily Gross Operated Mined Metal (kt) 936 947 Production (boepd) 188,784 185,587 Underground mines 936 724 Rajasthan 155,903 157,983 Open cast mines - 223 Ravva 14,890 17,195 Refined Zinc – Integrated (kt) 696 791 Cambay 17,991 10
Slide 29: Segment-wise Summary (cont’d)
Segment-wise Summary (cont’d) Copper-Zambia FY19 FY18 Aluminium FY19 FY18 Mined Metal (kt) 91 91 Aluminium Production (kt) 1,959 1,675 Finished Metal – Total (kt) 177 195 Jharsuguda I - 500kt 545 440 Integrated (kt) 90 84 Jharsuguda II - 1,250kt1 843 666 Custom Smelting (kt) 87 111 Korba-I 245kt 260
Slide 30: Aluminium profitability
Aluminium profitability $/t Q3 ‘19 1,971 29 93 2,093 (875) (793) (357) 11 $79/t (146) (225) (292) Q4 ‘19 99 2,010 (784) 1,859 52 (632) (360) (103) 131 (171) (236) (276) LME Ingot value Realisation Alumina Power Other Hot Conversion EBITDA Dep Int PBT premium addition Metal & others Operating costs V
Slide 31: Segment-wise Summary (cont’d)
Segment-wise Summary (cont’d) Power FY2019 FY2018 Iron Ore FY2019 FY2018 Power Sales (million units) 13,517 11,041 Sales (mt) 3.8 7.6 Jharsuguda 600MW 1,039 1,172 Goa 1.3 5.4 BALCO 600MW1 2,168 1,536 Karnataka 2.6 2.2 MALCO 100MW2 - 4 Production (mt) 4.4 7.1 Talwandi Sabo 1980MW 9,858 7,915 Goa 0.2
Slide 32: Segment Summary – Power (contd.)
Segment Summary – Power (contd.) Power Generation Capacity – c. 9GW IPP: 3.3GW CPP:5.5GW • 600MW Jharsuguda (of 2400MW • 1,215MW Jharsuguda plant) • 3*600MW Jharsuguda (of 2400MW • 1,980MW TSPL 37% plant) • 300MW BALCO (of 1200MW • 540MW BALCO plant) • 270MW BALCO 63% • 274MW HZL Wind Power • 3*300M
Slide 33: Sales Summary
Sales Summary Sales volume FY 2019 FY 2018 Sales volume FY2019 FY2018 Sales volume FY2019 FY2018 Power Sales (mu) Zinc-India Sales Iron-Ore Sales Jharsuguda 600 MW 1,039 1,172 Refined Zinc (kt) 694 793 Goa (mn DMT) 1.3 5.4 TSPL 9,858 7,915 Refined Lead (kt) 198 169 Karnataka (mn DMT) 2.6 2.2 BALCO 6
Slide 34: Currency and Commodity Sensitivities
Currency and Commodity Sensitivities Foreign Currency - Impact of 1 Rs depreciation in FX Rate Currency Increase in EBITDA INR/USD ~ US$ 30 - 35 million / year Commodity prices – Impact of a 10% increase in Commodity Prices FY 2019 Commodity Average price EBITDA ($mn) Oil ($/bbl) 70 119 Zinc ($/t) 2
Slide 35: 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% 90% Z