Vedanta Limited · NSE:VEDL
Vedanta — FY2017 Earnings Presentation
50 slides from Vedanta's earnings presentation, May 17, 2017
Slide 1: Vedanta Limited FY2017 Results
Vedanta Limited FY2017 Results 15 May 2017 Results conference call details are on the last page of this document Elements for a Sustainable Future Exhibit 99.4
Slide 2: Cautionary Statement and Disclaimer
Cautionary Statement and Disclaimer The views expressed here may contain information derived from publicly available sources that have not been independently verified. No representation or warranty is made as to the accuracy, completeness, reasonableness or reliability of this information. Any forwa
Slide 3: Contents
Contents Section Presenter Page Strategic Update Tom Albanese, CEO 3 Financial Update Arun Kumar, CFO 13 Business Review Tom Albanese, CEO 23 Q & A 32
Slide 4: Strategic Update
Vedanta Limited FY2017 Results 15 May 2017 Strategic Update Tom Albanese Chief Executive Officer Empowering Growth
Slide 5: Sustainable Development
Sustainable Development Note: ICMM 2014 methodology adopted from FY2016 onwards Building a Zero Harm Culture Safety 5 Fatalities during FY17 - crane related accident at a site in Rajasthan (4 fatalities in Q4) Social Licence to Operate Social Investment of Rs. 110 crore benefitted 2.2mn people 71 Mo
Slide 6: A diversified resources company with low cash costs, growth and strong balance sheet
Vedanta Limited: A diversified resources company, with low cash cost positions, market leading growth and strong balance sheet Attractive cost position Commodity diversification1 Strong balance sheet Sector leading growth I II III IV Size of circle denotes EBITDA contribution Iron ore Aluminium Zinc
Slide 7: A world-class natural resource powerhouse anchored in India
Vedanta Limited: A world-class natural resource powerhouse anchored in India The completion of the Cairn merger enables Greater financial flexibility to allocate capital efficiently Focus on shareholder returns - Dividend policy announced 6th largest diversified resources company in the world1 Only
Slide 8: FY2017 Results Highlights
FY2017 Results Highlights Operations: Record production, capacities ramping-up Ramp-up of capacities at Aluminum, Power, Iron Ore Record production at Zinc–India, Aluminum, Power and Copper India Gamsberg zinc project on track for CY18 production Financial: Strong free cash flow; PAT2 up 2.6 times S
Slide 9: Capital Allocation: Focus on Shareholder Returns
Capital Allocation: Focus on Shareholder Returns World class assets and operational excellence to deliver strong and sustainable cash flows Production growth and asset optimization Strong Shareholder Returns Announced dividend policy at Vedanta Ltd pass through of HZL’s regular dividend, plus minimu
Slide 10: Well-positioned to benefit from strong Zinc fundamentals
Vedanta well-positioned to benefit from strong Zinc fundamentals Refined Zinc inventory (mt) at 7 year lows, supporting zinc prices Sources: Bloomberg, Wood Mackenzie India’s zinc consumption expected to grow rapidly over next decade Zinc consumption (indexed) Low TCs reflect tightness in concentrat
Slide 11: Positioned to capitalize on India's growth and natural resource potential
Ideally positioned to capitalize on India’s growth and natural resource potential …to drive increasing resources demand India key themes GDP/capita growth Urbanisation Population growth Secular growth trends… 1.0% CAGR 8.5% CAGR +174mn Source: World Bank (May 2016) Source: World Bank (May 2016) Sour
Slide 12: Government's strong push for Infrastructure Growth
Government’s strong push for Infrastructure Growth Allocation of $35bn for infrastructure development “Housing for All” budget of $12bn over next three years Plans to construct 30 million houses by 2022 Positive Regulatory Developments Mining sector Government identified 300 mineral blocks to auctio
Slide 13: Delivering on our Strategic Priorities
Production growth De-leveraging Identify next generation of Resources Simplification of group structure Preserve License to Operate Delivering on our Strategic Priorities Strategic Priority What we Achieved in FY2017 Focus Areas for FY2018 Record production at several operations Significant ramp ups
Slide 14: Financial Update
Financial Update Arun Kumar Chief Financial Officer Value Creation
Slide 15: FY2017: Strong profitability and balance sheet
Notes:1. Excludes custom smelting at Copper India and Zinc-India operations 2. FY2017 Pro-forma excludes HZL Temporary short term borrowing of Rs. 7,908 crore; and incorporates dividends paid in April 2017 of Rs. 7,224 crore by HZL and Vedanta Limited Previous period figures have been re-grouped and
Slide 16: EBITDA Bridge (FY2017 vs FY2016)
EBITDA Bridge (FY2017 vs FY2016) FY2017 vs. FY2016 (In Rs. crore) Market & Regulatory Rs. 3,768 crore Operational Rs. 2,483 crore Zinc & Lead 3,196 Aluminium 576 Brent Discount 231 Iron ore 112 Brent 74 Power (173) Metal Premiums (290) Initiatives 1,850 Volume Led (219) Iron ore 674 Power 687 Alumin
Slide 17: Q4 FY2017 EBITDA at over $1bn
Q4 FY2017 EBITDA at over $1bn Q4 FY2016 vs. Q4 FY2017 (In Rs. crore) Market & Regulatory Rs. 2,212 crore Operational Rs. 1,549 crore Zinc & Lead 1,777 Aluminium 546 Brent 563 Iron ore 61 Brent Discount 96 Power 16 Metal Premiums (74) Zinc India 701 Aluminium 229 Iron ore 81 Power 134 Cairn (91) Zinc
Slide 18: Cost Savings and Marketing Initiatives
Cost Savings and Marketing Initiatives Cost and marketing savings program ($m) progressing ahead of original plan Segment-wise contribution of savings ($712mn) Cumulative savings of US$1.3bn expected to be achieved by H1FY2019 Savings in each period is over cost base of FY2015 and net of market fluc
Slide 19: Depreciation, Finance Cost and Other Income
Depreciation & Amortization Lower in Q4 and FY17 on account of lower amortization charge on mining reserves at Oil & Gas due to impairment in FY16, partially offset by capitalization at Al & Power Finance cost Lower in Q4 due to lower interest rates and capitalization of interest at Jharsuguda (this
Slide 20: Net Debt for FY2017
Net Debt for FY2017 (In Rs. crore) FCF Post Capex Rs. 13,312 crore Project Capex (5,355) Sustaining capex (768)
Slide 21: Optimising Capex to drive Cash Flow Generation
Optimising Capex to drive Cash Flow Generation FY2016 FY2017 FY2019e Growth Capex Profile and Free Cash Flow pre capex - $bn Prioritised capital to high-return, low-risk projects to maximise cash flows Capex spent for FY 17 at $0.7bn against original guidance of $1bn FY 2018 capex guidance at $1.2 b
Slide 22: Strong Credit Profile and Balance Sheet
Strong Credit Profile and Balance Sheet Term debt of $7.1bn ($4.5bn at Standalone and $2.7bn at Subsidiaries) Maturity profile shows term debt (excludes working capital of $0.3bn, short term debt of $2.3bn and short term borrowing at HZL of $1.2bn) 1 Term Debt excluding repayments till date Maturity
Slide 23: Financial Priorities: Shareholder returns while strengthening Balance Sheet
Financial Priorities: Shareholder returns while continuing to strengthen Balance Sheet Disciplined Capital Allocation; focus on FCF Ramp-ups at Aluminium, Power and Iron Ore are generating significant cash flows Continued optimization of Opex Further improvement in credit rating to AA+ Deleveraging;
Slide 24: Business Review
Vedanta Limited FY2017 Results 15 May 2017 Business Review Tom Albanese Chief Executive Officer Operational Excellence
Slide 25: Zinc India FY2017 Results
Zinc India FY2017 Results Record production: MIC at 907kt; silver at 453 tonnes Integrated refined metal production at 809kt CoP at $830/t; 1st quartile on global cost curve Projects – key highlights Capacity expansion to 1.2mt by FY2020 RAM U/G mine ramp-up progressing well SK mine capacity expansi
Slide 26: Zinc International FY2017 Results
Zinc International FY2017 Results Production at 156kt: Skorpion at 85kt; BMM at 70kt CoP $1417/t, higher mainly due to lower production 250kt Gamsberg Project On target for first production by mid-2018 Mining contract outsourced; 16mt of waste moved to date Over 75% of budgeted capex committed Plant
Slide 27: Cairn: Oil & Gas FY2017 Results
Cairn: Oil & Gas FY 2017 Results FY2017 gross average production at 189,926boepd Rajasthan production at 161,571boepd Offshore production at 28,355boepd Mangala EOR, world’s largest polymer program Successful ramp up with production level of 56 kboepd in Q4 RJ gas Q4 production of 21 mmscfd due to a
Slide 28: Cairn: Oil & Gas Forward Plan
Cairn: Oil & Gas Forward Plan RDG Gas project Phase-1: 40-45 mmscfd by Q2 FY2018 Phase-2: Gas production of 100mmscfd and condensate production of 5kboed by H1 CY2019; Tendering for new gas processing terminal and rig underway Key Oil projects Mangala Infill: Commencing 15 well program with producti
Slide 29: Aluminium
Aluminium Operating capacity Capacity to ramp up in FY2018 2,320 Capacity ramp up being evaluated Roadmap to 2.3mtpa Aluminium Capacity 28 228 pots impacted by outage in April 2017 1710 56 72 1,838 (560) (571) (298) (68) Q3’17 Aluminium Costs and Margins (in $/t, for Q4 FY2017) (158) (368) (184) $34
Slide 30: Power Results
Power Results TSPL: All 3 units became operational in FY 2017: record plant availability of 85% in Q4 FY2017 and 79% in FY2017 Plant currently out of production due to fire at coal conveyor in April 2017 Rectification in progress, expect to restart plant by end-June Targeting availability of 75%+ in
Slide 31: Iron Ore and Copper India
Iron Ore and Copper India Iron Ore Achieved full year production cap in Goa and Karnataka Produced additional allocation of 2.6mt in Goa Q4 Goa CoP reduced to US$19/t FY2017 CoP at US$21/t, 38% lower y-o-y FY2018 production allocation: 5.5mtpa at Goa and 2.3mtpa at Karnataka Goa government seeking i
Slide 32: Scorecard for the year
Focus Area Status Production growth Disciplined Capital Allocation; Focus on FCF De-leveraging Simplification of group structure Preserve License to Operate Identify next generation of Resources Shareholder returns Scorecard for the year
Slide 33: Q & A
Vedanta Limited FY2017 Results 15 May 2017 Q & A
Slide 34: FY2018 Guidance
FY2018 Guidance Segment FY18e Comments Zinc India Zinc-Lead Integrated: 950kt; Silver volume: +500 tonnes CoP ($/t): marginally higher than FY2017 Zinc International Zinc-Lead volume: c.160kt CoP: c.$1,500/t Gamsberg expected CoP: $1000-1,150/t Oil & Gas RJ Gross Volume: 165kboepd Ravva Gross volume
Slide 35: Project Capex
Project Capex Capex in Progress Status Capex ($mn) Spent up to March 2017 Spent in FY 17 Unspent as at 31 Mar 17 Cairn India - RDG, Mangala Infill, Aishwariya & Bhagyam EOR, Barmer Hill, Liquid handling etc 295 45 45 250 Aluminium Sector BALCO – Korba-II 325ktpa Smelter and 1200MW power plant(4x300M
Slide 36: Entity Wise Cash and Debt
(in Rs. crore) Company 31 March 2017 31 December 2016 31 March 2016 Debt Cash & LI Net Debt Debt Cash & LI Net Debt Debt Cash & LI Net Debt Vedanta Limited Standalone (excluding Cairn India) 43,233 2,316 40,917 43,168 1,247 41,921 33,466 1,352 32,114 Zinc India 7,908 32,166 (24,258) 0 25,373 (25,373
Slide 37: Net Debt for Q4 FY2017
Net Debt for Q4 FY 2017 (In Rs. crore) FCF Post Capex Rs. 8,772 crore Project Capex (2,133) Sustaining capex (105)
Slide 38: Debt Breakdown & Funding Sources
Debt Breakdown & Funding Sources Diversified Funding Sources for Term Debt of $7.1bn (as of 31 March 2017) Term debt of $ 4.5bn at Standalone and $2.7bn at Subsidiaries, total consolidated $7.1bn Debt Breakdown (as of 31 March 2017) Note: USD–INR: Rs. 64.8386 at 31March, 2017 Debt breakdown as of 31
Slide 39: EBITDA Bridge (Q4 FY2017 vs Q3 FY2017)
EBITDA Bridge (Q4 FY2017 vs Q3 FY2016) Q4 FY2017 vs. Q3 FY2017 (In Rs. crore) Market & Regulatory Rs. 304 crore Operational Rs. 985 crore Zinc & Lead 401 Aluminium 222 Brent (11) Iron ore (10) Brent Discount (68) Power (28) Metal Premiums 62 Zinc India 559 Aluminium 89 Iron ore (77) Power 41 Cairn 1
Slide 40: Segment Summary – Oil and Gas
Note: 1 Including internal gas consumption OIL AND GAS (boepd) Q4 Q3 Full Year FY2017 FY2016 % change YoY FY2017 FY 2017 FY 2016 % change YoY Average Daily Total Gross Operated Production (boepd)1 1,94,343 2,06,170 -6% 1,91,230 1,99,574 2,12,552 -6% Average Daily Gross Operated Production (boepd) 1,
Slide 41: Segment Summary – Zinc India
Production (in ’000 tonnes, or as stated) Q4 Q3 Full Year FY 2017 FY 2016 % change YoY FY 2017 FY 2017 FY 2016 % change YoY Mined metal content 312 188 66% 276 907 889 2% Refined Zinc – Total 215 154 40% 205 672 759 -11% Refined Zinc – Integrated 215 154 40% 205 670 759 -12% Refined Zinc – Custom -
Slide 42: Segment Summary – Zinc International
Production (in’000 tonnes, or as stated) Q4 Q3 Full Year FY 2017 FY 2016 % change YoY FY 2017 FY 2017 FY 2016 % change YoY Refined Zinc – Skorpion 21 27 -22% 17 85 82 4% Mined metal content- BMM 20 15 33% 15 70 63 11% Mined metal content- Lisheen - - - - 81 -100% Total 41 42 -2% 33 156 226 -31% Fina
Slide 43: Segment Summary – Aluminium
Particulars (in’000 tonnes, or as stated) Q4 Q3 Full Year FY2017 FY2016 % change YoY FY2017 FY2017 FY2016 % change YoY Alumina – Lanjigarh 313 211 48% 328 1,208 971 24% Total Aluminium Production 353 226 56% 319 1,213 923 31% Jharsuguda-I 132 123 7% 132 525 516 2% Jharsuguda-II1 100 19 84 261 76 245
Slide 44: Segment Summary – Power
Particulars (in million units) Q4 Q3 Full Year FY 2017 FY 2016 % change YoY FY2017 FY 2017 FY 2016 % change YoY Total Power Sales 3,462 3,391 2% 3,413 12,916 12,121 7% Jharsuguda 600MW (FY 16 nos are 2400MW) 1 952 1,906 -50% 879 3,328 7,319 -55% Balco 270MW 2 - - - 169 - Balco 600 MW 793 499 59% 660
Slide 45: Segment Summary – Copper India
Production (in ’000 tonnes, or as stated) Q4 Q3 Full Year FY 2017 FY 2016 % change YoY FY 2017 FY 2017 FY 2016 % change YoY Copper - Mined metal content - - - - - - - Copper - Cathodes 103 102 1% 102 402 384 5% Tuticorin power sales (million units) 64 68 -6% 46 200 402 -50% Financials (In Rs. crore,
Slide 46: Segment Summary – Iron Ore
Particulars (in million dry metric tonnes, or as stated) Q4 Q3 Full Year FY 2017 FY 2016 % change YoY FY 2017 FY 2017 FY 2016 % change YoY Sales 3.0 2.6 15% 3.7 10.2 5.3 91% Goa1 2.3 1.6 44% 2.6 7.4 2.2 - Karnataka 0.7 1.0 -30% 1.0 2.7 3.1 -13% Production of Saleable Ore 3.7 2.8 32% 2.6 10.9 5.2 - G
Slide 47: Sales Summary
Sales Volume Q4 FY2017 FY 2017 Q4 FY 2016 FY 2016 Q3 FY2017 Zinc-India Sales Refined Zinc (kt) 217 696 158 760 211 Refined Lead (kt) 47 138 41 145 36 Zinc Concentrate (MIC) 27 27 - - - Lead Concentrate (MIC) - - - - - Total Zinc (Refined+Conc) kt 243 723 158 760 211 Total Lead (Refined+Conc) kt 47 1
Slide 48: Sales Summary
Sales Summary Sales Volume Q4 FY2017 FY2017 Q4 FY 2016 FY 2016 Q3 FY2017 Iron-Ore Sales Goa (mn DMT) 3 2.3 7.4 1.6 2.2 2.7 Karnataka (mn DMT) 0.7 2.7 1.0 3.1 1.0 Total (mn DMT) 3.0 10.1 2.6 5.3 3.7 Pig Iron (kt) 202 714 213 663 141 Copper-India Sales Copper Cathodes (kt) 53 192 44 167 53 Copper Rods
Slide 49: Group Structure
Group Structure Konkola Copper Mines (KCM) 50.1% Vedanta Resources Plc 100% 64.9% Zinc India (HZL) Australian Copper Mines Vedanta Ltd 79.4% Subsidiaries of Vedanta Ltd Sesa Iron Ore Sterlite Copper (Tuticorin) Power (600 MW Jharsuguda) Aluminium (Odisha aluminium and power assets) Cairn India (O&G)
Slide 50: Results Conference Call Details
Results Conference Call Details 49 Results conference call is scheduled at 6:00 PM (IST) on Monday, 15 May 2017. The dial-in numbers for the call are given below: Event Telephone Number Earnings conference call on May 15, 2017 India – 6:00 PM (IST) Mumbai main access +91 22 3938 1017 Toll Free numbe