Vedanta Resources — H1 FY2023 Earnings Presentation
43 slides from Vedanta Resources's earnings presentation, Dec 15, 2022
Slide 1: 1HFY23 Earnings Presentation
VEDANTA RESOURCES LIMITED INVESTOR PRESENTATION December 15, 2022 1HFY23 Earnings Presentation Sensitivity: Internal (C3)
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: 1HFY23 Review and Business Update
VEDANTA RESOURCES LIMITED INVESTOR PRESENTATION 1HFY23 1HFY23 Review and Business Update Sunil Duggal Group CEO & Chief Safety Officer Sensitivity: Internal (C3)
Slide 4: Vedanta Resources: Overview
Vedanta Resources: Overview A globally diversified Strong management team natural resource 1st quartile cost curve Committed to ESG with >30 years of powerhouse with presence positioning globally across leadership in the natural experience; 76,000+ across Aluminium, Zinc- key segments with mine life
Slide 5: Vedanta is uniquely positioned to deliver sustainable value
Vedanta is uniquely positioned to deliver sustainable value Robust financial profile with strong World-class natural resources powerhouse with ROCE, cash flow and balance sheet low cost and long-life diversified asset base 1 Well positioned to capitalize on India’s 7 growth and benefit through the c
Slide 6: 1H FY23 Highlights
1H FY23 Highlights ESG Operational Financial ▪ Entered in exclusive club of top 10 S&P Global Key businesses continue to deliver strong ▪ Revenue of $ 9,523 mn, Corporate Sustainability Assessment benchmarked1 operating performance: up 21%YoY global Metals & Mining companies; ESG score ▪ Aluminium p
Slide 7: ESG strategy: Pillar 1 – transforming communities
Steadily progressing on our repurposed ESG strategy: Pillar 1 – transforming communities Total Beneficiaries 1H FY23 CSR Spend1 Total Nandghars Key Initiatives of CSR 2.40+ mn ₹ 147+ crores 3609 Areas of Focus in CSR Healthcare Drinking water and sanitation Nand Ghar Saplings Plantation > 30 Initiat
Slide 8: ESG strategy: Pillar 2 – transforming the planet
Steadily progressing on our repurposed ESG strategy: Pillar 2 – transforming the planet Baseline 2030 Our aims Key KPIs (UoM) Key strategic initiatives/outcomes (FY21) Target Absolute GHG emissions ▪ 500 MW RE power EOI issued 60mn 45mn (TCO2e) ▪ Biomass usage ~28000 MT in 1H FY23 ▪ ~ 1 Billion unit
Slide 9: ESG strategy: Pillar 3 – transforming the workplace
Steadily progressing on our repurposed ESG strategy: Pillar 3 – transforming the workplace Key KPIs Baseline 2030 Our aims Key strategic initiatives/ outcomes (UoM) (FY21) Target ▪ Launched CRM- Top 3 risk control initiatives ▪ Real time tracking of fatal potential observations for closure Ongoing t
Slide 10: Key ESG projects across Vedanta
Key ESG projects across Vedanta Green Copper (Sterlite Copper) Remote Blasting (HZL) Reducing Gas Flaring (O&G) Watershed Management Aim 4: Net Carbon neutral by 2050 Aim 7: Prioritizing safety and Aim 4: Net zero carbon by 2050 or BU: VAL - Lanjigarh or sooner health sooner Aim 5: Achieving net wat
Slide 11: ESG Moment: planting a trillion trees
ESG Moment: planting a trillion trees (video) Vedanta to plant 7 million trees Aim 7: Innovations for greener business model ▪ Part of World Economic Forum’s “1 Trillion Tree” initiative – 1t.org ▪ Trees to be planted between 2020 – 2030 ▪ Includes reforestation, agro- forestry, mangrove restoration
Slide 12: Vedanta Delhi Half Marathon: #RunForZeroHunger
Vedanta Delhi Half Marathon: #RunForZeroHunger – contributed 2 Mn Meals Shri Manish Sisodia at the Flag Off Mrs. Mallika Nadda at Prize Distribution Vedanta Leadership with Dy. CM Vedanta Employees at VDHM Medal made with the zinc from the 20+ national ads Coverage across top publications Priya Agar
Slide 13: Digitalization focus to become a data driven organization
Digitalization focus to become a data driven organization Smart Operations and Digital Mission - 2025 01 Asset Optimization Creating 10% EBITDA 5 impact 02 Workplace safety We are here Digitalization – Stage 2 Focus Pratham – 2 : Area Digitalization Aim to ✓ 100% automation in Enabling 03 Logistics
Slide 14: Digitalization Use Case: Smoke Hour Drilling
Digitalization Use Case : Smoke Hour Drilling KPI: Smoke hour drilling meters Automatic operations from Surface with Minimal manual intervention during shift changeover and after blasting Outcome and advantages: ✓ Provides flexibility and control in Operator Tele-remote drilling tool challenging env
Slide 15: Aluminium: strong volume delivery and improved COP
Aluminium: strong volume delivery and improved COP on operational and buying efficiencies Aluminium: Achieved record metal production COP ($/T) Key highlights: Production (kt) Margin ($/t) 1,118 1,149 2,541 2,653 2,429 Quarterly: 1,588 1,647 ▪ Aluminium production up 3% QoQ and 2% YoY 570 565 584 52
Slide 16: Aluminium: growth and vertical integration projects underway
Aluminium: growth and vertical integration projects underway to reduce market volatility impact and create value ▪ Aluminium capacity expansion to 3 MTPA o JSG capacity ramp-up to 1.8 MTPA – Completed Lanjigarh refinery expansion projects status o Balco capacity expansion to 1 MTPA – 2QFY24 o Debott
Slide 17: Zinc India: delivering sustainable growth
Zinc India: delivering sustainable growth Key quarterly performance highlights: Key half yearly performance highlights: ▪ Highest-ever 2Q mined metal production up 3% YoY ▪ Best-ever first half mined metal production, up 8% ▪ Best-ever 2Q refined metal production1, up 18% YoY driven by YoY improved
Slide 18: Zinc International: Gamsberg delivers record MIC production
Zinc International: Gamsberg delivers record MIC production; cost improves on increased recovery and operational efficiency Gamsberg - Production Key highlights: Production (kt) Quarterly: 108 ▪ Achieved highest ever MIC production 43%YoY growth 85 ▪ Highest recovery of 78.5%. Highest concentrate gr
Slide 19: Oil & Gas: focused on delivery of growth projects
Oil & Gas: lower production was partially offset by infill wells; focused on delivery of growth projects Key highlights: Gross production (kboepd) ▪ Production: Impact of natural decline in Rajasthan and Offshore blocks partly offset by infill wells in Mangala, Bhagyam 165 165 148 140 144 and Raages
Slide 20: Iron ore and VAB
Iron ore and VAB Karnataka Iron ore sales Iron ore – Karnataka: Sales (mn tonnes) ▪ Quarterly sales increased 8%YoY and 44% QoQ ▪ Half yearly Iron ore sales was down by 11%YoY due to 2.5 2.2 delay in implementation of procedural changes by DMG for sale of material 1.2 1.3 0.9 Value added business (V
Slide 21: ESL Steel and FACOR
ESL Steel and FACOR ESL: key performance highlights FACOR: key performance highlights ▪ Quarterly saleable production up 11%YoY on account of ▪ Quarterly and Half yearly ore production higher by 43% YoY completion of debottlenecking activity in blast furnace -3 in and 18% YoY respectively due to ope
Slide 22: Strategy to enhance long term value
Strategy to enhance long term value Optimize capital Operational Delivering on STRATEGIC Committed to ESG Augment reserves excellence and allocation & growth PRIORITIES leadership & resources base maintain strong cost leadership opportunities Balance Sheet o Achieve net o Disciplined o Focus on full
Slide 23: Finance Update
VEDANTA RESOURCES LIMITED INVESTOR PRESENTATION 1HFY23 Finance Update Ajay Goel Acting Group Chief Financial Officer Sensitivity: Internal (C3)
Slide 24: 1H FY23 financial snapshot
1H FY23 financial snapshot (In $ mn) Revenue EBITD EBITDA EBITDA Margin1 $ 9,523 mn $ 2,487 mn 29% 21% YoY 13% YoY Strong margin ROCE 2 Cash and Cash Net Debt / EBITDA equivalents c.29% $ 3,470 mn 2x Maintained at low-level Strong liquidity position 24 1. Excludes custom smelting at Copper Business
Slide 25: EBITDA bridge 1H FY23 vs. 1H FY22
EBITDA bridge 1H FY23 vs. 1H FY22 (YoY comparison) (In $ mn) Zinc 209 Aluminium (105) Oil and Gas 253 Zinc (82) Steel 91 Iron and Steel (37) Zinc 158 Aluminium 37 Iron Ore (31) 595 1,204 2,868 113 13 151 275 252 2,359 2,487 Market & Regulatory Operational: $ (124) mn $ (509) mn 1HFY22 LME/ Brent / I
Slide 26: Net Debt Walk 1H FY23
Net Debt Walk 1H FY23 (In $ mn) Inventories, debtors and other 188 Creditors/ Advances 168 141 11,686 1,483 1,138 11,808 11,808 356 964 FCF Post Capex $ 875 mn Net Debt Cash flow from WC Movements Capex Dividend Translation and Net Debt 31st Mar'22 operations Others 30th Sep'22 26 Vedanta Resources
Slide 27: Balance sheet and debt breakdown
Balance sheet and debt breakdown Net debt / EBITDA – maintained at low level Debt breakdown (as of 30th Sep 2022) Gross Debt In $bn 3.3 3.0 2.8 Term debt 13.9 2.4 1.9 2.0 Working capital 0.4 Short term borrowing 1.0 Total consolidated debt 15.3 FY'18 FY'19 FY'20 FY'21 FY'22 H1 FY'23 Cash and Cash Eq
Slide 28: Growth capex and returns profile
Growth capex and returns profile $ bn Full year Capex guidance 1.0 1.2 1.5 1.2 0.7 1.1 1.6 Growth Capex profile Oil & Gas Zinc Al & Power 1.6 Copper Other 0.2 1.1 0.6 0.1 0.8 0.8 0.7 0.0 0.7 0.1 0.1 0.5 0.1 0.6 0.2 0.2 0.2 0.3 0.1 0.5 0.3 0.3 0.2 0.5 0.5 0.0 0.1 0.6 0.3 0.1 0.0 0.2 0.2 0.2 0.1 0.12
Slide 29: Appendix
VEDANTA LIMITED INVESTOR PRESENTATION 1H FY23 Appendix Sensitivity: Internal (C3)
Slide 30: FY23 guidance
FY23 guidance Zinc India Aluminium ▪ Mined Metal : 1,050 - 1,075 Kt ▪ Alumina: 2.0 - 2.1 Mtpa ▪ Finished Metal: 1,000 – 1025 Kt ▪ Aluminium: 2.2 - 2.3 Mtpa ▪ Silver: c. 700 - 725 tonnes ▪ COP1 (2H FY23): $2,150/t - $2,250/t ▪ COP (FY23): $1,225/t - $1,275/t excluding royalty Zinc International ▪ Gam
Slide 31: Income statement
Income statement (In $mn) ▪ Depreciation & Amortization 1H 1H In $ Mn FY23 FY22 o Higher by 14% YoY mainly due to increase in Revenue from operations 9,523 7,870 depletion charge in Oil & Gas business and amortization in Zinc India EBITDA 2,487 2,868 Depreciation & Amortisation (648) (567) ▪ Finance
Slide 32: Project capex
Project capex Unspent4 Approved Spent up to Spent in Capex in Progress (In $ mn) Status as on 30th Capex2 FY223 1HFY23 Sep 2022 Cairn India1 – Mangala infill, Bhagyam & Aishwariya Polymer, 3,070 1,178 204 1,688 Liquid handling , ASP , OALP, Tight oil & gas etc. Aluminium Sector Jharsuguda 1.25mtpa s
Slide 33: Entity-wise Cash and Debt
Entity-wise Cash and Debt (In $mn) Sep 30, 2022 Mar 31, 2022 Company Debt Cash & Cash Eq Net Debt Debt Cash & Cash Eq Net Debt Vedanta Limited Standalone 5,557 485 5,072 4,855 934 3,921 Cairn India Holdings Limited1 118 242 (124) 212 184 28 Zinc India 259 2,185 (1,926) 373 2,750 (2,377) Zinc Interna
Slide 34: Funding sources and term debt maturities
Funding sources and term debt maturities Diversified funding sources for long term debt of $13.9 bn Long term debt maturities: $13.9 bn (as of 30th Sep 2022) (as on 30th Sep’22) Standalone Subsidiaries Total 8.8% 4.7 33.2% Bonds INR 4.1 Term Loan INR 3.9 3.4 In $Mn 32.2% Term Loan Fx 1.1 Bonds Fx 1.
Slide 35: Segment-wise Summary
Segment-wise Summary Oil & Gas 1H FY23 1H FY22 Zinc-India 1H FY23 1H FY22 Average Daily Gross Operated Mined Metal Content (kt) 507 470 Production (boepd) 144,267 165,114 Refined Zinc – Integrated (kt) 395 350 Rajasthan 124,291 140,787 Refined Lead – Integrated (kt)1 110 95 Ravva 10,468 14,471 Salea
Slide 36: Segment-wise Summary (cont’d)
Segment-wise Summary (cont’d) Aluminium 1H FY23 1H FY22 Copper 1H FY23 1H FY22 Aluminium Production (kt) Copper Cathodes– India (kt) 80 58 1,149 1,118 Jharsuguda Average Copper LME ($/t) 8,594 9,531 866 828 EBITDA ($mn) (4) (19) Korba 283 291 Average Aluminium LME ($/t) 2,604 2,528 FACOR 1H FY23 1H
Slide 37: Segment-wise Summary (cont’d)
Segment-wise Summary (cont’d) Power Sales (mn) 1H FY23 1H FY22 Iron Ore 1H FY23 1H FY22 Sales (dmt) 2.6 3.0 Jharsuguda 1,471 1,305 Goa 0.4 0.5 TSPL 5,433 3,418 Karnataka 2.2 2.5 BALCO 14 608 Production (mt) 2.3 2.7 HZL Wind power 274 289 Goa - - Total sales 7,192 5,620 Karnataka 2.3 2.7 Power Realis
Slide 38: Sales summary
Sales summary Sales volume 1H FY23 1H FY22 Sales volume 1H FY23 1H FY22 Zinc-India Sales Iron ore sales Refined Zinc (kt) 395 352 Goa (mn dmt) 0.4 0.5 Refined Lead (kt) 110 95 Total Zinc-Lead (kt) 506 447 Karnataka (mn dmt) 2.2 2.5 Silver (tonnes) 371 312 Total (mn dmt) 2.6 3.0 Zinc-International Sa
Slide 39: Currency and commodity sensitivities
Currency and commodity sensitivities Foreign Currency - Impact of ₹ 1 depreciation in FX Rate Currency Increase in EBITDA INR/USD ~$50-52 mn /year Commodity prices – Impact of a 10% increase in Commodity Prices 1H FY23 FY Impact on Commodity Average price EBITDA ($mn) Oil ($/bbl) 107 88 Zinc ($/t) 3
Slide 40: Disciplined capital allocation framework
Disciplined capital allocation framework o Intend to deleverage at group level Key Strategic Priority Optimize Leverage Ratio o Leverage ratio at Vedanta Limited should not be more than 1.5x. Project Capex o Volume augmentation, cost reduction or creating value added products are key guiding princip
Slide 41: Group structure
Group structure As of 30-Sep-22 Listed entities Vedanta Resources Ltd Unlisted entities Divisions of Vedanta Limited 79.4% 69.7% ⚫ Sesa Iron Ore ⚫ Sterlite Copper Konkola ⚫ Power (600 MW Jharsuguda) Copper Vedanta Ltd Mines (KCM) ⚫ Aluminium (Odisha aluminium and power assets) ⚫ Cairn Oil & Gas* Sub
Slide 42: Awards and Recognition – 1HFY23
Awards and Recognition – 1HFY23 Our group companies received more than 100 awards in the finance, operational excellence, sustainability, CSR and HR categories Sustainability development Finance and Operational Health, Safety & HR & CSR Balco awarded with ‘CEE Environment Balco awarded with ‘Happies
Slide 43: Disclosures & publications
Disclosures & publications Integrated Annual Report1 Tax Transparency Report2 Sustainability Report2 TCFD Report2 https://www.vedantaresources.com/InvestorReports/Ve https://www.vedantalimited.com/uploads/investor- https://www.vedantalimited.com/uploads/investor- https://www.vedantalimited.com/uploa