Slide 1: Vedanta Limited FY2016 Results
Vedanta Limited (formerly known as Sesa Sterlite Ltd.) FY2016 Results 28 April 2016 VEDANTA LIMITED - FY2016 RESULTS PRESENTATION Results conference call details are on the last page of this document
Slide 2: Cautionary Statement and Disclaimer
Cautionary Statement and Disclaimer The views expressed here may contain information derived from statements. We do not undertake to update our forward-looking publicly available sources that have not been independently verified. statements. We caution you that reliance on any forward-looking statem
Slide 3: Contents
Contents Section Presenter Page Strategic Update Tom Albanese, CEO 3 Financial Update D.D. Jalan, CFO 10 Business Review Tom Albanese, CEO 20 Appendix 30 VEDANTA LIMITED - FY2016 RESULTS PRESENTATION 2
Slide 4: Strategic Update
Strategic Update Tom Albanese Chief Executive Officer VEDANTA LIMITED - FY2016 RESULTS PRESENTATION
Slide 5: Safety and Sustainability
Safety and Sustainability Safety 1 fatality in Q4 FY2016; 9 fatalities in FY2016 LTIFR (per million man-hours worked) Focus on bringing in a culture of Zero-Harm 0.52 0.50 0.45 Making Better Risk Decisions (MBRD) training program for line 0.43 managers Implementation of Safety Performance st
Slide 6: FY2016 Results Highlights
FY2016 Results Highlights Operations: Record production, capacities ramping-up Group EBITDA Mix FY2016 vs FY2015 Record production of zinc, lead and silver at Zinc–India, FY2016 FY2015 aluminium, power and copper cathodes 3% 1% Ramp-up of capacities at Aluminium, Power and Iron Ore 4% 7% O&G:
Slide 7: Scorecard for the year
Scorecard for the year Focus Area Stated priorities Status Delivered during the year Ramp-up pots Received approval for captive use of power Secure domestic supply of bauxite and coal CoP reduced by 10% at $1572/t Aluminium Environmental approval for the Lanigarh refinery Received environmental appr
Slide 8: Ramp-up at Aluminium, Power & Iron Ore Underway
Ramp-up at Aluminium, Power & Iron Ore Underway Copper Eq. Production +30%1 EBITDA $3.6 bn $2.3 bn growth Capex $1.5 bn $0.6 bn $1.0 bn Strong free cash flows from: − Ramp up of capacities at Vedanta Ltd’s Aluminium, Power and Iron ore businesses − These are well invested assets Copper Eq. Product
Slide 9: India: Steady progress on regulatory changes
India: Steady progress on regulatory changes Positive Developments for Natural Resources India on accelerating growth trajectory MMDRA Act passed: Auction of natural resources commenced First round of coal and other mineral auctions completed in 9% FY2016; government is keen on further auctions
Slide 10: Strategic Priorities Remain Unchanged
Strategic Priorities Remain Unchanged Strategic Priorities Focus Areas for FY 2017 • Disciplined ramp-up of new capacities in Aluminium, Production Growth and Asset Power and Iron Ore optimisation • Zinc: Ramp-up volumes from Rampura Agucha U/G and develop Gamsberg • O&G: Enhance Gas production, EOR
Slide 11: Financial Update
Financial Update D.D. Jalan Chief Financial Officer VEDANTA LIMITED - FY2016 RESULTS PRESENTATION
Slide 12: Financial Highlights
Financial Highlights High quality diversified assets and strong operating performance provided resilience in a weak commodity environment during the year EBITDA of Rs.15,012 crore at margin1 of 30% Strong Free Cash flow post capex of Rs. 11,572 crore driven by operating performance and working
Slide 13: EBITDA Bridge
EBITDA Bridge FY2016 vs. FY2015 LME 4,363 (In Rs. Crore) Brent 4,507 Brent Discount 507 25,000 Premiums 1,908 22,296 11,285 23,000 One-off items Last year: Rs. 957 Crore 21,000 Current year Rs. 792 Crore Pertaining to Primarily Zinc 19,000 Royalty, RPO1, India, Iron ore & DMF, electricity TSPL duty
Slide 14: Cost Savings and Marketing Initiatives
Cost Savings and Marketing Initiatives Achieved c.$250 mn savings Cost and marketing savings program ($ mn) c.$ 190 mn in cost and c.$30 mn in marketing and c.$30 mn in eliminated capex 45 250 58 45% at Aluminium & Power 147 900+ procurement initiatives across businesses being implemented to
Slide 15: Income Statement
Income Statement Depreciation & Amortization In Rs. Crore Q4 Q4 − Depreciation higher in Q4 on account of revaluation of assets FY’16 FY’15 FY’16 FY’15 and capitalization in Aluminum & Power business EBITDA 3,508 4,011 15,012 22,296 − Additionally change in useful life of various assets resulted i
Slide 16: Non-Cash Impairment Charge in Q4
Non-Cash Impairment Charge in Q4 Total impairment charge of Rs. 12,304 crore in Q4 Oil and Gas Non-cash impairment charge taken, following carrying value test in light of steep decline in crude oil price Present value of long term future cash flows based on oil price of $41/bbl in FY2017, incr
Slide 17: Net Debt for FY2016
Net Debt for FY2016 (In Rs. Crore) FCF Post Capex Rs. 11,572 crore 35,000 31,540 (11,032) 30,000 1,655 25,286 WC (1,484) 25,000 3,662 Project 1,390 (94) (5,402) 4,226 20,000 731 15,000 10,000 Net Debt Cash Flow from WC movements Debtors & Sustaining Capex Project Capex Dividend Translation Loss Net
Slide 18: Optimising Capex to drive Cash Flow Generation
Optimising Capex to drive Cash Flow Generation Free cash flow pre-capex of $2.4bn during FY2016 in a volatile commodity price Cash Flow pre capex and Growth Capex Profile - $bn environment Oil & Gas Zinc Prioritised capital to high-return, low-risk projects to maximise cash flows Al & Power Free
Slide 19: Balance Sheet and Maturity Profile
Balance Sheet and Maturity Profile Maturity Profile of Term Debt ($8bn) (as of 31st March 2016) 2.3 Subsidiaries Standalone 1.0 1.6 1.6 0.7 0.7 1.0 0.8 0.8 0.4 0.2 0.3 1.2 0.9 0.9 0.5 0.6 0.6 FY2017 FY2018 FY2019 FY2020 FY2021 FY2022 & Later External term debt of $8bn ($4.7bn at Standalone and $3.3b
Slide 20: Financial Priorities leading to a stronger Balance Sheet
Financial Priorities leading to a stronger Balance Sheet Disciplined Capital Ramp-ups at Aluminium, Power and Iron ore to generate significant cash flows Allocation: Optimized Capex: FY2016 capex reduced by $1.4bn Optimising capex, Positive FCF at each segment remains a priority focus on FCF D
Slide 21: Business Review
Business Review Tom Albanese Chief Executive Officer VEDANTA LIMITED - FY2016 RESULTS PRESENTATION
Slide 22: Oil & Gas
Oil & Gas Results Mangala EOR program shows stabilizing MPT: water cut and Facility modifications Mangala EOR, world’s largest polymer program successfully executed increasing oil rate Polymer injection ramped up to 400kblpd, EOR contributing at an average of 32kboepd in Q4 FY2016 gross averag
Slide 23: Zinc: Strongest fundamentals across LME metals
Zinc: Strongest fundamentals across LME metals CY2016 Global Zinc Cost curve Global Zinc concentrate deficit supporting zinc prices (kt) US$/t 800 2,000 Century closure Dugald River 600 (500ktpa) (210 ktpa) and 1,700 Lisheen closure commence Zinc Intl 400 Hindustan Zinc (160 ktpa) Gamsberg (250ktpa)
Slide 24: Zinc India
Zinc India Results Rampura Agucha Mine – Longitude Vertical Section Mined metal production in line with guidance Record integrated zinc, lead and silver production Maintained lowest quartile cost position; FY2016 Zinc CoP lower by 7% at $804/t Cost improvement due to higher integrated produc
Slide 25: Zinc International
Zinc International Results FY 2016 Production of 226 kt Black Mountain production higher by 7% at 63kt; increase in mine volume supported by an increase in long-hole stoping Lower production at Skorpion due to planned shutdown in Q3 and decline in mine grades Lisheen had a safe, detailed and
Slide 26: Aluminium
Aluminium Results Aluminium Costs and Margins Record production of 923kt (in $/t, for Q4 FY2016) Alumina production at 971kt, marginally lower on single-stream Q3: 1,495 155 55 1,705 (607) (608) (312) (82) $96/t operations Reduction in seaborne Aluminium COP at $1,572 for FY 2016 and $1,431 fo
Slide 27: Power
Power Results Power Generation Capacity – c. 9GW Entire portfolio of 9000MW operational in March 2016 TSPL: Unit-I and Unit-II operated with availability of 86% in Q4 CPP:5.1GW IPP: 3.6GW 1,215MW Jharsuguda Unit-III synchronized in March 2016, expected to be capitalized in • • 600MW Jharsuguda
Slide 28: Iron Ore
Iron Ore Goa Goa operations ramped up in Q4; achieved exit run rate of 0.8 million Vedanta’s cost lower than top four iron ore miners1 tonne per month Avg C1 cash cost : $14.3/t Engaging with the state government for higher allocation Costs restructured, with operational efficiencies, contract
Slide 29: Copper - India
Copper - India Copper Cathodes: Positioned in the lowest cost quartile, with strong Tc/Rc and acid Smelter recovery rates realization 99% Smelter recovery rates have improved over time Net cost of conversion USc3.2/lb, reflecting plant efficiency and better acid realization 98% Maintenance s
Slide 30: Summary
Summary Disciplined ramp-up of capacities − Focus on ramp-up at Aluminium, Power and Iron ore − Newly ramped up capacities to generate strong free cash flow Resource sector is recovering − Commodity prices improved significantly from lows of early 2016 − We remain committed to further optimize o
Slide 31: Appendix
Appendix VEDANTA LIMITED - FY2016 RESULTS PRESENTATION
Slide 32: EBITDA Bridge
EBITDA Bridge Q4 FY2016 vs. Q3 FY2016 LME -14 (In Rs. Crore) Brent 226 Brent Discount -19 Primarily higher Premiums -29 in Copper India, Iron ore & TSPL 4,500 Pertaining to RPO, electricity duty & 134 energy cess 393 4,000 346 257 3508 223 25 3338 32 3,500 3221 164 115 3,000 2,500 Operational Market
Slide 33: Net Debt for Q4 FY2016
Net Debt for Q4 FY2016 In Rs. Crore Free Cash Flow post capex Rs. 4,800 crore 35,000 WC (400) Project Creditors 118 30,267 (2,829 ) 30,000 (2,478 ) (282 ) 646 (182 ) 25,286 144 25,000 20,000 15,000 10,000 Net Debt Cash Flow from WC movements Debtors and Sustaining Project Capex Translation Loss Net
Slide 34: Entity Wise Cash and Debt
Entity Wise Cash and Debt (in Rs. Crore) 31 March 2015 31 December 2015 31 March 2016 Company Debt Cash & LI Net Debt Debt Cash & LI Net Debt Debt Cash & LI Net Debt Vedanta Limited 37,636 840 36,796 42,645 3,055 39,590 42,448 1,341 41,107 Standalone Zinc India - 27,192 (27,192) - 28,214 (28,214) -
Slide 35: Debt Breakdown & Funding Sources
Debt Breakdown & Funding Sources Diversified Funding Sources for Term Debt of $ 8bn Debt Breakdown (as of 31 March 2016) (as of 31 March 2016) Short Term Loans - USD 3% Debt breakdown (in $bn) Money market External term debt 8.0 Instruments – Bonds-INR INR 15% 22% Working capital 1.9 Inter company l
Slide 36: Segment Summary – Oil & Gas
Segment Summary – Oil & Gas Q4 Q3 Full Year OIL AND GAS (boepd) % change % change FY 2016 FY 2015 FY2016 FY 2016 FY 2015 YoY YoY Average Daily Total Gross Operated Production (boepd)1 206,170 224,294 -8% 211,843 212,552 220,876 -4% Average Daily Gross Operated Production (boepd) 197,039 215,553 -9%
Slide 37: Segment Summary – Zinc India
Segment Summary – Zinc India Q4 Q3 Full Year Production (in ’000 tonnes, or as stated) % change % change FY 2016 FY2015 YoY FY 2016 FY 2016 FY2015 YoY Mined metal content 188 269 -30% 228 889 887 0% Refined Zinc – Total 154 217 -29% 206 759 734 3% Refined Zinc – Integrated 154 217 -29% 206 759 721 5
Slide 38: Segment Summary – Zinc International
Segment Summary – Zinc International Q4 Q3 Full Year Production (in’000 tonnes, or as stated) % change % change FY 2016 FY2015 FY 2016 FY 2016 FY2015 YoY YoY Refined Zinc – Skorpion 27 17 61% 13 82 102 -20% Mined metal content- BMM 15 16 -1% 17 63 59 7% Mined metal content- Lisheen - 37 -100% 21 81
Slide 39: Segment Summary – Aluminium
Segment Summary – Aluminium Q4 Q3 Full Year Particulars (in’000 tonnes, or as stated) FY 2016 FY2015 % change YoY FY 2016 FY 2016 FY2015 % change YoY Alumina – Lanjigarh 211 274 ‐23% 218 971 977 ‐1% Total Aluminum Production 226 229 ‐2% 234 923 877 5% Jharsuguda-I 123 131 ‐6% 131 516 534 ‐4% 1 Jhars
Slide 40: Segment Summary – Power
Segment Summary – Power Q4 Q3 Full Year Particulars (in million units) % change % change FY 2016 FY 2015 FY2016 FY 2016 FY 2015 YoY YoY Total Power Sales 3,391 2,547 33% 2,934 12,121 9,859 23% Jharsuguda 2400 MW 1,906 1,525 25% 1,593 7,319 7,206 2% BALCO 270 MW - 18 -100% 41 169 89 89% BALCO 600 MW
Slide 41: Segment Summary – Copper India
Segment Summary – Copper India Q4 Q3 Full Year Production (in ’000 tonnes, or as stated) % change % change FY 2016 FY2015 FY 2016 FY 2016 FY2015 YoY YoY Copper - Mined metal content - - - - - - - Copper - Cathodes 102 97 6% 89 384 362 6% Tuticorin power sales (million units) 68 158 -57% 40 402 641 -
Slide 42: Segment Summary – Iron Ore
Segment Summary – Iron Ore Q4 Q3 Full Year Particulars (in million dry metric tonnes, or as stated) % change % change FY 2016 FY2015 FY 2016 FY 2016 FY2015 YoY YoY Sales 2.6 1.5 5.3 1.2 Goa1 1.6 - 0% 0.6 2.2 - - Karnataka 1.0 - - 0.9 3.1 1.2 - Production of Saleable Ore 2.8 0.3 1.4 5.2 0.6 Goa 1.9 -
Slide 43: Sales Summary
Sales Summary Sales Volume Q4 FY2016 FY2016 Q4 FY2015 FY2015 Q3 FY2016 Zinc-India Sales Refined Zinc (kt) 158 760 223 736 204 Refined Lead (kt) 41 145 37 129 35 Zinc Concentrate (DMT) - - - - - Lead Concentrate (DMT) - - - - - Total Zinc (Refined+Conc) (kt) 158 760 223 736 204 Total Lead (Refined+Co
Slide 44: Sales Summary
Sales Summary Sales Volume Q4 Q4 Q3 Q4 FY2016 FY2016 Q4 FY2015 FY2015 Q3 FY2016 Sales Volume FY2016 FY2016 FY2015 FY2015 FY2016 Power Sales (mu) Jharsuguda 2,400 MW 1,906 7,319 1,525 7,206 1,593 Iron-Ore Sales TSPL 869 2,792 690 1,213 839 Goa (mn DMT)3 - 2.2 - - 0.6 BALCO 270 MW - 169 18 89 41 Karna
Slide 45: Group Structure
Group Structure Vedanta Resources Plc Divisions of Vedanta Limited 79.4% 62.9% Sesa Iron Ore Konkola Sterlite Copper (Tuticorin) Copper Vedanta Ltd Power (2,400 MW Jharsuguda) Mines (KCM) Aluminium (Odisha aluminium and power assets) Subsidiaries of Vedanta Ltd 59.9% 64.9% 51% 100% 100% 100%
Slide 46: Results Conference Call Details
Results Conference Call Details Results conference call is scheduled at 6:00 PM (IST) on Thursday, 28 April 2016. The dial-in numbers for the call are given below: Event Telephone Number Earnings conference call on Mumbai main access 28 April 2016 India – 6:00 PM (IST) +91 22 3938 1017 Mumbai standb