Vedanta Limited · NSE:VEDL
Vedanta — Q3 FY2018 Earnings Presentation
46 slides from Vedanta's earnings presentation, Jan 31, 2018
Slide 1: Vedanta Limited Q3 FY2018 Results
Vedanta Limited Q3 FY2018 Results 31 January 2018 Elements for a Sustainable Future VEDANTA LIMITED – OIL & GAS | ZINC | POWER | ALUMINIUM | IRON ORE | COPPER VEDANTA LIMITED – Q3 FY2018 RESULTS PRESENTATION
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 Strategic Update Kuldip Kaura, CEO 4 Financial Update Arun Kumar, CFO 11 Kuldip Kaura, CEO Business Review 17 Sudhir Mathur, CEO - Cairn Oil & Gas Appendix 27 VEDANTA LIMITED – Q3 FY2018 RESULTS PRESENTATION 3
Slide 4: Strategic Update
Vedanta Limited Q3 FY2018 Results 31 January 2018 Strategic Update Kuldip Kaura Chief Executive Officer Value Creation VEDANTA LIMITED – Q3 FY2018 RESULTS PRESENTATION
Slide 5: Sustainable Development
Sustainable Development Safety LTIFR – (per million man-hours worked) Third party Safety Maturity Survey conducted Risk workshops will be conducted in Feb to validate and 0.89 manage Critical Risks Controls Regrettably 4 fatalities occurred during Q3 – each has been 0.52 0.49 investigated an
Slide 6: Q3 FY2018 Results Highlights
Q3 FY2018 Results Highlights Operations: Robust production, and ramp-up on track EBITDA mix (Q3 FY2018) Zinc India: Refined zinc-lead production of 245kt, up 7% q-o-q 3% Zinc Zinc International: Strong production at BMM and Skorpion 5% 9% Aluminium: Continued ramp-up; production up 40% y-o-y w
Slide 7: Well invested asset base delivering growth and shareholder returns
Well invested asset base delivering growth and shareholder returns Consistent and successful strategy Delivering profitable capacity growth in attractive commodities Uniquely positioned to harness India’s resources potential and demand growth Clear priorities for capital allocation and shareholder r
Slide 8: Strategic Framework
Strategic Framework Near Term Priority Medium Term Priority (FY18-20) (FY20+) Deliver Selectively pursue growth Ramp up to Design Capacity superior options shareholders Well-invested assets ramping High quality portfolio with up by FY2020 to deliver attractive brownfield growth returns with indu
Slide 9: Near Term Priority: Ramp-up to Design Capacity
Near Term Priority: Ramp-up to Design Capacity Near-term expansions Total expanded capacity Progress Zinc Expansion to 1.2mt mined Zn-Pb metal 1.2mt Zn-Pb India Silver to 750t 750t Ag Zinc Gamsberg project (250kt) and Skorpion pit 400kt Intl. extension Various projects at Rajasthan - EOR, ti
Slide 10: Medium Term Priority: Selectively Pursue Growth Options
Medium Term Priority: Selectively Pursue Growth Options Future growth options Zinc Expansion of Zn-Pb to 1.5mtpa India Silver production of 1,000t + Zinc Gamsberg Phase 2 & 3 (350kt incremental) Intl. Swartberg (75kt) 300-500 kboepd Oil & Gas Accompanied by continued exploration Aluminiu
Slide 11: Financial Update
Vedanta Limited Q3 FY2018 Results 31 January 2018 Financial Update Arun Kumar Chief Financial Officer Empowering Growth VEDANTA LIMITED – Q3 FY2018 RESULTS PRESENTATION
Slide 12: Q3 Financial Highlights
Q3 Financial Highlights Higher EBITDA, driven by increased volumes and commodity prices, partially offset by input commodity inflation Gross debt reduced by Rs. 11,4504 Cr YTD FY2018, partially offset by acquisition of AvanStrate Inc., Japan Rs. crore or as stated Q3 FY2018 Q3 FY2017 Change Q2 F
Slide 13: EBITDA Bridge (Q3 FY2018 vs. Q2 FY2018)
EBITDA Bridge (Q3 FY2018 vs. Q2 FY2018) Q3 FY2018 vs. Q2 FY2018 (In Rs. crore) Iron-ore 222 Zinc India 94 Zinc & Lead 352 Aluminum 63 Brent 267 TSPL 86 Aluminum 259 Cairn 55 Metal Premiums 32 Others 26 Iron ore 23 Brent Discount 3 135 45 6,780 936 511 546 32 91 6,324 5,776 Market & Regulatory Operat
Slide 14: Income Statement
Income Statement In Rs. crore Q3 Q3 Q2 Depreciation & Amortization FY’18 FY’17 FY’18 − Higher q-o-q on account of higher production at Zinc Revenue 24,361 20,391 21,590 India, iron ore and capitalization of infill wells at EBITDA 6,780 5,976 5,776 Mangala in O&G business Depreciation & amortizatio
Slide 15: Net Debt for Q3 FY2018
Net Debt for Q3 FY2018 (In Rs. crore) 1 1,805 16,295 15,592 4,968 468 14,490 2,055 209 1,134 FCF Post Capex Rs. 1779 crore Net Debt CF from WC Movements Capex Translation & Minority Net Debt ASI Acquisition Reported Net 1st Oct 17 Operations Others dividend by HZL 31st Dec 17 Debt 31st Dec 17 Note 1
Slide 16: Financial Priorities: Maintain Strong Shareholder Returns and Balance Sheet
Financial Priorities: Maintain Strong Shareholder Returns and Balance Sheet Disciplined Capital Continued focus on generating cash flows from ramp up of assets Allocation; Further enhance credit rating to AA+ Focus on FCF Deleveraging; Continued reduction in gross debt Strong Liquidity Debt
Slide 17: Business Review
Vedanta Limited Q3 FY2018 Results 31 January 2018 Business Review Kuldip Kaura, Chief Executive Officer Sudhir Mathur, CEO – Cairn Oil & Gas Operational Excellence VEDANTA LIMITED – Q3 FY2018 RESULTS PRESENTATION
Slide 18: Zinc India
Zinc India Q3 FY2018 Results MIC at 240kt; refined zinc-lead 245kt and refined silver at 132t CoP at $1,022/t; impacted by high input commodity prices Capacity expansion to 1.2mtpa MIC by FY2020 on track RAM U/G mine crossed ore production run-rate of 2mtpa; shaft to take total production capa
Slide 19: Zinc International
Zinc International Q3 FY2018 Results Significant progress at 250kt Gamsberg project Total production at 47kt On target for first production by mid CY2018, with ramp-up Skorpion at 26kt: highest in last 6 quarters due to full capacity in 9-12 months to higher blended grades and refinery Capex
Slide 20: Cairn Oil & Gas
Cairn Oil & Gas Q3 FY2018 Results Gross average production at 184,133 boepd Rajasthan production at 157,096 boepd Offshore production at 27,037 boepd Operating cost RJ waterflood operating cost at $4.3/boe RJ blended cost including EOR at $6.4/boe Production to ramp-up in Q4 as planned
Slide 21: Cairn O&G: Execution of growth projects commenced
Cairn O&G: Execution of growth projects commenced Enhanced Oil Recovery Gross production Net capex (kboepd) ($mn) Contract awarded for Bhagyam & Aishwariya EOR 300 300 275-300 220-250 250 Rigs to be mobilized during Q4FY18 185- 190 Tight Oil & Gas Projects Contract awarded for tight oil & gas
Slide 22: Aluminium
Aluminium Q3 FY2018 Results Aluminium Costs and Margins (in $/t, for Q3 FY2018) Record Aluminium production of 445kt, with current run rate Q2 18 2,012 78 63 2,153 (718) (709) (430) (84) $211/t (146) (259) (194) of 1.8mtpa and alumina production of 287kt 53 2,249 94 (782) Aluminum CoP at $1,945/
Slide 23: Power
Power TSPL (3 x 660 MW) Coal Outlook – Aluminium CPPs Record quarterly plant availability of 97%; 9 months Domestic coal supply situation availability at 68% and targeting availability of c. Low realisation of linkage coal in Q3 resulting in 75% for FY2018 higher coal cost ‘Take or Pay’ arra
Slide 24: Iron Ore
Iron Ore Q3 FY2018 Results Total sales of 1.8mt and production of 0.9mt Goa commenced production of higher quality ore through beneficiation and blending Karnataka achieved full allocation production in Q3, inventory of 0.5mt to be sold in Q4 Realizations: Beneficiation and blending increase
Slide 25: Copper India
Copper India Q3 FY2018 Results Volumes Production at 101kt Q3 Tc/Rc’s at 20.8 c/lb Net CoP of Usc 5.6/lb, higher q-o-q due to higher input commodity prices Outlook Maintain guidance for FY2018 production at 400kt Benchmark Tc/Rc for CY2018 at Usc 21.3/lb; c.11% lower Tuticorin I Copper Sme
Slide 26: Well invested asset base delivering growth and shareholder returns
Well invested asset base delivering growth and shareholder returns Consistent and successful strategy Delivering profitable capacity growth in attractive commodities Uniquely positioned to harness India’s resources potential and demand growth Clear priorities for capital allocation and shareholder r
Slide 27: Appendix
Vedanta Limited Q3 FY2018 Results 31 January 2018 Appendix VEDANTA LIMITED – Q3 FY2018 RESULTS PRESENTATION
Slide 28: Guidance
Guidance Segment FY18e Comments Zinc-Lead Integrated: 950kt • Revised guidance due to high input Zinc India Silver volume: +500 tonnes commodity prices CoP ($/t): $950-975/t • YTD CoP at 1,495/t; Q4 to be temporarily high due to early Zinc-Lead volume: c.160kt production from Skorpion Pit 112 and Zi
Slide 29: EBITDA Bridge (Q3 FY2018 vs. Q3 FY2017)
EBITDA Bridge (Q3 FY2018 vs. Q3 FY2017) Q3 FY2018 vs. Q3 FY2017 (In Rs. crore) Zinc & Lead 1,052 Aluminum 1,115 Aluminum 356 Brent 343 Power 48 Metal Premium 49 Cairn 30 Brent Discount (102) Zinc India 12 9,000 Rupee (483) Iron Ore (225) 2,457 1,294 ZAR/NAD (9) Others 83 8,000 492 84 6,688 304 128 6
Slide 30: Entity Wise Cash and Debt
Entity Wise Cash and Debt (in Rs. crore) 31 Dec 2017 30 Sept 2017 30 Jun 2017 Company Debt Cash & LI Net Debt Debt Cash & LI Net Debt Debt Cash & LI Net Debt Vedanta Limited 36,894 11,897 24,997 38,232 12,375 25,857 42,711 16,698 26,013 Standalone Cairn India Holdings 3,480 6,280 (2,800) 3,554 6,562
Slide 31: Strong Credit Profile and Balance Sheet
Strong Credit Profile and Balance Sheet Maturity Profile of Term Debt: Rs.34,467 Crore ($5.4 bn) (as of 31st Dec 2017) 9.4 Subsidiaries Standalone 7.4 3.7 6.5 6.2 Rs. ‘000 Crore 1.9 4.7 2.1 4.8 2.4 5.7 4.6 4.0 2.3 2.6 0.3 FY2018 FY2019 FY2020 FY2021 FY2022 FY2023 & Later Term debt of Rs.34,467 crore
Slide 32: Debt Breakdown & Funding Sources
Debt Breakdown & Funding Sources Diversified Funding Sources for Term Debt of $5.4bn Debt Breakdown (as of 31st Dec 2017) (as of 31 Dec 2017) Debt breakdown as of (Rs. in 15% (in $bn) Term Loans-INR 31 Dec 2017 000’ Cr) Term debt 5.4 34.5 Bonds-INR Working capital 0.4 2.8 51% Short term borrowing 2.
Slide 33: 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 Maintain Strong Balance Sheet Grow Existing Businesses • Announced dividend policy at • Cont
Slide 34: Segment Summary – Zinc India
Segment Summary – Zinc India Q3 Q2 9M Production (in ’000 tonnes, or as stated) % change % change FY 2018 FY 2017 FY2018 FY 2018 FY 2017 YoY YoY Mined metal content 240 276 (13)% 219 693 595 16% Refined Zinc – Total 200 205 (3)% 192 585 457 28% Refined Zinc – Integrated 200 205 (3)% 192 585 456 28%
Slide 35: Segment Summary – Zinc International
Segment Summary – Zinc International Q3 Q2 9M Production (in’000 tonnes, or as stated) % change % change FY 2018 FY 2017 FY2018 FY 2018 FY 2017 YoY YoY Refined Zinc – Skorpion 26 17 50% 23 62 64 (3)% Mined metal content- BMM 21 15 36% 20 59 51 17% Total 47 33 43% 42 121 115 6% Financials (In Rs. Cro
Slide 36: Segment Summary – Oil & Gas
Segment Summary – Oil & Gas Q3 Q2 9M OIL AND GAS (boepd) % change % change FY 2018 FY 2017 FY2018 FY 2018 FY 2017 YoY YoY Average Daily Total Gross Operated Production 193,647 191,230 1% 190,389 193,553 201,286 (4)% (boepd)* Average Daily Gross Operated Production (boepd) 184,133 181,818 1% 180,955
Slide 37: Segment Summary – Oil & Gas (contd.)
Segment Summary – Oil & Gas (contd.) Q3 Q2 9M OIL AND GAS (boepd) % change % change FY 2018 FY 2017 FY2018 FY 2018 FY 2017 YoY YoY Average Daily Production Gross operated 184,133 181,818 1% 180,955 184,086 191,674 (4)% Oil 175,911 177,820 (1)% 173,408 176,391 185,984 (5%) Gas (Mmscfd) 49.3 24.0 - 45
Slide 38: Segment Summary – Aluminium
Segment Summary – Aluminium Q3 Q2 9M Particulars (in’000 tonnes, or as stated) % change % change FY 2018 FY 2017 FY2018 FY 2018 FY 2017 YoY YoY Alumina – Lanjigarh 287 328 (12)% 269 859 895 (4)% Total Aluminum Production 445 319 40% 401 1,198 860 39% Jharsuguda-I 116 132 (12)% 99 307 393 (22)% 1 Jha
Slide 39: Segment Summary – Power
Segment Summary – Power Q3 Q2 9M Particulars (in million units) % change FY 2018 FY 2017 FY2018 FY 2018 FY 2017 % change YoY YoY Total Power Sales 3,146 3,413 (8)% 2,950 7,933 9,453 (16)% Jharsuguda 600 MW 111 879 (87)% 93 768 2,376 (68)% BALCO 600 MW 466 660 (30)% 132 1,148 1,817 (37)% MALCO - 29 -
Slide 40: Segment Summary – Power (contd.)
Segment Summary – Power (contd.) Power Generation Capacity – c. 9GW IPP: 3.6GW CPP:5.1GW • 600MW Jharsuguda (of • 1,215MW Jharsuguda 2400MW plant) • 3*600MW Jharsuguda (of • 1,980MW TSPL 2400MW plant) • 2*300MW BALCO (of 41% • 540MW BALCO 1200MW plant) • 270MW BALCO 59% • 274MW HZL Wind Power • 2*30
Slide 41: Segment Summary – Iron Ore
Segment Summary – Iron Ore Q3 Q2 9M Particulars (in million dry metric tonnes, or as stated) % change % change FY 2018 FY 2017 FY2018 FY 2018 FY 2017 YoY YoY Sales 1.8 3.7 (52)% 0.7 4.8 7.1 (32)% Goa 1.0 2.7 (63)% 0.1 3.0 5.1 (42)% Karnataka 0.8 1.0 (20)% 0.6 1.8 2.0 (8)% Production of Saleable Ore
Slide 42: Segment Summary – Copper India
Segment Summary – Copper India Q3 Q2 9M Production (in ’000 tonnes, or as stated) % change % change FY 2018 FY 2017 FY 2018 FY 2018 FY 2017 YoY YoY Copper - Cathodes 101 102 (1)% 106 298 300 (1)% Tuticorin power sales (million units) 3 46 (93)% 4 36 136 (73)% Financials (In Rs. crore, except as stat
Slide 43: Sales Summary
Sales Summary Sales volume Q3 FY2018 9M FY2018 Q3 FY2017 9M FY2017 Q2 FY2018 Zinc-India Sales Refined Zinc (kt) 200 583 211 479 193 Refined Lead (kt) 45 119 36 91 39 Total Zinc (Refined+Conc) kt 200 583 211 479 193 Total Lead (Refined+Conc) kt 45 119 36 91 39 Total Zinc-Lead (kt) 245 702 248 570 232
Slide 44: Sales Summary
Sales Summary Sales volume Q3 9M Q3 9M Q2 Q3 FY 9M FY Q3 FY 9M FY Q2 Power Sales (mu) FY2018 FY2018 FY2017 FY2017 FY2018 Sales volume 2018 2018 2017 2017 FY2018 Jharsuguda 600 MW 111 768 879 2,376 93 Iron-Ore Sales TSPL 2,512 5,657 1,792 4,743 2,582 Goa (mn DMT) 1.0 3.0 2.7 5.1 0.1 BALCO 270 MW - -
Slide 45: Group Structure
Group Structure Vedanta Resources Plc Divisions of Vedanta Limited 79.4% 50.1% Sesa Iron Ore Sterlite Copper (Tuticorin) Konkola Copper Vedanta Ltd Power (600 MW Jharsuguda) Mines (KCM) Aluminium (Odisha aluminium and power assets) Cairn Oil & Gas* Subsidiaries of Vedanta Ltd 64.9% 51% 100
Slide 46: Results Conference Call Details
Results Conference Call Details Results conference call is scheduled at 6:30 PM (IST) on January 31, 2018. The dial-in numbers for the call are given below: Event Telephone Number Mumbai main access Earnings conference call on January India – 6:30 PM (IST) +91 22 3938 1017 31, 2018 Toll Free number