Vedanta Limited · NSE:VEDL
Vedanta — CLSA Conference (November 2016)
33 slides from Vedanta's conference presentation, Nov 14, 2016
Slide 1: Vedanta Ltd.
Vedanta Ltd. Tom Albanese Chief Executive Officer November 2016
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: Delivering on all fronts
Delivering on all fronts Ramping up production as guided − Focus on ramp-up at Aluminium, Power and Iron ore − On track for higher production in H2 at Zinc India Higher FCF driving deleveraging − Strong EBITDA margin at 39% − Continued focus on cost optimization and FCF generation Commodity pr
Slide 4: India's economic position today is similar to China in the mid 2000s
India’s economic position today is similar to China in the mid 2000s India’s GDP today is similar to China in the mid-2000s • Indian GDP today similar to China’s in the mid-2000s 14.4 China ( GDP $tn 1991 to 2015) 12.8 India ( GDP $tn 2001 to 2025) 11.2 India’s GDP reached US$2tr in 2014 9.6 8.0 C
Slide 5: India has the resource base to support its growth
India has the resource base to support its growth India: Shared geology and India reserves ranking India’s share of global non-ferrous exploration spending very mineral potential with Africa Global Ranking1 based on low 34.8% 100% & Australia reserves 5th Coal R&R: 295 bn tonnes 0.2% 3% 3% 3% 6th Zi
Slide 6: Vedanta well placed for the next cycle with exposure to late-cycle commodities
Vedanta well placed for the next cycle with significant exposure to “late-cycle commodities” and low exposure to China Late Stage Best Area Commodity 2020-2030 Vedanta Ltd Peer A Peer B Peer E India and Other China Focus High Growth Drivers Peer C Peer D Best Area 1990-2005 Early Stage Commodity Not
Slide 7: Vedanta: A Global Diversified Natural Resources Company
Vedanta: A Global Diversified Natural Resources Company • Portfolio of large, structurally low-cost, long-life Tier-I assets, that EBITDA Mix for Q2 FY2017 delivered strong free cash flow 2% – Significant ramp-up at Aluminium, Power and Iron ore 8% progressing well with minimal incremental capex 8%
Slide 8: Vedanta: Benefits of diversification and resilient margins
Vedanta: Benefits of diversification and resilient margins Vedanta’s diversified portfolio significantly reduces volatility Aluminium Zinc Copper Iron Ore 62% Silver Brent Oil VED commodity Basket¹ 160 150 48% (01 Jan 2016 = 100) Commodity prices 40% 140 34% 130 33% Vedanta commodity 120 27% Basket1
Slide 9: Aluminum, Power and Iron Ore ramping up
Aluminum, Power and Iron Ore ramping up Aluminium production (kt) 450 Aluminium production Q2 exit run rate of 1.2mtpa 400 350 300 250 − Impacted by pot outages at Jharsuguda and BALCO, but no significant change in full year 200 150 100 50 guidance 0 Q4'16 Q1'17 Q2'17 Q4'17e TSPL Production (mn un
Slide 10: Zinc: Fundamentals supporting performance
Zinc: Fundamentals supporting performance CY2016 Global Zinc Cost curve Global Zinc concentrate deficit supporting zinc prices (kt) 800 Century closure US$/t (500ktpa) Dugald River 600 (210 ktpa) 2,000 Lisheen closure (160 ktpa) Gamsberg 400 (250ktpa) to Gamsberg commence 1,700 Zinc Intl 200 Hindust
Slide 11: Zinc India: Well-positioned to reap benefits of strong fundamentals
Zinc India: Well-positioned to reap benefits of strong fundamentals Zinc India Rampura Agucha Mine – Longitude Vertical Section Projects RAM U/G main shaft crossed 920mtrs against the final depth of 950mtrs; winder erection at advanced stage of completion and +13mRL pre-equipping work of main shaf
Slide 12: Zinc International – First ore production in mid CY 2018 at Gamsberg
Zinc International – First ore production in mid CY 2018 at Gamsberg Gamsberg Project update 250kt Gamsberg Project: First ore production by mid-CY2018 Large, low-cost project with long mine life Targeting zinc production of 250ktpa in Phase-1 Feasibility Full Construction Ramp-up Study producti
Slide 13: Aluminium: Strong ramp-up underway
Aluminium: Strong ramp-up underway Aluminium Costs and Margins Q2 FY2017 Results (in $/t, for Q2 FY2017) Record quarterly production at 296kt Q1’17 1,572 127 53 1,752 (540) (622) (313) (70) $207/t (213) (427) (433) 1,620 82 72 1,774 Ramp-ups impacted by pot outages, on track to meet guidance of
Slide 14: Vedanta Ltd has a Best in Class Balance Sheet
Vedanta Ltd has a “Best in Class” Balance Sheet Credit profile for Global and Domestic Peers1 Domestic Peers (CRISL Ratings) 75% Global Peers (S&P Ratings) Peer B, AA Peer 6, BB- Peer C, AA- 65% Peer A , AA- 55% Peer D, AA- Gearing2 45% Peer 4, BBB- Peer 3, BB Peer 7, BBB- 35% Peer 5, B+ Peer E, AAA
Slide 15: Strategic Priorities Remain Unchanged
Strategic Priorities Remain Unchanged Production Growth and Asset optimisation − Disciplined approach towards ramp up Delever the Balance Sheet − Reduce gross debt − Continued optimisation of opex and capex − Continued discipline around working capital Simplification of the Group structure − Complet
Slide 16: Appendix
2S vedanta Appendix
Slide 17: Large, low cost and diversified asset base
Large, low cost and diversified asset base FY2016 R&R Life EBITDA Rs. (years) Production Crore ($mn) Key highlights 46.9 3,504 • India’s largest private-sector crude oil producer Oil & Gas 15+ 1 mmboe ($535mn) • Strong FCF generation even at low oil prices with opex of $6/bbl Zn - • Positioned on th
Slide 18: Oil & Gas: Low-cost producer with growth optionality
Oil & Gas: Low-cost producer with growth optionality Q2 FY2017 Results Mangala EOR, world’s largest polymer program yielding results EOR production reached 52 kboepd, 24% higher q-o-q Rajasthan production stable at 168 kboepd in Q2 RJ water-flood cost at $3.9/boe down 12% q-o-q, lowest in la
Slide 19: Power: 9GW portfolio operational
Power: 9GW portfolio operational Power Generation Capacity – c. 9GW Q2 FY2017 Results CPP:5.1GW 1980 MW TSPL: Plant availability of 77% in Q2 IPP: 3.6GW • 1,215MW Jharsuguda • 600MW Jharsuguda • 3*600MW Jharsuguda (of Unit-III capitalized on 1st September (of 2400MW plant) 2400MW plant) • 1,980M
Slide 20: Iron Ore and Copper: Strong cost positions
Iron Ore and Copper: Strong cost positions Iron ore: Steady production at Goa Copper Cathodes: Sales of 0.8mt in Q2; mining and shipping at Goa resumed post Stable production in Q2: Production impacted by outage for 10 days monsoon at end of Q2, Karnataka sales of 0.5mt in Q2 due to boiler leaka
Slide 21: Vedanta Ltd. – Cairn India merger: Transaction timetable
Vedanta Ltd. – Cairn India merger: Transaction timetable Key Event Expected date BSE, NSE and SEBI approvals sought Completed BSE, NSE and SEBI approvals Completed Application to High Court in India Completed Vedanta plc posting of UK Circular Completed Vedanta plc EGM Completed Vedanta Limited shar
Slide 22: Entity Wise Cash and Debt
Entity Wise Cash and Debt (in Rs. Crore) 30 September 2016 30 June 2016 30 September 2015 Company Cash & Debt Cash & LI Net Debt Debt Cash & LI Net Debt Debt Net Debt LI Vedanta Limited 41,285 2,114 39,171 35729 1,216 34,513 29,101 2205 26,896 Standalone Zinc India 1928 27,186 (25,258) 3,911 26,839
Slide 23: Debt Breakdown & Funding Sources
Debt Breakdown & Funding Sources Diversified Funding Sources for Term Debt of $ 8.8bn Debt Breakdown (as of 30 Sep 2016) (as of 30 Sep 2016) Short Term Loans - USD Debt breakdown (in $bn) 3% External term debt 8.8 Bonds-INR Working capital1 0.5 Money market 20% Instruments – INR 22% Short term borro
Slide 24: Balance Sheet and Maturity Profile
Balance Sheet and Maturity Profile Maturity Profile of Term Debt ($8.8bn) (as of 30th September 2016) Subsidiaries Standalone 2.2 0.5 1.7 1.7 0.7 0.7 1.2 1.1 0.9 0.3 0.5 0.3 1.6 1.0 1.1 0.8 0.7 0.6 FY2017 FY2018 FY2019 FY2020 FY2021 FY2022 & Later External term debt of $8.8bn ($5.8bn at Standalone a
Slide 25: Safety and Sustainability
Safety and Sustainability Health, Safety and Environment LTIFR (per million man-hours worked) Building a Zero Harm Culture 1.0 0.89 Line Leadership coaching programme in progress 0.9 0.8 Interactions with business executive leadership on accountabilities 0.7 and support for line leaders 0.6 0.
Slide 26: Segment Summary – Oil & Gas
Segment Summary – Oil & Gas Q2 Q1 H1 % OIL AND GAS (boepd) % change FY 2017 FY2016 FY 2017 FY 2017 FY2016 change YoY YoY Average Daily Total Gross Operated Production 206,230 214,247 -4% 206,455 206,342 216,081 -5% (boepd)1 Average Daily Gross Operated Production (boepd) 196,399 205,361 -4% 196,861
Slide 27: Segment Summary – Zinc India
Segment Summary – Zinc India Q2 Q1 H1 Production (in’000 tonnes, or as stated) % % change FY 2017 FY2016 FY 2017 FY 2017 FY2016 change YoY YoY Mined metal content 192 240 -20% 127 318 472 -33% Refined Zinc – Total 150 211 -29% 102 252 398 -37% Refined Zinc – Integrated 149 211 -30% 101 250 398 -37%
Slide 28: Segment Summary – Zinc International
Segment Summary – Zinc International Q2 Q1 H1 Production (in’000 tonnes, or as stated) % % change FY 2017 FY2016 FY 2017 FY 2017 FY2016 change YoY YoY Refined Zinc – Skorpion 23 17 37% 24 47 42 10% Mined metal content- BMM 16 16 2% 19 35 31 14% Mined metal content- Lisheen - 31 - - - 60 -% Total 39
Slide 29: Segment Summary – Aluminium
Segment Summary – Aluminium Q2 Q1 H1 Production (in’000 tonnes, or as stated) % % change FY 2017 FY2016 FY 2017 FY 2017 FY2016 change YoY YoY Alumina – Lanjigarh 292 272 8% 275 567 541 5% Aluminium- Total Production 296 233 27% 244 541 464 17% Jharsuguda –I 132 130 1% 129 261 262 0% Jharsuguda –II1
Slide 30: Segment Summary – Power
Segment Summary – Power Q2 Q1 H1 Particulars (in million units) % % change FY 2017 FY2016 FY 2017 FY 2017 FY2016 change YoY YoY Total Power Sales 3,030 2,718 11% 3,010 6,039 5,789 4% Jharsuguda 600 MW(FY 2016 nos are 2400 MW)1 605 1,554 -61% 892 1,497 3,820 -61% Balco 270MW2 - 28 - - - 128 - Balco 6
Slide 31: Segment Summary – Copper India
Segment Summary – Copper India Q2 Q1 H1 Production (in’000 tonnes, or as stated) % % change FY 2017 FY2016 FY 2017 FY 2017 FY2016 change YoY YoY Copper - Mined metal content - - - - - Copper - Cathodes 97 94 3% 100 198 193 3% Tuticorin power sales (million units) 30 118 -75% 60 90 293 -69% Financial
Slide 32: Segment Summary – Iron Ore
Segment Summary – Iron Ore Q2 Q1 H1 Particulars (in million dry metric tonnes, or as % stated) % change FY 2017 FY2016 FY 2017 FY 2017 FY2016 change YoY YoY Sales 0.8 0.6 25% 2.6 3.4 1.2 - Goa 0.3 - 2.1 2.4 - Karnataka 0.5 0.6 -27% 0.5 1.0 1.2 -14% Production of Saleable Ore 1.5 0.8 78% 3.2 4.7 1.0
Slide 33: 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 (600 MW Jharsuguda) Mines (KCM) Aluminium (Odisha aluminium and power assets) Subsidiaries of Vedanta Ltd 59.9% 64.9% 51% 100% 100% 100% 1