Slide 1: Vedanta Limited Q1 FY2017 Results
Vedanta Limited (formerly known as Sesa Sterlite Ltd.) Q1 FY2017 Results 29 July 2016 VEDANTA LIMITED – Q1 FY2017 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 4 Financial Update D.D. Jalan, CFO 10 Business Review Tom Albanese, CEO 18 Appendix 27 VEDANTA LIMITED – Q1 FY2017 RESULTS PRESENTATION 3
Slide 4: Strategic Update
Strategic Update Tom Albanese Chief Executive Officer VEDANTA LIMITED – Q1 FY2017 RESULTS PRESENTATION
Slide 5: Safety and Sustainability
Safety and Sustainability Health, Safety and Environment Building a Zero Harm Culture LTIFR (per million man-hours worked) HSE Charter launched, followed across the group 0.44 0.42 0.41 Business COO’s Forum formed to avoid repeat high potential incidents 0.39 Leadership Coaching Programme –
Slide 6: Q1 FY2017 Results Highlights
Q1 FY2017 Results Highlights Operations: Aluminium, Power and Iron ore ramp-up Group EBITDA mix progressing well Aluminium: Commissioning of pots at BALCO and 1st line of Q1 FY2017 Q1 FY2016 Jharsuguda-II smelters nearing completion, 2nd line ramp-up 2% commenced 11% 13% Iron ore: Production at
Slide 7: Continued Focus on Strong FCF Generation Through Disciplined Ramp-up
Continued Focus on Strong FCF Generation Through Disciplined Ramp-up Presented at FY2016 results Progress during Q1 FY2017 Copper Eq. Production Aluminium production exit run rate of EBITDA $3.6 $2.3 +30% 1.1mtpa in June bn bn growth Capex $1.5 bn $0.6 bn $1.0 bn Strong free cash flows from: G
Slide 8: Vedanta Ltd-Cairn India Merger: Revised and Final Terms
Vedanta Ltd-Cairn India Merger: Revised and Final Terms Revised and final terms Strategic rationale for the merger Cairn India minority shareholders will receive for each equity share Diversified portfolio de-risks earnings volatility and drives held, 1 Equity Share in Vedanta Ltd. and 4 Redeema
Slide 9: Strategic Priorities Remain Unchanged
Strategic Priorities Remain Unchanged Strategic Priorities Focus Areas for FY 2017 • Disciplined ramp-up of new capacities in Aluminium, Power and Iron Ore Production growth and asset • Zinc: Ramp-up volumes at Rampura Agucha U/G and develop optimisation Gamsberg • O&G: Enhance gas production; EOR a
Slide 10: Financial Update
Financial Update D.D. Jalan Chief Financial Officer VEDANTA LIMITED – Q1 FY2017 RESULTS PRESENTATION
Slide 11: Financial Highlights
Financial Highlights Our portfolio of structurally low-cost, Tier-I assets provided resilience in a low commodity price environment EBITDA of Rs. 3,543 crore strong EBITDA margin1 of 32% LME and Brent prices lower by 10% and 25% y-o-y respectively, impacted EBITDA adversely by c. Rs 1,300 cror
Slide 12: EBITDA Bridge
EBITDA Bridge Q1 FY2017 vs. Q1 FY2016 (In Rs. Crore) Brent (375) Zinc and Lead (365) Aluminium (256) Brent Discount (140) Zinc India (468) 5,000 Premiums (81) Oil & Gas (90) Others (106) Lisheen (75) Pertaining to Royalty, Others (22) DMF, electricity duty Iron ore 316 4,139 1,323 & energy cess Powe
Slide 13: Cost and Marketing Savings
Cost and Marketing Savings Cost and marketing savings program ($mn) Achieved cumulative savings c.$340 mn savings 1,300 1,300 $266 mn in cost and $44 mn in marketing and $30 mn in eliminated capex 90 340 250 $38 Mn Fresh 55% at Aluminium & Power $67 Mn FY'16 Recurring Q1'17 Cum. New timeline O
Slide 14: Ind AS Implementation
Ind AS Implementation Implemented Indian Accounting Standard (‘Ind AS’) with effect from 1st April 2016. Under Ind AS, Q1 FY 2017 Profit after tax is Rs. 1157 crore, higher by Rs. 140 crore as compared to the IGAAP numbers for Q1 FY 2017. Following are the key reasons for differences under Ind AS: `
Slide 15: Income Statement
Income Statement Depreciation Q1 Q1 Q4 In Rs. Crore - Marginally lower y-o-y on account of lower volume at Cairn FY’17 FY’16 FY’16 and Lisheen mine closure in Nov 15, partially offset by EBITDA 3,543 4,139 3,480 capitalisation of Al & Power assets - Higher q-o-q due to lower charge in Q4 FY 16 on
Slide 16: Net Debt for 1Q FY2017
Net Debt for 1Q FY2017 (In Rs. Crore) 28000 26000 25,284 7,030 Fair Valuation of 24,654 investments1 4,281 245 24000 22000 1,340 20000 18,254 1,536 3,346 18000 1,601 743 16000 14000 Free cash flow post capex Rs (1874) Cr 12000 10000 IGAAP Net Ind AS Adj - Net Debt 1st Cash Flow WC Debtors & Project
Slide 17: Balance Sheet and Maturity Profile
Balance Sheet and Maturity Profile Maturity Profile of Term Debt ($7.8bn) (as of 30th June 2016) Subsidiaries Standalone 1.9 1.6 1.6 0.6 0.7 0.6 1.0 0.8 0.9 0.2 0.4 0.3 1.3 0.9 1.0 0.5 0.6 0.6 FY2017 FY2018 FY2019 FY2020 FY2021 FY2022 & Later External term debt of $7.8bn ($4.9bn at Standalone and $2
Slide 18: Business Review
Business Review Tom Albanese Chief Executive Officer VEDANTA LIMITED – Q1 FY2017 RESULTS PRESENTATION
Slide 19: Zinc and Silver: Fundamentals supporting performance
Zinc and Silver: Fundamentals supporting performance CY2016 Global Zinc Cost curve Refined Zinc inventory (mt) at 6 year low US$/t 1.8 2,800 2,000 1.5 2,500 1,700 Zinc Intl 1.2 Hindustan Zinc 2,200 1,400 0.9 1,900 1,100 0.6 1,600 800 0.3 1,300 500 0.0 1,000 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100
Slide 20: Zinc India
Zinc India Results Rampura Agucha Mine – Longitude Vertical Section Metal in concentrate(MIC) production lower at 127kt as per the mine plan Refined zinc production at 101kt in line with MIC +13mRL Maintained 1st decile position on global cost curve -80mRL -105mRL Projects RAM U/G main shaft
Slide 21: Zinc International
Zinc International Skorpion and Black Mountain Results Quarterly production of 43kt Strong quarterly production of 19kt at BMM Skorpion metal production at 24kt COP lower at $1,167 driven by higher volumes at BMM and cost saving initiatives Outlook FY2017 volume expected at 170-190kt FY2
Slide 22: Oil & Gas
Oil & Gas Results MPT: Facility modifications Mangala EOR, world’s largest polymer program EOR production reached 42 kboepd, 31% higher q-o-q Rajasthan production stable at 167 kboepd in Q1 Rajasthan water flood opex further reduced to $4.4/boe; blended cost at $6.4/boe, better than earlier
Slide 23: Aluminium
Aluminium Alumina and Aluminium volumes ramping up Aluminium Costs and Margins Record quarterly production at 244kt (in $/t, for Q1 FY2017) Commissioning of pots at 1st line of Jharsuguda-II 1.25mt and Q4’16 1,516 134 65 1,705 (554) (570) (307) (61) $223/t BALCO II 325kt smelter nearing completi
Slide 24: Power
Power Results Power Generation Capacity – c. 9GW TSPL: Unit-I and Unit-II operated at an availability of 72% in Q1 CPP:5.1GW IPP: 3.6GW • 1,215MW Jharsuguda Unit-III synchronized, to be capitalized in Q2 • 600MW Jharsuguda • 3*600MW Jharsuguda (of BALCO 600MW IPP: 2nd unit of 300MW capitalized
Slide 25: Iron Ore and Copper India
Iron Ore and Copper India Iron ore Iron Ore Operations Ramped Up Goa production ramped up in Q1, run rate of 0.8 mt per month 10 Goa Karnataka 7.8 9 Karnataka 0.8 mt production 8 7 Engaging with the respective state Government for higher volumes 6 2.3 Maintained low cost of operations 5 4 2.
Slide 26: Summary
Summary Resource sector performed well, commodity prices strengthened in Q1 − Zinc and Silver prices outperformed − Volatility is here to stay in the near and medium term − Supply discipline improving fundamentals for commodities Disciplined ramp-up of capacities − Ramp-up of capacities coupled
Slide 27: Appendix
Appendix VEDANTA LIMITED – Q1 FY2017 RESULTS PRESENTATION
Slide 28: Draft Proforma Consolidated Profit and Loss for the year ended March 31, 2016 under Ind AS
Draft Proforma Consolidated Profit and Loss for the year ended March 31, 2016 under Ind AS Amount in Rs. crore Ind AS As per Particulars Adjustment Ind AS Impact on Profit IGAAP s Income from Operations Depletion, Depreciation and a) Net Sales/Income from Operations (18) Amortization Expense: 63,913
Slide 29: Draft Proforma Consolidated Profit and Loss for the year ended March 31, 2016 under Ind AS
Draft Proforma Consolidated Profit and Loss for the year ended March 31, 2016 under Ind AS Amount in Rs. crore As per Ind AS Impact on Profit Particulars Adjustment Ind AS IGAAP s Finance Cost 5,704 78 5,782 Finance Cost: Profit from ordinary activities after 6,748 992 7,740 • Unwinding of discount
Slide 30: Transaction timetable
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 August 2016 Vedanta plc EGM September 2016 Vedanta Limited shareholder meeting 8th Septembe
Slide 31: Entity Wise Cash and Debt
Entity Wise Cash and Debt (in Rs. Crore) 30 June2016 31 March 2016 30 June 2015 Company Debt Cash & LI Net Debt Debt Cash & LI Net Debt Debt Cash & LI Net Debt Vedanta Limited 45,322 1,216 44,106 42,256 1,356 40,900 39,948 1,285 38,662 Standalone Zinc India 3,911 26,839 (22,928) - 35,277 (35,277) -
Slide 32: Debt Breakdown & Funding Sources
Debt Breakdown & Funding Sources Diversified Funding Sources for Term Debt of $ 7.8bn Debt Breakdown (as of 30th Jun 2016) (as of 30th Jun 2016) Short Term Loans - USD Debt breakdown as of 30 June 2016 (in $bn) 3% External term debt 7.8 Money market Bonds-INR Instruments – Working capital 2.0 21% IN
Slide 33: Segment Summary – Oil & Gas
Segment Summary – Oil & Gas Q1 Q4 Full Year OIL AND GAS (boepd) FY 2017 FY 2016 % change YoY FY2016 FY 2016 Average Daily Total Gross Operated Production (boepd)* 206,455 217,935 -5% 206,170 212,552 Average Daily Gross Operated Production (boepd) 196,861 209,738 -6% 197,039 203,703 Rajasthan 166,943
Slide 34: Segment Summary – Zinc India
Segment Summary – Zinc India Q1 Q4 Full Year Production (in ’000 tonnes, or as stated) FY 2017 FY 2016 % change YoY FY2016 FY 2016 Mined metal content 127 232 -45% 188 889 Refined Zinc – Total 102 187 -45% 154 759 Refined Zinc – Integrated 101 187 -46% 154 759 Refined Zinc – Custom 1 - - - - Refined
Slide 35: Segment Summary – Zinc International
Segment Summary – Zinc International Q1 Q4 Full Year Production (in’000 tonnes, or as stated) FY 2017 FY 2016 % change YoY FY2016 FY 2016 Refined Zinc – Skorpion 24 26 -8% 27 82 Mined metal content- BMM 19 15 28% 15 63 Mined metal content- Lisheen - 29 - - 81 Total 43 70 -39% 42 226 Financials (In R
Slide 36: Segment Summary – Copper India
Segment Summary – Copper India Q1 Q4 Full Year Production (in ’000 tonnes, or as stated) % change FY 2017 FY 2016 FY2016 FY 2016 YoY Copper - Mined metal content - - - - Copper - Cathodes 100 98 2% 102 384 Tuticorin power sales (million units) 60 175 -66% 68 402 Financials (In Rs. crore, except as s
Slide 37: Segment Summary – Iron Ore
Segment Summary – Iron Ore Q1 Q4 Full Year Particulars (in million dry metric tonnes, or as stated) % change FY 2017 FY 2016 FY2016 FY 2016 YoY Sales 2.6 0.5 NM 2.6 5.3 Goa 2.1 - - 1.6 2.2 Karnataka 0.5 0.5 1% 1.0 3.1 Production of Saleable Ore 3.2 0.2 NM 2.8 5.2 Goa 2.4 - - 1.9 2.2 Karnataka 0.8 0.
Slide 38: Segment Summary – Aluminium
Segment Summary – Aluminium Q1 Q4 Full Year Particulars (in’000 tonnes, or as stated) FY 2017 FY 2016 % change YoY FY2016 FY 2016 Alumina – Lanjigarh 275 269 2% 211 971 Total Aluminum Production 244 232 6% 226 923 Jharsuguda-I 129 132 -2% 123 516 1 Jharsuguda-II 28 20 46% 19 76 245kt Korba-I 63 62 2
Slide 39: Segment Summary – Power
Segment Summary – Power Q1 Q4 Full Year Particulars (in million units) % change FY 2017 FY 2016 FY2016 FY 2016 YoY Total Power Sales 3,010 3,070 -2% 3,391 12,121 2 Jharsuguda 600 MW(FY2016 nos are for 2400 MW) 892 2,266 NM 1,906 7,319 BALCO 270 MW3 - 99 -100% - 169 BALCO 600 MW1 607 499 1,025 MALCO
Slide 40: Sales Summary
Sales Summary Sales volume Q1 FY2017 Q1FY2016 Q4 FY 2016 FY 2016 Zinc-India Sales Refined Zinc (kt) 120 180 158 760 Refined Lead (kt) 23 29 41 145 Zinc Concentrate (DMT) - - - - Lead Concentrate (DMT) - - - - Total Zinc (Refined+Conc) kt 120 180 158 760 Total Lead (Refined+Conc) kt 23 29 41 145 Tota
Slide 41: Sales Summary
Sales Summary Sales volume Q1 FY2017 Q1FY2016 Q4FY 2016 FY 2016 Sales volume Q1 FY2017 Q1FY2016 Q4FY 2016 FY 2016 Power Sales (mu) Jharsuguda 2,400 MW 892.3 2,266 1,906 7,319 Iron-Ore Sales TSPL 1,272.1 384 869 2,792 Goa (mn DMT) 2.1 - 1.6 2.2 BALCO 270 MW - 99 - 169 Karnataka (mn DMT) 1 0.5 0.5 1.0
Slide 42: 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
Slide 43: Results Conference Call Details
Results Conference Call Details Results conference call is scheduled at 6:00 PM (IST) on Thursday, 29 July 2016. The dial-in numbers for the call are given below: Event Telephone Number Earnings conference call on Mumbai main access 29 July 2016 India – 6:00 PM (IST) +91 22 3938 1017 Mumbai standby