Vedanta Limited · NSE:VEDL
Vedanta — Q1 FY2023 Earnings Presentation
44 slides from Vedanta's earnings presentation, Jul 28, 2022
Slide 1: 1QFY23 Earnings Presentation
VEDANTA LIMITED INVESTOR PRESENTATION 28th July 2022 1QFY23 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: 1QFY23 Review and Business Update
VEDANTA LIMITED INVESTOR PRESENTATION 1QFY23 1QFY23 Review and Business Update Sunil Duggal Group CEO & Chief Safety Officer Sensitivity: Internal (C3)
Slide 4: Commodity prices moderated on near-term macro volatility; supply gap to support prices
Commodity prices moderated on near-term macro volatility; Supply gap increase potential to support prices Near term macro volatility Supply gap to increase in medium and long term ▪ Global economy is facing Europe’s energy crisis led cost pressures, and volatility amidst – easing lockdowns and stimu
Slide 5: Vedanta is uniquely positioned to deliver sustainable value
Vedanta is uniquely positioned to deliver sustainable value Robust financial profile with improving World-class natural resources powerhouse with ROCE, increasing cash flow and a low cost and long-life diversified asset base stronger balance sheet 1 Well positioned to capitalize on India’s 7 growth
Slide 6: Strong start with best ever 1Q performance
Strong start with best ever 1Q performance Operational Financial ESG Key businesses continue to deliver strong ▪ Revenue of ₹ 38,251 crore, up ▪ Completed internal carbon pricing, climate operating performance: 36%YoY risk assessment, scope -3 inventorization ▪ Aluminium production grew 3%YoY ▪ Achi
Slide 7: ESG strategy: Pillar 1 – Transforming Communities
Steadily progressing on our repurposed ESG strategy: Pillar 1 – Transforming Communities ~1.8 million beneficiaries across 130 Vedanta-wide programs in 1QFY23 3,348 Nand Ghar established in 12 states Healthcare: Drinking water and sanitation: • Nearly 0.7 Million people benefited • More than 550,000
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 (FY21) Target Absolute GHG emissions 60mn ▪ Started Biomass usage at HZL / BALCO / Val J 45mn (TCO2e) ▪ Procured ~ 867 Million units of RE power in
Slide 9: ESG strategy: Pillar 3 – Transforming the workplace
Steadily progressing on our repurposed ESG strategy: Pillar 3 – Transforming the workplace Baseline 2030 Our aims Key KPIs (UoM) Key strategic initiatives (FY21) Target ▪ Implementing Critical Risk Controls on vehicular safety across Prioritizing Ongoing sites safety and Fatal incidences target- ▪ E
Slide 10: Aluminium: value creation through growth and integrated operations
Aluminium: value creation through continued focus on growth and integrated operations Aluminium: Record throughput, VAP sales continue to improve YoY Key highlights: Production (kt) COP ($/T) Margin ($/t) 580 2,653 ▪ Aluminium production up 3% YoY, driven by 570 2,182 572 JSG ramp-up 560 1,526 565 1
Slide 11: 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 Lanjigarh refinery expansion projects status o JSG capacity ramp-up to 1.8 MTPA – 2QFY23 o Balco capacity expansion to 1 MTPA – 1QFY24 Boiler #1 &
Slide 12: Zinc India: setting new milestones for 1Q performance
Zinc India: setting new milestones for 1Q performance ▪ Delivered mined metal production at 252 kt with 14%YoY growth; driven by higher ore production and better mill recovery ▪ Achieved highest ever 1Q refined metal production with 10%YoY growth; In line with mined metal and better plant availabili
Slide 13: Zinc International: highest ever 1Q production
Zinc International: achieved highest ever 1Q production with Gamsberg’s Jun’22 annualized MIC production run rate at 225 kt Gamsberg - Production Key highlights: ▪ Achieved record quarterly MIC production with 14% Production (kt) YoY and 19% QoQ growth 53 46 45 ▪ Quarterly plant recovery improved at
Slide 14: Oil & Gas: stable operations with focus on growth projects
Oil & Gas: stable operations with focus on growth projects Key highlights: Gross production (kboepd) ▪ Production: impact of natural decline in Rajasthan and 165 Offshore blocks largely offset by – 154 148 o Infill wells in Mangala, ABH and NI fields o Ramp-up of gas production at Rajasthan block ▪
Slide 15: Iron ore: VAB delivers resilient performance
Iron ore: VAB delivers resilient performance Key Highlights 1QFY23: Karnataka Iron ore sales ▪ Karnataka sales down 28%YoY and 48%QoQ due to delay in Sales (mn tonnes) implementation of procedural changes for material sale by DMG 1.7 ▪ VAB quarterly production increased 6% QoQ. It was lower 6% 1.3 Y
Slide 16: ESL Steel and FACOR
ESL Steel and FACOR ESL: key performance highlights FACOR: key performance highlights ▪ Hot metal production was lower by 10% YoY due to ▪ Highest ever quarterly Ore Production at 140kt since debottlenecking activities in blast furnace – 3 as part of acquisition, up 14% YoY and 223% QoQ 3MTPA capaci
Slide 17: Strategy to enhance long term value
Strategy to enhance long term value Optimise 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 18: FY23 key priorities
FY23 key priorities Deliver on target volume growth across businesses Strive for timely completion of capex projects Focus on integrated Aluminum operations to reduce impact on market volatility Continued focus on Reduce costs to sustain and improve margins sustainable shareholder value creation Imp
Slide 19: Finance Update
VEDANTA LIMITED INVESTOR PRESENTATION 1QFY23 Finance Update Ajay Goel Acting Group Chief Financial Officer Sensitivity: Internal (C3)
Slide 20: Key financial highlights
Key financial highlights Best-ever first quarter EBITDA ▪ Achieved highest ever first quarter EBITDA of 10,741 ₹10,741 crores 10,032 ▪ Continued focus on shareholder return: 6,448 5,479 5,670 5,189 o One of the best dividend yield among peers; 4,139 4,985 3,539 4,008 ~14% in FY221 and ~15.4% in YTD
Slide 21: 1QFY23 financial snapshot
1QFY23 financial snapshot Revenue EBITDA EBITDA Margin 1 Profit after tax ₹ 38,251 crore ₹ 10,741 crore 32% ₹ 5,592 crore 36% YoY 7% YoY Industry leading margin 6% YoY ROCE 2 Cash and Cash Net Debt Net Debt / EBITDA equivalents c.30% ₹ 34,342 crore ₹ 26,799 crore 0.6x ~780 bps YoY Strong liquidity p
Slide 22: EBITDA bridge 1QFY23 vs. 1QFY22
EBITDA bridge 1QFY23 vs. 1QFY22 (YoY comparison) Aluminium 1,781 (In ₹ crore) HZL,ZI 1,579 Cairn 780 ESL 390 VAL (1,028) BALCO (338) HZL (252) 4,698 4,677 43 311 886 10,896 1,399 934 10,741 10,032 HZL 369 Market & Regulatory Aluminium 169 ₹ 864 crore IOB (242) 1QFY22 LME/ Brent / Input Currency Regu
Slide 23: Net debt movement during 1QFY23
Net debt movement during 1QFY23 (In ₹ crore) 2,340 Inventory, Debtor & others 5,134 Creditors/Advances (3,545) 26,799 11,684 20,979 9,219 4,106 1,589 FCF Post Capex ₹ 3,524 Cr Net Debt CF from WC Movements Capex Dividend ICL & others Net Debt (Apr 1, 2022) Operations (Jun 30, 2022) 23 ICL: Intercomp
Slide 24: Balance sheet and debt breakdown
Balance sheet and debt breakdown Net debt / EBITDA – maintained at low level Debt breakdown (as of 30th Jun 2022) Gross Debt In $bn In ₹ 000’ crores 1.1 1.0 0.9 0.9 Term debt 6.4 50.6 0.5 0.6 Working capital 0.4 3.3 FY'18 FY'19 FY'20 FY'21 FY'22 1QFY'23 Short term borrowing 0.9 7.2 ▪ Liquidity: Cash
Slide 25: Appendix
VEDANTA LIMITED INVESTOR PRESENTATION 1QFY23 Appendix Sensitivity: Internal (C3)
Slide 26: Income statement
Income statement 1Q 1Q 4Q ▪ Depreciation & Amortization In ₹ Crore FY23 FY22 FY22 o Higher by 16% YoY in 1QFY23 mainly due to increase in depletion charge in Oil & Gas and increased Ore production Revenue from operations 38,251 28,105 39,342 at Zinc India Business Other operating income 371 307 480
Slide 27: Entity-wise Cash and Debt
Entity-wise Cash and Debt (In ₹ crore) Jun 30, 2022 Mar 31, 2022 Jun 30, 2021 Company Cash & Cash & Cash & Debt Net Debt Debt Net Debt Debt Net Debt Cash Eq Cash Eq Cash Eq Vedanta Limited Standalone 45,177 4,903 40,274 36,696 7,057 29,639 27,788 2,246 25,542 Cairn India Holdings Limited1 1,595 2,86
Slide 28: Funding sources and term debt maturities
Funding sources and term debt maturities Diversified Funding Sources for Term Debt of $6.4bn Term Debt Maturities : ₹ 50,658 crore ($6.4bn) (as of 30th Jun 2022) (as on 30th Jun’22) Standalone Subsidiaries 8% 21% In ₹ 000’ crore Bonds INR Term Loan INR 6.3 Term Loan USD 20.5 71% 2.1 5 2.0 5 6 3.7 Te
Slide 29: Segment Summary – Aluminium
Segment Summary – Aluminium Quarter Full year Particulars (in’000 tonnes, or as stated) 1QFY23 1QFY22 % YoY 4QFY22 FY22 Alumina – Lanjigarh 485 482 1% 503 1,968 Total Aluminum Production 565 549 3% 572 2,268 Jharsuguda 423 404 5% 428 1,687 Korba 142 144 (1%) 144 582 Financials (In ₹ crore, except as
Slide 30: Aluminium profitability
Aluminium profitability $/t 4QFY22 3,280 - 102 145 3,527 (858) (826) (499) (160) 1,185 (150) (253) 783 2,182 1QFY23 2,653 99 151 3,290 165 828 2,875 2,875 1,237 588 110 527 138 146 242 LME Strategic Ingot Value Realisation Alumina Power Other hot Conversion EBITDA Depreciation Interest PBT Hedging P
Slide 31: Segment Summary – Zinc India
Segment Summary – Zinc India Quarter Full year Production (in ’000 tonnes, or as stated) 1QFY23 1QFY22 % YoY 4QFY22 FY22 Mined metal content 252 221 14% 295 1,017 Integrated metal 260 236 10% 260 967 Refined Zinc – Integrated 206 188 10% 211 776 Refined Lead – Integrated1 54 48 11% 49 191 Refined Sa
Slide 32: Segment summary – Zinc International
Segment summary – Zinc International Quarter Full year Production (in’000 tonnes, or as stated) 1QFY23 1QFY22 % YoY 4QFY22 FY22 Mined metal content- BMM 15 15 - 10 52 Mined metal content- Gamsberg 53 46 14% 45 170 Total 68 61 11% 55 223 Financials (In ₹ Crore, except as stated) Revenue 1,459 1,119 3
Slide 33: Segment Summary – Oil & Gas
Segment Summary – Oil & Gas Quarter Full year Oil & Gas (boepd) 1QFY23 1QFY22 % YoY 4QFY22 FY22 Average Daily Gross Operated Production 148,104 164,899 (10%) 153,840 160,851 (boepd) Rajasthan 127,815 139,798 (9%) 132,443 137,723 Ravva 10,990 14,662 (25%) 13,248 14,166 Cambay 9,209 10,440 (12%) 8,065
Slide 34: Segment Summary – Oil & Gas
Segment Summary – Oil & Gas Quarter Full year Oil & Gas (boepd) 1QFY23 1QFY22 % YoY 4QFY22 FY22 Average Daily Production Gross operated 148,104 164,899 (10%) 153,840 160,851 Oil 126,292 139,978 (10%) 130,758 135,662 Gas (Mmscfd) 131 150 (13%) 138 151 Non operated- Working interest 489 530 (8%) 513 5
Slide 35: Segment Summary – Iron Ore and Steel
Segment Summary – Iron Ore and Steel Iron Ore Quarter Full year Particulars (in million dry metric tonnes, or as stated) 1QFY23 1QFY22 % YoY 4QFY22 FY22 Sales 1.26 1.64 (24%) 2.29 6.8 Goa 0.35 0.39 (9%) 0.55 1.1 Karnataka 0.91 1.26 (28%) 1.74 5.7 Production of Saleable Ore 1.26 1.46 (14%) 1.41 5.4 G
Slide 36: Segment Summary – Power
Segment Summary – Power Particulars (in million units) Quarter Full year 1QFY23 1QFY22 % YoY 4QFY22 FY22 Total Power Sales 3,577 2,716 32% 2,803 11,872 Jharsuguda 837 545 53% - 2,060 BALCO - 409 - 251 1,139 HZL Wind Power 150 134 12% 66 414 TSPL 2,590 1,628 59% 2,486 8,259 Financials (in ₹ crore exc
Slide 37: Segment Summary – FACOR and Copper
Segment Summary – FACOR and Copper Copper India Quarter Full year Production (in ’000 tonnes, or as stated) 1QFY23 1QFY22 % YoY 4QFY22 FY22 Copper - Cathodes 38 28 37% 34 125 Financials (In ₹ crore, except as stated) Revenue 4,215 3,499 20% 4,351 15,151 EBITDA (14) (106) - 16 (115) Copper LME Price
Slide 38: Sales Summary – Zinc and Aluminium
Sales Summary – Zinc and Aluminium Quarter Full Year Sales volume 1QFY23 1QFY22 4QFY22 FY22 Zinc-India Sales Refined Zinc (kt) 206 187 214 777 Refined Lead (kt) 54 49 49 192 Total Zinc-Lead (kt) 260 236 263 969 Silver (tonnes) 177 160 162 647 Zinc-International Sales Zinc Refined (kt) - - - - Zinc C
Slide 39: Sales summary – Iron & Steel, FACOR and Power
Sales summary – Iron & Steel, FACOR and Power Quarter Full Year Sales volume Quarter Full Year Sales volume 1QFY23 1QFY22 4QFY22 FY22 Power Sales (mu) 1QFY23 1QFY22 4QFY22 FY22 Iron ore sales Jharsuguda 837 545 - 2,060 Goa (mn dmt) 0.4 0.4 0.5 1.1 TSPL 2,590 1,628 2,486 8,259 Karnataka (mn dmt) 0.9
Slide 40: Currency and commodity sensitivities
Currency and commodity sensitivities Foreign Currency - Impact of ₹ 1 depreciation in FX Rate Currency Increase in EBITDA INR/USD ~ ₹ 1,100 crore / year Commodity prices – Impact of a 10% increase in Commodity Prices 1QFY 2023 Full Year Impact on Commodity Average price EBITDA ($mn) Oil ($/bbl) 114
Slide 41: Group structure
Group structure As of 30-Jun-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: 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 43: Awards and Recognition - 1QFY23
Awards and Recognition - 1QFY23 Our group companies received more than 100 awards in the finance, operational excellence, sustainability, CSR and HR categories Sustainability development & CSR Finance & Operational Health, Safety & HR Cairn awarded the ‘India Sustainability Award’ HZL Won People Fir
Slide 44: Results Conference Call Details
Results Conference Call Details Results conference call is scheduled at 5:30 PM (IST) on July 28, 2022. The dial-in numbers for the call are given below: Event Telephone Number +91 22 6280 1114 Universal Dial-In Earnings conference call +91 22 7115 8015 on July 28, 2022 India National Toll Free 1 80