Vedanta Resources — Investor Presentation (September 2023)
28 slides from Vedanta Resources's investor presentation, September 2023
Slide 1: Corporate Presentation
Corporate Presentation VEDANTA RESOURCES LIMITED SEPTEMBER 2023 TRANSFORMING TOGETHER Inclusive. Responsible. Value-accretive delivery Sensitivity: Internal (C3)
Slide 2: Cautionary statement and disclaimer
Cautionary statement and disclaimer This presentation does not constitute an offer to sell, offer to purchase, or a solicitation to sell or a solicitation to purchase or subscribe for securities (whether to the public or by way of private placement) within the meaning of the (Indian) Companies Act,
Slide 3: Operational Highlights
Operational Highlights Sensitivity: Internal (C3)
Slide 4: Recent business highlights & strategic initiatives
Recent business highlights & strategic initiatives On track to deliver volume growth across businesses, reduce costs and improve margins, while being committed to decarbonization Zinc Aluminum Steel Financial Updates ESG Updates Cost Initiatives Cost Initiatives Cost Initiatives • VRL has sold c. 6%
Slide 5: Comparison of recent performance
Comparison of recent performance While earnings have generally declined due to sluggish commodity prices in FY23, production continues to remain robust Hindustan Zinc Ltd Zinc International Aluminium Oil & Gas Power Iron Ore Steel Refined Metal Mined Metal Aluminum Oil & Gas Power Sales Saleable Ore
Slide 6: VRL Debt Position
VRL Debt Position Sensitivity: Internal (C3)
Slide 7: Several actions have been taken to meet VRL maturities (1/2)
Several actions have been taken to meet VRL maturities (1/2) VRL has undertaken several actions to meet maturities and de-lever its balance sheet by c. USD 3bn from Mar’22 to Jun’23 VRL Debt Profile (USD mn) VRL Debt Profile (Jun’23, USD mn) A Special Dividends from VEDL and HZL Loans at Bonds at VR
Slide 8: Several actions have been taken to meet VRL maturities (2/2)
Several actions have been taken to meet VRL maturities (2/2) Post increasing its stake in VEDL by 19.6% from FY20-22, VRL diluted its stake in VEDL in FY24 VRL’s Stake in VEDL (%) B 69.7% 69.7% 68.1% 65.2% 63.7% 55.1% 50.1% 50.1% Mar’20 Sep’20 Mar’21 Sep’21 Mar’22 Sep’22 Mar’23 Current Stake 8 Sensi
Slide 9: Sources of sustainable VRL cashflows: Dividends
Sources of sustainable VRL cashflows 1 Dividends Dividend earnings of >USD 5bn over the last 6 years VRL Dividend Income Over the Years (USD mn) 2,494 1,408 488 497 223 98 FY2018 FY2019 FY2020 FY2021 FY2022 FY2023 9 Sensitivity: Internal (C3)
Slide 10: Sources of sustainable VRL cashflows: Brand Fees
Sources of sustainable VRL cashflows 2 Brand Fees received from VEDL and its subsidiaries Yearly Brand Fees is upstreamed to VRL from VEDL and its subsidiaries at the beginning of each financial year ▪ Brand Fee is calculated basis 3% of revenue of Vedanta Ltd, 1.7% for HZL, and in a range of 0.75%-
Slide 11: Business Overview
Business Overview Sensitivity: Internal (C3)
Slide 12: Key Investment Highlights
Key Investment Highlights Diversified business risk profile with presence 1 across multiple commodities Vedanta is uniquely Well-positioned to capitalise on India’s economic 2 growth & natural resources potential positioned to deliver long term sustainable Strong operational track record across key
Slide 13: Diversified business risk profile with presence across multiple commodities
1 Diversified business risk profile with presence across multiple commodities Key Highlights UAE Fujariah Ireland Gold Aluminium Lisheen Mine(2) East Asia Glass India Largest capacity in India and 9th largest capacity globally FY23 EBITDA FY23 Production USD 707mn 2,291 kt 1,793 kt Liberia Iron Ore
Slide 14: Well-positioned to capitalise on India's economic growth & natural resources potential
2 Well-positioned to capitalise on India’s economic growth & natural resources potential India is amongst the fastest growing economy globally and is slated to be the world’s third largest economy by 2027, as per IMF Real GDP CAGR of World Largest Economies (2022 to 2028) 6.1% 4.1% 1.8% 1.7% 1.4% 1.
Slide 15: Strong operational track record across key business segments
3 Strong operational track record across key business segments Zinc-Lead & Silver Aluminium Oil & Gas 8.5x Increase in CuEq Production (kt) since IPO ✓ World largest underground zinc- ✓ Largest aluminium installed ✓ World’s longest continuously lead mine at Rampura Agucha, capacity in India at 2.3 M
Slide 16: Disciplined capital allocation framework
4 Disciplined capital allocation framework Leverage optimization via prudent capital allocation is the key strategic priority Project Capex ▪ Volume augmentation, cost reduction or creating value added products are key CAPITAL guiding principles for all projects EXPENDITURE ▪ Growth projects to ensu
Slide 17: Strong track record of FCF generation (1/2)
5 Strong track record of FCF generation (1/2) Vedanta’s business model …and is coupled with Vedanta’s continuous pursuit to lower cost of production is well diversified… Aluminium Zinc India Zinc International Oil & Gas Cost of Production Cost of Production Cost of Production Cost of Production Veda
Slide 18: Strong track record of FCF generation (2/2)
5 Strong track record of FCF generation (2/2) However, the retreat in key commodity prices in FY2023 has resulted in a moderation of earnings and margins, ultimately leading to a softening of free cash flow levels in Q1FY24 Revenue (USD mn) EBITDA (USD mn) 18,141 35% 17,619 31% 26% 25% 24% 13,006 11
Slide 19: Commitment to Decarbonization
6 Commitment to Decarbonization Well defined net-zero roadmap with a target to reduce absolute GHG emissions by 25% in FY2030 from FY2021 levels -25% vs FY21 baseline Key non-RE decarbonization projects Growth FY Emissions (mnt of CO2e) Projects • 5% biomass co-firing in powerplants Decarbonization
Slide 20: Appendix
Appendix Sensitivity: Internal (C3)
Slide 21: Vedanta Resources Limited Group Structure
Vedanta Resources Limited Group Structure VRL Group Structure All Amounts as on Jun’23 List of Intermediate HoldCos VRL Aggregated Holdco Debt (USD bn) Listed entities ▪ Twin Star Holdings Ltd. (“TSHL”) Loan 2.2 ▪ Vedanta Holdings Mauritius Ltd. (“VHML”) Bond 3.7 Total Debt (1) 5.9 ▪ Vedanta Holding
Slide 22: Zinc India
Zinc India 01 02 03 Capacity Mine Portfolio Cost Expansion with long life Optimization Ramping up underground Ramping up Exploration Drive production mines and smelters to enhance R&R efficiency Refined Metal Production (KTPA) Reserves and Resources (mnt) Cost of Production (USD/t) 1,032 1,050-1,075
Slide 23: Zinc International
Zinc International Current Operations VZI plans to achieve a capacity of 500 KTPA+ MIC run rate Gamsberg Operations: Gamsberg Expansion (Phase – 2) VZI(1) Production (kt) ▪ One of the world’s largest Zinc deposits BMM Gamsberg USD 466mn ▪ Phase 1 → 250 KTPA MIC capacity Approved Capex 273 270-310 BM
Slide 24: Oil & Gas
Oil & Gas Vision Key Drivers for augmenting R&R Production (kboepd) > 50% of India’s domestic 143 production 135-140 Infill wells Exploration PSC/OALP Maximize resource potential Operating fields namely Exploration drilling both onshore of 62 blocks Aishwarya, Bhagyam, Tight Oil & offshore across th
Slide 25: Aluminium
Aluminium Aluminium Value Chain – Existing Post Expansion Bauxite Alumina Smelting Bauxite Alumina Smelting ~6 MTPA 2 MTPA Aluminium 9 MTPA 5(1) MTPA Aluminium 2.3 MTPA 2.8 MTPA Minimal impact (50% – domestic (45% Captive) (Captive Bauxite) (~92% captive) procurement) on business due 2.5 MTPA 6 MTPA
Slide 26: Iron & Steel
Iron & Steel STEEL & Pig Iron IRON ORE FERRO ALLOY NICKEL Capacity expansion Capacity expansion Capacity expansion Capacity expansion planned upto 4MTPA planned upto 12MTPA planned upto 225KTPA planned upto 12KTPA ▪ Expansion at Bokaro / Goa ▪ Started mines in Liberia ▪ Charge Chrome plant (CCP) ▪ S
Slide 27: Cautionary statement and disclaimer
Cautionary statement and disclaimer 01 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 fo
Slide 28: Thank You
Thank You Sensitivity: Internal (C3)
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