Vedanta Resources — H1 FY2020 Earnings Presentation
36 slides from Vedanta Resources's earnings presentation, Dec 30, 2019
Slide 1: H1 FY2020 Investor Presentation
| Sredaye . transforming elements
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 H1 FY20 Review Venkat, CEO 4 Financial Update Arun Kumar, CFO 19 Appendix 24 VEDANTA RESOURCES LIMITED – H1 FY2020 INVESTOR PRESENTATION 3
Slide 4: H1 FY20 Review
H1 FY2020 H1 FY20 Review Venkat Chief Executive Officer
Slide 5: Key Highlights: H1 FY2020
Key Highlights: H1 FY2020 ▪ Zinc India ore production up by 6% y-o-y at 7.0 Mt with strong growth at Rampura Agucha and Zawar ▪ Zinc International overall production at 123kt, up 130% with COP $1,652/t down 31% ▪ O&G 166 wells drilled, 63 wells hooked up ▪ Early gas production facility currently ram
Slide 6: Heading Towards Zero Harm, Zero Waste, Zero Discharge
Heading Towards – Zero Harm, Zero Waste, Zero Discharge Dow Jones Sustainability Index Ranking Improves to 20th (24th in 2018) Ranked 7th in Asia Pacific Region (metals and mining sector) Safety Program Update Environment Update Four fatalities in H1 ▪ Safety committees to prevent repeats Tailings ▪
Slide 7: Contributing to the communities
Contributing to the communities Benefitting the lives of 3.0 million people across 1,042 villages Flagship Programs 1000th Nand Ghar established in 4 states Healthcare Drinking Water and 1.6 Million people benefited Sanitation > 35 Initiatives 350,000 people benefited > 25 Initiatives Community Infr
Slide 8: Zinc India: Zinc supply shortfall and low stocks expected to support price
Zinc India: Zinc supply shortfall and low stocks expected to support price Slower than expected production growth continues Refined market remains in deficit despite weak demand as • Reduction in production forecast in China production growth remains modest • Slow start at new projects • Plant closu
Slide 9: Zinc India: Achieving 1.2 Mtpa MIC Capacity in FY20
Zinc India: Achieving 1.2 Mtpa MIC Capacity in FY20 Production ramp up to 1.0 million tons mined metal H2 – Completing 1.2 Mtpa project activities • Traditional post-summer ramp-up in production 1200 • Completion of key projects in H2 YOY +7% 1000 Mined Metal in kt 800 52% 53% 65% >54% 600 H2 400 H1
Slide 10: Zinc India: Strong Foundation Driving Growth
Zinc India: Strong Foundation Driving Growth Performance Update Dow Jones Sustainability Index Ranking Quarter Performance: ▪ Metal Production 210kt, almost flat y-o-y ▪ MIC Production 219kt, down 6% y-o-y In metals and mining sector for 5th Globally the 2nd consecutive year ▪ Silver Production 134
Slide 11: Zinc International: Gamsberg Positioning for Long Term Value Creation
Zinc International: Gamsberg Positioning for Long Term Value Creation Performance Update Gamsberg Quarter Performance: ▪ Production at 24kt, up 7% q-o-q ▪ Overall production at 63kt, up 126% y-o-y ▪ COP at $1,477, up 6% q-o-q due to increase in mining cost ▪ COP of $1,584/t, down 35% y-oy ▪ Ore prod
Slide 12: Oil & Gas: Portfolio being monetized to drive multi-fold growth
Oil & Gas: Portfolio being monetized to drive multi-fold growth Capex Investment Production Ramp Up (kboepd) ▪ Gross Capex of $ 3.2 billion in PSC blocks 225 ▪ Monetization of 400 mmboe of resources ▪ Development cost of $ 7/boe 180 ▪ Capex of $ 0.8 million in OALP blocks across 51 blocks ▪ Integrat
Slide 13: Oil & Gas: All Around Efforts Driving Volume Growth
Oil & Gas: All Around Efforts Driving Volume Growth Capacity Addition Wells + Surface Facilities 8 15 10 225 180 9 3 H1 FY 20 Gas Early Liquid MBA Tight Oil Offshore H2 FY 20 Exit Production Handing Facility ▪ Commence full field polymer injection in Bhagyam and Aishwariya fields Mangala, Bhagyam &
Slide 14: Oil & Gas: Building for Future Growth
Oil & Gas: Building for Future Growth OALP Blocks PSC Blocks Well Diversified ~60,000 51 Acreage Work 40 Onshore sq km Investment Resources Drilling Program 11 Offshore ($mn) (mmboe) Status (Wells) Peak Production Resources (bnboe) 500 5.5 Rajasthan Drilling from (kboepd) Upside Scenario 60 300-600
Slide 15: Aluminium: Achieving Design Structure
Aluminium: Achieving Design Structure Structural Reduction in Cost Performance Update 2,049 1,990 Quarter Performance: 1,852 1,810 1,764 ▪ Aluminium COP at $1,852/t, down 10% y-o-y ▪ Lanjigarh production 410 kt, up 18% y-o-y ▪ Lanjigarh COP at $293/t, down 18% y-o-y ▪ EGA Bauxite supplies started fr
Slide 16: Aluminium: Significant progress on Strategic levers Continues
Aluminium: Significant progress on Strategic levers Continues 1,990 1,810 1,500 Coal Alumina Bauxite Initiatives Ramp Up Sourcing Others H1 FY19 H1 FY20 Target Initiatives Action Plan ▪ Increase Linkages through participation in Tranche V & VI, Coal Block Auctions Coal ▪ Target coal security 90% of
Slide 17: Other Assets: Iron ore and Electrosteel Steels
Other Assets: Iron ore and Electrosteel Steels Iron Ore Electrosteel Steels Performance Update Performance Update Quarter Performance: Quarter Performance: ▪ Karnataka sales 1.4 Mnt, significantly up y-o-y ▪ Production 270kt, down 5% y-o-y ▪ Pig Iron production 176kt, up 2% y-o-y ▪ Sales 283kt, up 6
Slide 18: Copper Zambia
Copper Zambia Background ▪ ZCCM, a minority shareholder in KCM and the investment arm majorly controlled by the Government of Republic of Zambia filed a petition in the High Court of Zambia to wind up KCM on a just and equitable basis and further chosen a route to exclude Vedanta, by having a Provis
Slide 19: Financial Update
H1 FY2020 Financial Update Arun Kumar Chief Financial Officer
Slide 20: Financial snapshot
Financial snapshot EBITDA FCF post capex EBTIDA Margin* Net Debt $ 1,395 mn $ 814 mn 26% $ 9,507 mn Down 19% y-o-y Consistent Cash generation Industry leading margin Down 7% y-o-y * Excludes custom smelting at Copper India, Copper Zambia and Zinc-India operations EBITDA Bridge (In $ mn) Zinc & Lead
Slide 21: Net Debt for H1 FY 2020
Net Debt for H1 FY 2020 (In $ Mn) Power Debtor Realization 130 Metal Debtor Realization 190 Inventory Liquidation 110 10,292 972 125 96 9,507 633 475 FCF Post Capex $ 814 Mn Net Debt CF from WC Capex Minority Translation Net Debt 1st Apr’ 19 Operations Movements Dividend Payment & others 30th Sep’19
Slide 22: Strong Financial and Returns Profile
Strong Financial and Returns Profile Term Debt Maturities - $12.1 bn (as of 30th Sep 2019) ▪ Liquidity – Cash and investments @ $ 5.1 billion 3.1 3.1 rated Tier I by CRISIL; 2.4 – Undrawn line of credit c. $ 1.0 billion 1.6 0.6 1.3 ▪ Net Interest 1.5 1.5 US$ billion 0.5 ▪ Interest Income – Returns ~
Slide 23: Self funded Capex Delivering Superior Returns
Self funded Capex Delivering Superior Returns Growth CAPEX Profile, $bn Oil & Gas Zinc Al & Power Copper Other Optionality Full year Capex guidance 0.7 1.0 1.2 1.5 1.2 x 1.1 0.1 0.1 0.1 0.8 0.7 0.5 0.4 0.6 0.1 0.2 0.3 0.4 0.5 0.04 0.2 0.1 0.3 0.2 0.1 0.1 0.5 0.3 0.6 FY2016 FY2017 FY2018 FY2019 H1 FY
Slide 24: Appendix
ZS vedani transforming elements
Slide 25: FY 2020 Guidance
FY 2020 Guidance Segment FY20 Production and COP Revised FY20 Guidance Mined Metal and Finished Metal: c 1.0 Mtpa Mined Metal and Finished Metal: c 950kt Zinc India Silver: 750 - 800 tonnes Silver: c. 650 tonnes < $1,000/t excluding royalty H2 COP < $1,030/t excluding royalty Skorpion and BMM: >170k
Slide 26: Income Statement
Income Statement Depreciation & Amortization In $ mn H1 FY’20 H1 FY’19 • Higher depreciation due to higher ore production across Zinc Revenue from operations 6,132 6,477 business, commencement of Gamsberg operations and EBITDA 1,395 1,730 higher charge in O&G business due to higher capitalisation. D
Slide 27: Project Capex
Project Capex Spent up to Capex3 Spent in H1 Unspent as at Capex in Progress Status ($mn) 31 Mar’194 FY20204 30 Sep’20195 Oil & Gas1 – Mangala Infill, Liquid handling, Bhagyam & Aishwariya EOR, Tight Oil & Gas etc 2,452 651 282 1,519 Aluminium Sector Line 3: Fully capitalised Jharsuguda 1.25mtpa sme
Slide 28: Entity Wise Cash and Debt
Entity Wise Cash and Debt 30 Sep 2019 ($mn) 31 Mar 2019 ($mn) Company Debt Cash & LI Net Debt Debt Cash & LI Net Debt Vedanta Limited Standalone 5,384 1,004 4,380 6,101 1,195 4,906 Cairn India Holdings Limited 1 172 703 (531) 379 1,172 (793) Zinc India 0 2,787 (2,787) 367 2,821 (2,454) Zinc Internat
Slide 29: Debt Breakdown & Funding Sources
Debt Breakdown & Funding Sources Diversified Funding Sources for Term Debt of $12.1 bn Debt Breakdown (as of 30th Sep 2019) (as of 30 Sep 2019) Debt breakdown as of (in $bn) 30 Sep 2019 Term Loans-INR Term debt 12.1 26% Bonds-INR 35% Working capital 0.9 Term Loans-USD/Foreign Short term borrowing 1.
Slide 30: Segment-wise Summary
Segment-wise Summary Oil & Gas H1 FY20 H1 FY19 Zinc-India H1 FY20 H1 FY19 Average Daily Gross Operated Mined Metal Content (kt) 432 444 Production (boepd) 179,398 190,431 Refined Zinc – Integrated (kt) 338 334 Rajasthan 149,790 159,593 Refined Lead – Integrated (kt)1 91 91 Ravva 13,015 13,855 Saleab
Slide 31: Segment-wise Summary (cont'd)
Segment-wise Summary (cont’d) Aluminium H1 FY20 H1 FY19 Copper-India H1 FY20 H1 FY19 Aluminium Production (kt) 947 976 Copper Cathodes– India (kt) 31 40 Jharsuguda I - 500kt 271 273 Tuticorin Power Plant (mu) - - Average Copper LME ($/t) 5,952 6,483 Jharsuguda II - 1,250kt1 401 420 EBITDA ($mn) (23)
Slide 32: Aluminium profitability
Aluminium profitability $/t Q1 ‘20 1,793 54 92 1,939 (712) (652) (400) (111) 64 (146) (269) (351) Q2 ‘20 83 1,905 1,761 61 697 774 381 81 (28) 133 245 (406) LME Ingot Value Realisation Alumina Power Other Conversion EBITDA Dep Int PBT Premium addition Hot & Others Metal VEDANTA RESOURCES LIMITED – H
Slide 33: Segment-wise Summary (cont'd)
Segment-wise Summary (cont’d) Power H1 FY20 H1 FY19 Iron Ore H1 FY20 H1 FY19 Power Sales (million units) 6,773 6,830 Sales (dmt) 2.6 1.8 Jharsuguda 600MW 287 289 Goa - 1.2 BALCO 1 878 1,137 Karnataka 2.6 0.6 Talwandi Sabo 1980MW 5,309 5,081 Production (mt) 2.4 2.8 HZL Wind Power 298 324 Goa - 0.2 Po
Slide 34: Sales Summary
Sales Summary Sales volume H1 FY20 H1 FY19 Sales volume H1 FY20 H1 FY19 Sales volume H1 FY20 H1 FY19 Power Sales (mu) Zinc-India Sales Iron-Ore Sales Jharsuguda 600 MW 287 289 Refined Zinc (kt) 335 331 Goa (mn DMT) - 1.2 TSPL 5,309 5,081 Refined Lead (kt) 91 91 Karnataka (mn DMT) 2.6 0.6 BALCO 878 1
Slide 35: Currency and Commodity Sensitivities
Currency and Commodity Sensitivities Foreign Currency - Impact of 1 Rs depreciation in FX Rate Currency Increase in EBITDA INR/USD ~ US$ 30 - 35 million / year Commodity prices – Impact of a 10% increase in Commodity Prices H1 FY20 Full year impact on Commodity Average price EBITDA ($mn) Oil ($/bbl)
Slide 36: Group Structure
Group Structure Vedanta Resources Ltd Divisions of Vedanta Limited 79.4% 50.1% ⚫ Sesa Iron Ore ⚫ Sterlite Copper Konkola ⚫ Power (600 MW Jharsuguda) Copper Vedanta Ltd Mines (KCM) ⚫ Aluminium (Odisha aluminium and power assets) ⚫ Cairn Oil & Gas* Subsidiaries of Vedanta Ltd 64.9% 51% 100% 100% 90% Z