Vedanta Limited · NSE:VEDL
Vedanta — Sterlite Industries (India) — Investor Presentation (February 2011)
30 slides from Vedanta's investor presentation, February 2011
Slide 1: Sterlite Industries (India) Ltd Corporate Presentation
Sterlite Industries (India) Limited Sterlite Industries (India) Ltd Corporate Presentation February 2011 1
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: Key Trends in Mining Sector
Key Trends in Mining Sector 2008–2009 themes 2011 themes Surviving the crisis Strong supply/demand in-balance driving near record high commodity prices and Build fortress balance sheets and liquidity strong cash flows Capital markets access and capacity Capital allocation dilemma High cost of capita
Slide 4: Vedanta: A Diversified Natural Resources Group
Vedanta: A Diversified Natural Resources Group FY 2009 - 10 FY 2010 -11E Pro Forma FY 2011-12E Pro Forma Aluminium Power Aluminium Oil & Gas Copper Power Aluminium Iron Ore Copper Iron Ore Copper Zinc-India Power (HZL) Zinc-India Zinc-Intl. (HZL) Zinc-India (Anglo Zinc) Zinc-Intl. (HZL) Iron Ore (An
Slide 5: Sterlite: India's Leading Metals and Mining Company
Sterlite: India’s Leading Metals and Mining Company FY 2003-04 FY 2010 -11E Pro Forma FY 2011-12E Pro Forma Copper Power Power Copper Aluminium Zinc-Intl. Zinc-India Copper Aluminium (HZL) Aluminium Zinc-India (HZL) Zinc-India (HZL) Sterlite Industries (India) Limited EBITDA: Rs. 1,450 crore Analyst
Slide 6: Strategy: Growth and Value Creation
Strategy : Growth and Value Creation Leverage unique position in India Structural low cost advantage Organic Growth Exploration focus Accelerated growth of acquired assets Brown field assets with embeded growth options High quality assets M&A Leverage core asset development and operational skills St
Slide 7: Track Record of Execution
Track Record of Execution Expansion of Tuticorin Rampura Agucha Mine expansion Silver-rich S.K. mine development progressing 1 smelter capacity to 400 ktpa from 3.75 mtpa to 5 mtpa year ahead of schedule through debottlenecking 88 ktpa Zinc debottlenecking at 1,200MW (2x600 MW) Unit of 2,400 MW 245
Slide 8: Industry-Leading Growth
Industry - Leading Growth Copper Equivalent Capacity (kt) 1,000 900 800 700 600 500 400 300 Sterlite Industries (India) Limited 200 100 0 FY 2003-04 FY 2006-07 FY 2009-10 FY 2010-11 FY 2011-12 FY 2012-13 Copper Power Aluminium Silver Zinc-India (HZL) Zinc-International Notes: 1. All metal and power
Slide 9: Delivering Consistent EBITDA Margins
Delivering Consistent EBITDA Margins EBITDA Margin FY 2003 - 04 36.9% FY 2004 - 05 36.9% FY 2005 - 06 45.7% FY 2006 - 07 63.9% FY 2007 - 08 57.8% FY 2008 - 09 39.2% FY 2009 - 10 50.1% Sterlite Industries (India) Limited 9M FY 2010-11 45.3% Excluding Custom Copper Smelting Delivering consistent margi
Slide 10: World's Largest Zinc-Lead Producer
World’s Largest Zinc-Lead Producer Global Zinc and Lead Mine Production (kt) - 2010E1 Zinc - Lead R&R (Mt): 25+ Years Mine Life Sterlite 1,064 2 4643 1,528 Zinc-International Zinc-India (HZL) 2 505 Xstrata 1,263 Teck 843 Glencore 533 206 Boliden 364 Top Zinc Mines MIC (kt) – 2010E Rampura-Agucha 655
Slide 11: Zinc Mining Cost: Competitively Positioned on Global Cost Curve
Zinc Mining Cost: Sterlite Competitively Positioned on Global Cost Curve Third Quartile ($1,267) 2300 International Operations ($668) Second Quartile ($909) 2000 1700 India Operations (HZL) ($300) First Quartile ($592) 1400 1100 Mining Cash Cost (C1) 800 ($/t) 500 200 -100 Sterlite Industries (India
Slide 12: Zinc-International: Skorpion Mine, Namibia
Zinc-International: Skorpion Mine, Namibia Overview Zinc Production (kt) Skorpion Acquisition completed on 3 December 2010 Integrated zinc refining: Unique technology to extract zinc metal from zinc oxide ore 152 Reserves & Resources: 8.3 Mt 150 11.3% Zinc 145 Gergarub Zinc-lead sulphide deposit Dis
Slide 13: Zinc-International: Black Mountain Mine, South Africa
Zinc-International: Black Mountain Mine, South Africa Overview Production (kt) Black Mountain Zinc Lead Acquisition completed on 4 February 2011 Underground mine producing zinc and lead New mining infrastructure related to deep shaft 51 coming online mid-2010 47 49 Reserves & Resources: 51.7Mt 36 28
Slide 14: Zinc-International: Lisheen Mine, Ireland
Zinc-International: Lisheen Mine, Ireland Overview Production (kt) Lisheen Zinc Lead Acquisition completed on 15 February 2011 21 19 Underground Mine 16 Reserves & Resources: 8.7 Mt 172 175 167 11.9% Zinc and 1.9% Lead CY 2008 CY 2009 CY 2010 Sterlite Industries (India) Limited 14
Slide 15: Value Creation Opportunity: Silver
Value Creation Opportunity: Silver Silver Production and Capacity (moz) • On track to become one of the world’s top Silver Production Silver exit capacity 16.0 silver producers at 16moz – Sindesar Khurd mine – Commissioning one year ahead of schedule, FY 2011-12 • 100% EBITDA margin – production cos
Slide 16: Silver: Unlocking Accumulated Value
Silver : Unlocking Accumulated Value HZL vs pure-play silver EV of pure-play silver EV/EBITDA2 producers (koz)1 producers ($mn) 13.5 x Fresnillo 41,388 Fresnillo 17,806 Fresnillo Silver Wheaton Silver 28,745 Silver Wheaton 13,730 Wheaton 22.8x Silver Standard 8,206 Silver 13.9x Silver Standard 2,154
Slide 17: Aluminium: Optimising Returns
Aluminium: Optimising Returns Aluminium capacity (kt) Power for sale (MW) Unit Pre Deferral1 Post Deferral1 1,200MW 600 1,200 CPP at BALCO 2,400MW 600 2,400 IPP at Jharsuguda Jharsuguda BALCO-1 CPP 270 270 BALCO Total 1,470 3,870 Sterlite Industries (India) Limited FY10 Production FY12 Capacity Post
Slide 18: Aluminium: Positioning on Global Cost Curve
Aluminium : Positioning on Global Cost Curve 3000 Third Quartile ($2,064) Second Quartile ($1,840) Jharsuguda ($1,974) Target cost of Target costs of Vedanta ($1,896) 2500 $1,100-1,200/t $1,800-1,900/t Korba ($1,785) with captive with bought-out First Quartile ($1,565) bauxite bauxite and alumina Ca
Slide 19: Commercial Energy - Sterlite Energy Limited
Commercial Energy - Sterlite Energy Limited Jharsuguda 2,400 MW SEL capacity (MW) Synchronisation Jharsuguda 2,400 MW −Unit 1: Q2 FY 2010-11 −Unit 2: Q3 FY 2010-11 Talwandi Sabo 2,640 MW −Unit 3: Q2 FY 2011-12 −Unit 4: Q3 FY2011-12 5,040 Fuel arrangements −65% Coal linkage −25-30% E-Auction/ Forward
Slide 20: Commercial Energy - Others
Commercial Energy - Others BALCO 1,200 MW Other power capacity(MW) Synchronisation Balco 1,200 MW −Unit 1: Q1 FY 2011-12 Balco 270 MW −Unit 2: Q2 FY 2011-12 −Unit 3: Q4 FY 2011-12 WPP −Unit 4: Q1 FY2012-13 1,743 Fuel arrangements 273 −65% Coal linkage for two units 1,443 −Coal Block under developmen
Slide 21: Copper – India/Australia
Copper – India/Australia Overview Production and Capacity (kt) One of the world’s largest single location copper custom Production (kt) Exit capacity (kt) smelter LME registered Cathodes and value added rods capacity of 240,000 tpa Efficient by-product management 800 Captive power plant under constr
Slide 22: Copper Smelting: Lowest Decile
Copper Smelting : Lowest Decile 40 35 Third Quartile (Usc 16.4) 30 Second Quartile ((Usc 11.3) Net Cash Cost 25 (c/lb) Usc 5.6) 20 First Quartile (Usc Tuticorin (Usc 5.0) 15 10 Sterlite Industries (India) Limited 5 0 -5 0 10 20 30 40 50 60 70 80 90 100 Cumulative Production Source: Brook hunt, 9 mon
Slide 23: Sustainable Development – Vedanta Way
Sustainable Development – Vedanta Way Environmental Stewardship Respect for nature, enhanced resource conservation and use of environment friendly technology are embodied in our working Empowering Communities Nurturing People Communities are integral People are our key assets. to our business. Commi
Slide 24: Our Immediate Sustainable Development Priorities
Our 5 Immediate Sustainable Development Priorities Review our Sustainability Governance Structure to make sure Sustainable Development is fully embedded into the way we do business. Improve our Health and Safety Performance to providing a safe, secure and healthy work environment for our employees a
Slide 25: Corporate Social Responsibility
Corporate Social Responsibility Case Study: Health Update Impact General Health Outreach 552 villages, 2.7 million people positively impacted 55,419 people benefited through 28 company run 145 villages under the Integrated Village Development hospitals Program 47,828 people reached by mobile health
Slide 26: Summary
Summary Copper Equivalent Capacity (kt) 1,000 Largest diversified non ferrous metals and mining player in India 900 - Portfolio of world-class assets in 800 India, Australia, Africa and 700 Ireland 600 - Structural low-cost advantage 500 400 Robust financial profile 300 - Strong balance sheet and 20
Slide 27: Appendix
Sterlite Industries (India) Limited Appendix 27
Slide 28: Zinc-International: Financial Highlights
Zinc-International: Financial Highlights Skorpion CY 2009 CY 2010 EBITDA ($mn) 100 165 CoP (c/lb) 41 46 Depreciation ($mn) 57 62 Tax rate (%) 1-5% 1-5% Black Mountain CY 2009 CY 2010 EBITDA ($ mn) 55 73 CoP (c/lb) 56 69 Depreciation ($mn) 1 1 Tax rate (%) 28% 27% Sterlite Industries (India) Limited
Slide 29: Zinc-International: Consideration Paid
Zinc-International: Consideration Paid Skorpion Black Mountain Lisheen Total Particulars ($mn) ($mn) ($mn) ($mn) Debt-Cash free acquisition price announced on 10 May 2010 698 332 308 1,338 Add: Opening Net Cash / (Net Debt) 46 (100) 209 155 Share Value 744 232 517 1,493 Add: Accrued Interest on Shar
Slide 30: Vedanta Group Structure
Vedanta Group Structure Vedanta Resources (Listed on LSE) 79.4% 70.5% 54.6% 94.5% 55.7% 29.5% 3.1% Sterlite Industries Sesa Goa Konkola Copper Vedanta Madras Aluminium (Listed on BSE (Listed on BSE Mines (KCM) Aluminium (VAL) (MALCO) and NSE and NYSE) and NSE) 100% VS Dempo and Company Private Limit
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