Vedanta Limited · NSE:VEDL
Vedanta — Q3 FY2023 Earnings Presentation
48 slides from Vedanta's earnings presentation, Jan 27, 2023
Slide 1: 3QFY23 Earnings Presentation
VEDANTA LIMITED INVESTOR PRESENTATION January 27, 2023 3QFY23 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: 3QFY23 Review and Business Update
VEDANTA LIMITED INVESTOR PRESENTATION 3QFY23 3QFY23 Review and Business Update Sunil Duggal Group CEO & Chief Safety Officer Sensitivity: Internal (C3)
Slide 4: Vedanta is uniquely positioned to deliver sustainable value
Vedanta is uniquely positioned to deliver sustainable value Robust financial profile with strong World-class natural resources powerhouse with ROCE, increasing cash flow and low cost and long-life diversified asset base balance sheet 1 Well positioned to capitalize on India’s 7 growth and benefit th
Slide 5: Vedanta is well positioned to capitalize on the momentum
Vedanta is well positioned to capitalize on the momentum Macro outlook Vedanta’s levers to capitalize on the momentum ▪ Improving commodity prices amidst – Cost optimization with improved linkage coal o Balanced supply demand and low inventories materialization and operational efficiencies o China’s
Slide 6: Strong quarterly operational and financial performance despite challenging macroeconomic environment
Strong quarterly operational and financial performance despite challenging macroeconomic environment ESG Operational Financial ▪ Significant improvement in ESG score of both Key businesses continue to deliver ▪ Revenue of ₹ 33,691 crore Vedanta Limited and Hindustan Zinc (HZL) by strong operating pe
Slide 7: ESG strategy: Pillar 1 – transforming communities
Steadily progressing on our repurposed ESG strategy: Pillar 1 – transforming communities Total Beneficiaries 9MFY23 CSR Spend1 Total Nandghars Key Initiatives of CSR 3.14+ mn ₹ 216+ crores 3,955 Areas of Focus in CSR Healthcare Drinking water and sanitation Nand Ghar Support: Ranthambore Nat. Park >
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) 3Q Key strategic initiatives/outcomes (FY21) Target Absolute GHG ▪ Procured ~ 390 Million unit of RE power in Aluminium BU in 3QFY23 60mn 45mn emissions (TCO2e) ▪ Biomass usa
Slide 9: ESG strategy: Pillar 3 – transforming the workplace
Steadily progressing on our repurposed ESG strategy: Pillar 3 – transforming the workplace Key KPIs Baseline 2030 Our aims 3Q Key strategic initiatives/ outcomes (UoM) (FY21) Target ▪ Conducted safety pause campaign across entire Vedanta sites to re- Ongoing emphasize importance of workplace safety
Slide 10: ESG Ratings: significant improvement across key external ratings
ESG Ratings: significant improvement across key external ratings Percentile Ranking Risk Score (Lower the better) ESG Rating ESG Rating 98% 47 BB 80 B 80 B 80 44 B 60 B- 60 89% 39.6 86% CCC 40 CCC 40 C 40 2020 2021 2022 2020 2021 2022 2019 2020 2021 2022 2019 2020 2021 2022 ▪ Vedanta among top 10 ▪
Slide 11: Key ESG projects across Vedanta
Key ESG projects across Vedanta Green Copper Critical Risk Management Renewable Energy Nature Based Solutions BU: Sterlite Copper BU: All BU BU: VZI BU: Cairn India Aim 4: Net Carbon neutral by 2050 Aim 7: Prioritizing safety and Aim 4: Net zero carbon by 2050 or Aim 6: Greener Business Model or soo
Slide 12: Digitalization focus to become a data driven organization
Digitalization focus to become a data driven organization Smart Operations and Digital Mission - 2025 01 Asset Optimization Creating 10% EBITDA 5 impact 02 Workplace safety We are here Digitalization – Stage 2 Focus Pratham – 2 : Area Digitalization Aim to ✓ 100% automation in Enabling 03 Logistics
Slide 13: Digitalization Use Case: Advanced Process Control (APC) – Evaporation
Digitalization Use Case : Advanced Process Control (APC) – Evaporation KPI: Specific Steam Consumption Optimization Specific Steam Consumption (SSC) across the evaporation units in alumina refinery is being optimized through the APC system by minimizing variability & driving efficiencies Outcome and
Slide 14: Aluminium: COP improved 12% QoQ on operational and buying efficiencies
Aluminium: COP improved 12%QoQ on operational and buying efficiencies Aluminium: Achieved record 9M metal production Key quarterly performance highlights: COP ($/T) ▪ Aluminium production lower by 2% YoY and 3% Production (kt) 1,697 1,716 Margin ($/t) QoQ 2,412 2,429 2,055 2,149 1,747 ▪ VAP sales st
Slide 15: Aluminium: significant progress in various growth projects
Aluminium: significant progress in various growth projects Lanjigarh expansion: few completed projects during 3QFY23 PHE Unit Ball Mill Gear Erection 13 MV Board Erection Evaporation Unit Compressor House Digestion Heater Flow Discharge Unit Raw water system unit 15 PHE: Plate Heat Exchanger Unit Ve
Slide 16: Zinc India: best-ever 9M mined metal and refined metal production
Zinc India: delivered best–ever 9M mined metal and refined metal production Key quarterly performance highlights: 9-Months’ key performance highlights: ▪ Mined metal production up 1% YoY with higher ore production ▪ Best-ever 9-month mined metal production, up 5% YoY ▪ Refined metal production was l
Slide 17: Zinc International: steady operations at 280+ KTPA MIC production run rate
Zinc International: steady operations at 280+ KTPA MIC production run rate MIC Production (KT) Key quarterly performance highlights: 210 Gamsberg BMM 168 51 ▪ Total MIC production increased 32%YoY 42 159 74 69 126 ▪ Gamsberg MIC production increased 26%YoY 52 19 17 11 55 52 ▪ Gamsberg COP (ex TcRc)
Slide 18: Zinc International: journey so far and value potential
Zinc International: journey so far and value potential 1,000 ZI Reserve and Resources ZI Production (mt tonnes) Gamsberg (KTPA) BMM (KTPA) 671 600 100 566 260 - 295 509 223 82 60-70 500 434 52 65 170 200-225 17 FY19 FY22 FY23e FY25e Medium-Term FY19 FY20 FY21 FY22 Potential Gamsberg Phase 2: ▪ Proje
Slide 19: Zinc International sale to HZL: unlocking significant value
Zinc International sale to HZL: unlocking significant value with a win-win deal for both VEDL and HZL shareholders ▪ Proposed transaction: Sale of Vedanta Zinc International (VZI) Transaction Structure business (Gamsberg, Black Mountain and Skorpion operations) to Hindustan Zinc Limited (HZL) ▪ Sale
Slide 20: Oil & Gas: QoQ volume improved with focus on growth projects
Oil & Gas: QoQ volume improved with focus on growth projects Key highlights: Gross production (kboepd) ▪ Rajasthan PSC Signoff: Addendum to PSC for 10-year 159 163 extension with effect from 15th May 2020 signed off 140 145 144 ▪ Production: 3QFY23 Average gross production higher by 3%QoQ mainly due
Slide 21: Iron ore and VAB
Iron ore and VAB Karnataka Iron ore production Iron ore – Karnataka: Production (mn tonnes) ▪ Quarterly production higher by 32% QoQ and 15% YoY 4.0 3.8 ▪ First to complete export shipment of Karnataka origin ore in Dec 22 post removal of export ban 1.4 1.2 1.1 Value added business (VAB): ▪ VAB prod
Slide 22: ESL Steel and FACOR
ESL Steel and FACOR ESL: key performance highlights FACOR: key performance highlights ▪ Quarterly saleable production lower by 6%QoQ on ▪ Quarterly Ore production increased 88%QoQ as 2QFY23 production account of maintenance activity in blast furnace in 3Q was affected by heavy monsoon; 9MFY23 Ore pr
Slide 23: Strategy to enhance long term value
Strategy to enhance long term value Optimize 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 24: Finance Update
VEDANTA LIMITED INVESTOR PRESENTATION 3QFY23 Finance Update Ajay Goel Acting Group Chief Financial Officer Sensitivity: Internal (C3)
Slide 25: 3QFY23 financial snapshot
3QFY23 financial snapshot Revenue EBITDA EBITDA Margin1 Profit after tax ₹ 33,691 crore ₹ 7,100 crore 24% ₹ 3,092 crore Lower 12% QoQ Strong margin Higher 15% QoQ Lower 7% QoQ FCF (Pre Capex) Net Debt / EBITDA Cash and Cash ROCE 2 equivalents c.23% ₹ 6,504 crore 0.96x ₹ 23,474 crore Maintained stron
Slide 26: EBITDA bridge 3QFY23 vs. 2QFY23 (QoQ comparison)
EBITDA bridge 3QFY23 vs. 2QFY23 (QoQ comparison) (In ₹ crore) Zinc (425) Aluminium 284 Brent (210) HZL (228) Aluminium (168) 16 2 92 569 8,436 8,038 920 765 1,426 7,100 Market & Regulatory Operational: ₹ 90 crore ₹ 398 crore 2QFY23 LME/ Brent / Input Fx Regulatory & Rebased Volume Cost & Others 3QFY
Slide 27: Net Debt Walk - 3QFY23
Net Debt Walk- 3QFY23 (In ₹ crore) Inventory, Debtors & others 944 1,233 38,076 Creditors 2,391 8,783 32,144 4,563 3,335 3,814 FCF Post Capex Rs 4,084 Cr Net Debt Cash flow from WC Movements Capex Dividend Translation and Net Debt 30th Sep'22 operations Others 31st Dec'22 27 Vedanta Limited 3QFY23 I
Slide 28: Balance sheet and debt breakdown
Balance sheet and debt breakdown Net debt / EBITDA – maintained at low level Debt breakdown (as of 31st Dec’2022) Gross Debt In $bn In ₹ 000’ crores 1.1 1.0 1.0 Term debt 6.1 50.7 0.9 0.9 0.5 Working capital 0.4 3.2 FY'18 FY'19 FY'20 FY'21 FY'22 Dec FY'23 Short term borrowing 0.9 7.7 ▪ Liquidity: Ca
Slide 29: Appendix
VEDANTA LIMITED INVESTOR PRESENTATION 3QFY23 Appendix Sensitivity: Internal (C3)
Slide 30: Income statement
Income statement ▪ Depreciation & Amortization 3Q 2Q 3Q In ₹ Crore FY23 FY23 FY22 o Higher YoY and QoQ mainly due to increase in depletion charge in Oil & Gas business Revenue from operations 33,691 36,237 33,697 Other operating income 411 417 400 ▪ Finance Cost o Increased YoY majorly due to increa
Slide 31: EBITDA bridge 3QFY23 vs. 3QFY22 (YoY comparison)
EBITDA bridge 3QFY23 vs. 3QFY22 (YoY comparison) (In ₹ crore) Aluminium (2,145) Zinc (931) Brent 179 10,938 Aluminium (11) 2,857 HZL (195) 75 347 1,557 1,548 7,997 312 238 7,100 IOB (141) HZL (94) Cairn (156) Market & Regulatory Operational: ₹ (659) crore ₹ (2,941) crore 3QFY22 LME/ Brent / Input Fx
Slide 32: Entity-wise Cash and Debt
Entity-wise Cash and Debt (In ₹ crore) Dec 31, 2022 Sep 30, 2022 Dec 31, 2021 Company Cash & Cash & Cash & Debt Net Debt Debt Net Debt Debt Net Debt Cash Eq Cash Eq Cash Eq Vedanta Limited Standalone 45,245 3,388 41,857 45,296 3,953 41,343 35,065 3,393 31,671 Cairn India Holdings Limited1 870 1,425
Slide 33: Funding sources and term debt maturities
Funding sources and term debt maturities Diversified Funding Sources for Long Term Debt of $6.1 Bn Long Term Debt Maturities : ₹ 50,718 crore ($6.1 Bn) (as of 31st Dec’22) (as on 31st Dec’22) 0.1% Standalone Subsidiaries 7% 29.3 20% In ₹ 000’ crore Bonds INR Term Loan INR 6.4 Term Loan Fx Bonds Fx 2
Slide 34: Segment Summary – Aluminium
Segment Summary – Aluminium Particulars (in’000 tonnes, or as Quarter 9-month stated) 3QFY23 3QFY22 % YoY 2QFY23 9MFY23 9MFY22 % YoY Alumina – Lanjigarh 443 472 (6%) 454 1,382 1,465 (6%) Total Aluminum Production 566 579 (2%) 584 1,716 1,697 1% Jharsuguda 424 432 (2%) 443 1,291 1,259 3% Korba 142 14
Slide 35: Aluminium profitability
Aluminium profitability $/t 2QFY23 2,354 234 190 2,778 738 1,066 624 184 165 2,429 2,149 3QFY23 153 2,548 71 2,324 757 1,791 782 611 190 209 LME Strategic Premium Realisation Alumina Power Other hot Conversion & EBITDA Hedging metal other 35 Vedanta Limited 3QFY23 Investor Presentation Sensitivity:
Slide 36: Segment Summary – Zinc India
Segment Summary – Zinc India Quarter 9 Months Production (in ’000 tonnes, or as stated) 3QFY23 3QFY22 % YoY 2QFY23 9MFY23 9MFY22 % YoY Mined metal content 254 252 1% 255 761 722 5% Integrated metal 257 261 (2%) 246 762 707 8% Refined Zinc – Integrated 210 214 (2%) 189 606 565 7% Refined Lead – Integ
Slide 37: Segment summary – Zinc International
Segment summary – Zinc International Quarter 9 Months Production (in’000 tonnes, or as stated) 3QFY23 3QFY22 % YoY 2QFY23 9MFY23 9MFY22 % YoY Mined metal content- BMM 17 11 53% 19 51 42 20% Mined metal content- Gamsberg 52 41 26% 55 159 126 27% Total 69 52 32% 74 210 168 25% Financials (In ₹ Crore,
Slide 38: Segment Summary – Oil & Gas
Segment Summary – Oil & Gas Quarter 9 Months OIL AND GAS (boepd) 3QFY23 3QFY22 % YoY 2QFY23 9MFY23 9MFY22 % YOY Average Daily Gross Operated 144,789 159,230 (9%) 140,471 144,441 163,146 (11%) Production (boepd) Rajasthan 118,314 136,795 (14%) 120,805 122,291 139,452 (12%) Ravva 13,064 14,457 (10%) 9
Slide 39: Segment Summary – Oil & Gas
Segment Summary – Oil & Gas Quarter 9 Months OIL AND GAS (boepd) 3QFY23 3QFY22 % YoY 2QFY23 9MFY23 9MFY22 % YOY Average Daily Production Gross operated 144,789 159,230 (9%) 140,471 144,441 163,146 (11%) Oil 118,530 133,731 (11%) 118,279 121,015 137,267 (12%) Gas (Mmscfd) 158 153 3% 133 141 155 (9%)
Slide 40: Segment Summary – Iron Ore and Steel
Segment Summary – Iron Ore and Steel Iron Ore Particulars (in million dry metric tonnes, or Quarter 9 Month as stated) 3QFY23 3QFY22 % YoY 2QFY23 9MFY23 9MFY22 % YoY Sales 1.4 1.6 (14%) 1.3 3.9 4.5 (13%) Goa 0.2 0.1 - 0.0 0.6 0.5 7% Karnataka 1.2 1.5 (22%) 1.3 3.3 4.0 (16%) Production of Saleable Or
Slide 41: Segment Summary – FACOR and Copper
Segment Summary – FACOR and Copper Copper Quarter 9 Months Production (in ’000 tonnes, or as stated) 3QFY23 3QFY22 % YoY 2QFY23 9MFY23 9MFY22 % YoY Copper - Cathodes 34 33 3% 41 114 91 25% Financials (In ₹ crore, except as stated) Revenue 4,158 3,741 11% 4,011 12,384 10,800 15% EBITDA (55) 15 - 15 (
Slide 42: Sales Summary – Zinc and Aluminium
Sales Summary – Zinc and Aluminium Quarter 9 Months Sales volume 3QFY23 3QFY22 2QFY23 9MFY23 9MFY22 Zinc-India Sales Refined Zinc (kt) 210 212 189 605 563 Refined Lead (kt) 46 47 57 157 142 Total Zinc-Lead (kt) 257 259 245 762 706 Silver (tonnes) 161 173 194 532 485 Zinc-International Sales Zinc Con
Slide 43: Sales summary – Iron & Steel, FACOR and Power
Sales summary – Iron & Steel, FACOR and Power Quarter 9 Months Sales volume Quarter 9 Months Sales volume 3QFY23 3QFY22 2QFY23 9MFY23 9MFY22 Power Sales (mu) 3QFY23 3QFY22 2QFY23 9MFY23 9MFY22 Iron ore sales Jharsuguda 736 755 634 2,207 2,060 Goa (mn dmt) 0.2 0.1 0.0 0.6 0.5 TSPL 2,651 2,355 2,843 8
Slide 44: Currency and commodity sensitivities
Currency and commodity sensitivities Foreign Currency - Impact of ₹ 1 depreciation in FX Rate Currency Increase in EBITDA INR/USD ~ ₹ 1000 crore / year Commodity prices – Impact of a 10% increase in Commodity Prices 9M FY23 9M Impact on Commodity Average price EBITDA ($mn) Oil ($/bbl) 101 60 Zinc ($
Slide 45: Group structure
Group structure As of 31-Dec-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 46: 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 47: Awards and Recognition - 3QFY23
Awards and Recognition - 3QFY23 Our group companies received more than 100 awards in the finance, operational excellence, sustainability, CSR and HR categories Sustainability development Finance and Operational Health, Safety & HR & CSR HZL won prestigious S&P Global - Platts Global Balco awarded wi
Slide 48: Results Conference Call Details
Results Conference Call Details Results conference call is scheduled at 5:30 PM (IST) on Jan 27, 2023. The dial-in numbers for the call are given below: Event Telephone Number +91 22 6280 1114 Universal Dial-In +91 22 7115 8015 India National Toll Free 1 800 120 1221 Canada 01180014243444 Earnings c