Vedanta Resources plc

Vedanta Resources — Barclays Fixed Income Conference 2016

35 slides from Vedanta Resources's conference presentation, Nov 16, 2016

  1. Slide 1: Vedanta Resources Plc Barclays Fixed Income Conference

    Vedanta Resources Plc Barclays Fixed Income Conference November 2016

  2. Slide 2: Cautionary Statement and Disclaimer

    Cautionary Statement and Disclaimer The views expressed here may contain information derived from statements. We do not undertake to update our forward-looking publicly available sources that have not been independently verified. statements. We caution you that reliance on any forward-looking statem

  3. Slide 3: India's economic position today is similar to China in the mid 2000s

    India’s economic position today is similar to China in the mid 2000s India’s GDP today is similar to China in the mid-2000s • Indian GDP today similar to China’s in the mid-2000s 14.4 China ( GDP $tn 1991 to 2015) 12.8 India ( GDP $tn 2001 to 2025) 11.2  India’s GDP reached US$2tr in 2014 9.6 8.0 C

  4. Slide 4: India has the resource base to support its growth

    India has the resource base to support its growth India: Shared geology and India reserves ranking India’s share of global non-ferrous exploration spending very mineral potential with Africa Global Ranking1 based on low 34.8% 100% & Australia reserves 5th Coal R&R: 295 bn tonnes 3% 0.2% 3% 3% 6th Zi

  5. Slide 5: Vedanta: A Global Diversified Natural Resources Group

    Vedanta: A Global Diversified Natural Resources Group • Portfolio of large, structurally low-cost, long-life Tier-I assets, that EBITDA Mix for H1 FY2017 delivered strong free cash flow 6% – Significant ramp-up at Aluminium, Power and Iron ore progressing well with minimal incremental capex 11% – De

  6. Slide 6: Vedanta: Benefits of diversification and resilient margins

    Vedanta: Benefits of diversification and resilient margins Vedanta’s diversified portfolio significantly reduces volatility Aluminium Zinc Copper Iron Ore 62% Silver Brent Oil VED commodity Basket¹ 160 150 48% (01 Jan 2016 = 100) Commodity prices 40% 140 34% 130 30% Vedanta Plc commodity 120 27% Bas

  7. Slide 7: Delivering on all fronts

    Delivering on all fronts Ramping up production as guided  Focus on ramp-up at Aluminium, Power and Iron ore  On track for higher production in H2 at Zinc India Higher FCF driving deleveraging  Strong EBITDA margin at 33% in H1  Continued focus on cost optimization and FCF generation  Positive c

  8. Slide 8: Aluminum, Power and Iron Ore ramping up

    Aluminum, Power and Iron Ore ramping up Aluminium production (kt) 450 400  Aluminium production H1 exit run rate of 1.2mtpa 350 300 − Impacted by pot outages at Jharsuguda and BALCO, but no significant change in full year 250 200 guidance 150 100 50 0 Q4 FY16 Q1 FY17 Q2 FY17 Q4 FY17e TSPL Productio

  9. Slide 9: Strategic Priorities Remain Unchanged

    Strategic Priorities Remain Unchanged Strategic Priorities Focus Areas for FY 2017 • Disciplined ramp-up of new capacities in Aluminium, Power and Iron Ore Production growth and asset • Zinc: Ramp-up volumes at Rampura Agucha U/G and develop optimisation Gamsberg • O&G: Enhance gas production; EOR a

  10. Slide 10: Financial Update

    = vedanta Financial Update

  11. Slide 11: Vedanta has a Strong Balance Sheet

    Vedanta has a Strong Balance Sheet Credit profile for Global and Domestic Peers1 Domestic Peers (CRISIL Ratings) 75% Global Peers (S&P Ratings) Peer B, AA Peer 6, BB- Peer C, AA- 65% Peer A , AA- 55% Vedanta plc, B Peer D, AA- Gearing2 45% Peer 4, BBB- Peer 3, BB Peer 7, BBB- 35% Peer 5, B+ Peer E,

  12. Slide 12: Strong Financial Profile

    Strong Financial Profile Term Debt Maturity Profile¹ ($15.6 billion) (as of 30th September 2016) Debt at VED Plc Term Debt at Subsidiaries 4.6 1.9 3.1 2.9 2.5 1.2 1.9 1.4 2.2 1.2 2.6 1.0 2.0 1.1 1.0 0.2 0.4 0.1 FY2017 FY2018 FY2019 FY2020 FY2021 FY2022 and later Vedanta plc Maturities: FY2017 Vedant

  13. Slide 13: Financial Priorities leading to a stronger Balance Sheet

    Financial Priorities leading to a stronger Balance Sheet Disciplined Capital Allocation:  Ramp-ups at Aluminium, Power and Iron ore to generate significant cash flows Optimising capex,  Continued optimization of Opex and Capex focus on FCF  Continued focus on reduction in debt Deleveraging;  Str

  14. Slide 14: Business Update

    2S vedanta Business Update

  15. Slide 15: Zinc: Fundamentals supporting performance

    Zinc: Fundamentals supporting performance CY2016 Global Zinc Cost curve Global Zinc concentrate deficit supporting zinc prices (kt) $/t 800 2,000 Century closure Dugald River 600 (500ktpa) (210 ktpa) Lisheen closure Gamsberg Gamsberg 1,700 Zinc Intl 400 (160 ktpa) (250ktpa) to commence Hindustan Zin

  16. Slide 16: Zinc India: Well-positioned to reap benefits of strong fundamentals

    Zinc India: Well-positioned to reap benefits of strong fundamentals Projects Rampura Agucha Mine – Longitude Vertical Section  RAM open pit Stage V: Limiting incremental pit depth to 30 mtrs vs. earlier plan of 50 mtrs, to mitigate pit wall challenges and significantly reduce waste-ore ratio − Ore

  17. Slide 17: Zinc International: First ore production in mid CY 2018 at Gamsberg

    Zinc International: First ore production in mid CY 2018 at Gamsberg Project timeline Gamsberg Project update 250kt Gamsberg Project: First ore production by mid-CY2018  Large, low-cost project with long mine life − Targeting zinc production of 250ktpa in Phase-1 Feasibility Full Construction Ramp-u

  18. Slide 18: Oil & Gas

    Oil & Gas H1 Results  Mangala EOR, world’s largest polymer program − H1 average EOR production at 47 kboepd (Q2 at 52 kboepd) − Rajasthan production stable at 168 kboepd in Q2  RJ water-flood cost at $4.2/boe in H1; $3.9/boe in Q2, lowest in the last ten quarters RDG Gas: Phased ramp-up  Phase-1:

  19. Slide 19: Aluminium

    Aluminium Smelters continue to ramp-up, partially impacted by pot outages Aluminium Costs and Margins (in $/t, for Q2 FY2017) Q1 FY17  Record half yearly production at 541kt 1,572 127 53 1,752 (540) (622) (313) (70) $207/t  Ramp-ups impacted by pot outages 82 72 1,774 − Jharsuguda-II: 168 pots imp

  20. Slide 20: Copper – Zambia

    Copper – Zambia Results Integrated volumes and C1 cash costs¹  Integrated production in H1 FY2017 was lower as Nchanga underground 213 208 50 195 198 operations (NUG) under care & maintenance 45 212 175 169 200  TLP production lower by 3% due to lower feed from current tails 195 187 171 177 40  C

  21. Slide 21: Copper – Zambia (contd.)

    Copper – Zambia (contd.) Regulatory Update Volumes (kt)  Mineral Royalty Tax linked to copper LME prices has been passed in Konkola Nchanga TLP Custom the parliament and is now effective from 1 June 2016 190kt  Power situation is challenging but improving − Government revised the tariff upwards by

  22. Slide 22: Power

    Power Results Power Generation Capacity – c. 9GW  TSPL IPP: 3.6GW CPP:5.1GW − Unit-III achieved COD in August and capitalized on 1st  600MW  1,215MW Jharsuguda September Jharsuguda (of  3*600MW Jharsuguda − Plant availability of 77% in Q2 and 75% in H1 2400MW plant) (of 2400MW plant)  1,980MW T

  23. Slide 23: Iron Ore and Copper India

    Iron Ore and Copper India Iron Ore Goa iron ore costs and margin (H1 FY2017, $/t)  Sales of 3.4mt in H1; mining and shipping at Goa resumed post monsoon at end of Q2 57 12  Goa operations achieved over 40% of annual allocated mining 6 capacity in Q1 2 37 6  Karnataka sales of 1mt in H1 7 7  Enga

  24. Slide 24: Appendix

    2S vedanta Appendix

  25. Slide 25: Vedanta Ltd.– Cairn India merger: Transaction timetable

    Vedanta Ltd.– Cairn India merger: Transaction timetable Key Event Expected date BSE, NSE and SEBI approvals sought Completed BSE, NSE and SEBI approvals Completed Application to High Court in India Completed Vedanta plc posting of UK Circular Completed Vedanta plc EGM Completed Vedanta Limited share

  26. Slide 26: Segment-wise summary

    Segment-wise summary Oil & Gas H1 FY2016 H1 FY2017 Zinc-India H1 FY2016 H1 FY2017 Average Daily Gross Operated Mined Metal (kt) 472 318 Production (boepd) 207,538 196,629 Refined Zinc – Integrated (kt) 398 250 Rajasthan 170,164 167,323 Refined Lead – Integrated (kt)1 67 55 Ravva 27,303 19,228 Saleab

  27. Slide 27: Segment-wise summary (contd.)

    Segment-wise summary (contd.) Copper-Zambia H1 FY2016 H1 FY2017 Aluminium H1 FY2016 H1 FY2017 Mined Metal (kt) 62 58 Aluminium Production (kt) 464 541 Finished Metal – Total (kt) 90 92 Jharsuguda I - 500kt 262 261 Integrated (kt) 60 55 Jharsuguda II - 1,250kt1 38 77 Custom Smelting (kt) 30 36 Korba-

  28. Slide 28: Segment-wise summary (contd.)

    Segment-wise summary (contd.) Power Iron Ore and Pig Iron H1 H1 H1 H1 FY2016 FY2017 FY2016 FY2017 Power Sales (million units) 5,789 6,039 Sales (mt) 1.2 3.4 Jharsuguda 2,400MW 3,820 1,497 Goa - 2.4 BALCO 270MW 128 - Karnataka 1.2 1.0 BALCO 600MW 158 1,156 Production 1.0 4.7 MALCO 320 115 Goa 0.0 2.9

  29. Slide 29: Entity Wise Cash and Debt

    Entity Wise Cash and Debt Net Debt Summary ($mn) 30 Sept 2015 31 Mar 2016 30 Sep 2016 Company Debt Cash & LI Net Debt Debt Cash & LI Net Debt Debt Cash & LI Net Debt Vedanta plc1 8,053 17 8,036 7,364 30 7,334 6,145 19 6,126 KCM 728 38 690 659 33 626 642 1 641 Vedanta Ltd. Standalone 4,422 334 4,088

  30. Slide 30: Debt Profile

    Debt Profile Diversified Funding Sources for Term Debt ($15.6bn) (as of 30 Sep 2016) 14% 21% Bonds - USD Bonds - INR Convertible Bonds - USD 11% 31% Term Loan - INR Term Loan - USD 0% Short Term Loans 23%  46% of the debt is fixed interest rate, 54% floating rate  52% of the debt is $ denominated,

  31. Slide 31: Inter-company Debt

    Inter-company Debt Debt Service Liability (in $mn) H1 FY2017 Vedanta Resources plc 31 Mar 2016 30 Sep 2016 Interest Cost Gross External Debt 7,507 6,262 221 Intercompany Receivable at Plc from Vedanta Ltd (1,867) (389) (28) Debt Service Liability 5,640 5,873 193 H1 FY2017 Vedanta Ltd. 31 Mar 2016 30

  32. Slide 32: Credit Metrics

    Credit Metrics Covenant FY2016 LTM Sep’16 (Up to March 2017) Net Debt/EBITDA 3.14x 3.58x < 4.0x EBITDA/Net Interest Expense1 3.86x 3.59x > 2.5x Net Assets/Debt 1.55x 1.50x > 1.4x Gearing2 52% 54% Gearing – pre-impairment2 33% 35% Several of our facilities have the covenants of Net Debt/EBITDA of <2.

  33. Slide 33: Currency and Commodity Sensitivities

    Currency and Commodity Sensitivities Foreign Currency - Impact of a 10% depreciation in FX Rate H1 FY2017 H1 FY2017 Currency Average FX rate EBITDA ($mn) INR/USD 66.9474 79.5 Commodity prices – Impact of a 10% increase in Commodity Prices H1 FY2017 H1 FY2017 Commodity Average price EBITDA ($mn) Oil

  34. Slide 34: Project Capex

    Project Capex Spent up Capex to March Unspent as at Capex in Progress Status ($mn) 2016 Spent in H1 30 Sep 2016 Cairn India 1,378 1,278 21 79 Total Capex in Progress - Oil & Gas 1,378 1,278 21 79 Aluminium Sector Smelter: 168 pots capitalized, further BALCO – Korba-II 325ktpa Smelter and ramp up in

  35. Slide 35: Group Structure

    Group Structure Vedanta Resources Plc Divisions of Vedanta Limited 79.4% 62.9%  Sesa Iron Ore Konkola  Sterlite Copper (Tuticorin) Copper Vedanta Ltd  Power (2,400 MW Jharsuguda) Mines (KCM)  Aluminium (Odisha aluminium and power assets) Subsidiaries of Vedanta Ltd 59.9% 64.9% 51% 100% 100% 100%

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