Vedanta Resources — Investor Presentation (September 2015)
21 slides from Vedanta Resources's investor presentation, Sep 9, 2015
Slide 1: Vedanta Resources plc Corporate Presentation
Vedanta Resources plc Corporate Presentation September 2015
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
Slide 3: Vedanta: A Global Diversified Natural Resources Company
Vedanta: A Global Diversified Natural Resources Company Diversified Business Model…. • Portfolio of large, structurally low cost, long life Tier-I EBITDA Mix2 for Q1 FY2016 assets: 1% 13% − Significant near term growth with well invested 6% 33% asset base not requiring large capex 5% − Well position
Slide 4: Recent volatility in commodities mainly driven by China
Recent volatility in commodities mainly driven by China Commodity Price Performance & Chinese Stock Index (rebased to 100) 110 PBOC rate cut ∆ YTD ∆ 3m Aluminium -13% -9% 100 Copper -18% -15% 90 Iron Ore -15% -8% Oil -21% -25% 80 China Market sell off given Zinc -18% -16% weak Chinese 70 economic da
Slide 5: China: Recalibration of economy and growth
China: Recalibration of economy and growth China Investment in absolute to grow at 6% CAGR “Soft landing” for China 8.0 49% 7.0 48% • New normal: shifting from high speed growth to 6.0 47% moderate growth 5.0 46% 45% 4.0 • Lower growth on higher base 44% 3.0 43% − Investment to GDP peaked, but absol
Slide 6: Oil: Volatility in short-term, with stability in medium term
Oil: Volatility in short-term, with stability and improved market dynamics in medium term Current Demand and Supply Dynamics Oil Supply & Demand forecasts (mmbbl/d) (mmbbl/d) Over supply has resulted in prices falling by c.50% last year 1.4 100 1.2 Iran could add to over-supply in the market 98 1.0
Slide 7: Aluminium: Cost curve suggests 50%+ of world's capacity at loss
Aluminium: Cost curve suggests 50%+ of world’s capacity at loss Aluminium Cost Curve Current Demand and Supply Dynamics Sharp rise in Chinese exports causing short-term market Cost (US$/t) 3,000 saturation Cost curve suggest >50% of world capacity at loss based on current 2,500 Spot price + Premium
Slide 8: Zinc: Attractive Fundamentals
Zinc: Attractive Fundamentals Zinc market is expected to be in a state of deficit Concentrate deficit supporting zinc prices ‘000 mt Zinc has strong fundamentals in the commodity complex; 500 Concentrate Surplus (+) Deficit (-) recent fall in Zinc prices driven by the broader sell off in commodity m
Slide 9: Copper and Iron Ore
Copper and Iron Ore Copper market to witness supply deficit in the medium term: Supply surplus partially offset by supply interruptions Tuticorin Smelter Smelter continues to maintain strong operational efficiency Positioned in the lowest cost quartile Strong TC/RC outlook and acid realizations Copp
Slide 10: Indian Government Committed to Reforms
Indian Government Committed to Reforms What has happened? Electrifying India through 22,000Km transmission lines Highway projects of c.8,000km awarded (3,621Km in FY14) Record increase in Coal production Government priorities and targets Housing for all by 2022: 60 million houses in urban and rural
Slide 11: Vedanta: Addressing current market volatility, well positioned for long term growth
Vedanta: Addressing current market volatility, well positioned to benefit from long term growth Aluminium consumption to rise with growth in population and urbanisation Diversified portfolio and high quality 60,000 2050 population level 10 workforce have enabled us to endure 50% 50,000 45% 8 40% urb
Slide 12: Appendix
33 vedanta Appendix
Slide 13: Safety and Sustainability: Key to our Operations
Safety and Sustainability: Key to our Operations Safety Focus on bringing in a culture of Zero-Harm LTIFR (per million man-hours worked) − Performance incentives linked to safety performance 0.83 − Ensure effective implementation of Safety Standards 0.55 0.54 0.46 Environment “Zero” Higher Category
Slide 14: Entity Wise Cash and Debt
Entity Wise Cash and Debt Net Debt Summary ($mn) 31 March 2014 30 Sept 2014 31 March 2015 Company Debt Cash & LI Net Debt Debt Cash & LI Net Debt Debt Cash & LI Net Debt Vedanta plc1 8,323 16 8,307 7,532 59 7,473 7,707 34 7,673 KCM 733 10 723 813 0 813 802 65 738 Vedanta Ltd. Standalone 5,011 427 4,
Slide 15: Optimising Capex to drive Cash Flow Generation
Optimising Capex to drive Cash Flow Generation Free cash flow post growth capex of $1bn in a volatile commodity price environment Prioritising capital to high-return, low-risk projects, to maximise cash flows − Oil & Gas FY2016 capex revised from $1.2bn to $0.5bn Retain the flexibility to invest fur
Slide 16: Strong Financial Profile
Strong Financial Profile Credit rating of BB-/Ba31 Diversified Funding Sources for Term Debt (as of 31 March 2015) Cash and Liquid Investments of $8.5bn, additional $1.2bn undrawn committed lines of credit 7% Debt profile: c.50% fixed, 50% floating rate; c.70% USD- Bonds - USD 25% denominated, 30% I
Slide 17: Credit Metrics
Credit Metrics FY2014 FY2015 Covenant Net Debt/EBITDA 1.8x 2.3x < 2.75x EBITDA/Net Interest Expense1 8.4x 6.8x > 4.0x Net Assets/Debt 2.2x 1.9x > 1.75x Gearing2 30.6% 40.8% Gearing – pre-impairment2 30.6% 33.5% Notes: 1. Interest includes Capitalized Interest. 2. Gearing is calculated as Net Debt di
Slide 18: Currency and Commodity Sensitivities
Currency and Commodity Sensitivities Foreign Currency - Impact of a 10% depreciation in FX Rate FY2015 FY2015 Currency Average FX rate EBITDA ($mn) INR/USD 61.1471 185.9 Commodity prices – Impact of a 10% increase in Commodity Prices FY2015 FY2015 Commodity Average price EBITDA ($mn) Oil ($/bbl) 85
Slide 19: Inter-company Debt
Inter-company Debt During FY2015 Debt Service Liability (in $mn) Cairn India lent $1.25bn to a Annualized wholly owned overseas Vedanta Resources plc 31 March 2014 31 March 2015 Interest Cost subsidiary of Vedanta Ltd Gross External Debt 8,511 7,891 c.500 Vedanta Ltd paid $0.8bn Intercompany Receiva
Slide 20: Merger of Vedanta Ltd and Cairn India Ltd
Merger of Vedanta Ltd and Cairn India Ltd Diversified portfolio de-risks earnings volatility and drives Diversified commodity model has generated superior stable cash flows through the cycle shareholder returns Improved ability to allocate capital to highest return projects Greater financial flexibi
Slide 21: 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% 100% 10
Vedanta Resources — Investor Presentation (September 2015) on 6ix