Vedanta Limited · NSE:VEDL
Vedanta — Q1 FY2018 Earnings Presentation
41 slides from Vedanta's earnings presentation, Jul 25, 2017
Slide 1: Vedanta Limited Q1 FY2018 Results
Vedanta Limited Q1 FY2018 Results 25 July 2017 Results conference call details are on the last page of this document Elements for a Sustainable Future VEDANTA LIMITED – Q1 FY2018 RESULTS PRESENTATION
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 Strategic Update Tom Albanese, CEO 4 Financial Update Arun Kumar, CFO 9 Tom Albanese, CEO Business Review 16 Sudhir Mathur, Acting CEO - Cairn Oil & Gas Q&A 26 VEDANTA LIMITED – Q1 FY2018 RESULTS PRESENTATION 3
Slide 4: Strategic Update
Vedanta Limited Q1 FY2018 Results 25 July 2017 Strategic Update Tom Albanese Chief Executive Officer Empowering Growth VEDANTA LIMITED – Q1 FY2018 RESULTS PRESENTATION
Slide 5: Sustainable Development
Sustainable Development Building a Zero Harm Culture LTIFR (per million man-hours worked) Safety 0.89 - Zero fatalities during Q1 FY18 - High Potential (HIPO) Incident reduced by 38% over 0.52 0.49 Q1 previous year. 0.41 0.43 0.40 0.37 - “Crane and lift” Safety Performance standard and guidance no
Slide 6: Q1 FY2018 Results Highlights
Q1 FY2018 Results Highlights Operations: Group EBITDA Mix Higher zinc-lead and silver volumes at Zinc India Q1 FY2018 Q1 FY2017 Gamsberg zinc project on track for mid CY18 Rs. 4,965 crore Rs. 3,539 crore production 4% 1% 2% Aluminium exit production run-rate of 1.4mtpa 10% (stabilized) 11% 12%
Slide 7: Delivering on our Strategic Priorities
Delivering on our Strategic Priorities Strategic Priorities Focus Areas for FY2018 Continued production ramp up Production Commence production at Gamsberg by mid CY2018 growth Continue to improve business efficiencies Efficiently refinance upcoming maturities, lower interest costs Deleveragi
Slide 8: Capital Allocation: Focus on Shareholder Returns
Capital Allocation: Focus on Shareholder Returns World class assets and operational excellence to deliver strong and sustainable cash flows Production growth and asset optimization Strong Shareholder Returns Maintain Strong Balance Sheet Grow Existing Businesses • Announced dividend policy at • Cont
Slide 9: Financial Update
Vedanta Limited Q1 FY2018 Results 25 July 2017 Financial Update Arun Kumar Chief Financial Officer Value Creation VEDANTA LIMITED – Q1 FY2018 RESULTS PRESENTATION
Slide 10: Q1 FY2018: Robust Profitability and Balance Sheet
Q1 FY2018: Robust Profitability and Balance Sheet • EBITDA higher 40% y-o-y, driven by higher commodity prices, higher volumes and cost savings - Lower q-o-q on account of lower volumes & commodity prices • Gross debt reduced by Rs. 6,2881 Crore; further reduction of Rs.2,500 Crore post June 30, 201
Slide 11: EBITDA Bridge (Q1 FY2018 vs. Q1 FY2017)
EBITDA Bridge (Q1 FY2018 vs. Q1 FY2017) Q1 FY2018 vs. Q1 FY2017 (In Rs. crore) Zinc & Lead 990 Aluminum 485 Brent 100 Zinc India 582 Brent Discount 96 Aluminum 184 Metal Premium (35) Others (82) 6,000 Iron ore (252) Rupee 315 Power (204) ZAR/NAD 59 1,384 242 183 119 132 4,965 5,000 374 480 22 4 4,28
Slide 12: Income Statement
Income Statement In Rs. crore Q1 Q1 Q4 Depreciation & Amortization FY’18 FY’17 FY’17 − Lower q-o-q and y-o-y due to change in depreciation Revenue 18,203 14,364 22,371 method in Oil & Gas business from 2P to 1P reserve EBITDA 4,965 3,539 7,275 based on guidance under Ind-AS w.e.f. 1st April. Depre
Slide 13: Net Debt for Q1 FY2018
Net Debt for Q1 FY2018 (In Rs. crore) 20,000 419 19,024 3,010 4,131 1,098 18,000 3,306 16,000 7,223 15,322 14,000 12,000 FCF Post Capex Rs. (273) crore 10,000 8,099 8,000 6,000 Net Debt Dividends Net Debt Pref. shares on CF from WC Movements Capex Translation & Net Debt 1st Apr 2017 Paid after divid
Slide 14: Strong Credit Profile and Balance Sheet
Strong Credit Profile and Balance Sheet Maturity Profile of Term Debt ($6.1bn) (as of 30th June 2017) Subsidiaries Standalone 1.3 1.2 1.0 0.4 1.0 0.4 0.9 0.3 0.7 0.3 0.4 0.9 0.4 0.8 0.7 0.6 0.4 0.4 FY2018 FY2019 FY2020 FY2021 FY2022 FY2023 & Later Term debt of $6.1bn ($3.9bn at Standalone and $2.2bn
Slide 15: Financial Priorities: Strong shareholder returns while strengthening Balance Sheet
Financial Priorities: Strong shareholder returns while continuing to strengthen Balance Sheet Disciplined Capital Continued focus on generating cash flows from ramp up of assets Allocation; Optimization of opex focus on FCF Further improvement in credit rating to AA+ Deleveraging; Continued
Slide 16: Business Review
Vedanta Limited Q1 FY2018 Results 25 July 2017 Business Review Tom Albanese, Chief Executive Officer Sudhir Mathur, Acting CEO - Cairn Oil & Gas Operational Excellence VEDANTA LIMITED – Q1 FY2018 RESULTS PRESENTATION
Slide 17: Vedanta well-positioned to benefit from strong Zinc fundamentals
Vedanta well-positioned to benefit from strong Zinc fundamentals Refined Zinc inventory (mt) at 7 year lows, supporting zinc Global Zinc demand (by industry) prices Consumer Industrial products LME SHFE Zinc LME $/t (RHS) machinery 1.8 3,500 6% 7% 1.6 3,000 1.4 2,500 1.2 2,000 Infrastructure Constru
Slide 18: Zinc India
Zinc India Q1 FY2018 Results MIC at 233kt; refined zinc-lead production at 228kt Refined silver production at 115 tonnes CoP at $973/t; higher q-o-q mainly due to lower production as per mine plan, input commodity costs and lower acid realization Projects – key highlights Capacity expansion
Slide 19: Zinc International
Zinc International Significant progress at 250kt Gamsberg project Q1 FY2018 Results On target for first production by mid CY2018 and on budget for a Production at 32kt: Skorpion at 14kt, BMM at 18kt capex target of $400mn CoP at $1690/t, higher q-o-q, driven by lower Critical milestone of co
Slide 20: Cairn Oil & Gas
Cairn Oil & Gas Q1 FY 2018 Results MPT: Facility modifications Gross average production at 187,203 boepd Rajasthan production at 159,351 boepd Offshore production at 27,852 boepd RJ Mangala EOR production stable at 56 kboepd in Q1 Commenced production from two more satellite fields viz Kaa
Slide 21: Cairn Oil & Gas Key Projects
Cairn Oil & Gas Key Projects MPT: Facility modifications RDG Gas project Phase-1: 40-45 mmscfd by Q2 FY2018 Phase-2: Gas production of 100mmscfd and condensate production of 5kboed by H1 CY2019; Drilling rig contract awarded, tendering for new gas processing terminal is underway Key Oil projec
Slide 22: Aluminium
Aluminium Q1 FY2018 Results Aluminium Costs and Margins (in $/t, for Q1 FY2018) Aluminium production of 352kt and Alumina 303kt Aluminum CoP at $1,727/t, higher q-o-q due to higher Q4 ‘17 1710 45 86 1,982 (645) (548) (298) (44) $447/t (150) (299) (2) 98 63 2,070 (751) input and power costs and I
Slide 23: Power
Power Q1 FY 2018 Results Power Generation Capacity – c. 9GW TSPL IPP: 3.6GW Plant was out of production for c. 2months, due to fire at coal conveyor in April 2017 CPP:5.1GW All 3 units restarted in end Jun 2017, currently 41% running at availability of 90%. Targeting availability of 70%+ for
Slide 24: Iron Ore and Copper India
Iron Ore and Copper India Q1 FY 2018 Results Iron Ore Sales of 2.32mt and production of 3.24mt Lower sales at Goa due to low pricing & widening of discounts from benchmark grade Beneficiation & blending in process to improve realisations and margins Karnataka achieved c.50% of allocated annu
Slide 25: Vedanta Limited: A diversified resources company with low cash cost positions
Vedanta Limited: A diversified resources company, with low cash cost positions, market leading growth and strong balance sheet Commodity diversification1 Attractive cost position I II III IV Size of circle Zinc denotes India EBITDA Zinc Intl. contribution Peers O&G Copper Aluminium India % Revenue (
Slide 26: Q&A
Vedanta Limited Q1 FY2018 Results 25 July 2017 Q&A VEDANTA LIMITED – Q1 FY2018 RESULTS PRESENTATION
Slide 27: Guidance
Guidance Segment FY18e Comments Zinc-Lead Integrated: 950kt Zinc India Silver volume: +500 tonnes CoP ($/t): slightly higher than FY2017 Zinc-Lead volume: c.160kt Zinc International Gamsberg expected CoP: $1000-1,150/t CoP: c.$1,500/t RJ Gross Volume: 165kboepd Oil & Gas Ravva Gross volume: 16kboepd
Slide 28: Entity Wise Cash and Debt
Entity Wise Cash and Debt (in Rs. crore) 30 June 2017 31 March 2017 30 June 2016 Company Debt Cash & LI Net Debt Debt Cash & LI Net Debt Debt Cash & LI Net Debt Vedanta Limited 42,711 16,698 26,013 43,233 2,316 40,917 35,729 1,216 34,513 Standalone Cairn India1 NA NA NA - 27,646 (27,646) - 23,565 (2
Slide 29: Debt Breakdown & Funding Sources
Debt Breakdown & Funding Sources Diversified Funding Sources for Term Debt of $6.1bn Debt Breakdown (as of 30th June 2017) (as of 30 June 2017) 2% Debt breakdown as of 30 Jun (in $bn) 15% 2017 Term Loans-INR Term debt 6.1 Bonds-INR Working capital 0.3 47% Term Loans-USD Short term borrowing 2.4 Shor
Slide 30: Segment Summary – Oil & Gas
Segment Summary – Oil & Gas Q1 Q4 Full Year OIL AND GAS (boepd) FY 2018 FY 2017 % change YoY FY2017 FY 2017 Average Daily Total Gross Operated Production (boepd)* 196,656 206,455 -5% 194,343 199,574 Average Daily Gross Operated Production (boepd) 187,203 196,861 -5% 184,585 189,926 Rajasthan 159,351
Slide 31: Segment Summary – Oil & Gas (contd.)
Segment Summary – Oil & Gas (contd.) Q1 Q4 Full Year OIL AND GAS (boepd) FY 2018 FY 2017 % change YoY FY2017 FY 2017 Average Daily Production Gross operated 187,203 196,861 -5% 184,585 189,926 Oil 179,892 190,305 -5% 180,914 184,734 Gas 44 39 12% 22 31 Working Interest 119,473 125,391 -5% 117,926 12
Slide 32: Segment Summary – Zinc India
Segment Summary – Zinc India Q1 Q4 Full Year Production (in ’000 tonnes, or as stated) FY 2018 FY 2017 % change YoY FY2017 FY 2017 Mined metal content 233 127 84% 312 907 Refined Zinc – Total 194 102 90% 215 672 Refined Zinc – Integrated 194 101 92% 215 670 Refined Zinc – Custom - 1 - - 2 Refined Le
Slide 33: Segment Summary – Zinc International
Segment Summary – Zinc International Q1 Q4 Full Year Production (in’000 tonnes, or as stated) FY 2018 FY 2017 % change YoY FY2017 FY 2017 Refined Zinc – Skorpion 14 24 (42)% 21 85 Mined metal content- BMM 18 19 (4)% 20 70 Mined metal content- Lisheen - - - - - Total 32 43 (25)% 41 156 Financials (In
Slide 34: Segment Summary – Copper India
Segment Summary – Copper India Q1 Q4 Full Year Production (in ’000 tonnes, or as stated) % change FY 2018 FY 2017 FY2017 FY 2017 YoY Copper - Mined metal content - - - - Copper - Cathodes 90 100 (10)% 103 402 Tuticorin power sales (million units) 30 60 (51)% 64 200 Financials (In Rs. crore, except a
Slide 35: Segment Summary – Iron Ore
Segment Summary – Iron Ore Q1 Q4 Full Year Particulars (in million dry metric tonnes, or as stated) % change FY 2018 FY 2017 FY2017 FY 2017 YoY Sales 2.3 2.6 -12% 3.0 10.2 Goa 1.9 2.1 -11% 2.3 7.4 Karnataka 0.4 0.5 -15% 0.7 2.7 Production of Saleable Ore 3.2 3.2 1% 3.7 10.9 Goa 2.2 2.4 -10% 3.7 8.8
Slide 36: Segment Summary – Aluminium
Segment Summary – Aluminium Q1 Q4 Full Year Particulars (in’000 tonnes, or as stated) FY 2018 FY 2017 % change YoY FY2017 FY 2017 Alumina – Lanjigarh 303 275 10% 313 1,208 Total Aluminium Production 352 244 44% 353 1,213 Jharsuguda-I 92 129 -29% 132 525 1 Jharsuguda-II 120 28 328% 100 261 245kt Korb
Slide 37: Segment Summary – Power
Segment Summary – Power Q1 Q4 Full Year Particulars (in million units) % change FY 2018 FY 2017 FY2017 FY 2017 YoY Total Power Sales 1,838 3,010 -39% 3,462 12,916 Jharsuguda 600 MW 564 892 -37% 952 3,328 BALCO 600 MW 551 607 -9% 793 2,609 MALCO 4 90 -96% 46 190 HZL Wind Power 156 148 5% 75 448 TSPL
Slide 38: Sales Summary
Sales Summary Sales volume Q1 FY2018 Q1FY2017 Q4 FY 2017 FY 2017 Zinc-India Sales Refined Zinc (kt) 190 120 217 696 Refined Lead (kt) 34 23 47 138 Zinc Concentrate (DMT) - - 27 27 Lead Concentrate (DMT) - - - - Total Zinc (Refined+Conc) kt 190 120 243 723 Total Lead (Refined+Conc) kt 34 23 47 138 To
Slide 39: Sales Summary
Sales Summary Sales volume Q1 FY Q1FY Q4FY FY Q1 FY2018 Q1FY2017 Q4FY 2017 FY 2017 Sales volume Power Sales (mu) 2018 2017 2017 2017 Jharsuguda 600 MW 564 892 952 3,328 Iron-Ore Sales TSPL 563 1,272 1,596 6,339 Goa (mn DMT) 1.9 2.1 2.3 7.4 BALCO 270 MW - - - - Karnataka (mn DMT) 1 0.4 0.5 0.7 2.7 BA
Slide 40: Group Structure
Group Structure Vedanta Resources Plc Divisions of Vedanta Limited 79.4% 50.1% Sesa Iron Ore Sterlite Copper (Tuticorin) Konkola Copper Vedanta Ltd Power (600 MW Jharsuguda) Mines (KCM) Aluminium (Odisha aluminium and power assets) Cairn Oil & Gas* Subsidiaries of Vedanta Ltd 64.9% 51% 100
Slide 41: Results Conference Call Details
Results Conference Call Details Results conference call is scheduled at 6:00 PM (IST) on Tuesday, 25 July 2017. The dial-in numbers for the call are given below: Event Telephone Number Mumbai main access Earnings conference call on July 25, India – 6:00 PM (IST) +91 22 3938 1017 2017 Toll Free numbe