Vedanta Limited · NSE:VEDL
Vedanta — Q2 FY2021 Earnings Presentation
41 slides from Vedanta's earnings presentation, November 2020
Slide 1: Q2 FY2021
Q2 FY2021 November 2020 Sensitivity: Internal (C3)
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 Q2 FY21 Review & Business Update Sunil Duggal, CEO 4 Financial Update Arun Kumar, CFO 12 Appendix 21 VEDANTA LIMITED – Q2 FY2021 INVESTOR PRESENTATION 3 Sensitivity: Internal (C3)
Slide 4: Q2 FY2021 Review & Business Update
Q2 FY2021 Q2 FY2021 Review Sunil Duggal | Chief Executive Officer & Business Update Sensitivity: Internal (C3)
Slide 5: Key Highlights: Q2 FY2021
Key Highlights: Q2 FY2021 ▪ Zinc India ever highest ore production of 3.9 Mnt since underground transition highest ever quarterly silver production of 203 tonnes lowest ever quarterly cost of $919/t since underground operations ▪ Zinc International Gamsberg highest ever production of 35kt ▪ O&G gros
Slide 6: Heading Towards – Zero Harm, Zero Waste, Zero Discharge
Heading Towards – Zero Harm, Zero Waste, Zero Discharge Safety Program Update Environment Update ▪ Increased focus on explosives safety, Water ▪ ~7.5 million m3 of water fatality prevention program conservation savings over three years 3 fatalities in Q2 ▪ Development of HSES video training module G
Slide 7: Zinc India: Strong Foundation Driving Growth
Zinc India: Strong Foundation Driving Growth Performance Update Metal in Concentrate Production Quarter Performance: 432 440 ▪ MIC Production 238kt, up 18% q-o-q 219 238 ▪ Metal Production 237kt, up 18% q-o-q 202 ▪ Highest ever Silver Production 203 tonnes, up 73% q-o-q Q2 FY20 Q1 FY21 Q2 FY21 H1 FY
Slide 8: Zinc International: Gamsberg Positioning for Long Term Value Creation
Zinc International: Gamsberg Positioning for Long Term Value Creation Performance Update Gamsberg Quarter Performance: ▪ Production at 35kt, up 38% q-o-q. Best ever production (14kt) achieved in Sep ▪ Overall production at 51kt, up 33% q-o-q ▪ COP at $1,246, down 6% q-o-q due to better ▪ COP of $1,3
Slide 9: Oil & Gas: Focus on Delivery of Growth Projects
Oil & Gas: Focus on Delivery of Growth Projects Growth Projects OALP ▪ Key projects on track to complete by Q3 FY21: ▪ FTG: Completed in 3 Cambay blocks (~15,000 LKM); • Gas introduced in the new terminal, sales to Work in progress in 7 Rajasthan blocks (~10,000 LKM) commence in Q3 FY21 (incremental
Slide 10: Aluminium: Record Cost Performance
Aluminium: Record Cost Performance Structural Reduction in Cost Performance Update 1,852 1,810 Quarter Performance: ▪ Aluminium COP at $ 1,288/t, marginally up 2% q-o-q 1,268 1,288 1,278 ▪ Both of our smelters at Jharsuguda and Balco operate in 1st quartile* of the cost curve for the year 2020 ▪ Lan
Slide 11: Other Assets: Iron ore and ESL Steel
Other Assets: Iron ore and ESL Steel Iron Ore ESL Steel Performance Update Performance Update Quarter Performance: Quarter Performance: ▪ Karnataka sales 1.3 Mnt, significantly up q-o-q ▪ Production 260kt, down 3% q-o-q ▪ Pig Iron production 186kt, up 71% q-o-q ▪ Sales 271kt, down 11% q-o-q ▪ Margin
Slide 12: Finance Update
Q2 FY2021 Finance Update Arun Kumar | Chief Financial Officer Sensitivity: Internal (C3)
Slide 13: Financial snapshot Q2
Financial snapshot Q2 EBITDA Net Debt ND/EBITDA ₹ 6,531 cr ₹ 27,190 cr 1.2x Up 45% y-o-y Flat q-o-q Maintained at low level Highest for >2 years EBITDA Margin* Cash & Cash equivalent ROCE^ 36% ₹ 35,569 cr c. 12% Robust Margin Liquidity Position Continuing double digit * Excludes custom smelting at C
Slide 14: EBITDA Bridge (Q2 FY 2020 vs. Q2 FY 2021)
EBITDA Bridge (Q2 FY 2020 vs. Q2 FY 2021) (In ₹ crore) Aluminium 720 Steel 191 Cairn 61 IOB 72 Zinc, Lead & Silver 285 Brent (536) Aluminium (230) 157 6,531 1,010 596 25 5,183 182 4,497 537 652 Market & Regulatory Operational ₹ 686 crore ₹ 1,192 crore Q2 FY20 LME / Brent Input Currency Regulatory Ad
Slide 15: EBITDA Bridge (Q1 FY 2021 vs. Q2 FY 2021)
EBITDA Bridge (Q1 FY 2021 vs. Q2 FY 2021) (In ₹ crore) Zinc, Lead & Silver 1,107 Brent 255 Aluminium 745 HZL 194 Steel 83 Al 98 232 6,531 252 2,169 92 199 493 332 5,554 4,008 Market & Regulatory Operational ₹ 1,546 crore ₹ 744 crore Q1 FY21 LME / Brent Input Currency Regulatory Adjusted Volume Cost
Slide 16: Net Debt for Q2 FY 2021
Net Debt for Q2 FY 2021 (In ₹ crore) Inventory , Debtors & Others 1,090 Creditors / Customers advance (2,898) 27,098 5,375 1,562 215 133 27,190 1,749 1,808 FCF Post Capex ₹ 1,818 crore Net Debt CF from WC Inter FACOR Net Debt Capex Translation 1st Jul’20 Operations Movements Company Acquisition 30th
Slide 17: Balance Sheet
Balance Sheet Term Debt Maturities - ₹ 53,411 Crore ($7.3 bn) (as of Sep 30, 2020) ▪ Liquidity: 27% 35% ▪ Cash and Cash equivalent at ₹ 35,569 crore 18.8 ▪ Net Interest: 14.2 8.0 18% ▪ Interest Income – Returns ~6.0% 15% 4.7 9.5 ▪ Interest Expense – Maintained ~7.8% ₹ ‘000 Crore 7.7 ▪ Average term d
Slide 18: Capex and Returns Profile
Capex and Returns Profile Growth CAPEX Profile, $bn Oil & Gas Zinc Al & Power Copper Other Optionality Full year Capex guidance 0.7 1.0 1.2 1.5 1.2 1.1 0.1 0.8 0.8 0.7 0.1 0.5 0.1 0.7 0.6 0.1 0.1 0.2 0.2 0.3 0.1 0.5 0.1 0.2 0.2 0.3 0.03 0.05 0.2 0.1 0.1 0.5 0.5 0.15 0.4 FY2016 FY2017 FY2018 FY2019 F
Slide 19: To Summarize: A Sustainable Business Model
To Summarize: A Sustainable Business Model Vedanta; A 20 Year Track Record Of Delivering Growth, Meeting All Obligations To Debt Holders On Schedule, Primary Focus Is On Stable Production With Healthy Cash Flow In Volatile Times Diversified Business Model Strong Balance Sheet Leveraging Strength All
Slide 20: Key Investment Highlights
Key Investment Highlights 1 Large Low Cost, Long Life and Diversified Asset Base with an Attractive Commodity Mix 2 Ideally Positioned to Capitalise on Favourable Geographic Presence 3 Well-Invested Assets Driving Cash Flow Growth 4 Operational Excellence and Technology Driving Efficiency and Sustai
Slide 21: Appendix
Q2 FY2021 Appendix Sensitivity: Internal (C3)
Slide 22: FY 2021 Guidance
FY 2021 Guidance Segment FY21 Production and COP Mined Metal and Finished Metal: 925 – 950 kt Zinc India Silver: c. 650 tonnes COP: < $1,000/t excluding royalty BMM: ~65kt Gamsberg: 150-160kt Zinc International ZI COP (excl Gamsberg) : $1,300/t Gamsberg: c $1,200/t Gross Volume: 170-180 kboepd; Exit
Slide 23: Income Statement
Income Statement Q2 Q2 Q1 In ₹ Crore Depreciation & Amortization FY’21 FY’20 FY’21 Revenue from operations 20,804 21,739 15,687 ▪ Higher q-o-q primarily due to higher ore production in Zinc business. Other operating income 303 219 286 EBITDA 6,531 4,497 4,008 ▪ Lower y-o-y majorly on account of Oil
Slide 24: Project Capex
Project Capex Approved Spent up to Capex3 Spent in H1 Unspent as at Capex in Progress Status ($mn) 31 Mar’204 FY20214 30 Sep 20205 Cairn India1 – Mangala Infill, Liquid handling, 2,522 1,144 86 1,292 Bhagyam & Aishwariya EOR, Tight Oil & Gas etc Aluminium Sector Line 3: Fully capitalised Line 4: Ful
Slide 25: Entity Wise Cash and Debt
Entity Wise Cash and Debt (In ₹ crore) Sep 30, 2020 Jun 30, 2020 Sep 30, 2019 Company Cash & Cash & Cash & Debt Net Debt Debt Net Debt Debt Net Debt Cash Eq4 Cash Eq Cash Eq Vedanta Limited Standalone 32,790 1,967 30,823 33,247 4,070 29,177 37,956 7,162 30,794 Cairn India Holdings 3,616 4,615 (1,000
Slide 26: Inter Company Loan
Inter Company Loan Below is the summary details of Inter Company Loan (“ICL”) extended by overseas subsidiaries (CIHL) of Vedanta Limited to Vedanta Resources Limited and its wholly owned subsidiary during the year: ICL outstanding (Refer Q1 disclosure note) $ 956mn $ 207mn due in June 2021 $ 300mn
Slide 27: Debt Breakdown & Funding Sources
Debt Breakdown & Funding Sources Diversified Funding Sources for Term Debt of $7.3bn Debt Breakdown (as of 30th Sep 2020) (as of 30th Sep 2020) Debt breakdown as of (in $bn) (₹ in 000’ Cr) 30 Sep 2020 1% Term debt 7.3 53.4 Term Loans-INR 12% Working capital 0.5 3.4 Bonds-INR Short term borrowing 0.8
Slide 28: Segment Summary – Zinc India
Segment Summary – Zinc India Q2 Q1 H1 Production (in ’000 tonnes, or as stated) FY 2021 FY 2020 % change YoY FY 2021 FY 2021 Mined metal content 238 219 9% 202 440 Integrated metal 237 210 13% 202 439 Refined Zinc – Integrated 180 166 9% 157 338 1 Refined Lead – Integrated 57 44 29% 45 101 Refined S
Slide 29: Segment Summary – Zinc International
Segment Summary – Zinc International Q2 Q1 H1 Production (in’000 tonnes, or as stated) FY 2021 FY 2020 % change YoY FY 2021 FY 2021 Refined Zinc – Skorpion 0 23 - 1 1 Mined metal content- BMM 16 16 (5)% 12 28 Mined metal content- Gamsberg 35 24 44% 25 60 Total 51 63 (20)% 38 89 Financials (In ₹ Cror
Slide 30: Segment Summary – Oil & Gas
Segment Summary – Oil & Gas Q2 Q1 H1 OIL AND GAS (boepd) FY 2021 FY 2020 % change YoY FY2021 FY 2021 Average Daily Gross Operated Production (boepd) 1,65,045 1,78,744 (8)% 158,779 161,929 Rajasthan 1,32,296 1,50,421 (12)% 127,937 130,128 Ravva 21,610 12,544 72% 22,037 21,822 Cambay 11,139 15,780 (29
Slide 31: Segment Summary – Oil & Gas
Segment Summary – Oil & Gas Q2 Q1 H1 OIL AND GAS (boepd) FY 2021 FY 2020 % change YoY FY2021 FY 2021 Average Daily Production Gross operated 1,65,045 1,78,744 (8)% 158,779 161,929 Oil 1,42,150 1,60,991 (12)% 142,772 142,459 Gas (Mmscfd) 137 107 29% 96 117 Non operated- Working interest 291 565 (49)%
Slide 32: Segment Summary – Aluminium
Segment Summary – Aluminium Q2 Q1 H1 Particulars (in’000 tonnes, or as stated) FY 2021 FY 2020 % change YoY FY2021 FY 2021 Alumina – Lanjigarh 462 410 13% 476 938 Total Aluminum Production 473 476 (1)% 469 941 Jharsuguda-I 131 137 (4)% 132 263 Jharsuguda-II 200 201 - 199 399 245kt Korba-I 66 63 5% 6
Slide 33: Aluminium profitability
Aluminium profitability $/t Q1 ‘FY21 1,497 64 40 1,601 (517) (469) (281) 26 # 360 (134) (295) (69) 1,268 Q2 ‘FY21 1,288 47 66 1,817 1,704 534 479 275 51 477 139 333 5 Ingot Value Realisation Alumina Power Other Conversion EBITDA Dep Int PBT LME Premium addition Hot & Others 245 Metal # Conversion &
Slide 34: Segment Summary – Power
Segment Summary – Power Q2 Q1 H1 Particulars (in million units) FY 2021 FY 2020 % change YoY FY2021 FY 2021 Total Power Sales 3,998 3,253 23% 1,843 5,843 Jharsuguda 600 MW 807 20 - 685 1,493 BALCO 300 MW 418 454 (8)% 403 821 HZL Wind Power 107 165 (35)% 112 219 TSPL 2,666 2,615 2% 643 3,310 Financia
Slide 35: Segment Summary – Iron Ore and Steel
Segment Summary – Iron Ore Particulars (in million dry metric tonnes, or Q2 Q1 H1 as stated) FY 2021 FY 2020 % change YoY FY2021 FY 2021 Sales 1.49 1.41 6% 1.02 2.51 Goa 0.16 0.0 - 0.6 0.7 Karnataka 1.33 1.41 (5)% 0.4 1.8 Production of Saleable Ore 1.46 1.31 11% 0.95 2.41 Goa - - - - - Karnataka 1.4
Slide 36: Segment Summary – Copper India
Segment Summary – Copper India Q2 Q1 H1 Production (in ’000 tonnes, or as stated) FY 2021 FY 2020 % change YoY FY 2021 FY 2021 Copper - Cathodes 25 16 58% 17 41 Financials (In ₹ crore, except as stated) Revenue 2,904 3,185 (7)% 1,377 4,281 EBITDA (11) (105) - (63) (75) Copper LME Price ($/MT) 6,519
Slide 37: Sales Summary
Sales Summary Sales volume Q2 FY2021 Q2 FY2020 Q1 FY2021 H1 FY2021 Zinc-India Sales Refined Zinc (kt) 181 168 163 344 Refined Lead (kt) 57 44 45 102 Total Zinc-Lead (kt) 238 212 208 446 Silver (tonnes) 203 135 146 348 Zinc-International Sales Zinc Refined (kt) 0 23 1 1 Zinc Concentrate (MIC) 44 34 2
Slide 38: Sales Summary
Sales Summary Q2 Q2 Q1 H1 Sales volume Q2 Q2 Q1 H1 Sales volume FY 2021 FY 2020 FY 2021 FY 2021 Power Sales (mu) FY 2021 FY 2020 FY 2021 FY 2021 Iron-Ore Sales Jharsuguda 600 MW 807 20 685 1,493 Goa (mn DMT) 0.2 - 0.6 0.7 TSPL 2,666 2,615 643 3,310 Karnataka (mn DMT) 1.3 1.4 0.4 1.8 BALCO 300 MW 418
Slide 39: Currency and Commodity Sensitivities
Currency and Commodity Sensitivities Foreign Currency - Impact of 1 Rs depreciation in FX Rate Currency Increase in EBITDA INR/USD ~ INR 600 cr / year Commodity prices – Impact of a 10% increase in Commodity Prices H1 FY‘21 Commodity Average price EBITDA ($mn) Oil ($/bbl) 36.1 27 Zinc ($/t) 2,154 80
Slide 40: Group – Present Debt Structure
Group – Present Debt Structure ($ bn) Vedanta Resources (Consolidated) Volcan H1 FY21 H1 FY21 EBITDA 1.44 EBITDA - Net Debt 10.6 Net Debt 0.2 Vedanta Resources (Standalone) H1 FY21 % EBITDA 0.02 1% Divisions of Vedanta Limited Net Debt 7.0 65% 50.1% ⚫ Sesa Iron Ore ⚫ Sterlite Copper Vedanta Ltd (Con
Slide 41: Results Conference Call Details
Results Conference Call Details Results conference call is scheduled at 6:00 PM (IST) on November 6, 2020. The dial-in numbers for the call are given below: Event Telephone Number Earnings conference call on November 6, 2020 India – 6:00 PM (IST) India: +91 7045671221 Toll free: 1800 120 1221 Univer