Vedanta Limited · NSE:VEDL
Vedanta — Q2 FY2023 Earnings Presentation
52 slides from Vedanta's earnings presentation, Oct 28, 2022
Slide 1: 2QFY23 Earnings Presentation
VEDANTA LIMITED INVESTOR PRESENTATION October 28, 2022 2QFY23 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: 2QFY23 Review and Business Update
VEDANTA LIMITED INVESTOR PRESENTATION 2QFY23 2QFY23 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: Levers at Vedanta to counter near term macroeconomic challenges
Levers at Vedanta to counter near term macroeconomic challenges Near term macro challenges Vedanta’s levers to counter macro challenges Cost optimization with improved linkage coal ▪ Global economy is facing various challenges: materialization and operational efficiencies o Broadening inflation pres
Slide 6: Robust cash generation underpinned by strong 2Q performance
Robust cash generation underpinned by strong 2Q performance despite challenging macroeconomic environment ESG Operational Financial ▪ Entered exclusive club of top 10 DJSI ranked Key businesses continue to deliver ▪ Revenue of ₹ 36,237 crore, up global Metals & Mining companies; ESG score strong ope
Slide 7: Vedanta enters top 10 DJSI ranked global metals & mining
Vedanta: entered in exclusive club of top 10 DJSI ranked global metals & mining companies Vedanta amongst top 10 Industry leaders on 2022 Dow Jones Sustainability World Index Vedanta ranks1 6th out of 148 metal and mining companies across the globe Vedanta is amongst top 2 percentile of metal and mi
Slide 8: ESG Moment: planting a trillion trees
ESG Moment: planting a trillion trees (video) Vedanta to plant 7 million trees Aim 7: Innovations for greener business model ▪ Part of World Economic Forum’s “1 Trillion Tree” initiative – 1t.org ▪ Trees to be planted between 2020 – 2030 ▪ Includes reforestation, agro- forestry, mangrove restoration
Slide 9: Vedanta Delhi Half Marathon: #RunForZeroHunger
Vedanta Delhi Half Marathon: #RunForZeroHunger – contributed 2 Mn Meals Shri Manish Sisodia at the Flag Off Mrs. Mallika Nadda at Prize Distribution Vedanta Leadership with Dy. CM Vedanta Employees at VDHM Medal made with the zinc from the 20+ national ads Coverage across top publications Priya Agar
Slide 10: Key ESG projects across Vedanta
Key ESG projects across Vedanta Green Copper (Sterlite Copper) Remote Blasting (HZL) Reducing Gas Flaring (O&G) Watershed Management Aim 4: Net Carbon neutral by 2050 Aim 7: Prioritizing safety and Aim 4: Net zero carbon by 2050 or BU: VAL - Lanjigarh or sooner health sooner Aim 5: Achieving net wat
Slide 11: ESG strategy: Pillar 1 – transforming communities
Steadily progressing on our repurposed ESG strategy: Pillar 1 – transforming communities Total Beneficiaries 1H FY23 CSR Spend1 Total Nandghars Key Initiatives of CSR 2.40+ mn ₹ 147+ crores 3609 Areas of Focus in CSR Healthcare Drinking water and sanitation Nand Ghar Saplings Plantation > 30 Initiat
Slide 12: 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) Key strategic initiatives/outcomes (FY21) Target Absolute GHG emissions ▪ 500 MW RE power EOI issued 60mn 45mn (TCO2e) ▪ Biomass usage ~28000 MT in 1H FY23 ▪ ~ 1 Billion unit
Slide 13: 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 Key strategic initiatives/ outcomes (UoM) (FY21) Target ▪ Conducted CRM- 7 design workshops ▪ Launched CRM- Top 3 risk control initiatives Ongoing target- ▪ Real time tracking o
Slide 14: 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 15: Digitalization Use Case: Smoke Hour Drilling
Digitalization Use Case : Smoke Hour Drilling KPI: Smoke hour drilling meters Automatic operations from Surface with Minimal manual intervention during shift changeover and after blasting Outcome and advantages: ✓ Provides flexibility and control in Operator Tele-remote drilling tool challenging env
Slide 16: Aluminium: strong volume delivery and improved COP
Aluminium: strong volume delivery and improved COP on operational and buying efficiencies Aluminium: Achieved record metal production COP ($/T) Key highlights: Production (kt) Margin ($/t) 1,118 1,150 2,541 2,653 2,429 Quarterly: 1,588 1,647 ▪ Aluminium production up 3% QoQ and 2% YoY 570 565 584 52
Slide 17: Aluminium: growth and vertical integration projects underway
Aluminium: growth and vertical integration projects underway to reduce market volatility impact and create value ▪ Aluminium capacity expansion to 3 MTPA o JSG capacity ramp-up to 1.8 MTPA – Completed Lanjigarh refinery expansion projects status o Balco capacity expansion to 1 MTPA – 2QFY24 o Debott
Slide 18: Zinc India: delivering sustainable growth
Zinc India: delivering sustainable growth Key quarterly performance highlights: Key half yearly performance highlights: ▪ Highest-ever 2Q mined metal production up 3% YoY ▪ Best-ever first half mined metal production, up 8% ▪ Best-ever 2Q refined metal production1, up 18% YoY driven by YoY improved
Slide 19: Zinc International: Gamsberg delivers record MIC production
Zinc International: Gamsberg delivers record MIC production; cost improves on increased recovery and operational efficiency Gamsberg - Production Key highlights: Production (kt) Quarterly: 108 ▪ Achieved highest ever MIC production 43%YoY growth 85 ▪ Highest recovery of 78.5%. Highest concentrate gr
Slide 20: Oil & Gas: focused on delivery of growth projects
Oil & Gas: lower production was partially offset by infill wells; focused on delivery of growth projects Key highlights: Gross production (kboepd) ▪ Production: Impact of natural decline in Rajasthan and Offshore blocks partly offset by infill wells in Mangala, Bhagyam 165 165 148 140 144 and Raages
Slide 21: Iron ore and VAB
Iron ore and VAB Karnataka Iron ore sales Iron ore – Karnataka: Sales (mn tonnes) ▪ Quarterly sales increased 8%YoY and 44% QoQ ▪ Half yearly Iron ore sales was down by 11%YoY due to 2.5 2.2 delay in implementation of procedural changes by DMG for sale of material 1.2 1.3 0.9 Value added business (V
Slide 22: ESL Steel and FACOR
ESL Steel and FACOR ESL: key performance highlights FACOR: key performance highlights ▪ Quarterly saleable production up 11%YoY on account of ▪ Quarterly and Half yearly ore production higher by 43% YoY completion of debottlenecking activity in blast furnace -3 in and 18% YoY respectively due to ope
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 2QFY23 Finance Update Ajay Goel Acting Group Chief Financial Officer Sensitivity: Internal (C3)
Slide 25: 2QFY23 financial snapshot
2QFY23 financial snapshot Revenue EBITDA EBITDA Margin1 Profit after tax ₹ 36,237 crore ₹ 8,038 crore 25% ₹ 2,690 crore 21% YoY 24% YoY Strong margin 54% YoY ROCE 2 Cash and Cash Net Debt Net Debt / EBITDA equivalents c.28% ₹ 26,453 crore ₹ 32,144 crore 0.7x ~200 bps YoY Strong liquidity position Ma
Slide 26: EBITDA bridge 2QFY23 vs. 1QFY23
EBITDA bridge 2QFY23 vs. 1QFY23 (QoQ comparison) Aluminium (2,404) (In ₹ crore) Zinc (1,230) Oil and Gas (314) Iron and Steel (635) Aluminium 163 Zinc 153 10,741 4,619 343 183 307 8,038 12 621 7,205 450 Zinc (178) Aluminium 107 Market & Regulatory Iron & Steel 253 ₹ (3,536) crore Operational: ₹ 490
Slide 27: EBITDA bridge 2QFY23 vs. 2QFY22
EBITDA bridge 2QFY23 vs. 2QFY22 (YoY comparison) (In ₹ crore) Aluminium (1,548) Oil & Gas 691 Steel 284 Aluminium (276) Iron & Steel (224) 618 Oil & Gas (134) 10,582 4,203 8,038 809 687 999 74 1,230 6,917 Zinc 686 Aluminium 99 Market & Regulatory ₹ (3,665) crore Operational: ₹ 122 crore 2QFY22 LME/
Slide 28: Net Debt Walk- 2QFY23
Net Debt Walk- 2QFY23 (In ₹ crore) Inventories, 1,642 debtors and other Creditors/ 464 2,075 32,144 Advances 31,680 10,339 26,799 6,026 3,717 4,285 FCF Post Capex Rs 5,458 Cr Net Debt Cash flow from WC Movements Capex Dividend Translation and Net Debt 30th June'22 operations Others 30th Sep'22 28 Ve
Slide 29: Balance sheet and debt breakdown
Balance sheet and debt breakdown Net debt / EBITDA – maintained at low level Debt breakdown (as of 30th Sep 2022) Gross Debt In $bn In ₹ 000’ crores 1.1 1.0 0.9 0.9 Term debt 6.1 49.8 0.7 0.6 Working capital 0.4 3.2 0.5 FY'18 FY'19 FY'20 FY'21 FY'22 1QFY'23 2QFY'23 Short term borrowing 0.7 5.6 ▪ Liq
Slide 30: Growth capex and returns profile
Growth capex and returns profile Full year Capex guidance 1.0 1.2 1.5 1.2 0.7 1.1 1.6 Growth Capex profile, $bn Oil & Gas Zinc Al & Power 1.6 Copper Other 0.2 1.1 0.6 0.1 0.8 0.8 0.7 0.0 0.7 0.1 0.5 0.1 0.6 0.2 0.2 0.2 0.1 0.3 0.5 0.3 0.3 0.2 0.0 0.1 0.6 0.5 0.5 0.1 0.0 0.3 0.2 0.2 0.2 0.1 0.12 FY20
Slide 31: Appendix
VEDANTA LIMITED INVESTOR PRESENTATION 2QFY23 Appendix Sensitivity: Internal (C3)
Slide 32: FY23 guidance
FY23 guidance Zinc India Aluminium ▪ Mined Metal : 1,050 - 1,075 Kt ▪ Alumina: 2.0 - 2.1 Mtpa ▪ Finished Metal: 1,000 – 1025 Kt ▪ Aluminium: 2.2 - 2.3 Mtpa ▪ Silver: c. 700 - 725 tonnes ▪ COP1 (2H FY23): $2,150/t - $2,250/t ▪ COP (FY23): $1,225/t - $1,275/t excluding royalty Zinc International ▪ Gam
Slide 33: Income statement
Income statement 2Q 1Q 2Q ▪ Depreciation & Amortization In ₹ Crore FY23 FY23 FY22 o Higher by 24% YoY & 6% QoQ mainly due to increase in depletion charge in Oil & Gas business and amortization in Revenue from operations 36,237 38,251 30,048 Zinc India Other operating income 417 371 353 ▪ Finance Cos
Slide 34: Project capex
Project capex Unspent4 Approved Spent up to Spent in Capex in Progress (In $ mn) Status as on 30th Capex2 FY223 1HFY23 Sep 2022 Cairn India1 – Mangala infill, Bhagyam & Aishwariya Polymer, 3,070 1,178 204 1,688 Liquid handling , ASP , OALP, Tight oil & gas etc. Aluminium Sector Jharsuguda 1.25mtpa s
Slide 35: Entity-wise Cash and Debt
Entity-wise Cash and Debt (In ₹ crore) Sep 30, 2022 Jun 30, 2022 Sep 30, 2021 Company Cash & Cash & Cash & Debt Net Debt Debt Net Debt Debt Net Debt Cash Eq Cash Eq Cash Eq Vedanta Limited Standalone 45,296 3,953 41,343 45,177 4,903 40,274 30,462 1,697 28,765 Cairn India Holdings Limited1 963 1,973
Slide 36: Funding sources and term debt maturities
Funding sources and term debt maturities Diversified Funding Sources for Term Debt of $6.1 Bn Term Debt Maturities : ₹ 49,771 crore ($6.1 Bn) (as of 30th Sep 2022) (as on 30th Sep’22) 0.01% Standalone Subsidiaries 6% 27.6 20% In ₹ 000’ crore Bonds INR 6.4 Term Loan INR Term Loan Fx Bonds Fx 21.2 9.4
Slide 37: Segment Summary – Aluminium
Segment Summary – Aluminium Particulars (in’000 tonnes, or as Quarter Half year stated) 2QFY23 2QFY22 % YoY 1QFY23 1HFY23 1HFY22 % YoY Alumina – Lanjigarh 454 511 (11%) 485 939 993 (5%) Total Aluminum Production 584 570 2% 565 1,149 1,118 3% Jharsuguda 443 423 5% 423 866 828 5% Korba 141 146 (4%) 14
Slide 38: Aluminium profitability
Aluminium profitability $/t 1QFY23 2,875 165 250 3290 (828) (1237) (588) (110) 527 2,653 2,429 2QFY23 190 2,778 234 738 2,354 2,040 1,066 … 624 184 165 LME Strategic Premium Realisation Alumina Power Other hot metal Conversion & EBITDA Hedging other 38 Vedanta Limited 2QFY23 Investor Presentation Se
Slide 39: Segment Summary – Zinc India
Segment Summary – Zinc India Quarter Half year Production (in ’000 tonnes, or as stated) 2QFY23 2QFY22 % YoY 1QFY23 1HFY23 1HFY22 % YoY Mined metal content 255 248 3% 252 507 470 8% Integrated metal 246 209 18% 260 506 445 14% Refined Zinc – Integrated 189 162 16% 206 395 350 13% Refined Lead – Inte
Slide 40: Segment summary – Zinc International
Segment summary – Zinc International Quarter Half year Production (in’000 tonnes, or as stated) 2QFY23 2QFY22 % YoY 1QFY23 1HFY23 1HFY22 % YoY Refined Zinc – Skorpion - - - - - - - Mined metal content- BMM 19 16 16% 15 33 31 8% Mined metal content- Gamsberg 55 39 43% 53 108 85 27% Total 74 55 35% 68
Slide 41: Segment Summary – Oil & Gas
Segment Summary – Oil & Gas Quarter Half Year OIL AND GAS (boepd) 2QFY23 2QFY22 % YoY 1QFY23 1HFY23 1HFY22 % YOY Average Daily Gross Operated 140,471 165,327 (15%) 148,104 144,267 165,114 (13%) Production (boepd) Rajasthan 120,805 141,766 (15%) 127,815 124,291 140,787 (12%) Ravva 9,952 14,282 (30%)
Slide 42: Segment Summary – Oil & Gas
Segment Summary – Oil & Gas Quarter Half Year OIL AND GAS (boepd) 2QFY23 2QFY22 % YoY 1QFY23 1HFY23 1HFY22 % YOY Average Daily Production Gross operated 140,471 165,327 (15%) 148,104 144,267 165,114 (13%) Oil 118,279 138,121 (14%) 126,292 122,264 139,044 (12%) Gas (Mmscfd) 133 163 (18%) 131 132 156
Slide 43: Segment Summary – Iron Ore and Steel
Segment Summary – Iron Ore and Steel Iron Ore Particulars (in million dry metric tonnes, or Quarter Half year as stated) 2QFY23 2QFY22 % YoY 1QFY23 1HFY23 1HFY22 % YoY Sales 1.3 1.3 2% 1.3 2.6 3.0 (12%) Goa 0.0 0.1 (59%) 0.4 0.4 0.5 (18%) Karnataka 1.3 1.2 7% 0.9 2.2 2.5 (11%) Production of Saleable
Slide 44: Segment Summary – FACOR and Copper
Segment Summary – FACOR and Copper Copper Quarter Half year Production (in ’000 tonnes, or as stated) 2QFY23 2QFY22 % YoY 1QFY23 1HFY23 1HFY22 % YoY Copper - Cathodes 41 30 39% 38 80 58 37% Financials (In ₹ crore, except as stated) Revenue 4,011 3,560 13% 4,215 8,226 7,059 17% EBITDA 15 (38) - (14)
Slide 45: Segment Summary – Power
Segment Summary – Power Quarter Half Year Particulars (in million units) 2QFY23 2QFY22 % YoY 1QFY23 1HFY23 1HFY22 % YoY Total Power Sales 3,615 2,904 24% 3,577 7,192 5,621 28% Jharsuguda 634 760 (17%) 837 1,471 1,305 13% BALCO 14 199 (93%) - 14 608 (98%) HZL Wind Power 124 155 (20%) 150 274 289 (3%)
Slide 46: Sales Summary – Zinc and Aluminium
Sales Summary – Zinc and Aluminium Quarter Half Year Sales volume 2QFY23 2QFY22 1QFY23 1HFY23 1HFY22 Zinc-India Sales Refined Zinc (kt) 189 164 206 395 352 Refined Lead (kt) 57 47 54 110 95 Total Zinc-Lead (kt) 246 211 260 506 447 Silver (tonnes) 194 152 177 371 312 Zinc-International Sales Zinc Ref
Slide 47: Sales summary – Iron & Steel, FACOR and Power
Sales summary – Iron & Steel, FACOR and Power Quarter Half Year Sales volume Quarter Half Year Sales volume 2QFY23 2QFY22 1QFY23 1HFY23 1HFY22 Power Sales (mu) 2QFY23 2QFY22 1QFY23 1HFY23 1HFY22 Iron ore sales Jharsuguda 634 760 837 1,471 1,305 Goa (mn dmt) 0.0 0.1 0.4 0.4 0.5 TSPL 2,843 1,790 2,590
Slide 48: Currency and commodity sensitivities
Currency and commodity sensitivities Foreign Currency - Impact of ₹ 1 depreciation in FX Rate Currency Increase in EBITDA INR/USD ~ ₹ 1,000 crore / year Commodity prices – Impact of a 10% increase in Commodity Prices 1H FY23 Impact on Commodity Average price EBITDA ($mn) Oil ($/bbl) 107 44 Zinc ($/t
Slide 49: Group structure
Group structure As of 30-Sep-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 50: 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 51: Awards and Recognition - 2QFY23
Awards and Recognition - 2QFY23 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 Balco awarded with ‘CEE Environment Balco awarded with ‘Happies
Slide 52: Results Conference Call Details
Results Conference Call Details Results conference call is scheduled at 5:30 PM (IST) on Oct 28, 2022. The dial-in numbers for the call are given below: Event Telephone Number +91 22 6280 1114 Universal Dial-In Earnings conference call +91 22 7115 8015 on Oct 28, 2022 India National Toll Free 1 800