Vedanta Resources — FY2022 Earnings Presentation
42 slides from Vedanta Resources's earnings presentation, Jun 6, 2022
Slide 1: FY22 Earnings Presentation
VEDANTA RESOURCES LIMITED INVESTOR PRESENTATION 6th June 2022 FY22 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: FY22 Review and Business Update
VEDANTA RESOURCES LIMITED INVESTOR PRESENTATION FY22 FY22 Review and Business Update Sunil Duggal Group CEO & Chief Safety Officer Sensitivity: Internal (C3)
Slide 4: Vedanta Limited – Overview
Vedanta Limited – Overview A globally diversified Strong management team 1st quartile cost curve Committed to ESG Contribution to natural resource with > 30 years of positioning globally leadership in the natural exchequer of powerhouse with experience; 76,000+ across key segments with resources sec
Slide 5: Emphasis on superior and consistent shareholder returns while investing for growth
Emphasis on superior and consistent shareholder returns while investing for growth Dividend payout of ₹ 47,691 crore (~$7 bn) over 10 years by Vedanta Limited $mn 16,727 Total 7,880 shareholder 7,099 7,005 return of 269% 3,531 782 964 1,216 1,038 1,450 in last 10 years FY2013 FY2014 FY2015 FY2016 FY
Slide 6: FY22 Highlights
FY22 Highlights Operational Financial ESG ▪ Record annual production across key businesses ▪ Record Revenue of $ 17,619 Mn with ▪ 3,200+ Nand Ghars created for social and stable Oil & Gas performance: 50%YoY growth welfare o Aluminium and Alumina production grew to 2.3 ▪ All time high consolidated E
Slide 7: EBITDA contribution by key businesses
EBITDA contribution by key businesses FY20 FY21 FY22 $Mn 299 5% 256 207 7% 7% 442 7% Zinc 200 7% 372 10% O&G 2,377 281 9% 38% 1,283 1,689 Aluminium EBITDA 43% EBITDA 44% EBITDA $Mn 3003 $Mn 3800 Iron Ore & Steel $Mn 6255 2,328 1,046 37% Others 1,032 28% 34% 437 11% 809 13% ▪ Aluminium: 2nd largest c
Slide 8: H2 FY22 Highlights
H2 FY22 Highlights Operational Financial ESG ▪ Strong quarterly volume growth at key ▪ Record Revenue of $ 9,749 Mn, up ▪ Signed PDA for 580 MW RE - a significant businesses: 42%YoY step towards 2.5 GW RE commitment o Aluminium production grew 12%YoY ▪ Highest ever EBITDA of ~ $ 3.4Bn, up ▪ Launched
Slide 9: Pillar 1: Transforming communities
Pillar 1: Transforming communities - benefitting the lives of 4.64 million people across 1268 villages 3,200+ Nand Ghar across India Nearly 4.64 million beneficiaries through Vedanta-wide 180 programs Healthcare: Drinking water and sanitation: • Nearly 2.4 million people benefited • More than 323,00
Slide 10: Pillar 2: Transforming the planet
Pillar 2: Transforming the planet Net Zero Carbon Company by 2050 or sooner | 25% absolute GHG reduction by 2030 Renewable power: Fuel Switch Programs: Committed to use 2.5 GW of RE RTC equivalent by 2030 ▪ Biomass firing: Committed to use 5% ▪ Signed PDA for 580 MW of RE by FY25 biomass in thermal
Slide 11: Pillar 2: Transforming the planet
Pillar 2: Transforming the planet Water Positivity | Waste Management | Partnerships Achieve Water Positivity by 2030: Partnerships: ▪ Collaboration with TUV-SUD to develop roadmap for ‘Net ▪ Green Spark: Program to collaborate with Water Positive’ initiative technology start-ups to solve ESG challe
Slide 12: Pillar 2: Transforming the planet - Green Spark
Pillar 2: Transforming the planet - Green Spark Spark vision: Green spark objective: To achieve corporate innovation and growth outcomes through Strategic investments in start-ups to unlock value across Vedanta. strategic partnerships and investments with Digital or Offers opportunities to explore b
Slide 13: Pillar 3: Transforming workplace
Pillar 3: Transforming workplace Organizational design to ensure right people in right roles; Launch of ‘People’ CoP to have globally benchmarked HR practices on ESG side In decision making bodies Leadership roles Enabling roles Overall Safety & health: Group 2030 target 30% 40% 50% 50% ▪ Focus on “
Slide 14: Aluminium: value creation through continued focus on growth and integrated operations
Aluminium: value creation through continued focus on growth and integrated operations Aluminium: achieved record production, margins continue to improve Key highlights: Production (kt) COP ($/T) Margin ($/T) ▪ Record annual Aluminium production at 15%YoY growth 2,268 1,858 2,118 driven by JSG ramp-u
Slide 15: Zinc India: touched a new milestone with >1 mn tonnes Mined metal production
Zinc India: touched a new milestone with >1 mn tonnes Mined metal production Key performance highlights: ▪ Highest ever annual mined Metal production - crossed 1 MTPA mark ▪ Highest ever annual refined Metal production with 4%YoY growth; supported by better plant and concentrate availability ▪ Silve
Slide 16: Zinc International: Gamsberg achieved 220 kt annualized run rate
Zinc International: Gamsberg achieved 220 kt annualized run rate of MIC production in Mar’22 Gamsberg - Production Key highlights: Production (kt) ▪ Achieved highest ever annual production of mined 170 metal with 18%YoY growth; Crushing throughput 145 increased to 827tph in FY22 from 767tph in FY21
Slide 17: Oil & Gas: stable operations with focus on growth projects
Oil & Gas: stable operations with focus on growth projects Key highlights: Gross production (kboepd) ▪ Production: annual production was broadly stable as impact of natural decline was largely offset by – 162 165 157 162 161 o Polymer injection in Bhagyam & Aishwariya fields, o Infill wells in Manga
Slide 18: Iron ore: continue to improve performance trajectory
Iron ore: continue to improve performance trajectory Karnataka Iron ore sales Iron ore Karnataka: Sales (mn tonnes) 5.7 ▪ Achieved highest ever annual sales of 5.7 mn tonnes 4.4 with 30%YoY growth ▪ Annual Iron ore production was up by 8%YoY 3.2 2.6 2.5 Value added business (VAB): H2 FY21 H1 FY22 H2
Slide 19: ESL Steel and FACOR
ESL Steel and FACOR ESL: key performance highlights FACOR: key performance highlights ▪ Record Annual Hot Metal production of 1,355 kt since ▪ Highest ever Annual Chrome Ore production at 250kt, since acquisition, up 5% YoY acquisition, up 70%YoY ▪ Annual production was up 6% with enhanced furnace ▪
Slide 20: Upcoming growth projects – Oil & Gas and Aluminium
Upcoming growth projects – Oil & Gas and Aluminium Oil & Gas: $687mn new growth capex projects, this includes Aluminium: $1.4 bn growth capex over 2 years; vertical integration $360mn to monetize 52.6mmboe reserves and $327mn to grow focus to reduce market volatility impact and create value resource
Slide 21: Upcoming growth projects – Zinc International and ESL
Upcoming growth projects – Zinc International and ESL Zinc International ESL Steel ▪ $466 mn capex on Gamsberg phase 2 project ▪ Capex investment of $348 mn ▪ New 4 MTPA Concentrator (200 kt MIC) ▪ Doubling Hot Metal Capacity to 3.0 MTPA from 1.5 MTPA ▪ Completion by 1HFY24 and commissioning in 3QFY
Slide 22: Finance Update
VEDANTA RESOUCES INVESTOR PRESENTATION FY22 Finance Update Ajay Goel Acting Chief Financial Officer Sensitivity: Internal (C3)
Slide 23: Financial snapshot FY22
Financial snapshot FY22 Revenue EBITDA EBITDA Margin 1 $ 17,619 mn $ 6,255 mn 40% 50% YoY 65% YoY Industry leading margin ROCE 2 Cash and Cash Net Debt / EBITDA equivalents c.32% $ 4,396 mn 1.9x 1.7 times YoY Strong liquidity position Best in 5 years 23 1. Excludes custom smelting at Copper Business
Slide 24: EBITDA bridge FY22 vs. FY21
EBITDA bridge FY22 vs. FY21 (YoY comparison) Aluminium 2,131 Zinc, Lead & Silver 793 (In $ mn) Oil & Gas (O&G) 436 ESL 223 AL (212) Steel (50) O&G (47) 1,232 16 109 212 373 198 6,218 6,255 3,775 Aluminium 154 Facor 29 3,800 Zinc 15 IOB 11 Market & Regulatory $ 2,418 mn FY21 LME/ Brent / Input Curren
Slide 25: Net debt movement during FY22
Net debt movement during FY22 (In $ mn) Inventory, Debtor & others (765) 139 11,686 Creditors/Advances 99 1,971 10,731 1,206 4,184 1,434 667 FCF Post Capex $ 2,083 mn Net Debt CF from WC Movements Capex Dividend Stake increase Translation & Net Debt (Mar 31, 2021) Operations (Incl Buyer’s VEDL Other
Slide 26: Balance sheet and debt breakdown
Balance sheet and debt breakdown Net debt / EBITDA – maintained at low level Debt breakdown (as of 31st Mar 2022) 3.3 Gross Debt In $ Bn 3.0 2.8 Term debt 15.2 2.4 1.9 Working capital 0.2 Short term borrowing 0.7 Total consolidated debt 16.1 Cash and Cash Equivalents 4.4 FY 18 FY 19 FY 20 FY 21 FY 2
Slide 27: 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 28: Growth capex and returns profile
Growth capex and returns profile $ Bn Full year Capex guidance 1.0 1.2 1.5 1.2 0.7 1.1 Growth Capex profile 2.0 Oil & Gas Zinc 0.2 Al & Power Copper Other 1.0 1.1 0.1 0.8 0.8 0.7 0.1 0.0 0.7 0.5 0.1 0.2 0.1 0.2 0.2 0.3 0.5 0.3 0.3 0.0 0.6 0.5 0.5 0.1 0.0 0.3 0.12 0.2 0.2 0.1 FY2017 FY2018 FY2019 FY2
Slide 29: Strategy to enhance long term value
Strategy to enhance long term value Committed to ESG leadership Augment reserves & Delivering on growth resources base opportunities Operational excellence Optimise capital allocation & and cost leadership maintain strong Balance Sheet 29 Vedanta Resources Limited FY22 Investor Presentation Sensitiv
Slide 30: Appendix
VEDANTA RESOURCES LIMITED INVESTOR PRESENTATION FY22 Appendix Sensitivity: Internal (C3)
Slide 31: FY23 guidance
FY23 guidance Zinc India ▪ Mined Metal and Finished Metal: 1,000 - 1,025 Kt Aluminium ▪ Silver: c. 700 - 725 tonnes ▪ Alumina: 2.0 - 2.1 Mtpa ▪ COP: $1,125/t - $1175/t excluding royalty ▪ Aluminium: 2.2 - 2.3 Mtpa Zinc International ▪ BMM: 60 – 70 Kt Oil & Gas ▪ Gamsberg: 200 - 225 tonnes ▪ Average
Slide 32: Income statement
Income statement In $ Mn FY’22 FY’21 ▪ Depreciation & Amortization Revenue from operations 17,619 11,722 o Higher by 12%YoY in FY22 mainly due to increase in EBITDA 6.255 3,800 amortization as a result of increased Ore production at Zinc Depreciation & amortization (1,228) (1,099) Business and highe
Slide 33: Project capex
Project capex Approved Spent up to Spent in Unspent as at Capex in Progress (In $ mn) Status Capex2 31 Mar’213 FY223 31 Mar 20224 Cairn India1 – Mangala infill, Bhagyam & Aishwariya 3,100 1,028 184 1,888 Polymer, Liquid handling , ASP , OALP, Tight oil & gas etc. Aluminium Sector Balco smelter and r
Slide 34: Entity-wise Cash and Debt
Entity-wise Cash and Debt (In $ mn) Mar 31, 2022 Mar 31, 2021 Company Debt Cash & Cash Eq3 Net Debt3 Debt Cash & Cash Eq3 Net Debt3 Vedanta Limited Standalone 4,855 934 3,921 4,388 798 3,590 Cairn India Holdings Limited1 212 184 28 383 191 192 Zinc India 373 2,750 -2,377 979 3,044 -2,064 Zinc Intern
Slide 35: Funding sources and term debt maturities
Funding sources and term debt maturities Diversified Funding Sources for Term Debt of $15.2bn Term Debt Maturities : $ 15.2 bn (as of 31st Mar 2022) (as on 31st Mar’22) Standalone Subsidiaries 7% Bonds - INR 37% Term Loan - INR 4.0 4.0 3.9 30% Term Loan - USD 3.3 1.3 1.1 1.0 Bonds - USD In $ billion
Slide 36: Segment-wise Summary
Segment-wise Summary Oil & Gas FY22 FY21 Zinc-India FY22 FY21 Average Daily Gross Operated Mined Metal Content (kt) 1,017 972 Production (boepd) 160,851 162,104 Refined Zinc – Integrated (kt) 776 715 Rajasthan 137,723 132,599 Refined Lead – Integrated (kt)1 191 214 Ravva 14,166 19,177 Saleable Silve
Slide 37: Segment-wise Summary (cont'd)
Segment-wise Summary (cont’d) Aluminium FY22 FY21 Copper FY22 FY21 Aluminium Production (kt) Copper Cathodes– India (kt) 125 101 2,268 1,969 Jharsuguda Average Copper LME ($/t) 9,689 6,897 1,687 1,400 EBITDA ($mn) (15) (21) Korba 581 569 Average Aluminium LME ($/t) 2,774 1,805 Aluminium COP ($/t) 1,
Slide 38: Segment-wise Summary (cont'd)
Segment-wise Summary (cont’d) Power FY22 FY21 Iron Ore FY22 FY21 Power Sales (million units) 11,872 11,261 Sales (dmt) 6.8 6.5 Jharsuguda 600MW 2,060 2,835 Goa 1.1 2.1 BALCO 1,139 1,596 Karnataka 5.7 4.4 Production (mt) 5.4 5.0 Talwandi Sabo 1980MW 8,259 6,479 Goa - - HZL Wind Power 414 351 Karnatak
Slide 39: Sales summary
Sales summary Sales volume FY22 FY21 Sales volume FY22 FY21 Sales volume FY22 FY21 Zinc-India Sales Iron ore sales Jharsuguda 2,060 2,835 Refined Zinc (kt) 777 724 Goa (mn dmt) 1.1 2.1 TSPL 8,259 6,479 Refined Lead (kt) 192 216 Total Zinc-Lead (kt) 969 940 Karnataka (mn dmt) 5.7 4.4 BALCO 1,139 1,59
Slide 40: Currency and commodity sensitivities
Currency and commodity sensitivities Foreign Currency - Impact of ₹ 1 depreciation in FX Rate Currency Increase in EBITDA INR/USD ~ $50 million/year Commodity prices – Impact of a 10% increase in Commodity Prices FY 2022 Full Year Impact on Commodity Average price EBITDA ($mn) Oil ($/bbl) 81 68 Zinc
Slide 41: Awards 2HFY22
Awards 2HFY22 Our group companies received more than 100 awards in the finance, operational excellence, sustainability, CSR and HR categories Sustainability development & CSR Finance & Operational Health, Safety & HR Cairn awarded the ‘Global CSR Excellence and ESL awarded the ‘Best Indirect Tax Tea
Slide 42: Group – present debt structure
Group – present debt structure As of 31-Mar-22 ($bn) Volcan Listed entities Unlisted entities EBITDA - Vedanta Resources (VRL) Net Debt - Consolidated Standalone EBITDA 6.3 0.2 Net Debt 11.7 8.9 69.7% Divisions of Vedanta Limited ⚫ Sesa Iron Ore Vedanta Limited (VEDL) ⚫ Sterlite Copper ⚫ Power (600