Vedanta Limited · NSE:VEDL
Vedanta — Sterlite Industries (India) — Investor Presentation (July 2009)
34 slides from Vedanta's investor presentation, Jul 6, 2009
Slide 1: Delivering Through the Cycle: Investor Update Presentation
DELIVERING THROUGH THE CYCLE Investor Update Presentation 30 June 2009
Slide 2: Disclaimer
Disclaimer By attending the meeting where this presentation is made, or by reading the presentation slides, you agree to be bound by the following limitations: The information in this document is being provided by the Company and is subject to change without notice. The information contained in this
Slide 3: Investment Highlights
DELIVERING THROUGH THE CYCLE Investment Highlights
Slide 4: Sterlite Overview
Sterlite Overview Copper Zinc -Lead Power Silver Aluminium • Largest integrated zinc producer globally • Zinc-lead capacity: Current -754 ktpa; Increasing to 1,065 ktpa by mid-2010 • Lowest quartile cost producer1 • 19 year average mine life2 100% Sterlite Energy Hindustan Zinc 64.9% (HZL) (Listed o
Slide 5: Sterlite is Uniquely Positioned
Sterlite is Uniquely Positioned . . . • World class asset base and high quality zinc, bauxite, coal and silver reserves1 • Low cost of production2 • High level of integration including power and coal • Abundant skilled manpower • Demonstrated project execution skills — ahead of time and on budget •
Slide 6: To Benefit from India's Growth Story
. . . to benefit from India’s Growth Story • Strong GDP growth rate • FY2009 — 6.7%, FY2010E — 7.0%1 • Exports account for only 23% of GDP2 • Coalition government decisively re-elected in May 2009 • Renewed focus on reforms and reviving growth across sectors • Potential divestment to reduce fiscal d
Slide 7: Strong Growth Pipeline
Strong Growth Pipeline 359 357 570 516 359 381 1,086 24 0 250 500 750 1,000 1,250 1,500 FY2008 2009 After Expansion Capacity (2013E) Balco Production(kt) VAL attributable to Sterlite(kt) Aluminium LME Aluminium Cash Price: $1,616/t1 Marginal Cost of Production: $1,681/t2 2009 Exit Cost of Production
Slide 8: Strong Track Record of Prudent, Profitable Growth & Returns
Strong Track Record of Prudent, Profitable Growth & Returns Strong financial results Increasing returns to shareholders Strong balance sheet Decisive action taken in response to market conditions • Marginal aluminium production shut down (BALCO I smelter) • Sale of surplus power • Working capital ma
Slide 9: Delivering on our Strategy
Delivering on our Strategy Increasing Capacity Consolidating minorities Focus on asset optimisation and reducing CoP Seeking further growth • Aluminium to 1.1 mtpa1 • Zinc / Lead to 1.0 mtpa • Power to over 5,500 Mw1 • Silver to 16.0 mn oz • 387MU2 of surplus power sales in FY2009 • 31% increase in
Slide 10: Operational Review
DELIVERING THROUGH THE CYCLE Operational Review
Slide 11: Zinc
Zinc • Record annual production of zinc, lead and silver • 50% segment profit margin1 despite significant fall in LME prices • Underlying costs held flat • FY2009 silver revenues of $45 mn • Increase in silver feed grade • Exploration success • Total reserves of 88.9 mt with 11.8 mt contained metal;
Slide 12: Zinc-Lead Expansion Projects
Zinc-Lead Expansion Projects Current capacity of 754 ktpa increasing to 1,065 ktpa Smelter and CPP expansion • 210ktpa zinc smelter, 100ktpa lead smelter and 160Mw CPP project • Smelter projects to be completed by mid 2010 Mine expansions • Rampura Agucha (from 5.0mtpa to 6.0mtpa) • Major ordering c
Slide 13: Aluminium
Aluminium 2,504 4,752 15,765 14,244 8,954 24% 27% 38% 34% 23% FY2005 2006 2007 2008 2009 Segment Profit (Rs.mn) Segment Profit Margin 99 174 313 359 1,086 570 24 516 381 0 200 400 600 800 1,000 1,200 1,400 FY2005 2006 2007 2008 2009 After expansion (2013E) BALCO (kt) Sterlite proportion in VAL (kt)
Slide 14: Aluminium Expansion Projects
Aluminium Expansion Projects BALCO Korba: 325 ktpa smelter & 1,200 MW CPP ..Construction commenced ..First metal tapping from October 2010, full commissioning by September 2011 Vedanta Aluminium Limited2 Lanjigarh 1.4mtpa alumina refinery ..Stream I has attained full capacity ..Stream II recently co
Slide 15: Copper: India and Australia
Copper: India and Australiazx ..Amongst the top 15 largest copper custom smelters globally1 ..Stable operating cost performance ..Improved segment profit margins2,3 ..Improved production volumes of Phosphoric acid3 ..Lower FY2009 volumes on account of shutdowns ..TC/RCs ..FY2009: down 25% at 12 USc
Slide 16: Copper: Proposed Acquisition of Asarco
Copper: Proposed acquisition of Asarco • Agreement for Sterlite to buy substantially all of the operating assets of Asarco • Asarco is the 3rd largest copper producer in the US • 241 kt of refined copper production in 2008 • Total refining capacity of c.450 ktpa • Estimated reserves of 5.2 mn tons o
Slide 17: Power
DELIVERING THROUGH THE CYCLE Power
Slide 18: Strategic Rationale
Strategic Rationale SupplySupply—demand deficit ofdemand deficit of power in Indiapower in India Significant additional capacitySignificant additional capacity requirement in the next fewrequirement in the next few yearsyears Policy changes transformingPolicy changes transforming the Indian power se
Slide 19: Commercial Power in India: A Significant Growth Sector
Commercial Power in India: A Significant Growth Sector • Supply shortages—average peak deficits of 10 -12% • Low per capita consumption (India: 503kwh, China 2,040 kwh, OECD 8,381kwh and World: 2,659kwh) 1 • Demand driven by GDP growth • Government priority to promote investment • Sector de-regulate
Slide 20: Strategically Located in Coal Rich Parts of India
Strategically Located in Coal Rich Parts of India States with > 25 billion tons coal reserves States with > 8 billion tons coal reserves Power plants fired by CoalPower plants fired by Coal Located in Close Proximity to Coal MinesLocated in Close Proximity to Coal Mines Region Accounts for over 80%
Slide 21: Attractive Portfolio of Power Projects Under Construction
Attractive Portfolio of Power Projects Under Construction • SEL Jharsuguda 2,400 Mw (4 * 600 MW) • Coal-based, subcritical • Commercial power generation • First unit to be commissioned in Q3 FY2010, full completion by Q2FY2011 • 112 mn tonnes of coal blocks allotted • Total Capital expenditure of $1
Slide 22: Financial Review
DELIVERING THROUGH THE CYCLE Financial Review
Slide 23: Financial Overview
Financial Overview Margin Net Sales (Rs. mn) Segment Profit (Rs. mn)1 300.0 CAGR:2005-2009 = 33.6% 125.0 CAGR:2005-2009 = 32.9% 70% 246.4 241.2 250.0 98.6 60% 212.2 100.0 82.8 40.9% 33.6% 50% 200.0 75.0 40% 30.1% 50.2 150.0 122.8 24.1% 23.7% 30% 50.0 36.9 100.0 20% 66.6 25.0 16.1 10% 50.0 0.0 0% 0.0
Slide 24: Strong Financial Position and Cash Flow Generation Capability
Strong Financial Position and Cash Flow Generation Capability Cash Flow from Operations (Rs. bn)1 ($1.4Bn) 70.4 69.7 64.6 25.3 10.8 FY2005 2006 2007 2008 2009 Net (Debt)/Cash Position (Rs. bn)2 ($3.1Bn) 148.2 158.2 40.4 (0.2) FY2006 2007 2008 2009 1. Cash from operations before investment in short-t
Slide 25: Conclusion
DELIVERING THROUGH THE CYCLE Conclusion
Slide 26: Delivering Through the Cycle
Delivering Through the Cycle . . . • Demonstrated project execution skills in India, including in energy • High level of integration including power and coal • Ideally positioned to capitalise on India’s natural resources • World class asset base and high quality zinc, bauxite, coal and silver reser
Slide 27: Appendix
DELIVERING THROUGH THE CYCLE Appendix
Slide 28: World Class Assets
Investor Presentation 30 June 2009 28 © 2009, Sterlite Industries (India) Limited World Class Assets Copper Zinc Aluminium Energy Power Projects Under Construction .. Captive Power Plant Mt. Lyell Mine Australia Chanderiya smelters Debari smelter Rampura Agucha Mine Dariba and Zawar Mines Korba smel
Slide 29: Sensitivities
Sensitivities Currency sensitivities on Operating Income Commodity price sensitivities on Operating Income Impact on Group of a 10% movement in currency INR / USD AUS$ / USD Operating Income ($ mn) $161.3 $13.3 Impact on Group of a $100 movement in LME price Copper Price Aluminium Price Zinc Price O
Slide 30: Project Capital Expenditure
Investor Presentation 30 June 2009 30 © 2009, Sterlite Industries (India) Limited Project Capital Expenditure Revised Cost (US$ mn) Spent to 31-Mar-09 Committed but not yet spent Status Hindustan Zinc Chanderiya smelter (zinc) 306.5 304.8 1.7 In Progress Wind energy 141.0 141.0 . Completed Zinc-lead
Slide 31: Key Income Statement Items
Key Income Statement Items Rs. in mn — As of March 31 2007 2008 2009 2009 $ mn Net Sales 241,246 246,414 212,192 4,171.3 Other operating revenue 2,251 2,616 3,683 72.4 Total revenue 243,497 249,030 215,875 4,243.7 Cost of Sales (144,798) (164,869) (164,566) (3,235.1) Selling and distribution expense
Slide 32: Key Balance Sheet Items
Key Balance Sheet Items Rs. in mn — As of March 31 2007 2008 2009 2009 $ mn Assets Cash & cash equivalents 9,436 12,363 2,701 53.1 Restricted cash 1,093 1,659 3,776 74.2 Short-term investments and deposits 51,325 154,364 186,302 3,662.3 Accounts receivable, net 15,769 13,340 7,639 150.2 Inventories
Slide 33: Key Cash Flow Items
Key Cash Flow Items Rs. in mn — As of March 31 2007 2008 2009 2009 $ mn Cash Flow From Operating activities Net income 47,432 42,600 29,562 581.1 Depreciation, depletion and amortization 5,970 7,060 7,845 154.2 Net realized and unrealized investment gains (2,280) (4,511) (2,254) (44.3) Deferred inco
Slide 34: Policy Changes Transforming the Indian Power Sector
Policy Changes Transforming the Indian Power Sector ProvisionsProvisions ImpactImpactRegulations/ GuidelinesRegulations/ Guidelines —— Allows electricity tradingAllows electricity trading —— Allows open access to transmissionAllows open access to transmission — DeDe—licenses generationlicenses gener
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