Vedanta Limited · NSE:VEDL
Vedanta — Q2 FY2020 Earnings Presentation
45 slides from Vedanta's earnings presentation, November 2019
Slide 1: Vedanta Q2 FY2020 Investor Presentation
@ vedanta = transforming elements “ALUMINIUM & POWER | COPPER | IRON ORE& STEEL . .
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 FY20 Review Venkat, CEO 4 Financial Update Arun Kumar, CFO 19 Appendix 26 VEDANTA LIMITED – Q2 FY2020 INVESTOR PRESENTATION 3
Slide 4: Q2 FY2020 Review
Q2 FY2020 Review Venkat Chief Executive Officer
Slide 5: Key Highlights: Q2 FY2020
Key Highlights: Q2 FY2020 ▪ Zinc India ore production up by 3% y-o-y at 3.6 million ton with strong growth at Rampura Agucha and Zawar Mines ▪ Zinc International overall production at 63kt (24kt Gamsberg), up significantly y-o-y ▪ O&G 166 wells drilled, 63 wells hooked up ▪ Early gas production faci
Slide 6: Heading Towards Zero Harm, Zero Waste, Zero Discharge
Heading Towards – Zero Harm, Zero Waste, Zero Discharge Dow Jones Sustainability Index Ranking Improves to 20th (24th in 2018) Ranked 7th in Asia Pacific Region (metals and mining sector) Safety Program Update Environment Update 1 rail-related fatality in Q2 ▪ Rail safety committee to prevent repeat
Slide 7: Contributing to the communities
Contributing to the communities Benefitting the lives of 3.0 million people across 1,042 villages Flagship Programs 1000th Nand Ghar established in 4 states Healthcare Drinking Water and 1.6 Million people benefited Sanitation > 35 Initiatives 350,000 people benefited > 25 Initiatives Community Infr
Slide 8: Zinc India: Zinc supply shortfall and low stocks expected to support price
Zinc India: Zinc supply shortfall and low stocks expected to support price Slower than expected production growth continues Refined market remains in deficit despite weak demand as • Reduction in production forecast in China production growth remains modest • Slow start at new projects • Plant closu
Slide 9: Zinc India: Achieving 1.2 Mtpa MIC Capacity in FY20
Zinc India: Achieving 1.2 Mtpa MIC Capacity in FY20 Production ramp up to 1.0 million tons mined metal H2 – Completing 1.2 Mtpa project activities YOY +7% • Traditional post-summer ramp-up in production 1200 • Completion of key projects in H2 1000 Mined Metal in kt 800 52% 53% 65% >54% 600 H2 400 H1
Slide 10: Zinc India: Strong Foundation Driving Growth
Zinc India: Strong Foundation Driving Growth Performance Update Dow Jones Sustainability Index Ranking Quarter Performance: ▪ Metal Production 210kt, flat y-o-y ▪ MIC Production 219kt, down 6% y-o-y In metals and mining sector for 5th Globally the 2nd consecutive year ▪ Silver Production 134 tons, d
Slide 11: 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 24kt, up 7% q-o-q ▪ Overall production at 63kt, up 126% y-o-y ▪ COP at $1,477, up 6% q-o-q due to increase in mining cost ▪ COP of $1,584/t, down 35% y-oy ▪ Ore prod
Slide 12: Oil & Gas: Portfolio being monetized to drive multi-fold growth
Oil & Gas: Portfolio being monetized to drive multi-fold growth Capex Investment Production Ramp Up (kboepd) ▪ Gross Capex of $ 3.2 billion in PSC blocks 225 ▪ Monetization of 400 mmboe of resources ▪ Development cost of $ 7/boe 180 ▪ Capex of $ 0.8 million in OALP blocks across 51 blocks ▪ Integrat
Slide 13: Oil & Gas: All Around Efforts Driving Volume Growth
Oil & Gas: All Around Efforts Driving Volume Growth Capacity Addition Wells + Surface Facilities 8 15 10 225 180 9 3 H1 FY 20 Gas Early Liquid MBA Tight Oil Offshore H2 FY 20 Exit Production Handing Facility ▪ Commence full field polymer injection in Bhagyam and Aishwariya fields Mangala, Bhagyam &
Slide 14: Oil & Gas: Building for Future Growth
Oil & Gas: Building for Future Growth OALP Blocks PSC Blocks Well Diversified ~60,000 51 Acreage Work 40 Onshore sq km Investment Resources Drilling Program 11 Offshore ($mn) (mmboe) Status (Wells) Peak Production Resources (bnboe) 500 (kboepd) 5.5 Rajasthan Drilling from Upside Scenario 60 300-600
Slide 15: Aluminium: Achieving Design Structure
Aluminium: Achieving Design Structure Structural Reduction in Cost Performance Update 2,049 1,990 Quarter Performance: 1,852 1,810 1,764 ▪ Aluminium COP at $1,852/t, down 10% y-o-y ▪ Lanjigarh production 410 kt, up 18% y-o-y ▪ Lanjigarh COP at $293/t, down 18% y-o-y ▪ EGA Bauxite supplies started fr
Slide 16: Aluminium: Significant progress on Strategic levers Continues
Aluminium: Significant progress on Strategic levers Continues 1,990 1,810 1,500 Coal Alumina Bauxite Initiatives Ramp Up Sourcing Others H1 FY19 H1 FY20 Target Initiatives Action Plan ▪ Increase Linkages through participation in Tranche V & VI, Coal Block Auctions Coal ▪ Target coal security 90% of
Slide 17: Other Assets: Iron ore and Electrosteel Steels
Other Assets: Iron ore and Electrosteel Steels Iron Ore Electrosteel Steels Performance Update Performance Update Quarter Performance: Quarter Performance: ▪ Karnataka sales 1.4 Mnt, highest ever ▪ Production 270kt, down 5% y-o-y ▪ Pig Iron production 176kt, up 2% y-o-y ▪ Sales 283kt, up 6% y-o-y ▪
Slide 18: Strategy to Enhance Long Term Value
Strategy to Enhance Long Term Value Continue Focus on World Class ESG Performance Augment Our Reserves & Resources Base Delivering on Growth Opportunities Optimise Capital Allocation & Maintain Strong Balance Sheet Operational Excellence VEDANTA LIMITED – Q2 FY2020 INVESTOR PRESENTATION 18
Slide 19: Financial Update
Financial Update Arun Kumar Chief Financial Officer
Slide 20: Financial snapshot Q2
Financial snapshot Q2 EBITDA Attributable PAT EBITDA Margin* ₹ 4,497 cr ₹ 2,158 cr 25% Down 13% q-o-q Up 60% q-o-q Industry leading margin Gross Debt Net Debt ND/EBITDA ₹ 55,898 cr ₹ 20,081 cr 0.9x Down 6% q-o-q Down 29% q-o-q Lowest among Indian peers * Excludes custom smelting at Copper India and
Slide 21: EBITDA Bridge (Q2 FY2019 vs. Q2 FY2020)
EBITDA Bridge (Q2 FY2019 vs. Q2 FY2020) (In ₹ crore) Aluminum (970) Oil & Gas (320) Zinc, Lead & Silver (186) IOB 164 Steel (160) ZI 133 HZL (55) RPO (210) 5,281 1,712 PP 144 59 220 111 74 4,497 72 4,240 684 Market & Regulatory Operational ₹ (1,040) crore ₹ 331 crore Q2 FY19 LME/ Brent / Input Curre
Slide 22: Net Debt for Q2 FY 2020
Net Debt for Q2 FY 2020 (In ₹ crore) Power Debtor Realization 1,400 Metal Debtor Realization 520 Inventory Liquidation 1,055 Creditors/Customer Advance 3,540 28,403 4,283 6,531 2,191 301 20,081 FCF Post Capex ₹ 8,623 Cr Net Debt 30th WC Net Debt 30th CF from Capex Translation Jun’19 Movements Sep’19
Slide 23: Balance Sheet
Balance Sheet Term Debt Maturities - ₹ 39,861 Crore ($5.7 bn) (as of Sep 30, 2019) ▪ Liquidity 12.4 11.4 – Cash and investments @ ₹ 35,817 cr 8.6 rated Tier I by CRISIL; 3.5 – Undrawn line of credit ₹ c. 7,200 crore ₹ ‘000 Crore 2.9 7.0 3.9 ▪ Net Interest – Reducing q-o-q 3.5 7.9 1.4 5.7 2.1 5.4 ▪ I
Slide 24: Self funded Capex Delivering Superior Returns
Self funded Capex Delivering Superior Returns 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 x 1.1 0.1 0.1 0.1 0.8 0.7 0.5 0.4 0.6 0.1 0.2 0.3 0.4 0.5 0.04 0.2 0.1 0.3 0.2 0.1 0.1 0.5 0.3 0.6 FY2016 FY2017 FY2018 FY2019 H1 FY
Slide 25: Key Investment Highlights
Key Investment Highlights 1 Large 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 Sustainability 5 Strong Financ
Slide 26: Appendix
3S vedanta SS E Appendix |
Slide 27: FY 2020 Guidance
FY 2020 Guidance Segment FY20 Production and COP Revised FY20 Guidance Mined Metal and Finished Metal: c 1.0 Mtpa Mined Metal and Finished Metal: c 950kt Zinc India Silver: 750 - 800 tonnes Silver: c. 650 tonnes < $1,000/t excluding royalty H2 COP < $1,030/t excluding royalty Skorpion and BMM: >170k
Slide 28: Income Statement
Income Statement Depreciation & Amortization Q2 Q2 Q1 In ₹ Crore • Higher q-o-q and y-o-q on account of higher ore FY’20 FY’19 FY’20 production at Zinc businesses, commencement of Revenue from operations 21,739 22,432 21,167 Gamsberg operations and higher charge in O&G business due to capitalisation
Slide 29: Project Capex
Project Capex Spent up to Capex3 Spent in H1 Unspent as at Capex in Progress Status ($mn) 31 Mar’194 FY20204 30 Sep’20195 Cairn India1 – Mangala Infill, Liquid handling, 2,452 651 282 1,519 Bhagyam & Aishwariya EOR, Tight Oil & Gas etc Aluminium Sector Line 3: Fully capitalised Jharsuguda 1.25mtpa s
Slide 30: Entity Wise Cash and Debt
Entity Wise Cash and Debt (In ₹ crore) Sep 30, 2019 Jun 30, 2019 Sep 30, 2018 Company Debt Cash & LI Net Debt Debt Cash & LI Net Debt Debt Cash & LI Net Debt Vedanta Limited Standalone 37,956 7,162 30,794 39,922 4,147 35,775 44,754 8,050 36,704 Cairn India Holdings 1,213 5,180 (3,968) - 6,167 (6,167
Slide 31: EBITDA Bridge (Q1 FY 2020 vs. Q2 FY 2020)
EBITDA Bridge (Q1 FY 2020 vs. Q2 FY 2020) (In ₹ crore) HZL (82) Zinc, lead & Silver (344) ZI 85 Oil & Gas (190) Oil & Gas 78 Electrosteel (160) Aluminum 30 RPO (112) PP 188 5,188 854 134 67 206 18 67 119 4,587 4,497 Market & Regulatory Operational ₹ (601) crore ₹ (72) crore Q1 FY 20 LME/ Brent / Inp
Slide 32: Segment Summary – Zinc India
Segment Summary – Zinc India Q2 Q1 H1 Production (in ’000 tonnes, or as stated) FY 2020 FY 2019 % change YoY FY2020 FY 2020 Mined metal content 219 232 (6)% 213 432 Integrated metal 210 212 (1)% 219 429 Refined Zinc – Integrated 166 162 2% 172 338 Refined Lead – Integrated1 44 49 (11)% 48 91 Refined
Slide 33: Segment Summary – Zinc International
Segment Summary – Zinc International Q2 Q1 H1 Production (in’000 tonnes, or as stated) FY 2020 FY 2019 % change YoY FY2020 FY 2020 Refined Zinc – Skorpion 23 15 54% 18 41 Mined metal content- BMM 16 13 22% 19 35 Mined metal content- Gamsberg 24 - - 23 47 Total 63 28 - 60 123 Financials (In ₹ Crore,
Slide 34: Segment Summary – Oil & Gas
Segment Summary – Oil & Gas Q2 Q1 H1 Production (in boepd, or as stated) FY 2020 FY 2019 % change YoY FY2020 FY 2020 Average Daily Production Gross operated 178,744 185,926 (4)% 180,059 179,398 Oil 160,991 177,026 (9)% 165,983 163,473 Gas (Mmscfd) 107 53 99% 84 96 Non operated- Working interest 565
Slide 35: Segment Summary – Oil & Gas
Segment Summary – Oil & Gas Q2 Q1 H1 Production (in boepd, or as stated) FY 2020 FY 2019 % change YoY FY2020 FY 2020 Average Daily Working Interest Production 114,994 118,748 (3)% 114,570 114,783 Rajasthan 105,294 108636 (3)% 104,407 104,853 Ravva 2,822 3,037 (7)% 3,036 2928 Cambay 6,312 6,894 (8)%
Slide 36: Segment Summary – Aluminium
Segment Summary – Aluminium Q2 Q1 H1 Particulars (in’000 tonnes, or as stated) FY 2020 FY 2019 % change YoY FY2020 FY 2020 Alumina – Lanjigarh 410 348 18% 446 856 Total Aluminum Production 476 494 (4)% 471 947 Jharsuguda-I 137 137 0% 134 271 Jharsuguda-II 1 201 216 (7)% 199 401 245kt Korba-I 63 64 (
Slide 37: Aluminium profitability
Aluminium profitability $/t Q1 ‘20 1,793 54 92 1,939 (712) (652) (400) (111) 64 (146) (269) (351) 61 83 1,905 Q2 ‘20 1,761 697 774 381 81 (28) 133 245 (406) LME Ingot Value Realisation Alumina Power Other Conversion EBITDA Dep Int PBT Premium addition Hot & Others Metal VEDANTA LIMITED – Q2 FY2020 I
Slide 38: Segment Summary – Power
Segment Summary – Power Q2 Q1 H1 Particulars (in million units) FY 2020 FY 2019 % change YoY FY2020 FY 2020 Total Power Sales 3,253 3,514 (7)% 3,523 6,776 Jharsuguda 20 124 (84)% 267 287 BALCO1 454 480 (6)% 425 878 HZL Wind Power 165 185 (11)% 134 298 TSPL 2,615 2,725 (4)% 2,697 5312 Financials (in
Slide 39: Segment Summary – Iron Ore and Steel
Segment Summary – Iron Ore Particulars (in million dry metric tonnes, or Q2 Q1 H1 as stated) FY 2020 FY 2019 % change YoY FY2020 FY 2020 Sales 1.4 0.4 - 1.2 2.6 Goa 0.0 0.1 - 0.0 - Karnataka 1.4 0.2 - 1.2 2.6 Production of Saleable Ore 1.3 1.4 (6)% 1.1 2.4 Goa - - - - - Karnataka 1.3 1.4 (6)% 1.1 2.
Slide 40: Segment Summary – Copper India
Segment Summary – Copper India Q2 Q1 H1 Production (in ’000 tonnes, or as stated) FY 2020 FY 2019 % change YoY FY 2020 FY 2020 Copper - Cathodes 16 15 2% 16 31 Financials (In ₹ crore, except as stated) Revenue 3,185 2,376 34% 1,777 4,962 EBITDA (105) 12 - (66) (171) Copper LME Price ($/MT) 5,802 6,1
Slide 41: Sales Summary
Sales Summary Sales volume Q2 FY 2020 Q2 FY 2019 Q1 FY 2020 H1 FY 2020 Zinc-India Sales Refined Zinc (kt) 168 160 167 335 Refined Lead (kt) 44 49 47 91 Total Zinc-Lead (kt) 212 209 215 427 Silver (tonnes) 135 161 155 289 Zinc-International Sales Zinc Refined (kt) 23 15 17 40 Metal in Zinc Concentrat
Slide 42: Sales Summary
Sales Summary Q2 Q2 Q1 H1 Sales volume Q2 Q2 Q1 H1 Sales volume Power Sales (mu) FY 2020 FY 2019 FY 2020 FY 2020 FY 2020 FY 2019 FY 2020 FY2020 Jharsuguda 20 124 267 287 Iron-Ore Sales TSPL 2,615 2,725 2,694 5,309 Goa (Mn DMT) - 0.1 - - BALCO 2 454 480 425 878 Karnataka (Mn DMT) 1.4 0.2 1.2 2.6 HZL
Slide 43: Currency and Commodity Sensitivities
Currency and Commodity Sensitivities Foreign Currency - Impact of ₹ 1 depreciation in FX Rate Currency Increase in EBITDA INR/USD ~ INR 600 crs / year Commodity prices – Impact of a 10% increase in Commodity Prices H1 FY 2020 Full Year Impact on Commodity Average price EBITDA ($mn) Oil ($/bbl) 66 10
Slide 44: Group Structure
Group Structure Vedanta Resources Ltd Divisions of Vedanta Limited 79.4% 50.1% ⚫ Sesa Iron Ore ⚫ Sterlite Copper Konkola ⚫ Power (600 MW Jharsuguda) Copper Vedanta Ltd Mines (KCM) ⚫ Aluminium (Odisha aluminium and power assets) ⚫ Cairn Oil & Gas* Subsidiaries of Vedanta Ltd 64.9% 51% 100% 100% 90% Z
Slide 45: Results Conference Call Details
Results Conference Call Details Results conference call is scheduled at 6:00 PM (IST) on November 14, 2019. The dial-in numbers for the call are given below: Event Telephone Number India: +91 7045671221 Earnings conference call on November 14, India – 6:00 PM (IST) Toll free: 1800 120 1221 2019 Univ