Slide 1: Vedanta Limited Q2 FY2016 Results
Vedanta Limited (formerly known as Sesa Sterlite Ltd.) Q2 FY2016 Results 27 October 2015 Results conference call details are on the last page of this document
Slide 2: Cautionary Statement and Disclaimer
Cautionary Statement and Disclaimer The views expressed here may contain information derived from statements. We do not undertake to update our forward-looking publicly available sources that have not been independently verified. statements. We caution you that reliance on any forward-looking statem
Slide 3: Strategic Update
Strategic Update Tom Albanese Chief Executive Officer
Slide 4: Safety and Sustainability
Safety and Sustainability Safety LTIFR (per million man-hours worked) 2 fatalities in Q2 FY2016; 6 fatalities in H1 FY2016 LTIFR for H1 higher due to shift to ICMM 2014 Health & Safety methodology: restricted injuries considered as LTI unlike earlier Focus on bringing in a culture of Zero-Harm
Slide 5: Q2 FY2016 Results Highlights
Q2 FY2016 Results Highlights Operations EBITDA Mix Zinc-India: Strong mined & refined metal production; integrated silver production up 64%; U/G mine ramping up Q2 FY2016 Q2 FY2015 Oil & Gas: Q2 production up 6% & H1 in line with guidance 2% Aluminium: Stable volumes from existing smelters; co
Slide 6: Taking measures to maximise cash flows and deleverage
Taking measures to maximise cash flows and deleverage Positive FCF at each segment is a top priority Strong focus on opex o Cost in 1st/2nd quartile of the global cost curve across all major businesses o Cost restructuring and optimisation at all businesses: Group-wide assessment completed, contin
Slide 7: Well-invested assets to deliver near-term growth with minimal capex
Well-invested assets to deliver near-term growth with minimal capex Total Production (copper equivalent kt) 2,500 Contribution to copper Zinc-Lead Silver Copper Aluminium Power Iron Ore Oil & Gas equivalent production growth (%) 2,000 +66% Copper Equivalent Production (kt) 9%1 1,500 6% 8.1x or 21% C
Slide 8: India: Macro and Regulatory Update
India: Macro and Regulatory Update Strong Macroeconomic Indicators Indian GDP to grow 44% by 2020,highest among the BRICS India is the fastest growing major economy (IMF) 160 India was no.1 FDI destination in H1 CY2015 (EY) World Brazil 150 − Capital inflows of US$31 bn in H1 CY2015 China Russia
Slide 9: Strategic Priorities Remain Unchanged
Strategic Priorities Remain Unchanged Production Growth and Asset optimisation − Disciplined approach towards ramp up: positive FCF at each segment a top priority Delever the Balance Sheet − Optimise opex and capex to maximise cash flows − Deliver marketing and procurement cost savings of US$1.3bn −
Slide 10: Financial Update
Financial Update D.D. Jalan Chief Financial officer
Slide 11: Financial Highlights
Financial Highlights Robust EBITDA margins¹ at 32% in a volatile commodity market − Margins reflect benefits of low-cost, diversified portfolio Higher attributable PAT driven by higher EBITDA, lower tax and currency depreciation Record quarterly FCF post-capex at Rs 7,145 crore Net debt decr
Slide 12: EBITDA Bridge Q2 FY2016 vs. Q1 FY2016
EBITDA Bridge Q2 FY2016 vs. Q1 FY2016 Largely pertaining to (In Rs. Crore) Primarily Zinc India spend on EOR4 & TSPL Primarily RPO1 & DMF2 4,500 reversal 38 49 67 4,113 4,039 1,370 430 4,000 47 3,663 699 3,500 3,000 225 23 2,500 Operational Market & Regulatory Rs. 450 crore (Rs. 376) crore 2,000 Q1
Slide 13: Cost and Marketing Savings
Cost and Marketing Savings Announced c.$1.3 bn savings program in March 2015 over 4 years − c.$800 mn in cost and c.$500 mn in marketing Program commenced in Q4 FY 2015 Realised savings of $147 mn in H1 FY2016 y-o-y Total Cost of Ownership (TCO) methodology including cost efficiencies − $109
Slide 14: EBITDA Bridge H1 FY2016 vs. H1 FY2015
EBITDA Bridge H1 FY2016 vs. H1 FY2015 (In Rs. Crore) 14,000 12,006 5,884 12,000 Pertaining to Royalty, RPO2, electricity duty & Primarily Zinc energy cess India, TSPL & Copper India 10,000 557 8,153 109 8,000 958 701 1,176 1,295 221 634 5,491 6,000 4,000 Market & Regulatory (Rs. 6,515) crore Operati
Slide 15: Net Debt Reduction in Q2 FY2016
Net Debt Reduction in Q2 FY2016 Q2 FY2016 vs. Q1 FY2016 (In Rs. Crore) 34,000 32,439 32,000 EBITDA: 4,113 WC*: 1,806 Net Interest: (699) 30,000 Tax & Others : (341) 28,000 27,105 666 1,145 (4,880) 26,000 1,276 233 24,000 (3,774) 22,000 20,000 18,000 Opening Net Cash flow from Debtors Cash Sustaining
Slide 16: Optimising Capex to drive Cash Flow Generation
Optimising Capex to drive Cash Flow Generation Free cash flow of Rs. 10,026 crore during H1 FY2016 in a volatile commodity price Cash Flow and Growth Capex Profile - $bn environment Prioritised capital to high-return, low-risk Oil & Gas Capex¹ Zinc Capex M&M Capex² Free Cash Flow³ projects to ma
Slide 17: Maturity Profile
Maturity Profile Maturity Profile of Term Debt ($7.3bn) FY16 maturities : (as of 30 September 2015) • $0.52bn term loans committed • $0.9bn term loans approved in-principle, subject to final Subsidiaries Standalone approval 1.5 1.5 1.5 1.3 1.0 0.6 0.6 0.9 0.4 0.6 0.5 0.9 0.9 0.2 0.9 0.6 0.4 0.3 FY20
Slide 18: Income Statement
Income Statement Finance cost In Rs. Crore Q2 Q2 Q1 - Benefits of low cost refinancing accrue (c.30 FY’16 FY’15 FY’16 bps reduction y-o-y) EBITDA 4,113 6,336 4,039 - Sequentially higher on account of Finance Cost (1,418) (1,464) (1,358) capitalization of assets and write-off of Other Income 721 68
Slide 19: Focus on reducing net debt and maximising free cash flows
Focus on reducing net debt and maximising free cash flows Optimising opex and capex Reduction of net debt and Deliver $1.3 bn savings strong liquidity • Cost in 1st/2nd quartile of the • Reduced net debt by $0.8bn • Delivered $147 mn cost & cost curve across major from June 2015 marketing savings in
Slide 20: Business Review
Business Review Tom Albanese Chief Executive Officer
Slide 21: Oil & Gas
Oil & Gas Q2 Results Production up 6% YoY & H1 production in line with guidance Rajasthan production 3% higher at 168,126 boepd Ravva & Cambay production 19% higher at 37,236 boepd Gas production from Raag Deep Gas (RDG) field increased to 30mmscfd in Q2 FY2016 from 19 mmscfd in Q1 FY2016, r
Slide 22: Zinc India
Zinc India Q2 Results RA Underground Mine Development Strong mined and refined metal production (in meters per month) − Record quarterly integrated saleable lead & silver production Maintained lowest quartile cost position; Q2 Zinc CoP lower at 15% 1200 y-o-y to $771/t 1000 − DMF contribution no
Slide 23: Zinc International
Zinc International Q2 Results Production of 63 kt in line with guidance − Lower Lisheen production in line with closure plan; expected to end production in November 2015 − Volumes impacted by partial industrial action and a planned 30-day maintenance shutdown at Skorpion in Sept Q2 FY2016 COP at
Slide 24: Aluminium
Aluminium Q2 Results Aluminium Costs and Margins1 Stable volumes at 500kt Jharsuguda-I & 245kt Korba-I smelters (in $/t, for Q2 FY2016) Higher production of 272kt at Lanjigarh alumina refinery Value added production at 53% Aluminium CoP at $1,648 /t Jharsuguda COP at $1,599/t, flat QoQ due t
Slide 25: Power
Power Q2 Results Power Generation Capacity: Q2 FY2016 Coal Mix (6 mt) Jharsuguda 2400 MW: 32% PLF due to lower demand & softer c. 9 GW power rates Captive TSPL: Unit-I availability of 86% as per guidance, Unit-II Commercial Power Linkage E-auction Imports c. 3 GW commissioning activities commenc
Slide 26: Other Assets: Iron Ore and Copper - India
Other Assets: Iron Ore and Copper - India Iron Ore Karnataka: Q2 Sales at 0.6million tonnes Goa Approvals in place for production of 5.5mtpa saleable ore Mining resumed in Q2 with first export shipment made on 19 Oct 2015 Progressive ramp up of production in Q3 FY2016 Cost reduction in
Slide 27: Strategic Priorities Remain Unchanged
Strategic Priorities Remain Unchanged Production Growth and Asset optimisation − Disciplined approach towards ramp up: positive FCF at each segment a top priority Delever the Balance Sheet − Optimise opex and capex to maximise cash flows − Deliver marketing and procurement cost savings of US$1.3bn −
Slide 28: Appendix
= vedanta Appendix
Slide 29: Entity Wise Cash and Debt
Entity Wise Cash and Debt (in Rs. Crore) 30 September 2014 30 June 2015 30 September 2015 Company Net Debt Cash & LI Net Debt Debt Cash & LI Net Debt Debt Cash & LI Debt Vedanta Limited 40,187 3,143 37,044 40,164 1,263 38,901 39,394 2,194 37,200 Standalone Zinc India - 25,412 (25,412) - 27,519 (27,5
Slide 30: Debt Breakdown & Funding Sources
Debt Breakdown & Funding Sources Diversified Funding Sources for Term Debt of $ 7.3bn Debt Breakdown (as of 30 September 2015) (as of 30 September 2015) Short Term Loans - USD 4% Debt breakdown (in $bn) Money market External term debt 7.3 Instruments – INR 16% Working capital 2.2 Bonds-INR - 28% Int
Slide 31: EBITDA Bridge Q2 FY2016 vs. Q2 FY2015
EBITDA Bridge Q2 FY2016 vs. Q2 FY2015 (In Rs. Crore) 7,000 6,500 6,336 3,881 Market & Regulatory Operational 6,000 (Rs. 3,756) crore Rs. 1,533 crore 5,500 5,000 Primarily Zinc Pertaining to Royalty, India, TSPL and 4,500 RPO, electricity duty & Cairn energy cess 67 132 4,113 507 4,000 3,500 827 523
Slide 32: Case Studies – Cost / Marketing Initiatives
Case Studies – Cost / Marketing Initiatives Using technology to drive efficiency (Cairn) Strategy around high cost operations Polishing Filter Package Rolloed Product facility at BALCO • Alternate methodology of modifying existing • Temporarily suspended with effect in H2 FY2016 infrastructure and u
Slide 33: Segment Summary – Oil & Gas
Segment Summary – Oil & Gas Q2 Q1 H1 OIL AND GAS (boepd) % change % change FY 2016 FY 2015 FY2016 FY 2016 FY 2015 YoY YoY Average Daily Total Gross Operated Production (boepd)* 2,14,247 2,04,128 5% 2,17,935 2,16,081 2,15,301 0% Average Daily Gross Operated Production (boepd) 2,05,361 1,94,508 6% 2,0
Slide 34: Segment Summary – Zinc India
Segment Summary – Zinc India Q2 Q1 H1 Production (in ’000 tonnes, or as stated) % change % change FY 2016 FY 2015 FY2016 FY 2016 FY 2015 YoY YoY Mined metal content 240 213 13% 232 472 376 26% Refined Zinc – Total 211 181 17% 187 398 321 24% Refined Zinc – Integrated 211 174 22% 187 398 312 28% Refi
Slide 35: Segment Summary – Zinc International
Segment Summary – Zinc International Q2 Q1 H1 Production (in’000 tonnes, or as stated) % change % change FY 2016 FY 2015 FY2016 FY 2016 FY 2015 YoY YoY Refined Zinc – Skorpion 17 27 -38% 26 42 60 -30% Mined metal content- BMM 16 16 - 15 31 31 - Mined metal content- Lisheen 30 36 -17% 29 60 72 -17% T
Slide 36: Segment Summary – Copper India
Segment Summary – Copper India Q2 Q1 H1 Production (in ’000 tonnes, or as stated) % change % change FY 2016 FY 2015 FY2016 FY 2016 FY 2015 YoY YoY Copper - Mined metal content - - - - - - - Copper - Cathodes 94 100 -6% 98 193 166 16% Tuticorin power sales (million units) 118 183 -35% 175 293 319 -8%
Slide 37: Segment Summary – Iron Ore
Segment Summary – Iron Ore Q2 Q1 H1 Particulars (in million dry metric tonnes, or as stated) % change % change FY 2016 FY 2015 FY2016 FY 2016 FY 2015 YoY YoY Sales 0.6 0.6 5% 0.5 1.2 1.1 8% Goa - - - - - - - Karnataka 0.6 0.6 5% 0.5 1.2 1.1 8% Production of Saleable Ore 0.8 0.3 - 0.2 1.0 0.3 - Goa 0
Slide 38: Segment Summary – Aluminium
Segment Summary – Aluminium Q2 Q1 H1 Particulars (in’000 tonnes, or as stated) % FY 2016 FY 2015 change FY2016 FY 2016 FY 2015 % change YoY YoY Alumina – Lanjigarh 272 226 20% 269 541 460 18% Total Aluminum Production 233 222 5% 232 464 424 9% Jharsuguda-I 130 138 -6% 132 262 270 -3% 1 Jharsuguda-II
Slide 39: Segment Summary – Power
Segment Summary – Power Q2 Q1 H1 Particulars (in million units) % change FY 2016 FY 2015 FY2016 FY 2016 FY 2015 % change YoY YoY Total Power Sales 2,718 2,028 34% 3,070 5,789 4,627 25% Jharsuguda 2400 MW 1,554 1,653 -6% 2,266 3,820 3,807 0% BALCO 270 MW 28 1 - 99 128 71 80% BALCO 600 MW1 158 - - - 1
Slide 40: Sales Summary
Sales Summary Sales volume Q2 FY2016 H1 FY2016 Q2 FY2015 H1 FY2015 Q1 FY2016 Zinc-India Sales Refined Zinc (kt) 217 398 178 320 180 Refined Lead (kt) 40 70 30 62 29 Zinc Concentrate (DMT) - - - - - Lead Concentrate (DMT) - - - - - Total Zinc (Refined+Conc) kt 217 398 178 320 180 Total Lead (Refined+
Slide 41: Sales Summary
Sales Summary Q2 H1 Q2 H1 Q1 Sales volume Q2 FY2016 H1 FY2016 Q2 FY2015 H1 FY2015 Q1 FY2016 Sales volume Power Sales (mu) FY2016 FY2016 FY2015 FY2015 FY2016 Jharsuguda 2,400 MW 2,266 1,554 3,820 1,653 3,807 Iron-Ore Sales TSPL - - 384 693 1,077 Goa (mn DMT) - - - - - BALCO 270 MW 99 28 128 1 71 1 Ka
Slide 42: Timeline: Merger of Vedanta Ltd and Cairn India Ltd
Timeline: Merger of Vedanta Ltd and Cairn India Ltd Event Completion BSE, NSE and SEBI approvals sought Q2 CY2015 BSE, NSE and SEBI approvals Q3 CY2015 Vedanta plc posting of UK Circular Q4 CY2015 Application to High Court in India Q4 CY2015 Vedanta plc EGM Q4 CY2015 Vedanta Limited and Ca
Slide 43: Group Structure
Group Structure Vedanta Resources Plc Divisions of Vedanta Limited 79.4% 62.9% Sesa Iron Ore Konkola Sterlite Copper (Tuticorin) Copper Vedanta Ltd Power (2,400 MW Jharsuguda) Mines (KCM) Aluminium (Odisha aluminium and power assets) Subsidiaries of Vedanta Ltd 59.9% 64.9% 51% 100% 100% 100%
Slide 44: Results Conference Call Details
Results Conference Call Details Results conference call is scheduled at 6:00 PM (IST) on Tuesday, 27 October 2015. The dial-in numbers for the call are given below: Event Telephone Number Earnings conference call on Mumbai main access 27 October 2015 India – 6:00 PM (IST) +91 22 3938 1017 Mumbai sta