Ladies and gentlemen, good day and welcome to the Q4 and full year FY 2022 earnings conference call of Vedanta Limited. As a reminder, all participant lines will be in the listen-only mode, and there will be an opportunity for you to ask questions after the presentation concludes. Should you need assistance during the conference call, please signal an operator by pressing star then zero on your touchtone phone. Please note that this conference is being recorded. I now hand the conference over to Mr. Sandep Agrawal from Vedanta Limited. Thank you, and over to you.
Thank you, Stanford. Hello, everyone. I am Sandep Agrawal. On behalf of Vedanta, I am delighted to welcome you to our fourth quarter and full year FY 2022 earnings call. We have with us today our Group CEO, Mr. Sunil Duggal, our Group Acting CFO, Mr. Ajay Goel. We are also joined by Deputy CEO, Aluminium, Mr. Rahul Sharma, Deputy CEO, Oil & Gas, Mr. Prachur Sah, CEO, Iron & Steel, Mr. Sauvik Mazumdar. We will start with update on key highlights of our performance and then answer the questions which you may have. Please note, today's entire discussion will be covered by safe harbor clause mentioned on page two of the presentation. Now, without further ado, I would like to hand over to Mr. Duggal to take us through the presentation. Over to you, Mr. Duggal.
Thank you, Sandep. Hello, everyone. Welcome to Vedanta Limited fourth quarter and full financial year 2022 earnings conference call. The commodity market had a remarkable spell in the financial year 2022. Initially, driven by energy crisis in China, natural gas stock shortage in Europe, coal supply shortage due to Australian and Indonesian coal supply curtailment, and then due to Russia-Ukraine conflict. Metal supply chain is seeing disruptions with increased energy costs, financing issues due to sanctions on Russia, and logistic issues due to trouble in ports access from Russia and Ukraine. Production cuts by various European manufacturers, particularly for aluminium and zinc, coupled with extremely low inventories, have led to all-time high metal prices.
Oil and gas prices have also jumped amidst increased demand and Europe's high dependence on Russia's oil and gas. It appears that strong supply side disruptions continue to outweigh potential of economic risk from high inflation and rising COVID cases in China.
Metal prices can remain elevated for longer, especially in short to medium term. Indian economy remained resilient on the back of record exports, improving manufacturing and services, government-led infra spending, buoyant GST and other tax collections. Rising new investment proposals indicate investment cycle revival. Core sector output growth was also at a four-month high of 5.8% YoY in February, signaling a rebound in the industrial activities. Vedanta continues to deliver strong performance underpinned by asset quality and business model strength. We have delivered best ever annual financial performance with an EBITDA of INR 45,319 crore and strong free cash flows. Driven by record volume growth across our key businesses, EBITDA margins remained strong despite inflationary pressure on cost of production. In line with our earnings distribution track record, we had record INR 45 per share dividend payout in FY 2022.
As per our redefined ESG strategy, our overall purpose is supported by three pillars. Under the first pillar of transforming the community, we have worked to uplift the quality of communities through various initiatives, including drinking water, sanitation, healthcare, community infrastructure, children wellbeing, et cetera. 4.36 million lives benefited across 168 villages. We are proud to announce that we established more than 3,200 Nand Ghars, benefiting 240,000 children and women. Under the second pillar of transforming the planet, we took a very significant action by signing 580 MW of renewable power purchase agreement. We launched Restora and Restora Ultra brand of green aluminum to usher in new era of green metals. In line with our aim to move to a greener business model, Jharsuguda dispatched first fly ash straight to cement plant.
We are saddened by loss of three lives in the fourth quarter. Our senior leadership team has completed post-incident investigation. The outcomes have been shared immediately with all our sites to deploy the learnings. Safety standdowns have been conducted across the sites to communicate learning to all employees and business partners. We are making steady progress towards aim to ensure gender parity, diversity, and inclusivity across the organization from the senior leadership and decision-making bodies who are SBU and enabling functions. Our aim is to strengthen our position as an equal opportunity employer. We have launched group-wide program Vedanta Spark to scale our partnership with innovative startups to leverage their technological capability and execution speed, aimed towards achieving strategic goals in operational excellence, new product development, and 360-degree sustainability. For the Atmanirbhar Bharat, India needs to reduce electronics imports.
Semiconductor, which is a critical raw material for electronic manufacturing, has significant demand-supply gap. We are partnering with the largest global player, Foxconn, to start semiconductor production in two years' time. This has a very large potential for shareholder value creation. Now I will turn to business verticals. Our aluminum business recorded highest ever annual aluminum and alumina production of 2.3 million tons and 2.0 million tons respectively, driven by strong focus on operational excellence and asset optimization. Fourth quarter was also exceptional with 8% YoY metal production growth. Quarterly aluminum COP was $2,182 per ton, impacted by input commodity headwinds, particularly power cost. With our continued focus on growth and integrated operation, aluminum business has now become second-largest contributor in group's profitability.
It is poised to be third-largest global player ex-China with $1.4 billion CapEx program over the next two years for growth and vertical integration to create sustainable value and reduce market volatility impact. Zinc India achieved historic high mine metal production, crossing 1 million ton mark. Quarterly mine metal production was 295 KT, was also best ever since underground transition. The cost of production was down by 1% to $1,136 per ton on QoQ basis, and input commodity inflation impact was more than offset by high volumes, operational efficiency, including improved recoveries and favorable LME. Zinc International Gamsberg is now well poised to deliver significant value. Gamsberg achieved 220 KT annualized run rate of MIC production in the month of March. The COP increased mainly due to spend on south pit recovery projects and exchange rate appreciation.
We successfully finished the commissioning of the zinc rougher cell, which resulted in 3%-5% recovery improvement. We are spending $466 million to increase Gamsberg MIC capacity to 450 KTPA. Gamsberg has potential to become South Africa's largest zinc producer and one of the biggest zinc smelting complexes in the world. Oil and gas business operations remain stable. The natural field decline was largely offset by infill wells, polymer injection, and RDG field gas lift. OpEx increased to $12.4 per barrel in the fourth quarter, primarily on increased polymer prices in line with higher oil prices and polymer consumption to arrest decline. We notified two OALP hydrocarbon discoveries, Durga-1 in Rajasthan and Jaya-1 in Cambay, adding 40 million barrels of oil resources.
To augment our reserves and resources and mitigate natural decline, we'll spend $657 billion on exploration work in OALP and PSC block, infill well programs, and shale exploration. In iron ore, we achieved highest ever annual production with 13% YoY growth. Quarterly sales grew 17% YoY with support from all key operational projects. We have achieved record annual production of 790 KT. We have recorded highest ever annual margin of $111 per ton. Quarterly margin was down due to higher coking coal prices after a partial offset from higher steel prices. Steel delivered record annual hot metal production of 1.36 million tons through enhanced furnace operations. Quarterly hot metal production grew 3% YoY. The margin was higher by 10% QoQ, mainly on improved market despite input commodity headwinds.
We commenced commercial production from recently acquired two iron ore mines in Orissa, which will enable ESL to have 100% iron ore security. FACOR continues its turnaround journey. It achieved historic annual ferrochrome production with 10% YoY growth. Our annual EBITDA margin was up by 3x YoY to $534 per ton. Quarterly ferrochrome production was 18 KT, lower due to maintenance shutdown. Overall, if you see, we have made significant progress across our strategic priorities, creating value for all stakeholders. Our world-class assets have delivered outstanding financial results, driven by operational performance and supported commodity prices. Our underlying businesses remain strong, and we are committed to make it stronger through growth. Vertical integration, operational efficiencies, unlocking through technology and digitization, and targeted acquisitions. With this now, I would like to hand over to my friend, Mr. Ajay Goel, CFO, for the financial performance.
Thank you, Sunil, and good evening, everyone. We achieved our best ever financial performance, not only for the quarter, but also the full year was a record year in terms of various financial metrics by a significant margin. This quarter witnessed our highest ever revenue and EBITDA performance. The leverage ratio, which is net debt to EBITDA, was the lowest in last five years. The quarter was benefited by positive operational performance across our key businesses and favorable sales realization following strong demand and elevated commodity prices for all our major commodities, namely zinc, aluminum, and Brent. The record earnings and resultant cash flows supported the full year dividend of INR 45 per share, with total quantum of dividend payout at INR 16,728 crores. I'd like to highlight a few of the vital few numbers for the fourth quarter, the quarter just bygone.
Highest ever quarterly EBITDA of INR 13,768 crores, up 51% YoY and up 26% with an underlying margin of 39%. We maintain the leadership position across the industry on margins. PAT before exceptionals and any one-time gains stands at INR 7,570 crores, up 48% YoY and 40% quarter-on-quarter. We continue to maintain our strong liquidity position with cash and cash equivalents at INR 32,130 crores. With that, the net debt stands at about INR 21,000 crores, which is down 24% quarter-on-quarter. Let me add, this is the quarter where we also paid dividend.
Net debt is down 24% quarter-over-quarter with net debt to EBITDA ratio of 0.5, which again, as I mentioned, is the lowest in last five years and is the best amongst Indian peers. I also want to call out a couple of key numbers for the full fiscal, FY 2022. All-time high EBITDA of INR 45,319 crores, up 66% from the previous year with an underlying margin of 39%. PAT before exceptionals and any one-time gains stands at INR 24,299 crores. It is up by 95% from the previous year. The ROCE, return on capital employed, was 30%, which is 1.6x higher versus last year's number of 19%. Our profitability is racing ahead of need for the capital.
We have a detailed income statement in the appendix, and I want to just update you on couple of items in that income statement. It's in the page number 31 in the IR presentation. Depreciation charged for the fourth quarter was INR 2,379 crores. It is 60% higher YoY due to higher overall depreciation charge for RG at oil and gas and higher ore volumes and capitalization at zinc. The depreciation quarter-on-quarter increased by 5%, which is in line with the business magnitude for the current quarter. The finance cost for Q4 was INR 1,333 crores, up 1% YoY, primarily on account of one-time prepayment charge on loan refinancing. It is partly offset by lower average borrowings and lower interest rate.
Income from investment for the fourth quarter was INR 520 crores, down 40% year-over-year and up 1% quarter-on-quarter due to NPM accounting, mark-to-market movement, and change in the mix of the investment. The normalized ETR for the full fiscal stands at about 28%, which is in line with the guidance provided. As you know, the normalized ETR excludes any tax on exceptional items or any deferred tax asset reverses on the losses. I'll now move to EBITDA bridge. Where the EBITDA is up 51% year-over-year and 26% up quarter-on-quarter. As you may have seen from the bridge, the strong demand for all our commodities and higher pricing have positively impacted our EBITDA along with higher volumes across all our key businesses. This has been partly offset by input inflation across various commodities, specifically in the aluminum business.
Moving on to the net debt bridge. Net debt as on the year-end, March 31, stands at about INR 20,979 crores, reduced by INR 6,590 crores from the previous quarter. This is supported by strong cash flows from operations and partly offset payment of dividend in the fourth quarter and CapEx spending. From balance sheet viewpoint, long-term strategic balance sheet management is a key enterprise-wide priority for us. The average maturity for long-term debt is about 3.5 years with an average cost of borrowings at 7.9%. The 7.9% has come down to 7.7% as of March end.
I'm very happy to report to you that our rating has been augmented to double A with a stable outlook in the first quarter, both by India Ratings and CRISIL, and that demonstrates our strong financial performance and the free cash flows. As you are aware, we announced our allocation of capital policy in the fourth quarter, sometime in February. This policy establishes various guardrails on allocation of funds. The policy focuses on rapid and responsible growth with the key objectives of deleveraging across the group and at the same time maximizing shareholders' value. Our CapEx program is progressing quite well, and it is in line with overall policy on allocation of capital, which intends to invest in next phase of growth projects.
You may have seen on the guidance provided for the current fiscal, as in FY 2023, we have planned for $2 billion of growth CapEx in the current year, wherein we are investing in aluminum business towards vertical integration. We are also investing in oil and gas to augment R&R and mitigate any natural decline in the oil fields. We are also looking to double the capacity at Zinc International and ESL. In FY 2022, we achieved highest ever cash flows before CapEx of about $3.6 billion, which shows the strength of our operations. Our CapEx programs over the various previous years has been largely self-funded and will continue doing so in near future as well. Overall, in summary, with an excellent yearly performance, we delivered record profitability. We are progressing well on the path of deleveraging and rewarding shareholders through consistent dividend.
I also want to mention that we ensure highest level of corporate governance and transparency with clean statutory audit report across the group as of year-end. With this, we are confident that we will continue to sustain our strong performance in the current fiscal as well and create further value for the shareholders. Thank you all. I go back to operator for any Q&A.
Thank you very much, sir. Ladies and gentlemen, we will now begin the question and answer session. Anyone who wishes to ask a question may please press star then one on their touchtone telephone. If you wish to remove yourself from the question queue, you may press star then two. Participants are requested to use handsets while asking a question. Participants are requested to limit your questions to two per participant. If you have any further questions you may come back for the follow-up. To ask a question, please press star then one. The first question is from Amit Dixit from Edelweiss. Please go ahead.
Yeah. Good evening. Thanks for the opportunity, and congratulations for a good set of numbers. I have two questions. The first one is essentially on the premium aluminum products, Restora and Restora Ultra. If you can throw some light on the timeline, the volume and the premium that these products will command over your regular aluminum products. That is the first question.
May I go ahead with the first question? Or you want to go ahead with.
Yeah, sure.
No, I'll answer this. These are two products. One is Restora and Restora Ultra. Restora Ultra is made with the green power, so renewable power, it was made. It is with the intensity of, say, 3.2 ton of CO2 per ton of metal, compared to a traditional 17-18 ton of CO2 per ton of metal. This is Restora. The other is Restora Ultra. Restora Ultra is made from the aluminium dross. The aluminium dross is normally dumped in the secure landfill. Our sister organization, Runaya, set up the technology to process this dross to convert it into aluminum. With this, the overall the carbon per ton of metal is around 0.32.
Yes, 0.37 . Not 0.32 . This is 0.37 tons per ton of metal. This is Restora Ultra. I may also tell you that the global standard, the green metals are made with CO2 of 4 tons CO2 equivalent per ton of metal. Even our Restora metal is better than the global standard, and the Restora Ultra is also better than the global standard. These numbers have been ratified and verified by DNV, the third party, and based on that certification, we have launched this product in the market. This is enabling us to earn good premium from the export market. My colleague, Rahul, is also there.
Rahul, anything you want to add on what premium we are earning from the market on this?
No, no. Thanks, Mr. Duggal. I think the point is that why we have gone for it's an obvious reason. You know, when we want to be seen from the metal side and more from the ESG side. That's the start of our journey to make, you know, 25% ESG reduction by 2030. That was the first product which has been launched last year. It's been registered and launched as a Restora brand, as Mr. Duggal said that. This product has better than the global average, which is less than 4 ton CO2 emission per ton of aluminum.
The last year, if we say that we have already, you know, produced 130 KT. This year also, we have already, you know, customer with us and we'll be continue to ramp up the volume. That's a volume which we did last year. More than with premium, I think is a more of a segment, which is more, you know, friendly or more conscious about the environment. They are demanding, and we are contributing towards our ESG goal and the demand.
Yeah. Okay. Thanks for the comprehensive answer. The second question is essentially on the balance sheet and cash flow. If I look at the working capital build up, that is almost INR 10,000-odd crores. INR 8,100 crores has been receivable. But if I look at the balance sheet and the trade receivable, you know, they have gone up, but not to the extent of INR 8,100 crores. Just wanted to understand where the remaining receivables have gone up.
Yeah. Sure, Amit. If you also look at the overall the bridge in terms of free cash flow for the full fiscal, and you're right, the working capital is an investment for the full fiscal. We should not look at just the absolute value. As we have seen, our revenue has grown from about INR 87,000 crore last year to about INR 130,000 crore. That is 1.5 x. The investment in the working capital, be it inventory or in terms of debtors, is all led by the pricing, the higher volume in the current fiscal. If you look at the number of days outstanding, our working capital impact is lower than the last year.
No, that's fine. My question was more on receivables. If I look in cash flow, the receivables have gone up by INR 8,100 crores. In balance sheet, trade receivables are up, like, INR 1,500 -odd crores in current asset and in non-current assets, they are up, like, by hardly. I can't reconcile this difference in receivables. INR 8,100 crores has gone up. The trade receivable has gone up by only INR 1,500 crores. Just wanted to understand that what is the other component of these receivables?
It is multiple components, Amit. It is the normal trade debtors, and including, the power debtors. What we can do, we can send you a breakup over the email.
Great. I have a few questions that I'll come back with the team. Thanks, and all the best.
Thank you. You keep.
Thank you. The next question is from Pinakin from JP Morgan. Please go ahead.
Thank you very much, sir. Sir, I have two questions. My first question relates to the aluminum segment. Now, the company has laid out the three coal mines, Jamkhani and other two, and the expectations of, you know, commissioning. My first question relates to coal is that can you give us a sense of what is the expected volumes from each of the mines? What would be the total all-in cost at these mines versus your current procurement of coal cost, adjusted for calorific values? I'm trying to understand what could be the potential savings from these captive coal mines.
I'll go about it. We have three mines we have won through auction. One is Jamkhani, another is Radhikapur and third is Kuraloi. These mines are located within the stone's throw from our Jharsuguda operation. Jamkhani coal block, we are planning to make it operational next month. This mine has a licensed capacity of 2.6 billion tons per annum. But the potential is much larger. Once we start operation and we would like to, you know, have a mine plan for much larger value, much larger capacity. My own sense is that this can go to 6-8 billion tons per annum.
The current estimated cost from this mine is around INR 0.80 per GCV. Irrespective of GCV value, we convert it into the figure of paisa per GCV. This is 70-80 paisa per GCV. The current cost has been varying over the quarters. The current cost is, say, INR 1.15 or so, which was the average for the last quarter. I'm just mentioning this figure just for the comparison, and you can work out your numbers. The Radhikapur (West), this mine has a capacity of 6 billion tons per annum. This mine we want to make it operational in the second half of the year.
The potential cost per GCV could be, as per our internal calculation, is INR 0.53 per GCV. The third mine is Kuraloi (North), which has a licensed capacity of 8 million tons, and this also has a potential of around 8 million tons. This will become operational by first half of FY 2024. In the next 12-15 months' time, our belief is that all these three mines should become operational. With the current license capacity, it should produce around 17 million tons. With the full potential, it can produce 25-26 million tons. The overall cost of all these three, the average cost of all these three, could be INR 0.57-INR 0.60 against the last quarter cost, which I mentioned, was around INR 1.15.
Thank you. Thank you very much, sir. My second question relates to slide number 48. Vedanta Resources standalone net debt stands as of March 31st at $8.9 billion. Now, given the dividend that the company has paid out and the cash flows that Vedanta Limited will generate, can we get a sense of how much the net debt at the parent unlisted entity is expected to reduce in the next financial year? The chairman had talked about a number of $5 billion over four years, but can we break this down into the expected debt reduction over the next 12 months at the unlisted parent?
Yeah. Sure, Pinakin. You may have to write page 48. It shows Vedanta Resources' debt still remains about $8.9 billion. Today also the board announced its first interim dividend of almost $1.6 billion. In that case, almost $1 billion becomes a receipt at VRL's hand. This proceeds will be mostly used for part tender of $1 billion bonds which are due in July. Overall, what we committed a couple of months ago in our Mumbai meet with deleveraging Vedanta Resources of $4 billion over three years. We don't have breakup by year. One thing I can commit to you that the whole $4 billion over three years will not be back-ended, will be front-ended. At least $1 billion deleveraging in the current fiscal is our target.
I will add on a couple of sentences here. You see, we have made an EBITDA of $6.3 billion last year. With a run rate of say $1.2 billion or $1.92 billion in quarter four. If you do your math and the commodity prices and the performance till here, it has a potential of 8 billion dollars. With the efforts and the projects in the pipeline which will integrate the operation, and you just heard about operationalization of the coal mines. You also know that we are raising the capacity of our Lanjigarh operation from 2 million ton to 5 million ton. Here, even with the imported bauxite, it has a differential contribution of $150 per ton.
With the local bauxite it has a potential of another $150 per ton. With the power cost potential of, say, $300-$350 per ton, and this potential of $300 per ton, the cost reduction, the integration of the operation, adding the value, added product capacity, increasing it from 44%-90%, and the ESL capacity going up. We have the projects all over. I also talked about Zinc International, the potential the Zinc International has. I'm also very happy to report to you that the SRK has just certified the report that we have added another 100 billion tons of R&R in our Zinc International operation. We have a huge potential.
We're looking at all the potential, if we capture the full potential, I think our revenues could be, you know, $30 billion, $30-$35 billion in the next two years. EBITDA could be $12-$13 billion. With that EBITDA, you can look at our CapEx and the other line items, it could deliver us a cash flow of $7-$8 billion. With a debt of $9 billion and the cash flow of this, you can do your own math as to where we can land.
Understood. Thank you very much, sir.
Thank you.
Thank you. The next question is from the line of Vishal Chandak from Motilal Oswal Financial Services. Please go ahead.
Thanks for taking my question. My first question was with regards to the coal cost at Vedanta. If you could highlight what is the breakdown of your imported coal, e-auction coal, and linkage coal?
I gave you the overall cost of INR 1.15, and the power cost in Q4 was $26 per ton. But if you want the overall breakup, I have my colleague, Rahul. Rahul, in brief, if you can tell the breakup of the various sources of the coal procurement which you have and the overall breakup of the power cost.
Thanks, Mr. Chandak. Now, ideally, if you see that the last year the total procurement was 22 million, and the percentage per se linkage was 31%, and the e-auction was 63%. Rest 5%-6% more of aggregator. Total cost per GT was INR 1. We know that always linkage cost is, you know, close to INR 0.70 or INR 0.72. That's all you can find out from, you know, the calculation what I said, you can calculate. Q4, the first year was INR 1.15, which Mr. Duggal also said that. That's a percentage break up, what I have said for the, you know, last year for 22 million, which we have consumed as a company.
Sir, if you could just highlight on the Q4, because I believe Q4 was significantly different because the coal and the e-auction volumes were low and the premiums were significantly higher. How would you look through it for the next two quarters in terms of, you know, coal not being able to allocate coal for the e-auctions and FSA, which is not coming up to most of the aluminum guys?
Yeah. Basically, you know, if you see that, from a coal point of view, I think you must understand one, as I said that I have 100%, you know, coal security. What movement has happened from Q3 to Q4 is that my tranche five, which is my major quantity of 63%, that is, you know, around that is 72 paisa, right? The balance comes as rupees of, you know, e-auction was INR 1.19. Then if you average out, it comes to entire is INR 1.18. I understand that today the challenge is not the coal availability. Today is the challenge of materialization.
That's how that we are also facing some challenges, maybe, you know, and which we are overcoming and by now, to convert from rail to RCR mode, rail to road. That's how we are managing and that's how we are, you know, looking our coal materialization. Because security percent, we have 100% security, rather better security movement from the Q3 to Q4, because Q3 was 30% on linkage, which have moved to just double from the Q3 to Q4. Hope I have answered your question.
Basically you've just said that if I understand this correctly, sir, you've mentioned that from Q3 to Q4, your FSA procurement has doubled from 31% to 63%. e-Auction is actually halved from 63% to 27%. Your cost of production on equivalent basis for Q4 was INR 0.0118 per GCV.
Yeah. I mean, I see your cost outlook Q3 to Q4 was, remains flat.
Remains flattish.
Yeah.
Okay. Second question was with regard to.
I will add on. You can see that the overall power cost has remained stable over quarter three and quarter four. As Rahul said that the materialization is key factor. As you said that we are taking the option of road. We believe that the option of road will be able to materialize it better because the distances are not very large from our location. Apart from that, as I told you that the operationalization of the coal mines, Jamkhani coal block getting operationalized just at the beginning of the next month itself. Along with that, the pending linkage rate materialization comes up.
I think it will help us to conserve and bring down our cost in the coming quarters. All efforts are in that direction. The cost, our cost has peaked up in the last quarter. Anything and everything which will happen, it will only reduce the cost from now on.
That is actually very great to hear about how you have managed your power costs, and that was a big surprise as well. My second question was with regards to the repayment schedule at the parent. You mentioned $1 billion is coming up for July, which has now already been arranged, and that's what we also anticipated. Now, if you could just highlight what are the other, what's the schedule of repayment at the promoter entities for the next two years?
Yeah, sure. If I give you a breakup of the current year. In the current fiscal, in the first half, almost INR 2 billion worth of loans or term loans are falling due for repayment. Same year, the second half is almost 0.7. In the FY 2023, the value is about 2.7 billion. In FY 2024, it is about 3 billion. Net, if you may have seen, as I mentioned, almost INR 1 billion, if not more, we will repay using our free cash flows. Balance will be a mix of repayment or refinancing. With our current profitability, which lead to again, robust free cash flows.
Secondly, the current structure with a 70% holding of Vedanta Resources in Vedanta Limited, we feel that, in terms of refinancing or repayment, we are quite comfortable.
That's very useful, sir. Thank you so much.
Thank you. Thank you.
The next question is on the line of Ritesh Shah from Investec. Please go ahead.
Yeah. Hi, sir. Thanks for the opportunity. A couple of questions. Sir, first on the ESG side, you have indicated in the presentation, on the PDA as well as, substitution on natural gas. Would it be possible for you to explain the underlying economics on how it will actually help us with the current, sourcing on energy that we have?
We have done the PDA for 580 MW, which is 200 MW of Balco, 200 MW of Zinc, and 180 MW of Jharsuguda. The PDAs which has been done, today's cost at Hindustan Zinc is around INR 5.50 or so current cost, against which the PDAs are at a much lesser cost. Similarly at Balco and Jharsuguda, we will get a benefit of say 20%-25% from the current marginal cost. This project has overall IRR of more than 25%.
If I have to systematically look at it from a rupees per kilowatt-hour basis, what should one look at that particular number, first coming to this 500 MW on some total basis?
Roughly, the average for 5 AT MW is around INR 4 per unit.
Okay. That's helpful. Sir, second on the gas side, wherein we have indicated partnership with GAIL, how should one look at the volume and the economics over here?
This is at a feasibility stage. They have to connect the pipeline from the GAIL pipeline to our complex. That will also need a CapEx. We are looking at the feasibility and the overall economy, but definitely it is going to be cheaper than what we are doing today. The similar project we did for Hindustan Zinc for our smelting complex at Chanderiya, and we also did for our Pantnagar operation. There we got the cost benefit of say 30%-40% in that time. We believe that similar benefits should come here.
Okay. Sir, my second question is, on the Hindustan Zinc call, we had indicated that we have taken hedges on zinc. Sir, what was the thought process behind that? If you have done on zinc, why not for other commodities which will actually give us safety on tax laws, on forward basis?
No, it is a very conscious call we have taken. We wanted to secure our business plan and when the future prediction we looked at and our own strategy team deliberated and a part of the production we have hedged for the next few months. The overall, I think, anything, Ajay, you want to add on this?
Yeah. I'd like to supplement a couple of areas. You're right. Traditionally, Vedanta's philosophy has been to capture the average LME or the average Brent for the month of production, and we have not been hedging that strategically. As you would appreciate that given the current environment is quite volatile, very tumultuous, and even the pricing is quite lofty. We want to capture the benefit in our income statement.
Using that route, we have made this time one course correction. Across three key commodities, which is zinc, aluminum and oil and gas, oil specifically, we have hedged about 15% of the volume for the current fiscal. That will secure our profitability for next 3-4 months.
Sir, you indicated oil we have hedged at 15% of the total volume?
Yes. Across zinc, aluminum and oil, give or take a 15% on average. The business plan volume for the current fiscal has been hedged.
Sir, can you indicate the pricing here? This is quite critical and at a great step actually what the company has taken.
I can give ballpark numbers. Zinc, for example-
That's okay.
Is more than $4,100 per ton. Aluminum is about $3,600 per ton, and oil at about $100 per Brent.
This is great, sir. Thank you so much. I have more questions. Probably I'll just join back with you. Thank you so much for the answers.
Thank you.
Thank you.
Thank you. The next question is from the line of Rahul Jain from Systematix. Please go ahead.
Hi, sir. Thanks for taking my question. Sir, firstly on the, you gave in great detail about the coal sourcing and so how should we read it? In the next two quarters, are we going to see cost remaining where they were in the fourth quarter or because the auction you know are still high and, so how should we read on the cost front?
See, the market is very volatile. You see, I mean, you know, everything what is happening in the market. Market is very volatile. We are doing what we can do. We have tranche five, which gives us a security of 1-1.1 million ton of coal through the tranche five. This will have a cost, a landed cost of say 75 paisa-78 paisa per GCV, depending on the mode we transport and land at our operation. As we explained earlier, we have taken a call where we have decided that we will transport the coal through road, if the rake availability is becoming a constraint.
With that belief, we believe that the materialization of the tranche 4-5 coal could become better. With this, 60%-70% of the security could be provided. As I said that we are operationalizing the Jamkhani coal block and which will deliver coal to us at around 80 paisa-82 paisa per GCV. With these two combination, if we are able to do, and whatever we have done in the quarter three and quarter four of last year, I believe that anything which has happened in quarter three, quarter four has picked up. From now on, with these initiatives, the coal cost should become better from now on.
Right. That was helpful. Then going forward, if I see your CapEx plans and, you know, the guidance on volumes that you have provided. We haven't really done much on Zinc International where, you know, we have such, you know, robust plans. Are we going to kickstart these projects? And similarly for oil also. Even for the guidance for this year seems to be quite off. I'm just wondering, you know, when are you going to work on these two? Or we are just focused on, you know, more on cash generation rather than, you know, doing more CapEx.
On Zinc International, you know that we set up this project with the designed volume delivery of say 200 KTPA. This was the Anglo American zinc assets from whom we acquired. They did not put up the project last many years, 50 years. We took a call to put up this project, partner with the global technology suppliers like Wood Group and all that, and designed this project. It had certain impurities like manganese, and the mineralogy was such that it was difficult to float. Over the three years, we have mastered the art of floating this. We have done a lot of modification in the plant, like the flotation circuit, putting up the regrind cleaner filters, and all those things what we wanted to do.
As we said that the success now in the month of March, April, in the last quarter is such that it is crossing now the designed capacity. It has given us a full confidence. With that confidence, we have designed another circuit, which is a parallel circuit, incorporating all those learnings, which we got from first phase, and even building up the capacity better than that. My sense is that the full potential from both these lines could be 600 KTPA. If that be the case, we could be making it as one of the biggest complex in the world. We have also decided that with this success coming up, we may look at putting up the spacing capacity here.
Now we have already ordered the second phase of the project at a CapEx of $450 million. A part of it will come in a cash flow. This will have a timeline of 16-18 months from now. The kickoff has already taken place and the groundbreaking work is about to start.
You're saying in 2025 we will have 600 KT. Is that right to look at it that way? In FY 2025?
See, the second phase will get commissioned in FY 2024, and we take the call to put up a smelter in the next few months. We believe that we deserve to put up the smelter there. With 600 KT and we also have the Black Mountain mine there. We are doing some better debottlenecking, and the capacity may go up to 100 KTPA. With the full capacity of, you know, 600-700 KTPA, this complex can get fully integrated into a finished metal of 600 KT PA capacity. We are on drawing board. We will come back and report to you as we progress, but that is our vision. Our belief is that we should be able to convert this complex to this size.
Right. Sir, what about oil and gas?
Yes. Oil and gas, my colleague is there, he will tell you. Basically, apart from addressing the infill drilling, doing some target exploration and ordering now ASP, which is enhanced oil recovery program, in our MBA assets, and doing the pilot on shale oil. These are the four major areas but you may both give little more detail and more color on this.
Sure. Thank you, Duggal. I think we covered most of it. The growth projects in oil are broken up into two. One is the infill drilling, as Duggal mentioned, which is primarily going to cater to manage the natural decline. Whatever natural decline is there can be managed through the infill projects. The three growth projects that is going to add the reserve and subsequent production is the enhanced recovery in our MBA fields, which is supposed to be adding about $200 million overall, when successful. We have going to do our shale pilot, probably starting in June or July. Third will be the exploration across the different acres we have in our existing blocks and our new blocks.
In combination with these three projects, with the gestation period about 1.5-2 years, we should see the volumes coming through.
Is there any CapEx number for this year in the oil and gas business or is it still like?
Yes.
What is the number?
The CapEx number for this year is INR 687 million if I'm not wrong. Out of which 50%, close to 50% is in the infill projects to manage the natural decline, and the remaining is on the three growth projects that I mentioned. Correct me if I'm wrong. I think my number is right? INR 680 million.
That, that's right, Rahul, but cash flow could be a part of it.
Right, right. Thank you so much. Thank you.
Thank you. The next question is on the line of Bhavin Chheda from Enam Holdings. Please go ahead.
Yeah. Congratulations on the reported numbers. Two questions. One on aluminum expansion to 3 million. What stage are we in terms of all the approvals on the environment side and all the other approvals? How much is the order?
On 3 million tons, you may know that we have ramped up almost all ports at Visakhapatnam. The balance ports are going to be online this quarter. Apart from that, the expansion of 0.4 million tons at our Balco complex, we have the proposal by EAC has been cleared. We may get EC at any point of time. In the meantime, ordering and the partnering is being finalized. We will put the shovel on the ground soon. Anything, Rahul, you want to add?
No, just to add that like, you know, whether we talk about our Lanjigarh and Balco, we have got all the FC in hand. All approvals are in hand. Balco also we have got recently environment clearance. That's not the issue on the table.
The point coming from the expansion has almost you know, 75% order is already in place. This all the project is in full swing. As we see that, you know, momentum in terms of the project progress. We have given the timeline also, when we are planning to have, you know, Balco expansion and Lanjigarh, which is already part of our presentation.
Okay. Yeah, last question. The coal thing, which you mentioned that 15.3 we have done in tranche five. Have you started receiving coal from this tranche five?
Yes. We have been receiving coal from the tranche five. Materialization was not so good, but now, the materialization has improved. Now with this decision taken, I think, we should be able to get almost full quantity.
This is cumulative 15.3 you get over 5 years, right?
No, no. Every year is a 15 million against the requirement of 22 million.
Every year. Around 1.1-1.2 million tons per month.
Per month. You have been getting that kind of quantity because Coal India has been reducing quantities to the non-power sector. How much was based on that front? And if I believe that normally what they do is that it gets carried forward where they do supply it. Can you update on that?
You see the quantity has been going down. We have got around two together. The volume has not been so good. In the month of March, we got a good quantity. Say around 0.5 million ton plus we got. The quantity has not been so bad. Of late it has been ramping up. With this decision taken, I think and we believe that we should be able to get almost the full quantity.
Thank you.
Thank you. Ladies and gentlemen, we take the last question from the line of Abhiram Iyer from Deutsche CIB Centre. Please go ahead.
Yes, sir. Congratulations on a good set of numbers. I had a quick question on, you know, so, sir, on the holding company levels. Sir, could you just let us know what the current cash is at the holding company level? And is this inclusive of the dividend that was paid, that was sort of announced in March? And the second question is, do you have any update on, you mentioned that you'll be doing a mix of refinancing and repayment of the loans at the holding company. Do you have any update for us on any refinancing that's occurred at the holding company? Any debts that's been pushed back or, you know, refinanced on your maturity?
Sir, I partly answered that, maybe, in the call previously. Our overall intent is about deleveraging at least $1 billion every fiscal and overall $4 billion over three years. That is all using our organic free cash flows. In terms of maturities, we got a page in our deck. I just request that we limit this call's questions mostly on Vedanta Limited. We'll have another call for Vedanta Resources once we are done with the bigger financials. We can cover Vedanta Resources more in detail in that call please. Thank you.
Thank you. Ladies and gentlemen, that was the last question. I now hand the conference over to Mr. Sandep Agrawal for closing comments.
Thank you, Stanford. Thank you all for taking the time to join us this evening. I hope we were able to answer most of your questions. If you have any further questions, please feel free to reach either me or the rest of the investor relations team. This concludes today's call. We look forward to reconnect with you for next quarter. Thank you.
Thank you very much, sir. Ladies and gentlemen, on behalf of Vedanta Limited, that concludes this conference. We thank you all for joining us. You may now disconnect your lines.