Ladies and gentlemen, good day and welcome to Vedanta Limited's third quarter financial year 2024-25 earnings conference call. 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 touch-tone phone. Please note that this conference is being recorded. Participants connected on webcast link may change the quality settings to 1080p to watch the proceedings on best quality. I now hand the conference over to Mr. Charanjit Singh, Group Head Investor Relations, Vedanta. Thank you, and over to you, sir.
Thank you, Michelle. Good evening, everyone, and welcome to Vedanta Limited Q3 FY25 earnings call. On behalf of the Vedanta team, I thank you all for joining us today to discuss the company's quarter three and nine-month performance. I hope you had the chance to look at our press release, the earnings presentations, and the detailed financials, which are available on the stock exchanges' websites and also on the company website. On this call from the Vedanta leadership team, we have with us Mr. Arun Misra, our Executive Director, Mr. Ajay Goel, Group CFO, Mr. Ajay Agarwal, President, Finance and Taxation, Mr. Sunil Gupta, CEO, Aluminium Business, Mr. Anup Agarwal, CFO, Aluminium Business, Mr. Hitesh Vaid, CFO, Oil and Gas Business, and Mr. Chris Griffith, CEO, Vedanta Base Metals. We'll start with an update on the company's operational performance by Mr. Arun Misra, followed by financial highlights by Mr.
Ajay Goel, before we open the lines for Q&A. This call is covered by the cautionary statement on slide 40 of the results presentation. With this, I now hand over the call to Mr. Arun Misra for his opening remarks. Over to you, Arun.
Thank you, Charanjit. Good evening, everyone. Thank you for joining us today to discuss Vedanta's third quarter FY25 performance update. I'm pleased to state that we have delivered another outstanding quarter as we continue our journey to deliver $10 billion EBITDA in the future. I am also happy to share that Vedanta Group companies have once again demonstrated their leadership in sustainability. In the S&P Global Corporate Sustainability Assessment 2024, earlier known as DJSI ESG Index, Hindustan Zinc has maintained its top position, while Vedanta Limited has been ranked fourth among 248 global diversified metal and mining companies. Vedanta Aluminium Business also secured second position in global aluminium peers in the index. Moving to the quarterly performance, we delivered revenue of INR 38,526 crores, which is an increase of 10% year-on-year and a record third quarter EBITDA of INR 11,284 crores, a jump of 30% year-on-year.
Vedanta's Aluminium and Zinc operations continued their industry-leading cost positioning despite inflationary pressures in the global market, ranking in the top quartile and decile of the global cost curve, respectively. Business operations, starting with Aluminium Business, the Aluminium Business has achieved its highest-ever quarterly and nine-month production, with 613 KT up 2% year-on-year and 1.819 million tons up 3% year-on-year, respectively. In quarter three FY25, the business delivered an all-time high quarterly value-added product at 317 KT, up 16% year-on-year, and quarterly domestic sales at 302 KT, which is up 29% year-on-year. This resulted in securing our best-ever quarterly net effective premium of $262 per ton on metal sales at aluminium. The EBITDA margin per ton of aluminium has jumped 50% year-on-year and 5% quarter-on-quarter to $867 per ton. We are well placed to achieve our volume guidance.
Providing some more aspects of our aluminium production costs, on the cost side, the business achieved hot metal production costs, excluding alumina, at $896 per tonne, which is the lowest in the past 14 quarters. While the overall hot metal cost of production increased quarter-on-quarter due to a sudden jump in alumina prices in the global market, however, we expect cost improvement in the coming months, given the significant softening in the global alumina prices, currently trading at below $550 per tonne versus the peak of $805 per tonne in December. Additionally, the production ramp-up at our Lanjigarh refinery in the coming months will enable us to bring down the overall cost. Moving to Zinc India, we achieved 265 KT of mine metal production and 259 KT of refined metal production. With the quarter three production, we delivered the highest-ever nine-month mine metal and refined metal production this year.
The production cost of the quarter stood at $1,041 per tonne, improved by 5% year-on-year. We are on track to achieve the lowest full-year production cost in the last four years, while also achieving our guidance for mine metal, refined metal, and cost of production in FY25. In our Zinc International business, overall volumes increased 12% year-on-year and 6% quarter-on-quarter to 46,000 tonnes. Our Gamsberg mine delivered a strong 21% year-on-year and 10% quarter-on-quarter increase in MIC production of 35 KT. In January 2025, Zinc International achieved a monthly run rate of 18 KT, reflecting a continuous improvement. On the cost side, we delivered the lowest quarterly cost of production for Zinc International in the last seven years at $1,181 per tonne, driven by higher and efficient production and lower TCRC, much ahead of our guidance of $1,300 per tonne.
Talking about oil and gas business, natural decline in our fields has been partially offset by infill wells brought online in Mangala, Aishwarya, and Raageshwari deep gas fields. We drilled nine infill wells across the Mangala and Aishwarya fields in quarter three FY25, thereby taking the total count of infill wells to 18 in the initial nine months of FY25. Our EBITDA performance improved 2.5% sequentially, supported by improvement in price realization despite some slackness in volume. To unlock the potential of our East Coast deep water block, we have recently awarded contracts for controlled source electromagnetic review. This advanced technology shall help us de-risk the prospect and prioritize the drilling sequence. We expect to complete this activity by May 2025. Our iron ore business has seen a strong increase in quarterly production, rising 10% year-on-year and 17% sequentially, primarily driven by the Bicholim mine in Goa.
Despite the geotechnical and operational issues encountered at the Bicholim mine, we have now achieved the production run rate of 2.4 million tonnes per annum for saleable ore. Looking forward, with the pig iron business receiving environmental clearance for 1.2 million tonnes per annum capacity, we are geared up for improved realization and profitability in the business. Now, let me provide an update on our key growth projects. First, on Aluminium Business, I'm delighted to announce that we have successfully doubled our rolled product capacity at BALCO to 100 KTPA. With this commissioning, Vedanta has become the second largest producer of rolled products by capacity in India. There has also been an addition of 30,000 tonnes per annum aluminium silicon ingots and 50,000 per annum slab capacity. Moving on to the Lanjigarh refinery, the ramp-up of Train 1 is now progressing steadily.
Despite some teething issues and challenges on the supporting infrastructure side, we are making gradual progress. Train 2 is scheduled for commissioning in quarter four of current fiscal year. In addition, the BALCO smelter expansion is now in an advanced stage, with commissioning targeted in quarter four of FY26. In zinc India, the 160,000 tonnes per annum roaster at Debari and 510,000 tonnes per annum fertilizer plant are progressing as planned, with final commissioning targeted for quarter four of the current fiscal and quarter four of the next fiscal, respectively. Our alloy plant is ramping up as per the plan and has achieved the run rate of generating annual EBITDA of INR 150-160 crores. In our journey for 2 million tonnes smelter expansion, we are targeting to commission the next phase of 250,000 tonnes per annum of smelters by FY27-28.
At Zinc International, which is one of the largest zinc deposits globally, our phase II expansion project is in full swing, with commissioning targeted in FY26. In our Merchant Power business, Meenakshi and Athena Power plants are scheduled to be operating at full capacity in FY26. With this, our Merchant Power operating capacity will increase to 5 GW within the next 12-15 months. In summary, we have delivered our strongest-ever quarter three performance. Building on this momentum, we are confident of delivering the highest-ever yearly EBITDA in FY25. Looking ahead, FY26 will be a transformational year for Vedanta. We are confident of successful completion of our key growth and integration projects in the coming months that will place our key businesses in the top decile of the global cost curve, while also driving the volume growth.
We remain dedicated to creating long-term value for our stakeholders through operational excellence, strategic growth, and unwavering commitment to sustainability. I will now hand over to Ajay for an update on financial performance.
Thank you, Arun, and good evening, everyone. I'm delighted to share yet another quarter of outstanding financial performance and strategic progress. Q3 has been marked by exceptional growth across our key businesses, reflecting the strength of our operational execution and disciplined financial management. Additionally, our continued commitment to strengthening the balance sheet has resulted in significant upgrades to our ratings and the debt position, reinforcing both our financial resilience and the market's confidence in Vedanta. In Q3 FY25, we delivered the highest-ever third quarter EBITDA in our history, reaching INR 11,284 crores, a strong 30% growth YOY. This achievement reflects our consistent trajectory of EBITDA expansion, supported by volume growth and structured and sustainable cost initiatives. Our EBITDA margin expanded by 517 basis points YOY to 34%, and the profit after tax PAT surged 70% YOY to INR 4,876 crores.
Additionally, our ROCE improved by 170 basis points YOY, reaching 24%, a testament to our capital efficiency and disciplined allocation. On a nine-month basis, we achieved record performance, with EBITDA rising 40% YOY to INR 31,924 crores and PAT soaring 151% to INR 14,438 crores, excluding last year's one-time key arbitration gain and other exceptional items. Turning to our debt position and the impact of corporate actions at both Vedanta Limited and Vedanta Resources Limited, as of Q3 FY25, our net debt stands at INR 57,058 crores, with a net debt-to-EBITDA ratio of 1.4x, the best in the last seven quarters. This marks four consecutive quarters of improvement, demonstrating our commitment to reducing leverage and progressing towards our target of bringing this ratio below 1x. Free cash flows pre-CapEx generation stood at INR 6,766 crores in Q3, up 57% YOY, further strengthening our liquidity position.
As a result, our cash and cash equivalents stood at INR 21,138 crores as of December 2024. Moving now to VRL and the bonds, a key highlight is the significant progress we have made in deleveraging our parent company, Vedanta Resources, VRL. Over the last two and a half years, we have reduced the debt of VRL by $4.3 billion, bringing it down to $4.8 billion, the lowest level in a decade. In the first nine months of the current fiscal year alone, the VRL's debt has been declined by one billion. Further, in the last four months, we have restructured VRL's entire $3.1 billion bond portfolio, securing longer maturities of up to eight years, more favorable covenant terms, and a significant reduction in our debt cost by 250 basis points.
This momentum will continue as we drive further deleveraging, optimizing capital structure, and secure more favorable financing terms for both VDL and VRL. An update on our ratings, our strong business performance and improved liquidity have translated into significant rating upgrades. Both CRISIL and ICRA have augmented Vedanta's rating to AA, while VRL has seen an impressive six-notch improvement over the last 12 months, reaching a B+ rating. These upgrades reaffirm the strength of our financial position both on the P&L and balance sheet and underscore the confidence the market places in our strategic direction. On the demerger front, we are in the important stage of execution. The shareholders and the creditors' meeting is scheduled on February 18. This transformative step is poised to unlock significant value for our investors.
In summary, Q3 has been a pivotal quarter marked by strong financial performance, enhanced rate quality, balance sheet strength, and progress on the demerger. Looking ahead, we remain steadfast in our focus on robust cash generation, further deleveraging, and cost leadership. With a solid balance sheet, improved ratings, and a clear strategic direction, Vedanta is very well positioned to capture opportunities in an evolving global landscape. Thank you. I will now hand over to the moderator for any Q&As.
Thank you very much, sir. We will now begin with a question and answer session. Anyone who wishes to ask questions may press star and one on their touch-tone phone. If you wish to withdraw yourself from the question queue, you may press star and two. Participants are requested to use only handsets while asking a question. Ladies and gentlemen, we will wait for a moment while the question queue assembles. The first question is from the line of Amit Lahoti from Emkay Global Financial Services. Please go ahead.
Thanks for the opportunity and congratulations on these numbers. My first question is on bauxite and coal mines commissioning timelines that were given last quarter. So the question is, do they still hold or is there any change?
So, bauxite and commissioning, so they still hold. We are looking at FY26, some in quarter three, some in quarter four. Yes.
So in the last quarter, it was Q1 for the Sijimali bauxite mine. So is it changing?
Yeah. Yeah. Q1 of next fiscal, no?
Yeah. Q1 of FY26.
Correct. So my second question is that we have reported hot metal cost, ex-alumina, $900, which the company has highlighted that it is lowest in the last three years. So what has contributed to this benefit in Q1? And then are there enough levers with us to reduce it to even lower levels in the coming quarters?
We have an aluminium team on the call, Mr. Anup Agarwal and Sunil Gupta. Anup, would you please address this question?
Yes. Thanks, Ajay. So Amit, to your question, if you would recall, last time I also had covered that in power, due to increased materialization, better GCV, and the better planned PLF, the cost will progressively come down in the next two quarters. And we had also indicated a number of $40-$50. And you can see that of it, $25 has come down in quarter three. Another $20-$25 we believe will come down in quarter two. And to your question, whether we have further levers, I can say that the lever may be to an extent of $100. Maybe $30-$40 will come out of the operating efficiencies, and the balance will come as and when we ramp up our captive coal blocks.
Okay. Thank you. Very clear.
I hope that answers your question.
Thank you.
Thank you. The next question is from the line of Amit Dixit from ICICI Securities. Please go ahead.
Yeah. Hi. Good evening, everyone. And thanks for the opportunity. First of all, congratulations for a very good set of numbers in a very challenging quarter. I have two questions. The first one is on oil and gas. So while I understand that the ASP injection is in progress, we have been taking a lot of initiatives on that front, but still we see a secular one-way decline in oil production. Just wanted to understand when this decline will be arrested and we can see actually a bump up in the production.
We got the oil and gas CFO. Hitesh was on the line. Hitesh?
Hi. Good evening. You know, from an oil and gas field point of view, our current production is primarily from the discoveries which we made a long time back. As it happens in this industry, these fields start maturing and declining. Obviously, our job is to manage this decline through good reservoir management practices, which we've been trying to do. One of the drivers for us to arrest this decline materially and move up the curve is, of course, the benefit which ASP injection will help us. That project is happening. In the first half of FY26, we'll start the injection into the larger part of the field and we'll start realizing the benefit. But in terms of near-term volume acceleration, what we are trying to do is work on infill opportunities in our existing field and try to manage that decline.
That is the objective. Two-fold, one is to accelerate that ASP injection process so that we can correct the decline and move the curve upward. And second is, how do we bring in more infill wells to manage our current decline? And of course, as we had said earlier as well, beyond this, what we are also trying to do is build a larger portfolio so that we have additional opportunities through which the volume can come in. So for example, our OALP block, which is a Jaya field, which is currently producing around 3,000-4,000 barrels, that is what and which gives us an extra cash per barrel. We are going to drill a couple of more wells in the same block in 2:2 and a half months' time, and that will give us near-term volume opportunity.
Beyond that, of course, Northeast where we are doing exploration, that is at least the well which we are doing now has given us positive results, and we hope to make that work. The other part, which is the bigger part in our piece, is the deep water block where we have just started the survey also. The contract has been awarded, and by May, we should be ready with our drilling plan to start next year. That's the broad plan of how we are trying to manage the current production as well as what we are doing to have an uptick in volume going forward in the next financial year.
Thanks, Ajay. Very elaborate answer. So what it means is that H2 FY26, maybe we can see the production bumping up if all these initiatives and steps go in the right direction. Will it be a reasonable assumption?
The way I will interpret is that for H2, we will see the benefit, the largest-time benefit from the ASP injection, which we have already invested money and are doing a small injection as well as of now. From now to the next six months, we are doing a lot of infill wells for which the approval was there, and those wells are also starting to come online. We'll start seeing incremental volumes from them, which will arrest our decline and have a stable volume going forward.
Okay. Got it. The second question is on Zinc International now, massive improvement in cost, something that we have not seen in Zinc India as well. But of course, the scope to improve existed much more in international. So just wanted to understand how much of this decline is sustainable because it is much beyond your own guidance. So what are the key drivers behind it, and how much of it is sustainable going forward? Requesting Chris to address this. And also, in case Chris, you want to give the bigger picture for overall base metal and TCRC?
Okay. Amit, thanks. So thanks for the question. I think we had a really spectacular third quarter in terms of cost. I think that's probably a little bit better than we expecting to do. And my expectation is that we should see the cost range between $1,200 and $1,300. So that's massively down from the sort of $1,600-$1,700 a ton that we were seeing earlier on in the year. So this is perhaps a little bit better than we would expect going forward. But what we have been seeing is a sustainable increase in the volume from ZI. So we're going through a particular weak patch last year and this year as we needed to increase the amount of stripping. We had some geotechnical challenges. We needed to push back the one wall of the open pit.
We had very, very constrained areas in the remaining fifth, in the second fifth, that we were going through old underground workings. So all those challenges, I think we've largely worked themselves through. We've increased the stripping, just to give you an example. From the beginning of this financial year, we were stripping at about 4.5 million tons per month. We just hit two months in a row at 8 million tons a month. So that's the rate that we require for both of the phase I and phase II. So I think we're finally starting to get ourselves into a much more sustainable position. This next year that we see, so we will definitely see another uptick again in the first quarter. And then in the year of 2026, we're going to see another much more sustainable performance from ZI.
So what you should see is overall lower cost than we have been seeing, but perhaps not quite as good as the $1,100. And as I said, I think the range should be in about $1,200-$1,300. And then, as Arun said in the introductory session, what we will see is that the end of this financial year, so at the very end of 2025, we'll see the completion of phase II, and then in the first quarter of next year, so the end of the financial year 2026, we'll have ramped up the production. So for 2027, then we see production from both phase I and phase II. So overall, we're expecting to see continued improvement and much better results from ZI going forward.
And then, Ajay, just to check while I'm speaking, would you like me just to talk a little bit about KCM?
Yes, please.
Okay. Folks, just while I'm chatting, I'll just give you a little bit of an update. You'll recall that we started production in September after having got the asset back. That was just sort of getting going. So we only had a very, very small production in September. But then from Q3, we ramped up to sort of about 8 kilotons of copper a month. And in this next quarter, we're going to be ramping up further. From this month, we should do about 10, ramping up to about 15. So already, after just six months of production, we're going to be at a run rate of sort of 160-175 kilotons of copper. So that's almost at the run rate that we were before the business went into liquidation. So in this coming year, we should see a much better performance.
So we're going to deliver about 60 kilotons of copper in the six months. And then what you should see next year, I reckon, in the region of 150-200. So we'll give you proper guidance, of course, at the end of the year. But KCM is ramping up very nicely. Of course, in the beginning, it's going through all the teething problems of five years of liquidation. We've got quite a bit of sort of normal maintenance and fix-up capital that you would expect after that kind of timeframe of being in liquidation. All of that is planned. The fundraising process is well underway. So I think we're very well positioned for this coming year to be in a fantastic position to deliver, as I mentioned, very solid performance from KCM on this amazing copper asset.
Just to remind you, I mean, KDMP, as we are, is 3.5% copper. We've got 50 years' worth of life at 300 kilotons of copper. So the primary integrated, our own production is ramping up nicely. Custom with very low treatment charges. So with sort of a bit of we'll manage that as we go along because, of course, we don't just want to chase the copper production number and lose money as a result. So custom, we'll see how that goes. But our integrated production is starting to deliver very nice numbers, and next year should be a fantastic year for us. Thanks. I'll pause there. Amit?
Thank you. So did I hear you right when?
Thank you. The next question is from the line of Ashish Kejriwal from Nuvama Wealth Management. Please go ahead.
Yeah. Hi. Thanks for the opportunity. And congratulations to the entire management team, basically, to manage your aluminium operations well as well as that situation of Vedanta Resources, a parent company. Kudos to you guys. Sir, my two questions. One, obviously, on alumina. Last quarter, we said that we were operating at 3 million ton run rate. So what went wrong because we ended up with 2 million ton run rate entire quarter? So what went wrong and where we are currently? And is it possible to guide how much we can produce in Q4 or FY26? That's my first question.
Sure. Sure. Sure. So, Sunil Gupta and Anup, to address this, please.
Ajay, thank you, Ajay. And let me address this. So, as to your question, you're right. Last time, we said. And let me reiterate. From a technical capacity point of view, we tested the run rate of 3 MTPA on multiple instances during quarter three. Okay. However, having said that, the same could not be sustained throughout due to unplanned shutdowns and infra handling. And Arun covered that. Now, going forward, we believe that most of the issues are behind us or will get addressed in, say, a month or two. Now, if you were to ask me quarter one, where we will be, and with the confidence, we can say that at least 60%-65% of our requirement will be met through captive sourcing. Quarter four maybe will be higher compared to quarter three.
If I were to give a number, it can be anywhere between 10%-15%. Now, having said that, I would also like to cover the bigger picture. As you know, Train 1, as I said, will be closer to three million tons per annum for the rated capacity as we exit this year. Train 2, we will start commissioning in quarter four of this year. Taking from the learnings that we've had during the commissioning of Train 1, we believe next year, at least 70% of our requirement, we should be able to address through our captive alumina production.
Sure.
Thank you so much, sir. That's very helpful. Second question is on international zinc. What we heard is that in January, we were operating at 18,000 tons per month, and obviously, as you mentioned, that it's going to ramp up further, so because we have seen many times lots of issues going over there and because of which our production fluctuates. So are we seeing that now these sort of issues are behind us and at least we can do 18,000-20,000 tons per month going forward, and when the second phase of expansion is going to be commissioned, are we seeing any volumes coming in for the second phase in FY26?
Requesting Chris to address, please.
Okay. So I'll just mention some of the points that I made earlier, is that we have made significant progress in addressing the challenges that were hampering us. And those were, just to recap, a historical understripping, a number of geotechnical issues which forced us to actually stop one of the two pits and push back the whole wall. That process will still be taking the whole of this coming year, the whole of 2026, to complete. Because we stopped one of the two pits, we only had the one pit. We were delivering volume out of one of the two pits. So we're getting ourselves into a much more sustainable position. We also were mining through historical underground working. So the one pit of the two that we had was work going through underground holes that made it very difficult to have open pit mining.
Now, I mentioned that we have made substantial progress. We've mined through those underground workings. We still only have one pit available, and during the course of 2026, we get ourselves into a position where we start getting two pits producing. So now, I think 2026 will still be a fairly challenging year for us, but we should see a substantial increase in the production from ZI, so we should do somewhere between 160 and 180 kilotons of production this year, and next year, this is not our guidance. We'll give official guidance at the end of the year, but we'll see somewhere between sort of 240-250 kilotons of production from Gamsberg and Black Mountain next year, so a very substantial pickup in production, over 20%-25% next year.
But what we won't see is any of the production because we only finished the phase II plant at the end of the financial year 2026. So you'll see both phase I and phase II delivering in 2027. So next year, to summarize all of that, much better production. We've worked ourselves through most of the problems. We act at run rates of stripping. I mentioned 8.5 million tons per month is double what we were started at the beginning of the year, 4.5. So again, we're stripping at the rate now that we need for both plants. So we've got a little bit of catch-up to do, and we'll see that catching up during the course of 2026. So I would say that 2026, most of the problems are worked through, but we're still going to be, I think, fairly tight.
Under those circumstances, if anything goes wrong, then it does impact you. But we're going to be in a much better position next year. Then from 2027 onward, you're going to see ZI in a fantastic position. Then it'll be generating cash flow that I think you'll be proud of. Thanks.
That's great, Chris. Thank you so much and all the best.
Thank you.
Thank you. The next question is from the line of Ritesh Shah from Investec. Please go ahead.
Yeah. Hi. Thanks for the opportunity and congratulations for a great refi. First question was on capital allocation. I think Chris made a comment on TCRC, and he also indicated looking at integrated production. So just wanted to have some thoughts on whether it's with respect to the MOU in Saudi Arabia, $2 billion. Will it be at Vedanta India level or at VRL level? How should we look into that?
Ritesh, could you please paraphrase your question? So in the question that, will KCM be structurally part of Vedanta?
No. Vedanta Copper, basically, we have signed an MOU with Saudi Arabia to invest $2 billion. It's for an integrated smelter refinery. So I wanted to understand what the status of this particular project is and whether it will fall at Vedanta India or at VRL level.
Project with Saudi Arabia, only let's see the concepts be fully frozen, then we decide the structure and the investment strategy around it.
Right. But do we have clarity that we intend to have it?
From structuring,
sorry, sir. Go ahead.
Yes, sir. From a structuring viewpoint, it is a part of Vedanta India Consolidated. So it is a part of VDL and not VRL. Now, in terms of project status, yes, it is producing quite well on schedule. From allocation of capital viewpoint, the number that you heard is $2 billion. That is over the timeframe, multiple years. But in the near future, over the next couple of quarters, it is very, very small. If you also look at multiple priorities that the government of Saudi Arabia has proposed, they want to also look at areas beyond oil and gas. Metals and mining has been identified as one of the important areas for development. So any project in Saudi Arabia around metals and mining also will see multiple government partnerships. Now, that can be around a significant subsidy on CapEx.
It also means multiple benefits in terms of cost. Example remains the power cost. At the same time, the lower cost of funding. So it will lead to a partnership between the government and Vedanta project progressing well right now in initial stages. And the cost of funding and capital CapEx will be quite minimal over the next couple of quarters.
Sure. That helps. Sir, I have a couple of questions. Please bear with me. Sir, my second question was on the debt refi. I would presume the total number is around you indicated $4.8 billion. But that would be excluding ICL. And to what my memory serves, I think ICL was due in December 2024. So just wanted to know what the status is on ICL. And second related question is, I would presume the loans would be around the $2 billion.
What is the weighted average cost over there? Those are specifically related to debt and loans at VRL level.
Sure. So starting with the first one, you write the amount of $4.8 billion at Vedanta Resources. It is only the external debt. And you also got to transpose on that $0.4 billion, $400 million is the intercorporate loan. Total, in that case, debt at VRL becomes $5.2 billion all in, internal and external. Now, the ICL you write was due in December. Now, the board has decided and recommended to extend this ICL by almost 15 months. So out of $400 million, the loan now becomes due in over two tranches. So $200 million is due in January 2026. So it is one year from now. Another $200 million is due in May 2026. So it has been extended by on average 15 months. Now, if I look at the current debt stack at Vedanta Resources, $4.8 billion. One can think of three cohorts.
Roughly $3.1 billion is multiple bonds. That is what we have restructured over the last three, four months. Another $1 billion is multiple bank loans, which are mostly from the Indian state PXF bankers. The remainder $1 billion is basically the PXF from Standard Chartered. $3 billion bonds, $1 billion bank loans, and $1 billion PXF.
Right. Sir, sorry to drag into this.
Cost you mentioned?
Yes, sir. Average cost. Sorry. Sorry to interrupt.
Sure. Sure. Please.
The average cost from 13.3% at the year beginning is now down to almost 11%, and as we also repay and refinance this PXF in April and August, in that case, the cost of debt at Vedanta Resources will come down to a single digit, almost 9.8%, sometimes in July, August of the current calendar year.
This is quite useful. Sir, is it possible to explain the underlying reason for the deferment of ICL given payouts have been nice? So from a priority standpoint of cash flows, how should one understand that? Or the other way to put it is, what are the terms on the ICL right now?
See, if you look at overall group cash management and maybe look back over the last nine months, where VRL has been deleveraged by $1 billion. Even at Vedanta Limited, which is led by operating free cash flows and multiple corporate actions to beat QIP, offer for sale for zinc 1.5%, we have significant cash and cash equivalent, as I mentioned, INR 21,000 crore. The feedback from the investors, both from the debt and equity, has been to look at this ICL deferred by almost one more year. So it does help the group in terms of optimal cash management. And of course, following the due process, which means we take board approval and even multiple legal opinions and view by the EY. So it is the cash management overall.
Sure. Sir, a few bookkeeping questions. We have not touched upon Athena and Meenakshi. I think Arunji in initial remarks indicated that we expect that commissioning in FY26. Please correct me if I'm wrong. Wanted to understand the commissioning schedule over here. Are we looking at short-term, long-term PPAs? What the status is? And do we have any linkages or are we looking at imported coal? Just trying to understand the economics and the cash flow from the power assets, which are quite significant.
Both Meenakshi and Athena, yes, sir, correct. They are supposed to come to full capacity in FY26. Of course, we always will look at as much domestic coal linkage-wise possible running through options. Also, we will look at synergy with our coal mines allocated to other units, how do we synergize that? That could be another option. And yes, they will have a final capacity of 5 GW maybe in the next 12-15 months once they're commissioned.
Sir, I was looking at more detailing probably. I'll join back with you with the same follow-up question. I'll join back with you. Thank you, sir.
Sure.
Thank you. The next question is from the line of Raashi Chopra from Citigroup. Please go ahead.
Thank you. Just continuing with the question on the debt. So now the interest cost should be somewhere around $515 million, right? And from a repayment perspective, this year is about $800 million for the Standard Chartered loan. And what would the amount be for next year? This is for PXF.
Okay. Raashi, I will give you an overall picture for Vedanta Resources. You write with the recent deleveraging and the bond refinancing, the interest cost at VRL for the full fiscal is almost $500 million, $0.5 billion. The total repayment due next fiscal is about $900 million. So $0.9 billion is a principal. $0.5 billion is interest, so $1.4 billion. Now, how this will be serviced? There are two sources of cash and income at Vedanta Resources. Brand fee is $400 million-$450 million. And that leaves $950 million-$1 billion as a principal. Now, as you may have seen over the last three odd years, the payment of dividend at the VRL receipt is about $2.5 billion. So going forward, even by paying almost one-third the dividend of historical average, the VRL debt can be easily managed.
It is a $0.9 principal, $0.5 interest cost, $1.4 for the full fiscal.
For FY27, what is that number, the principal repayment?
Principal is almost $650 million. And the interest cost will be even lesser, I would say almost $400-$450. So give and take $1-$1.1 billion, both principal and the interest in FY27.
Got it. And at the India level, what is due for repayment now in this year, FY25? $600 million, no?
For the current fiscal?
Yes.
If you look at Vedanta Limited standalone, it is, you're right, almost $0.5 billion. Vedanta Consolidated, about $1.2 billion. For India, as you know, it's a different regime, because the entire debt is secured. So refinancing or repayment is a bit different at Vedanta India Consolidated.
Got it. On the CapEx side, what has been spent in I mean, are you on track for your $1.9 billion target? What has been spent in the nine months?
So nine months is about $1.15 billion. And we will be in the ballpark of $1.5-$1.6 billion in the current fiscal on CapEx.
And just one last question for me. On the I think this time you haven't given the slide with your targeted volume and cost. So for aluminium, the original target was, I think, FY25, 2.3-2.4. So where are we at now for the fourth quarter?
Yeah, starting with this side, so on the volume, we should be slightly above 2.4 million tons as we exit this year on the hot metal.
And on the cost side, for aluminium?
The cost, let me tell you. See, in quarter one, let me tell you, and we spoke. The cost drivers from here would be one, the captive alumina as we ramp up our alumina, and on the bought-out alumina, we've already spoken about the prices coming down from the levels of 800- 500 thousand. Now, if you ask me where the cost will be in quarter one, we can very well say that the alumina cost would be 15%-20% lower than what we saw in quarter three. Quarter four, because of some high cost inventory and limited in transit, alumina cost will remain at the elevated levels, so broadly, if you ask me for the year as a whole, we should be somewhere around $1,800 on the hot metals cost. For FY25, this is in the middle, it will be for FY25.
Understood. Thank you.
Thank you.
Thank you. The next question is from the line of Indrajit Agarwal from CLSA. Please go ahead.
Hi, sir. Thank you for the opportunity of a few questions. First, on the two large projects, that is Ghogharpalli mine and Sijimali mine, what are the milestones that are still to be received or achieved, and what should we look out for for timely commissioning? Because bauxite mine Sijimali is actually as soon as next quarter. So how should we look at it?
Arun, would you address this?
Yeah, yeah. I will address. So coming to the Sijimali mines, we have already in the 96% of our land acquisition is over. We are in the advanced stage of the forest clearance. And we may get maybe another one, one and a half months' time, we will get the forest clearance. So we are very at the advanced stage of Sijimali operational. Maybe in the quarter two, we are going to start the Sijimali mine. This is the status of Sijimali mine. For the Ghogharpalli mines, we have already taken the question on the ground. Land acquisition, elimination of land is already completed. We have application for EC and TOR has been filed. Application for ML has been filed. So we are on track as far as the Ghogharpalli. And the mining plan is already submitted to MoEF.
I'm very hopeful that quarter one of, as per the original target of Ghogharpalli, quarter four of FY26, we are going to take out the first quarter for the Ghogharpalli.
Sure. Thank you. This quarter, we also had a slight increase in alumina cost of production, captive alumina cost of production. What were the drivers for that, and how should we look at it going forward?
Look, Arun?
Yeah, yeah, and I'll do it. So actually, you're right. See, we've had a marginal increase in our cost of alumina production. And that is to do slightly with the imported bauxite cost that imported bauxite that we've consumed more compared to the earlier quarter. And going forward, so let me again reiterate. See, what is going to happen is maybe if you look at the full year picture, Raashi, we would need broadly 10-11 million tons of bauxite next year, broadly I'm seeing. Out of it, 60% should be through the domestic sources, OMC and some other sources. 25%-30%, we believe, should come from Sijimali once it starts and then ramps up. So you can see that maybe 10%-15% is what will be the imported cost. And we believe as we progress along, this imported bauxite cost should come down.
Accordingly, the alumina cost should be closer to the levels of 320-325 for the year.
Sure. And one last question, if I may, on the KCM operations. At 160-180 KT kind of run rate, assuming today's copper price and TCRC, etc., what kind of annualized EBITDA can we generate over there?
Again, I'll go back to Chris for this question.
Thank you.
That's a very good question, and I'd like actually not to respond to that now. Can I ask AJ through you that we respond? I'll get that number to you. It's actually some work that we are underway at the moment running our business plan, and we've also got to make assumptions about what the TC treatment charges and the RC earnings will be, so can I ask AJ through you that I don't answer that now? We'd rather get back to the gentleman that asked that question shortly. Thanks.
Sure. So Indrajit, as you'd appreciate, the whole KCM is under ramp-up. And right now, the management is focused similarly on operations and the ramp-up. This mine has become operational after three, four years. And hence, maybe the cost right now won't be a good indication. So allow us a couple of more months' time. And once we publish our full year numbers, or before that, we will come back to you in terms of both EBITDA and the cash estimates for KCM for next year.
Sure. Thank you. That's very helpful. That's all from my side.
Appreciate it. Thank you.
Thank you. The next question is from the line of Pallav Agarwal from Antique Stock Broking. Please go ahead.
Yeah, good evening, sir. So just a clarification. KCM is still part of Vedanta Resources, right? Or is there any plan of shifting that to the base metals business during the restructure?
Yes, sir, you're right. It is a part of Vedanta Resources and right now, there are no plans to be discussing actively, so it remains part of Vedanta Resources in the near future.
Sure. So just a couple of clarifications. So if I look at the Zinc International business, so we've had higher production and lower cost, right? And even zinc prices, zinc and lead zinc has been sequentially higher. So why have we seen a small decline in EBITDA on a sequential basis?
Chris, what do you want to understand?
No, we actually are increasing as the costs are reducing and the volumes are increasing, we're increasing EBITDA. That'll continue again for this fourth quarter as we once again increase production. You'll see an increased EBITDA for Q4. Of course, likewise, that'll continue into 2026.
So Chris, I was actually referring to the sequential.
There is a small.
Yeah, please go ahead.
You're right. Maybe there's a small impact. Yes, sir. So yes, there's higher volumes, the lower cost as well. And if you look at sequentially, maybe the EBITDA in the second quarter, 378, and the third quarter, it is 4. Small difference. And that is mostly one can attribute towards pricing.
Sorry, can you repeat that? Which pricing?
So overall, the pricing is the reason. But overall, the volumes are better, and so is the cost. The small impact on EBITDA is a function of mostly pricing. So if you see the zinc pricing in the second quarter was a bit different than the second quarter.
Sure. Okay. The average was higher in the third quarter, but yeah, maybe the timing difference could lead to that. Similarly, on the oil and gas business, the crude prices were down sequentially. And OpEx also, as per the presentation, went up sequentially. Even the production, there was a decline, so but we've had sequentially higher EBITDA, so any particular reason for that?
Hitesh?
Yeah. Hi. See, in the oil and gas business, beyond the oil price, volume and cost, one of the factors is our recovery from the revenue of the spend which we do on CapEx. And as I said, we have started investing money in new infill wells, which will help us to gain volume in the near term, as well as the ASP project where the work is happening on the ground. Since I'm spending a bit more in infill wells and development, my profit sharing goes down, and that's why my EBITDA goes up, even though there is a marginal change in the volume as well as a bit uptick in cost.
So basically, the CapEx affects the profit sharing with the government. And so that is leading to this increase.
Correct. Because now I'm putting more money to bring volume in the near term. So that helps me to generate additional revenue and EBITDA, which I'm investing in the business.
Sure. Finally, just on the power business, we've seen a pretty sharp decline in EBITDA on a sequential basis. So is this because of higher costs over there, or does something change in the TSPL profitability?
It's timing because of the shutdown in one of the IPPs, which was also a scheduled shutdown. You will see a further improvement in the Q4.
Okay. Yeah. Thank you so much.
Thank you. Ladies and gentlemen, this will be the last question for today, which is from the line of Sumangal Nevatia from Kotak Securities. Please go ahead.
Yeah. Thank you for the chance. A couple of questions. First, on bauxite, we shared that roughly we're expecting 25% from Sijimali and 25% from imports. Just want to understand what could be the cost difference at the bauxite level or alumina level between these two?
Hello?
Sumangal, can you just repeat the second half you said? What is the cost?
Yeah. So I wanted to understand, sir, what would be the cost difference between the two sources of bauxite? One is from Sijimali mine, and the second is from imports at the plant level, say.
See, I'll try and give you some broad numbers. Now, Sijimali should be closer to the bauxite cost that we get from our OMC mines. That is what we're looking at. And of course, the imported bauxite costs have been slightly 25%-30% higher than the domestic bauxite sources.
Okay. So at the alumina level, what could be the difference?
Yeah. Sorry.
Sir, go ahead.
No. So at the alumina level, just to get some numbers for some calculation, what could be the difference in the cost of production of alumina from Sijimali mine, bauxite, or from imported bauxite?
See, broadly, you can assume that the alumina cost will be in the range of, say, 260 to 270 if we are using it from the Sijimali, and the same can go up to, say, 330, 335 if we use an imported source.
Understood. That's very helpful. My second question is on the royalty. So just want to understand what is the current royalty we are paying? What are the chances of it increasing in the near future? And when is our agreement expiring with respect to the royalty with the parent?
So the royalty and the strategic fee rate right now remains same, which is 3% for Vedanta Limited. In case of zinc, it is 2%. It is being paid to Vedanta Limited first. And out of that, 0.3% is what Vedanta retains. And the balance, 1.7%, is a pass-through. So in summary, the rate of royalty has not changed. We don't foresee it changing. When the board last revised the rate, it was locked for next six years. The current agreement is for the long term. It's expiring only in 2028.
Understood. Understood. And just one last question on the coal mines. So out of the four coal mines, or at least say Kuraloi, Radhikapur, Ghogharpalli, has any of them received forest clearance, final forest clearance?
I'll go ahead and finish for this.
Yeah, yeah.
So we are in the advanced stage for getting the forest clearance for the Kuraloi mines. So maybe another one month's time, we are expecting forest clearance for the Kuraloi mines. And the Ghogharpalli, as I told that we are only applied for the mining lease. So it will take another forest clearance. It will take time. For the Kuraloi, for sure, we are going to get for within one year's time.
What about Radhikapur, sir?
Radhikapur, we are progressing. With Radhikapur, we have already got the EC. So there is no issue in that. So Radhikapur, there is no problem.
I'm asking about the FC stage too.
Yeah. Sorry.
Sumangal, can we take this question? Because I think we have run out of the time. So we can run over it. You can take it offline with me.
Sure, sure. Great result. All the best to the team. Thanks for the answers.
Thank you.
Thank you.
Thank you.
Thank you. As that was the last question for today, I would now like to hand the conference over to Mr. Charanjit Singh for closing comments. Over to you, sir.
Thank you, everyone, for joining us today. I hope we have managed to answer most of your questions. In case you still have any questions unanswered, you can reach out to us. With this, we conclude our today's call. And we look forward to reconnecting with you for a full year results towards the end of April, early May. Thank you and good day, everyone.
Thank you, members of the management. On behalf of Vedanta Limited, that concludes this conference. We thank you for joining us, and you may now disconnect your lines. Thank you.
Thank you.
Thanks, everyone.