Ladies and gentlemen, good day, and Welcome to the Q2 and H1 FY23 earnings conference call of Vedanta Limited. As a reminder, all participant lines will be in 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 Agarwal, Head, Investor Relations, at Vedanta Limited. Thank you, and over to you, sir.
Thank you, Steven, and hello everyone. I am Sandep Agarwal. It's a pleasure to welcome you all to Vedanta's Q2 FY23 earnings call. An audio archive and transcript of this call will be made available on our website. The financial statements, press release, and presentation are already available on our website. From our leadership today, we have with us Mr. Sunil Duggal, our Group CEO, Mr. Ajay Goel, acting Group CFO. We are also joined by leaders from our key businesses, Mr. Arun Mishra, CEO, Zinc Business, Mr. Prachur Sah, Deputy CEO, Oil & Gas. Please note today's entire discussion will be covered by the cautionary statement on slide two of the presentation. We will start with update on operational and financial performance, and then we will open the floor for questions and answers. Now, without further ado, I would like to hand over the call to Mr. Duggal.
Thank you, Sandep. Good evening, everyone. Thank you for joining our second quarter earnings call. You all are aware that the global economy has recently been facing certain macroeconomic challenges emanating from Ukraine-Russia war, broadening inflationary pressure, energy shock, food shortage, appreciating dollar, and so on. Most of the central banks have been tightening monetary policies to tame inflation. These near-term macro challenges have weighed down commodity prices during the quarter. Despite these macro challenges, we have delivered strong operational performance with production growth in key businesses and cost optimization during the quarter. We have achieved consolidated EBITDA of INR 8,038 crore. This, along with structural streamlining of working capital investment, helped us to generate a robust free CapEx-free cash flow of INR 8,369 crore.
Our center of excellence designed around quality, asset optimization, digital transformation are helping us to capture full potential of our assets. Our growth and vertical integration projects aimed at reducing market volatility impact are progressing very well. Now we have six coal mines which have 40 million tons per annum plus production potential along with two recently won mines. These mines will be more than sufficient to take care of entire coal requirement of aluminum business and help us to make it structurally strong. All these levers will make Vedanta stronger to deliver sustainable and predictable performance across all cycles and create stakeholder value. We remain committed to create value for our shareholders. In first half of financial year, we have distributed dividend worth INR 51 per share, which translates into dividend yield of 15.4%, one of the best among peers.
Vedanta Group is one of the highest contributor to Indian Exchequer with INR 37,180 crore contribution in the first half of financial year. In our pursuit to uplift people's life, we have reached the milestone of 3,600 Nand Ghars for women and child welfare. Our BALCO Medical Center has also signed MoU with Tata Memorial Centre to drive excellence in cancer care. Our ESG program has been progressing very well. I'm happy to share that Vedanta has entered into the exclusive club of top 10 DJSI ranked global metals and mining companies. Ranked sixth globally with strong 14-point score improvement. Under the pillars of transforming the planet, we are on track to achieve 2.5 GW renewable energy target. We have issued EOI for additional 500 MW RE procurement. HZL Pantnagar is now our first unit to run entirely on renewable energy.
Zinc and iron ore business have achieved third-party assurance for water positivity. We are also making steady progress on waste utilization and R&D for new technologies. In continuation to our industry-leading people practices on diversity and inclusion, we have identified 120 women leaders who are being developed for future CXO roles. We are launching V-Shakti, a program for women leadership development in third quarter. Now let us move to the business verticals. Coming first to the aluminum business. We completed Jharsuguda capacity ramp up to 1.8 million tons per annum. Our aluminum production grew by 2% YOY and 3% quarter-over-quarter. Our quarterly COP reduced by 8% to INR 2,429 per ton. We have started Chotia coal mine operation in September 2022 to rationalize our coal cost. Our linkage coal materialization also improved from 22%- 55% in the quarter.
We now have availability of three captive rigs on a daily basis, which move the material or coal from mines to our plant. We continue to focus on volume growth and vertical integration projects to make this business sustainable and predictable across all cycles. Coming to Zinc India. It achieved its best ever second quarter refined metal production of 246 KT, up 18% YOY, driven by improved smelter performance and better mined metal availability. Silver production grew by 28% YOY. The operations have overcome quarterly variation and are now sustainably at 1 million ton per annum plus run rate. The next focus is to achieve 1.2 million ton per annum run rate in the near future. Coming to Zinc International, Gamsberg recorded highest ever quarterly zinc production of 55 KT with a 43% YOY increase, driven by higher ore production and higher zinc recoveries.
Cost of production also improved through potential operational efficiency. We have successfully gone through learning curve to handle the difficult ore and now operating at about 300 KTPA run rate in the current quarter. With Gamsberg phase II expansion, Zinc International will be among the largest operations globally at 500 KTPA plus size of operations. In oil and gas business, our average gross operated production was 141 KBOPD. Natural production decline was partially offset by infill wells in MB-1 and RDG-2 field. We are focused on delivery of growth projects. We have hooked up eight wells during the quarter. OpEx increased by $0.5 per bbl Q-Q to $13.5 per bbl due to increase in polymer prices and maintenance activities. We continue to engage the government on special excise duty within the framework of PSC and RSC.
I'm pleased to inform you that government has extended PSC for our Rajasthan block for another 10 years. To establish share potential, we have partnered with Halliburton and Schlumberger to drill pilot wells in Barmer. Our Cambay infill campaign is looking promising. The third well came online in September and has helped increase production from 9,000 to 12,000 barrels per day. The business secured 8 blocks in discovered small fields in round 3 and 1 coal bed methane block in special CBM round 2021 across onshore and offshore regions. Coming to iron ore, our Karnataka sales increased by 7% YOY, though prices remained under pressure, you know, because of the export duty. Pig iron production was lower on YOY basis due to shutdown of smaller blast furnace. The government of India imposed import duty on iron ore, pig iron, among others.
This impacted our realization, and our margin fell 88% sequentially. However, we have depleted high cost inventory in quarter two and see cost reduction in quarter three. We successfully started our production in our Liberia mine in July. We're planning our first shipment in current quarter. In steel, our saleable production grew 11% YOY to 324 KT with the completion of debottlenecking activities as shared in July. EBITDA margin was majorly impacted from export duty imposition, driven by steel price decline, and high-priced coking coal inventory materialization in this quarter. In FACOR, ore production grew 43% YOY due to operational efficiency. Ferrochrome production were lower by 42% YOY on account of shutdown taken for relining of furnace and its debottlenecking.
Further growth is lined up with 60 KTPA of furnace commissioning by December 2022 at a CapEx of INR 200 crore, which will take the total capacity of FACOR from 75 KT- 150 KT. In terms of outlook, you may have noted that aluminum, zinc, and lead production cuts have been continued in Europe amidst high energy costs. Energy shortage in some of the Chinese provinces is also impacting metal supply. We also expect Chinese government stimulus effort to boost commodity demand. While Indian economy is not fully insulated from the global events, it is relatively resilient. As reflected by strong industrial production, export competitiveness, tax collection buoyancy, and non-food credit growth. Indian government increased capital expenditure continues to support demand. Indian economy is projected to grow at a robust of 6.8% in total 2023, fastest amongst the major global economies.
Following the monsoon lull, construction activities have restarted and consumer durable market is vibrant now. This augurs well for metal demand in India. India being our largest market, its continued strength bodes well for our business performance. We have an outstanding foundation of world-class long life and low-cost assets, producing vital commodities for global decarbonization transition. With a rich diversified asset portfolio and strong balance sheet, we remain well-positioned to benefit from the global mega trends of decarbonization and energy transition and withstand the challenging macroeconomic environment. With this now, I would like to hand over the microphone to my colleague and friend, CFO, Shri Ajay Goel for the financial performance.
Thank you, Sunil, and good evening, everyone. The macro operating environment in the quarter was quite mixed, with the softening auto prices, input inflation, and various fiscal and monetary policy changes. The Indian economy, though, is far better positioned compared to global peers. India's outlook has been optimistic towards domestic consumption, which is evident in several economic indicators. The commodities indexes are also flattening and cooling off in many cases. The impact of tightening monetary policies by central banks is likely to bring positive results in coming quarters. This quarter, we have pursued various initiatives which resulted in strong performance despite input inflation and softening pricing on output side. Our businesses have delivered strong quarterly revenue and very robust free cash flow before CapEx. Which is driven by working capital initiatives, where we have reduced the number of days structurally by 15% quarter-over-quarter and optimized inventory levels.
This should continue to benefit us in terms of cash in coming quarters. Our focus remained on attractive returns to shareholders with highest ever 15.4% dividend yield. Our leverage stays at best amongst Indian peers at 0.7x with a strong ROC of 28%. I'm happy to share that we are progressing well on deleveraging commitment at Holdco, which is INR 4 billion over next three years. We have deleveraged the Holdco in the first half of the year by INR 1.4 billion. The Q2 results very clearly are the reflection of operating environment, and some of the key financial highlights of the quarter are. Consolidated quarterly revenue of INR 36,237 crores, up 21% YOY. Quarterly EBITDA of INR 8,038 crores, lower 24% YOY, with strong EBITDA margin of 25%.
Free cash flow before CapEx of INR 8,369 crores. You would note that the free cash flow pre CapEx for the quarter is more than 10% of EBITDA. The EBITDA to cash conversion ratio has improved almost 2x over the recent past. ROC of 28%, which is higher by 2% over last year's number of 26%. We continue to maintain healthy cash and cash equivalents of INR 26,543 crores with net debt to EBITDA, the leverage ratio of 0.7x, maintained at low levels amongst all Indian peers. Finally, we paid the second interim dividend of INR 19.5 per share, amounting to INR 7,249 crores in the second quarter, which takes total dividend payout for the first half at INR 51 per share. That amounts to almost INR 19,000.
INR 18,933 crores. One of the best dividend-paying company in India. We have an income statement in the appendix, page number 30, where you can find more information against each line of profit and loss account. I wish to state that our ETR guidance for the full year will be around 30% now against 28% earlier. This change is driven by movement in profit mix amongst various businesses. Now I move to EBITDA bridge. As clear from the EBITDA bridge quarter-on-quarter, the impact of market-driven factors has been partially set off through better volumes across businesses and lowering of cost impact through several measures on cost, with also the input prices also tapering in second quarter. We were also benefited from strategic hedging, which helped us to some extent in navigating the tumultuous pricing.
Similarly, if you see the EBITDA bridge year-over-year, versus last year, the major impact is coming from market-driven factors. Led by the macroeconomic environment and inflation, which was partly offset by increased operation performance and strategic hedging. Moving on to the page on net debt. Net debt as on September thirteenth stands at about INR 30,144 crore. Again, on net debt bridge, as I mentioned at the beginning, through various initiatives we have improved working capital, which resulted in strong free cash flows before growth CapEx amounting to INR 8,369 crore. This enabled us to declare interim dividends in second quarter. The increase in net debt in Q2 sequentially quarter-on-quarter is due to amount invested in CapEx in second quarter through borrowed resources. Moving on to the balance sheet now. Our balance sheet remains resilient, providing both protection and optionality for growth.
We achieved net debt to EBITDA, as I mentioned, 0.7x well within the range of our capital allocation framework and best amongst Indian peers. Our average maturity maintained at about 3.8 years with average cost of borrowing at about 7.7%. Our credit rating continues to be at double A with a stable outlook both by India Ratings and Research and CRISIL. We are investing for future, both in terms of value-driven growth and positioning the portfolio for longer-term demand themes while remain committed to capital allocation discipline. Our CapEx programs are on track as planned. We have spent INR 0.6 billion in the first half of the year on growth CapExes. On full year basis, we are revising the growth CapEx guidance for aluminum business to INR 0.6 billion from INR 1 billion, which is in line with cash outlay estimates.
All growth CapEx programs for aluminum remain on track as planned. With this, full year growth CapEx guidance now stands at INR 1.6 billion. I'm happy to share that Vedanta was recently awarded the Golden Peacock Global Award 2022 for excellence in corporate governance. Lastly, I'd like to reiterate, we have an outstanding portfolio of long-term assets and the expertise to invest in growth in delivering vital commodities for a low carbon future and continue to pay handsome dividend. We will continue to challenge ourselves and deliver goods across various cycles. With this, I hand over the mic back to operator for Q&A. Thank you.
Thank you very much, sir. We will now begin the question and answer session. Anyone who wishes to ask a question may press star and one on their touchtone telephone. If you wish to remove yourself from the question queue, you may press star and two. Participants are requested to use handsets while asking a question. Participants are also requested to limit their questions to maximum two questions per participant. Ladies and gentlemen, we will wait for a moment while the question queue assembles. The first question is from the line of Indrajit Agarwal from CLSA. Please go ahead.
Hi. Good evening. Thank you for the opportunity. I have two questions. First, is a two-part question. First, you mentioned about 40-million-ton capacity of coal blocks that you have won so far. So, if you can give us some guidance as to what will be the cost of production of these and what kind of savings we can expect from that. Second part is more near term. You have guided for about $2,150-$2,250 aluminum cost of production for second half, which is about $200 lower than the second quarter. So, what would drive this cost reduction? Is it more linked with coal availability? My last question is on the Holdco level. If you can remind us again, what is the repayment due for rest of FY 2023 and also in effect before? Thank you. That's all from my side.
Thank you. I'll take your first question. As you rightly said that, we have now six coal blocks allotted to us. For Jharsuguda, we have Jamkhani, Radhikapur, Kuraloi and Ghogharpalli. For BALCO, we have Chotia and Bara. As we speak today, the Chotia mine is operative and started feeding coal to BALCO. Jamkhani is about to commission and start production any day from now. All regulatory clearances are in place. All the 95% land is in our hands now, and we are about to put the shovel in the ground. It will start feeding the coal to Jharsuguda plant very soon.
Apart from that, you are aware that the Radhikapur and Kuraloi mine, which we had won earlier, there is substantial progress which has happened, including mine plan approval, moving for forest diversion, environment clearance, negotiation taking place for the land, process taking place for the acquisition of the land. You also know that in the last quarter, we have won Ghogharpalli mine. Ghogharpalli mine has a mine reserve of around 1.2 billion ton, and the license capacity of this mine is 20 million ton. This mine has a capacity even to go to 30 million ton. Bara is a very recent block which we have won. It is more like a exploration block. As the data we have, it has geological reserve of around 900 million ton.
This can easily produce 10-15 million tons per annum. In total, if we take a very conservative capacity, it is 40-45 million tons. The full capacity from these mines is around 60 million tons. Even if we have a risk that how long or what risk is there to make these mines operational, we should be able to get the security of 30-35 million tons not very far out from today. We have made a year-wise plan that how the mines are going to open up and how the coal will be fed. From the year, it will start feeding the coal maybe from the current year.
There is a progressive reduction which is going to take place from say INR 0.9 per GCV to INR 0.5 per GCV. There is going to be a substantial reduction in the cost in three years from today. This is against current cost of INR 1.20- INR 1.30, which we have in the current quarter. If we actually work out the power cost at INR 0.5, it comes to somewhere between $325 or so per ton against maybe more than $1,000 of the power cost which we had in the last quarter. There is a very solid plan of how the fuel prices are going to be controlled in the coming year. What was the second question?
On the near term cost reduction in aluminum business.
We have given a very conservative guidance. You must have noticed that we had $240 cost reduction in quarter two. We are looking at a cost reduction of say $300-$350 per ton in quarter three coming from the various levers. The last quarter only, from the power cost the reduction out of the total reduction $240, $170 was from power. I also mentioned in the talk track that now we have three captive rail rakes available with us. With the three captive rakes which are available with us, we are able to move the substantial quantity of coal to Jharsuguda. This will not only help us to get more linkage coal but also help us to reduce the logistic cost.
Because in quarter two, we got the option of moving the coal by road, and although the linkage improved from 22%- 55%, the reduction of power cost to that extent has not happened, which I think will have a much higher impact this quarter. Apart from that, there are other initiatives of the operational efficiency, but the CP coke CT pitch prices are also going to get controlled. We have certain strategy around how these prices will be brought down. Of course, with the depletion of the high cost alumina and getting into the cycle where we have the alumina available at current prices. A combination of these three factors, I believe that, we should have a cost reduction of $300-$400 in the current quarter.
On the third question, Indrajit, in terms of the whole core debt. Maybe what we can do, we can look at the total liabilities, which is a combination of loans, bonds, including the interest and the cost. If you look at the current fiscal FY 2023, H1, the total liabilities are about INR 3 billion, and out of which you may have seen that we paid the two dividends. The balance about INR 1.3 billion at VRL got refinanced mostly through Indian PSU bankers with the longer-term maturities and the lower cost. Net net in H1 against the INR 3 billion liabilities, almost INR 1.4 billion, as I mentioned initially, have been deleveraged. In first half, the VRL debt came down from INR 9.7 billion-INR 8.3 billion.
In second half, the liabilities including interest cost is about INR 1 billion, and which will be again mostly get refinanced. Overall, in the current fiscal almost INR 4 billion, a combination of loans, bonds, interest costs and INR 1.4 billion is deleveraging. F-24 again it is more or less same. Three billion is liabilities, loans and the bonds with interest cost. Four billion is a maturity in F-24. I just wish to make one point that the F-22 and F-23 most of the VRL debt did also emanate from the loans taken for increasing the stake, which was mostly unsecured and which is getting repaid in second half. Coming F-24 most of maturities are from secured bucket which are easier to refinance. Net net, INR 4 billion, INR 4 billion in both the years and deleveraging of INR 1.4 billion in the current fiscal.
Thank you for your elaborate answers. All the best.
Thank you.
The next question is from the line of Amit Dixit from ICICI Securities. Please go ahead.
Yeah. Good evening, everyone and congratulations for a good set of numbers in very challenging times. I have just a couple of questions. The first one is on essentially the increased CapEx guidance for BALCO expansion. If you could throw some light on the key elements because it is very unusual for Vedanta to revise capex. If you could throw light on the key elements that has led to this increased CapEx in BALCO expansion. That is first question. The second one is on the sharp reduction in oil and gas production guidance. Do you think that you would be able to achieve the FY 2024 number that was laid out in the analyst meet in March? These are the two questions I have.
I'll try to answer you the first question and for second question, I'll also take the help of my colleague and friend who is there on the call, Prachur Sah. The first question is about the CapEx cost revision on the BALCO project. This is in two, three parts. As you would remember that we had got the smelter project approved with the similar capacity of billet production. There's some CapEx increases there because of the various events which have taken place and the commodity prices from the time it has happened. There is some cost increase it has happened. Majorly there are two, three things beyond this. One is that Primary Foundry Alloy project which was not a part of the bigger scheme of things.
We have seen that what could be the right way or what could be the right product to get the right NEP from the market. The value-added product portfolio should be such that it should be accepted by the market. We have planned to add a capacity of 90 KTPA of Primary Foundry Alloy. The other factor here is that rolled products. Earlier the sanction was to increase the capacity from 50 KTPA to 130 KTPA. Now we want this capacity to be 180 KTPA. While we are executing the project for rolled product, we realized that it is good to have this capacity.
180 KTPA will be the final capacity for rolled product, 80 KT for PFA, 420 KTPA for billet, and along with that the original capacity of 414 smelter capacity. This will take the total VAP capacity to more than 100%, so say around 105%. This will fetch us the right premium and will also enable us to serve the market in a wider portfolio. That is why the cost increase on three, four factors have, which has happened.
Oil and gas production.
Yeah. Oil and gas production, while we have been able to majorly arrest the decline by doing the project on RDG and well intervention and some production which has also come from Cambay and Ravva. That more to happen and, as we speak, we have seen some success in the current month. The next year guidance will be better depending on the exploration success. Some advantage may also come from ASP and Shale. Of course, this is going to take some time before these projects will realize the volume for us. Prachur, over to you for a little more detailed explanation.
Thank you, Duggal. From a production point of view, in Q2, there was slight impact on production, primarily in our MBA field, where we had some impact of a polymer breakthrough, where we had to change our operating strategy from a chemical to a mechanical one, but we have overcome that. We have currently deployed with Schlumberger and Halliburton to recover the recovery from MBA. As Duggal mentioned, we have drilled offshore now. In offshore we have had success in Cambay offshore, where we have currently increased the production from 9,000- 13,000. The Ravva drilling campaign, the first well was successful and the second one which is ongoing or the third one which is ongoing is potentially on the line of success.
In the short term, these are the few certain labor that will bring the production back up. In fact, in October itself we have seen an uptick of close to 6,000 this one. In terms of long term, the exploration wells continue. As you have heard that we have got the extension which will unlock the exploration program, which was kind of held back during the temporary extension period. That should bring back the robustness on the volume growth as we go into the next year.
In a nutshell, you know, in MBA field the production should come back because these temporary factors are now off the table. Is it the correct understanding?
Basically the decline, the natural decline, would be offset by the temporary measures that we are currently taking, which is moving to a more mechanical workover compared to the chemical workover that was happening. Yes.
Okay. Understood. Thanks and all the best.
Thank you.
The next question is from the line of Ritesh Shah from Investec. Please go ahead.
Hi, sir. Two questions. First question has three parts. So first question broadly on capital allocation in ESG. So this first is some sort of clarification around the news flow on investments into semiconductor business versus advanced materials. What is it that we are looking at the company level at the parent level? That's the first thing. Secondly, we have incremental announcements on Athena Power and BALCO upstream expansion. How do we marry this with ESG? That's the second on capital allocation. Third, Hindustan Zinc OFS, where are we on the process? That's three parts to the first question. Second question is more on debt-wise, the profile at VRL. Thank you.
Okay. You asked too many questions in two questions and I'm trying to reply that. On semiconductor, I think that entity we have already declared that does not lie under Vedanta as of now. I will not be able to comment on that in this call, although there are, you know, heated negotiations and the discussions are going on as we speak, and this project is going to hit ground as soon as possible. This was one. The second you said that.
Sir, can I just follow? Sir, so semiconductor expansion won't fall under Vedanta listed entity. Is that thing right?
Yes. That's what we have declared as of now.
Okay. Perfect, sir. Done. Sorry, sir.
As far as Athena Chhattisgarh Power is concerned, I don't think the carbon footprints are going to increase because of that. This will actually there is a study call which has taken based on the power equation, which will be there for BALCO. One of the options is to feed power to BALCO new smelter depending on the power equation we maintain through Athena. Overall footprints are not going to increase, but you must have also realized the way we are progressing on renewable power. You may not have heard from any other global player because 550 MW already signed with Centrica and there is a lot of progress which has happened in the land acquisition and tying up of the transmission network and the ordering of panels.
We have also given an EOI of 400 MW for another set of power requirement in all our locations. This will be more than 1,000 MW against our commitment of 2.5 MW by 2030. In two years, we have moved at quite a speed. Apart from that, you must have also heard that some of our unit like Pantnagar is completely on renewable power. We have purchased more than a billion units of renewable power in the current year already from various sources. Our commitment to ESG is above any question.
We are totally committed not only on RE. We have made a substantial progress on all the pillars and all the aims, and that is why you must have seen that our DJSI rating has jumped by 14 points, and this is the maximum rating probably you must have seen any jump in any global mining and major mining company globally. We have a full focus on the biomass usage. There are a lot of other ESG projects which are going on. We have started capturing flare, which was going in the chimneys. We have started generating 4.4 MW power out of that. There are large number of projects which are going on ESG. We have also committed that in the period from 2020- 2030, we will plant 7 million trees.
2 million trees we have already planted in the last two years. Against a commitment of 7 million, 10 years, 2 million trees are already planted. There is a lot which is happening in this space.
Sure, sir. Sir, Hindustan Zinc OFS status check.
That is for the government to answer because what you are hearing from the market, I am also hearing. They are going for a roadshow, and they are quite excited to sell it into the market through the OFS route.
Sir, I'll just refine the question on the maturity. Sir, you did indicate in, I think one of the initial questions, on $3 billion was taken care of in first half. I just wanted to know the sources for that. Secondly, in FY 2024 you indicated three plus one, total $4 billion. Just wanted to get a sense on how you are looking to basically fund this. If you can tie it up with two variables. One is the pledges at Vedanta level, pledge or encumbrance at Vedanta level is already, you know, nearly 100%. Secondly, GR to RE, I think you already got shareholders approval. Are there any other approvals which are pending? I presume it could be NCLT or something else. If NCLT gives the approval, do we still need to go for creditors to get approval for them to actually use those funds towards payouts?
Yeah. I'll try to cover, Ritesh, I mean, one of those briefly. If you're right, in terms of the H1 current year, we are in maturity of INR 3 billion. The source remains almost INR 1.6 billion was dividend. You may have seen we paid two dividend, the first in the first quarter and the second, in the current quarter. INR 1.6 billion is dividend. INR 0.2 billion is a brand fee. That makes INR 1.8 billion. And roughly INR 1.3 billion is a refinancing. Now one significant change in terms of refinancing remains that most of refinancing in the current year first half is done through Indian PFC banks, including SBI, which comes, of course, at a cheaper rate and a longer maturity. Dividend brand fee INR 1.8 billion and INR 1.3 billion is new loans.
H2 as I mentioned, is rather small. It's about INR 1 billion, and we don't see much of a change. We are in advanced stage of various discussions with both the Indian PFC bankers and couple of multinational banks. Finally, FY 2024 is again, almost same number. Roughly INR 3 billion is loans and bonds. About INR 1 billion other costs. Most of FY 2024 maturities onwards are coming from the secured bucket as I mentioned, and hence refinancing will not be a challenge. Net net, the plan for de-leveraging of INR 4 billion over three years remains intact and all other priorities on allocation of capital remains subservient to this goal. Quickly, lastly, commenting on GR to RE conversion. You may have seen approval from NCLT, no comment from SEBI was taken until last quarter.
We also had as a second last step, one court convened meeting, so it is NCLT monitored meeting of shareholders, and that vote for conversion was upheld with a resounding majority of 99.9%. Now, the last step remains any approval from lenders or secured creditors for which we are seeking exemption from NCLT. Once that is done, the whole process will get finished.
Okay. That's quite helpful. Hypothetically,
Tushar.
I'll join back with you, a little later.
Yeah. Thank you.
Thank you.
The next question is from the line of Pallav Agarwal from Antique Stock Broking. Please go ahead.
Good evening, sir. My question was on the alumina costs, you know, for this quarter. You know, if I looked at the cost, it shows it's in excess of $400. Would it make more sense for us to actually buy more external alumina because those prices would be lower than, you know, $400 per ton, at least in the third quarter?
No, I think the overall alumina cost decrease per ton of hot metal decreased by say around $90-$100 in the last quarter. Alumina and Lanjigarh cost was higher compared to the previous quarter because the previous quarter, the one-time approval was taken by OMC for sale of the additional quantity. We had some shutdowns also during that quarter. That differential is there. In the current quarter you will see the cost reduction coming up in the next quarter because of the alumina production from Lanjigarh.
The other thing was, sir, in the copper segment, you know, we've reported, I think, a positive EBITDA. You know, some, like, earlier quarters you were reporting a loss, so what has led to this improvement over there?
I think we have done few structural changes here. One is that the overall material, the raw material, we have started purchasing the blister or some secondary material also, and we have mastered the art of modifying our process through which the impurities are being addressed. This has not only helped us to recover good metal value like nickel has started fetching us some value which gives the credit to the cost. Apart from that, purifying the solution gives us improved current efficiency that improve the throughput, that improve the quality of the material. NEP goes up, the overall capacity is ramped up. There are many factors which are responsible for that. There are more actions in the pipeline in the coming quarter which you will see even the improved performance from our Silvassa plant.
Okay. Yeah, thank you, sir.
Thank you. The next question is from the line of Ashish Kejriwal from Nuvama Wealth. Please go ahead.
Yeah. Hi. Good evening. Thanks for taking my question. My question is again on aluminum because, if I'm looking at aluminum, even in the last quarter when we mentioned the cost reduction in power, we have not seen that kind of cost reduction. Going forward also the kind of guidance which we are giving in the cost reduction in power, that also does not satisfy the earlier comment also. My question is, on account of coal cost, when we are talking about that it has reduced from 1.9 per GCV to 1.3 this quarter, we have seen cost reduction of just $170 per ton. When our captive coal also comes and it's come to be 0.5, 0.6, then how come it comes to be around $325?
This math I'm unable to understand. Second question related to that also, if I'm looking at aluminum different cost of production, like ingot conversion costs, it is shooting up like $110-$190. Other costs are still on a rise. Thirdly, on premium side also, we are seeing that premiums are also coming down. Is it ingot premium which is coming down or the value addition part which we are seeing over here? These are three elements on the table.
Yeah, yeah. No, thanks for your question and very relevant question also. First, if I would come to the power cost. Power cost last quarter was around $1,000 plus. This was at an average cost of coal of 1.7, which we are hoping to fall down to, say, 1.4 in the current quarter. If the overall power cost at 1.73 is, say, $1,000 odd, you can work out your numbers that if the overall coal cost falls down to 0.5, 0.6 or 0.7, what could be the number for the power cost?
This quarter you are talking about 1.73 versus 1.9 in the first quarter or something else?
Yes, yes. The first quarter, the average coal cost was 1.9. Quarter two it was around 1.7. In quarter three we are hoping to say around 1.4 or so.
Okay. What was the reason for not achieving our earlier guidance when we were talking about that our power cost will come back to fourth quarter level of something like $800, and which we couldn't do it in the second? Because in last quarter you clearly mentioned about this, and we are really surprised to see this kind of reduction in power cost.
There are two factors for that. One is that, the power demand and the coal stocks at IPPs did not go up and the linkage coal realization was not to the extent we had thought, number one. Number two, even when the linkage coal realization improved from 22%- 55%, we had to move a lot of coal through road and, which actually hit the cost. In real sense, if this coal would have come by rake, which was the original allotted means of movement of the coal, this would have reduced the coal cost to a larger extent.
Okay.
Now with the three captive rakes which we have mobilized, there is a lot of movement of coal which is taking place through these rakes, apart from what is being allotted by the railway. There is a substantial quantity movement which is happening. As we speak, there is the stocks in the IPPs and the linkage allocation has become much higher. Combination of these two things will help us to bring the cost down. Although the third factor we have not accounted for when I am telling you the cost, the Jamkhani coal block operationalization. Depending on how fast we are able to do the stripping and expose the coal, but if we are able to do that, it will further help us to reduce the cost.
Understood. Sir, just to get clarification from metallization from 22%- 55%, still because of just movement of railway or less movement of railways, we were able to reduce cost to a certain extent. From second to third quarter when we are talking about reduction, we are assuming that all 55% linkage or whatever, that will be routed through rail or again there could be surprised going forward?
No, not that the total coal will move through rail. A part of it will still move through road, but it will also depend on the rake allotment and the relaxation which will be provided by the railways. A combination of our own rakes and the railways, we feel that we should be able to reduce our coal cost substantially.
Sure. Sir, next, other questions on premium as well as ingot conversion cost.
Yeah. The other conversion cost, the processing cost, is majorly dependent on the CP coke and CT pitch. As we speak, we have been able to bring down the CP coke and the CT pitch prices substantially by 30%, or so. This will definitely help us to reduce the processing cost. On the premium, you know the demand which has eased out in the high premiums geographies. A combination of that, we had to you know tweak the product portfolio along with the slabs and the value-added product. The combination of the easing out of premium in the market in various geographies and the product portfolio, it has actually impacted our NEP.
Sure. Sir, lastly on alumina, whether we are producing at a lower cost than purchased alumina?
There was an aberration in quarter two, which we hope that it is not going to happen in the coming quarter, which normally does not happen. It also depends, the imported alumina landed cost also depends on which cycle we are. Through that cycle, the landed cost, I mean, there is a lag between the purchase and the landed and the usage. The cost is booked on the usage. With that, I think, this is not going to happen. There is always a differential between the imported and the Lanjigarh cost by, say, around $100-$150. That differential is going to be maintained in the coming quarters also.
Sure. Thank you so much. Sir, eagerly waiting for your cost reduction initiatives to actually reflect in the numbers. Thank you and all the best.
That is our biggest motivation as of now. Thank you, Ashish Kejriwal.
Thank you. Ladies and gentlemen, we take that as the last question for today. I now hand the conference over to Mr. Sandep Agrawal for closing comments. Over to you, sir.
Thank you, Steven. Thank you all for taking the time out to join us. I hope we were able to answer most of your questions. In case you have further questions, please feel free to reach out to me or my colleagues at IR team. This concludes today's call. We look forward to reconnect with you on next quarter results. Thank you. Have a good night.
Thank you. Ladies and gentlemen, on behalf of Vedanta Limited, that concludes this conference. We thank you all for joining us and you may now disconnect your lines.