Ladies and gentlemen, good day, and welcome to Vedanta Limited's third quarter Financial Year 2025, 2026 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 touchtone 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, Yash. Good evening, everyone, and welcome to Vedanta Limited Q3 FY 2026 Earnings Call. On behalf of Team Vedanta, I thank you all for joining us today. I hope you had the chance to look at the press release, earnings presentation, and the detailed financial statements. On this call from Vedanta side, we have with us Ms. Deshnee Naidoo, Group CEO; Mr. Arun Misra, our Executive Director; Mr. Ajay Goel, Group CFO; Mr. Rajeev Kumar, CEO, Aluminum Business; Mr. Anup Agarwal, CFO, Aluminum Business; Mr. Yasin Sahurti, CEO, Oil and Gas; and Mr. Rajinder Singh Ahuja, CEO, Power Business. We will begin with the business and operational update from Ms. Naidoo, followed by an update on the financial highlights by Mr. Ajay Goel, and thereafter, we'll open the lines for Q&A. With this, I now hand over the call to Ms. Naidoo.
Over to you, Deshnee.
Thank you, Charanjit. Good evening, everyone. It is a privilege to address you once again as I present our performance for the third quarter of FY 2026, a period marked by record operational achievements, key transformational milestones in Vedanta's 2.0 journey. We achieved our best-ever quarterly EBITDA of INR 15,171 crore, while also recording our lifetime high revenue and PAT of INR 45,899 crore and INR 7,807 crore, respectively. Notably, two of our businesses delivered the best-ever EBITDA, resulting in a consolidated EBITDA margin of 41%, a historic high for the, for Vedanta, representing a year-on-year increase of 629 basis points. Quarter three was truly has truly been one for the books, with Vedanta recording significant milestones on all fronts: operational, capital-related, and corporate actions. Firstly, the key operational milestones.
We delivered our highest-ever quarterly and nine-month alumina and aluminum production, with quarterly alumina output rising 57% year-on-year to around 0.8 million tons. We are well on track to deliver our full-year volume guidance of around 3 million tons, a new record in Vedanta's history. Our aluminum business recorded its lowest hot metal cost of the last 17 quarters at $1,674 per ton, better than our full-year guidance of $1,700-$1,750 per ton. This improvement is primarily driven by the $110 per ton quarter-on-quarter decline in power cost after the maintenance of our captive power plant in quarter two. HZL recorded its highest-ever mined metal and refined metal output, with both items registering 79% increase quarter-on-quarter and 4% year-on-year.
Like our aluminum business, Hindustan Zinc also delivered its five-year lowest production cost at $940 per ton, 6% better than our cost guidance for FY 2026. At our Zinc International business, the Gamsberg Mine delivered its best-ever recovery at around 85% in December, with the third quarter production surging 28% year-on-year and nine-month volumes increasing 38% year-on-year, in line with our full-year guidance. Our power business is on track to deliver an outperformance against our annual guidance, with Athena recording a PLF of 72% in quarter three, which is an 11% increase over guidance. Our iron and steel businesses delivered a record nine-month pig iron production of 680,000 tons.
That's an 11% increase year-on-year, and billet production of 775,000 tons, 13% increase year-on-year. In oil and gas, our average gross production stood at 85,000 barrels of oil equivalent per day. Owing to various interventions across our wells, the decline in the rate of base volume at our existing oil fields has dropped from 18% to 13% over the first nine months. These achievements were aided by strategic capacity additions and the completion of debottlenecking initiatives, reflecting our strong commitment towards achieving the guidance given at the beginning of the year. Again, these milestones have been achieved across all five businesses. Our aluminum business reported three major commissionings.
First, the addition of the 1.5 million tons per annum Train Two at our refinery in Lanjigarh, thereby taking our total alumina production capacity to 5 million tons per annum. Second, the production of first metal from the new 435,000 tons per annum bulk ore smelter. And third, is the commissioning of the first 125,000 tons per annum pellet line as part of the 250,000 tons per annum project at the Jharsuguda plant. Zinc India business commissioned its 160,000 tons per annum Debari roaster and completed the debottlenecking projects at Chanderia and Dariba smelters, which added 21,000 tons per annum to our refined zinc capacity. The Gamsberg Phase 2 project at our Zinc International business is almost 90% complete, with commissioning being targeted in the next quarter.
The power business added 1.3 gigawatts of new capacity at Meenakshi and Athena power plants. Currently, Meenakshi has entered into a short and medium-term supply contract for 750 megawatt capacity, while Athena has signed supply contracts for its entire first unit of 600 megawatts. Our ferrochrome business reported the start of Kalrangi Mines and the approval for the enhanced production of from Ostapal Mine up to 530,000 tons. At our Mangala oil field, one of the large ASP implementations globally on a single field, is reaching its final stage of commissioning and is expected to open up additional reserves of 50 million barrels for the company. We have made, as you would have seen, a gas discovery in the Cambay field, awarded to us in September 2022, through the competitive bidding process.
Evaluations are underway to assess the potential of the discovery. In the initial nine months, we invested around $1.3 billion in growth CapEx in various projects across all five businesses, and we are on track to achieve our full year guidance of around $1.7 billion. On the corporate action front, a significant milestone in this quarter has been the approval of our demerger scheme. This marks a defining moment in our journey, one that empowers our businesses to sharpen their strategies, strengthen their balance sheets, and accelerate growth with the aim of unlocking shareholder value. On the sixteenth of December, the NCLT approved our demerger scheme, and on the twenty-first of January, we received the certified copy of NCLT's order. We are now progressing towards its implementation and targeting first of April as the effective date, with listings in the same quarter.
Turning to ESG and CSR. At Vedanta, responsible growth is at the heart of everything we do. The safety of our workforce remains our highest priority and non-negotiable aspect of our operations. Through various initiatives at a group level, including critical – the implementation of critical risk management, we continue to strengthen the safety culture across our facilities. However, much more needs to be done. On a year-to-date basis, our metrics do show an improvement, however, with our lost time injuries down 20% and our TRIFR down 13%. Sadly, we lost three of our colleagues in this year, ending in Quarter 3. This is incredibly painful for the team and I, and hence we continue to redouble our efforts on safety. During the quarter, we made various strides in our sustainability journey, too.
Vedanta Aluminium once again demonstrated its ESG leadership, securing a second rank in the S&P Corporate Sustainability Assessment for the third consecutive year. Our oil and gas business made a remarkable debut in its very first participation in the S&P assessment, ranking in the top five companies globally in the oil and gas upstream and integrated sector, and emerging as the highest score in India. In the CDP ratings, Vedanta maintained a strong climate score of B, while our water rating improved from B to A minus. Besides ratings, we also achieved other recognitions, reflecting progress across our sustainability commitments. Hindustan Zinc's Kaya Mine was recognized for excellence in energy and water efficiency. Balco's low-carbon aluminum product, Restora, recorded GHG emissions lower than 4 tons of CO2 equivalent per ton of product.
Reaffirming our unwavering commitment to inclusive growth, we continued our initiatives of empowering communities with investments of around INR 268 crore in the initial nine months of FY 2026 towards various CSR initiatives that positively impacted over 5.5 million lives. These milestones are proof of our values and actions, of the responsibility we carry towards our communities and the planet, and our vision for a sustainable future. To summarize, Quarter 3 is registered as a landmark quarter in Vedanta's history. The company recorded its lifetime best revenue, EBITDA and PAT, on the back of expanded volumes and sustained cost optimization across all businesses, alongside improvement in metal prices. During the quarter, we also achieved commissioning of new aluminum smelter and a refinery train. These are significant milestones that will drive business growth in the coming quarters.
We received the NCLT's approval for a historic demerger and approval to acquire Incab Industries. Another strategic move aligned with our vision of unlocking downstream synergies and broadening our market presence to enhance profitability. With our Quarter 4 performance likely to surpass Quarter 3 levels, we are on track to deliver what will become a lifetime high annual EBITDA of over $6 billion, surpassing the guidance given at the time of the H1 results. Progressing into FY 2027, we are targeting commissioning of the Sijimali bauxite mine, having received FC1 earlier this month, the start of operations at Ghogharpalli Coal Mine, commissioning of the second 600 megawatt turbine at Athena, our 510,000 ton per annum fertilizer project at Hindustan Zinc, and our 250,000 ton and 510,000 ton VAB projects at both Jharsuguda and BALCO.
Phase two commission at Gamsberg, and our 420,000 tons per annum DI pipe plant in Goa. These projects will further enhance volumes and deliver significant cost reductions through to FY 2027. We thank you for your continued support and trust in us. Ajay will now provide a summary of our financial performance. Ajay?
Thank you, Deshnee, and a very good evening, everyone. The quarter bygone, Q3 FY26, has been a quarter of immense significance for Vedanta, marked by remarkable performance, both operationally and financially, and crucial progress made on demerger and capital structure. The macro environment is supportive, with a strong demand and pricing being favorable, and we expect these conditions to sustain going forward. On the results presentation, following NCLT order on December 16, 2025, the demerger accounting under Indian Accounting Standards, Ind AS 105, has been incorporated in Q3 results filed with the regulators. These results shows aluminum, oil and gas, and iron and steel businesses separately in a summary one-line form. For clarity and for like-to-like comparison, below results are for combined operations, which is pre-demerger, and for all Vedanta existing businesses.
On performance, we delivered our highest ever quarterly revenue of INR 45,899 crore, up 19% YOY, with our portfolio strength supported by pricing, which is favorable, and a strong operational execution and sustained growth across our core businesses. We also this quarter delivered our best ever quarterly EBITDA of INR 15,171 crore, growing 34% YOY, with EBITDA margins expanding sharply by six hundred and twenty-nine basis points YOY to 41%. Finally, the PAT grew 60% YOY to INR 7,807 crore, marking our highest ever quarterly PAT in Vedanta history. Overall, on a nine-monthly basis, the performance remains equally strong. We delivered our record best nine months revenue of more than INR 120,000 crore, up 10% YOY, and best ever nine months EBITDA of INR 37,529 crore, up 18% YOY.
9 months PAT at about INR 15,744 crore, our second best ever. On growth CapEx, we remained focused on disciplined and value accretive growth. Over the first 9 months, we invested about $1.3 billion in strategic projects across aluminum, zinc, oil and gas, and power, and remain on track to invest about $1.7 billion for the full year, as we have earlier guided. As these projects come on stream, they will drive higher volumes, margins, and earnings visibility across pricing cycles. Briefly moving on to the balance sheet. Our balance sheet continues to strengthen in a sustained and visible manner. Net debt stood at about 60,624 crore, with cash and cash equivalents 20,085 crore.
Our net debt to EBITDA ratio leverage improved to 1.23x from 1.4x in third quarter, further strengthening our position in terms of debt to EBITDA. We have brought down VDL's cost of borrowings to below 9% in third quarter, with further finance cost reduction in sight in near future. Offer for Sale, OFS. We also, we have noted on January twenty-seventh, we launched Zinc India offer for sale, which has seen strong demand and broad-based investor interest. Post-completion, our shareholding in HZL will be around 60.7% from 61.8%. So about 1.1% will be the stake dilution in Zinc as we close transaction over today and tomorrow. The transaction will further strengthen the balance sheet through fast-track deleveraging and capital structure optimization, aligned with company's long-term interests.
On the credit rating, the improving financial performance continued to get noticed and recognized by the rating companies. Following the demerger order, both CRISIL and ICRA has reaffirmed Vedanta's rating as double A, with Watch Developing implications. In addition, we got upgrades from S&P, Moody's, and Fitch. So VRL rating, rating outlook changing from stable to positive, and that indicates there's a room for rating augmentation in near future. This underscores confidence in our improved balance sheet, cash flow visibility, and strategic direction clarity. Moving on to demerger and value unlock.
It is about time for Vedanta 2.0, as we advance on demerger execution. With the NCLT order in place and key regulatory and operational matters worked through, we remain committed to completing demerger as earlier guided, targeting April first as effective date of demerger, with listing of the demerged entities in the same quarter, around mid to end of May. This structural transformation will unlock further value and improve capital efficiency across verticals. You also may have noted that Vedanta delivered a TSR of almost 30% in third quarter alone, representing 5x of the index overall, and 2.7 times of Nifty Metal Index. In conclusion, FY2023-2026 marks a clear defining part of Vedanta, with a strong performance and notable advancements across our strategic focus areas.
With supporting macro environment and operating rigor, we are confident of delivering record EBITDA in FY 2026, surpassing $6 billion at Vedanta India consol level. Finally, the demerger marks Vedanta's transition into a new phase of growth and value unlocking into a powerhouse of critical minerals, energy transition and technology. Thank you, and back to operator for Q&A.
Thank you very much. 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. Ladies and gentlemen, we will wait for a moment while the question queue assembles. We'll take our first question from the line of Amit Lahoti from Emkay Global. Please go ahead.
Thanks for the opportunity, and congratulations on a good set of numbers. I'm really sorry for the loss of Mr. Agnivesh Agarwal. My first question is on demerger. As we have classified the businesses as discontinued operations in the financial statements, is it fair to say that all the approvals and name transfer on the assets are in place for demerger to go through?
Amit, thank you so much, for the question, and thank you so much for your, condolences. Amit, now that we have the formal order in hand, we will start with actually the various CPs we have, and then, all of the, all of the necessary steps actually give effect to the corporate restructuring will happen. But, Ajay, do you want to add anything to that?
No, sure. So, Amit, the entire demerger accounting follows the Indian accounting regulation, specifically Ind AS 103 and 105. Under that guidelines, in case the demerger is more likely over the next 12 months, then you have to account the way we have accounted. Now, obviously, we have to work through a couple of CPs and other statutory approvals, but as we earlier mentioned, we are committed and confident making first April as a date on which demerger becomes effective.
Okay. And then my second question is on aluminum hot metal cost. So where we have alumina cost, which is still at $800 per ton, and the cost of alumina production is clearly higher than the market price, which is now close to $300 in the international markets. So what would be the mix of captive production versus imports going ahead? So basically, the question is, is there any incentive for increasing captive production at all, given that the market price is lower than what we are producing at?
Mm. Thank you so much for that question. I'm actually going to shoot this straight to Anup and Rajeev. But Anup?
So thank you, Amit, for that question. So, Amit, on your first question on the captive mix, see, as we are ramping up Lanjigarh, and Deshnee covered it, we did about 800 KT in quarter three, and we are expecting 900 KT plus in quarter four. So that means 60% in quarter three, captive, 70% in quarter four, and going forward, quarter one, quarter two, it should be 80%. Now, coming to your second question on the alumina cost being closer to $800. See, I'll tell you. As I said, now, on the bought out alumina, what happens is, on the pricing month, you know, we actually lock in the LME. And the, and as you are seeing, with the LME in charge, you know, we are not getting the benefit that we had intended.
Now, if you see quarter three, the LME was closer to 2,600, now 2,800, and as we speak, it is closer to 3,100, and that is the reason. Last time we said you will see a $50 lower cost quarter on quarter. What we are seeing is a $20-$22 in quarter three, and maybe a $25 in quarter four. Probably as we go into the quarter one, you will see a cost sub $750. But the main driver remains the captive, and as I said, we will be closer to 80% as we go into the quarter one. Amit, hopefully, I've answered your question.
Yes. So just to follow up on this, what is the contract as percentage of your total alumina consumption, as in contract related to LME price of aluminum?
See, Amit, as I said, no, be it API, be it LME, whenever we are buying, whenever that material is getting priced, no, we lock in the LME. So that, that has been our policy.
Okay, got it. Thank you so much.
Thank you, Amit.
Thank you. We'll take our next question from the line of Dhananjay Bagrodia from Alchemy Capital. Please go ahead.
Hi. Congratulations to everyone.
Hi.
Hi, can you hear me? Just wanted to ask you, sir, firstly, congratulations on a fantastic
Go ahead.
Congratulations on a fantastic set of numbers in an environment. I just wanted to ask you, for our aluminum capacities for production, how much do we see the 600+ KT be, let's say, in a year from today?... Hello? Hello?
Thank you for that. I'm actually going to hand over to Rajiv, but just very quickly, the increase in aluminum production is coming from our BALCO project. So let Rajiv update on the BALCO project and talk about the ramp up that we'll see over the coming two quarters. Rajiv?
Thank you, Dhananjay. We are just now at 20 pots in the new 435 KT smelter at Balco. We intend to increase to about 100,000 tons by this year end, March end, and then next three to six months, we'll ramp up the rest of the pots. There are 304 pots divided into four zones, so the first set of 76 pots would be online by March, and the rest of the numbers would be on by in the next three to six months. And we will ramp it up from there. We have taken a best benchmark number of ramping up of the pots anywhere in the world for this kind of smelter. So-
Thank you so much for that, Rajiv. Maybe, Dhananjay, just to summarize, just to summarize on that-
Mm-hmm.
We will get to 2.8 million tons of aluminum post our Balco project ramp up. The team is working on a set of debottlenecking exercises to close the gap from 2.8 to 3 million tons, which is what we've guided in the market, over the next 18 months. But in addition to that, our Al- our Lanjigarh refining will get up to 5 million tons. We're already close to those run rates. So as Anup just explained, that is what gives us the integrated or the captive benefit there. But the other opportunity right now on aluminum is actually our value added. So we have value added projects both at Balco and Jharsuguda.
So in addition to the volume uplift, which you'll see in the next year, you're also gonna see a margin increase from us in terms of BAB, which the team is working on how much more we can actually sell in the domestic market. So I just wanted to give you the full aluminum growth and margin story to expect over the next one year.
Fantastic. And, secondly-
Remember, the BALCO project is 435. Sorry, please go on.
No, sure. In power, where do we see our capacities, let's say, a couple of years or three years from hence, how do we see that ramping up our power capacities?
Certainly. So in terms of current projects, we have another unit in Athena to go, which is another 600 megawatts. But I have Rajinder Ahuja, our Power CEO, on the line. So, Rajinder, I think it would be good for you just to talk through where we are today, the current projects, and of course, you know, somewhat of the strategy around power or post the next three years.
Thank you, Deshnee, and hi, Mr. Patolia. Just wanted to tell you that, you know, as of now, we, this year we have commissioned around 1.6 gigawatt of capacity at Athena Meenakshi. So total capacity as of now, up and running, is 4.2 gigawatt. This is expected to go to around 5 gigawatt, 4.8 nearly gigawatt by, you know, end of H1 of the next year. And as we demerge, we really want to be a growth company and write the India growth story on energy. So we are having a plan in place to, you know, put additional 10-12 gigawatt. That's a plan being made.
You will really see that, you know, this company will be on continuous growth chart for the next five to seven years, as India needs more thermal power capacity.
Sir, for this, do we have tie-ups to the five, to reach from five to 10? Are there even equipment available, everything is available, or how is that coming along on ground?
So we are keeping all options open. Indian players, yes, there's definitely capacity constraint from Indian manufacturers, but we are exploring India as well as, you know, outside India, all who can supply us. And we have a good discussion going on. Maybe at right time we will come out with the, you know, concrete numbers on that.
Okay.
But the focus right now, right, Rajendra, is to get us to the 5 gigawatts-
Right.
As soon as... That's the focus, and the focus there is also to look at how we tie up most of that into contracts, as we saw with the current PPAs that we just landed, for both Athena and Meenakshi. So that's the focus. When we have the rest of the plans in terms of how to grow the power sector, especially now with the demerger, we will come back to the market.
Sure. And, lastly, thank you to Charanjit and the IR team for such strong disclosures. It's been really, really helpful for us as investors, so thank you to Charanjit and the team. Thank you, guys.
Thank you.
Thank you.
Thank you. Take our next question from the line of Sumangal Nevatia from Kotak Securities. Please go ahead.
Yeah, good evening. Thank you for the chance. I have a few questions. I got disconnected in between, so please excuse if it's repeated. Firstly, I wanted to know hedging volumes, what, what proportion is hedged for fourth quarter and mainly for FY 2027, across divisions, mainly aluminum, silver, and zinc? And what sort of policy are we, policy or strategy are we following as far as hedging is concerned?
Hi, Sumangal.
Sure, Sumangal. We haven't covered hedging, so I think it's all right. Hedging, I think all of you would agree, in the current environment is highly tumultuous. It makes sense to hedge.
...Hedging as a policy is dynamic, it is a real time, and we map the market, the impact of practically on time, real-time basis. We also have a global expert out of Vedanta advising the Vedanta risk committee on the hedging. So it is, it is a joint call that we all take. That's the policy. In terms of for how much we have hedged across the key commodities, the silver hedging for the current fiscal, as of now, is about 68 tons, and it's about 10% of volume of the current fiscal. Additionally, about 50 tons is covered for next year, about 7%. So overall, 10% for the current fiscal and 7% for the next year. 17% is a hedged quantity. The average rate is about $45 per troy ounce.
In case of zinc, the hedging is almost 50 KT each, both for the fourth quarter and next year. So almost 100 KT, almost 9% volume for the full fiscal is hedged. The average value, the price locked is almost $3,000 per ton across Q4 and next year. And finally, in terms of aluminum, 8%, about 125 KT for the fourth quarter, and almost 490, 10%, is the next year hedging. So net net, 18% quantity hedged for aluminum. The average pricing is about $2,650. So in summary, about 10% for the current fiscal and 10% for the next year is has been hedged.
Thanks. Ajay, can you just give FY 2027, what's the price, hedge price? The average price is fourth quarter and FY 2027, right?
That's correct. That's right. In fact, for the next year, the numbers are much higher, slightly higher. The silver at about $55 per ton, about the quantity is 48 tons exactly. In case of zinc, it is 43 tons, and the price is about $3,072. Aluminum is about 10%, 490 or so, and the pricing about $2,625.
Understood. That's, that's very clear. Second question is on the aluminum cost. I just wanted to understand what sort of cost changes are we expecting over the next one or two quarters? And, from BALCO smelter, what sort of ramp-up schedule can we expect over FY 2027? Do we expect, I mean, what utilization could we achieve in FY 2027 on an average?
Thank you, Sumangal. We did already answer the BALCO ramp-up, but we can certainly re-summarize for you. But maybe, Anup, you can start with the cost over the next two quarters.
So, Sumangal, so as you would have seen, you know, in quarter three, our hot metal cost reduced by 8% compared to the last quarter. While answering the alumina cost, now, I had guided that next quarter, alumina cost will be lower, almost $25. We have a planned maintenance of one of our bigger power plant units, and there you will see a higher cost. So both will tend to offset each other. Next quarter, broadly, we are saying costs will remain flat at the constant LME. Maybe 0.5% here and there because of the inflationary pressure that we're seeing on the carbon commodity. Coming to quarter one.
Coming to quarter one, with the ramp-up in Lanjigarh and the bauxite that we're expecting from Sijimali, we believe we should have a $50-$60 cost reduction compared to where we are today.
Understood. And just very lastly, any new deleveraging targets for both Vedanta Resources in India, given the cash flows and the commodity prices?
Yeah, sure. I mean, overall, what we committed last time, Sumangal, we as a group at VRL level, almost $0.5 billion deleveraging. And given the current offers in the play, again, another $0.5 billion. So roughly about $0.8 billion-$1 billion will be deleveraging across the group in the current fiscal. With that, the VEDL India debt will come down by almost $0.7 billion in the current year, and almost $300 million at VRL level. At Vedanta India, we track debt to EBITDA, so compared to 1.23x, as on third quarter, we'll be closing the fiscal at about 1x, and that will be, I think, lowest in the last many, many years.
Understood. Thank you so much. I'll join the queue back. Yeah.
Thank you.
Thank you. We'll take our next question from the line of Ashish Kejriwal from Nuvama Wealth Management. Please go ahead.
Yeah, hi. Thank you for the opportunity, and many congratulations to the entire team. My question is on the alumina part. Anup, sir, you mentioned that, you know, we try to purchase alumina at a percentage to LME. So, because, you know, our alumina production is increasing, so do you think that whatever is requirement for FY 2027, we can't go for spot basis? Because as a percentage of LME, we are not getting any benefit. In fact, if I do the calculation, third quarter, purchased alumina cost seems to be higher than second quarter. And obviously, it will continue to go higher because of the aluminum price. So for the strategy part, can't we go for spot purchase, or is it not available itself? That's my first question.
So, Ashish, see, last time I had said that we had some LME link contracts, okay? But as we go into the next financial, most of our contracts are API linked. That's the. That is what you call the Alumina Price Index, it's not LME linked. The point that I had covered, in the pricing month, and we explained it time and again, that there is a 45-60 days lag. So what we did do is, when in the month of pricing, no, we actually lock in the LME, be it API, be it LME. And in a LME rising scenario, which you've seen... almost 10% rising, two months, you see that gap.
If the LME was a constant, I'm again repeating, you would have, you could have seen almost a $40-$45 reduction in alumina this quarter and the next quarter. So at some point of time in the constant LME, you know, you will see that big gain coming in. But LME-linked contracts are almost not there for the next financial year. Very small quantity.
So is it safe to say that from first quarter of FY 2027, when we are expecting $50-$60 fall in hot metal cost, we are saying that entire alumina purchase or maximum alumina purchase is API linked, not aluminum price linked?
Yes. So, that's a fair point. On a constant LME, something which I mentioned. Keep that in mind.
But this is somewhat confusing actually, because the spot prices which we look at is something like $310-$315 per ton for alumina. Whereas, if I link with aluminum, and even if you got 12%-13% as a percentage of LME, it will be much higher, $400+. So what you are trying to say is that-
Let me tell you.
Yeah.
No, Ashish, I'm only trying to say that. See, suppose if I had bought alumina at $310, as you rightly said, and there is a lag of 60 days. So when I'm pricing the alumina, the LME is $3,000. In the consumption month, if it is $3,200, you only have that lag. Otherwise, there is absolutely no lag. Because as a policy, we lock in the LME in the month of pricing. It's not LME linked.
I think it's very clear, Ashish. It's price is API linked. Consumption in the month, right? Would be LME linked. But that's just, that's just the way we account for it.
Okay, I'll try to take it offline. Second thing is in terms of our coal block, Kurloi, which we are saying that we are going to start in fourth quarter. So have we received all regulatory clearances and now we are on ground? Because we are already at end of January. So how comfortable we are in that coal block for Kurloi? And as well as Sijimali, we have received Stage 1 forest clearance. But even after that, we need and other local bodies clearances. How comfortable we are saying that, you know, Sijimali, we can start before monsoon this year?
Rajeev, I think you can give a full update on both the coal as well as all our bauxite blocks.
So, thank you for the question, Ashish. On Kurloi, as you rightly said, we got the FC Stage One on May 12th 2025, and FC Stage Two clearance we got on J anuary 12th, this month, 2026. And, CTO and some approvals, mine plan opening, as well as escrow account opening, all that is running in parallel, and we are quite hopeful. We have already put in the MDO, and the team is on the ground, and we are ready. We have already shifted our offices in that area on Kurloi, and we are very hopeful of commissioning the Kurloi mine by quarter four of FY 2026, which has been the guidance. As far as Sijimali is concerned, FC Stage One was obtained on 31/12/2025.
EC, we are expecting by February 2026, and we are quite hopeful of operationalizing the mine, as you rightly said, in the monsoon month. So we are, we are quite there, and we are very hopeful of doing both. As far as Ghogharpalli is concerned, we have also made headway, and mine plan is already approved. And public hearing, we got it in January 2026, done, completed. EC, we are expecting by May 2026, and FC by July 2026. Again, commissioning, as we have guided, we will stick to that commissioning. So we are in control, and last leg of approvals as far as Kurloi and operationalizing Sijimali by quarter one, FY 2027.
That's, that's great. And lastly, on steam, we have not heard anything on the getting clearances for our expansion from 1.5 to 3. And obviously, every quarter or half yearly, we keep on postponing that, you know, final date. So, where we are, do we think that that 1.5 to 2 or 3 million ton approval from the government, or the regulatory authorities, we are going to get in this year, or actually, where we are on that process? Thank you.
Thank you so much for the question. So we have completed the acquisition of our 913 hectares of forest land, that we've already handed over to the forest department. The team on the ground has been engaging with the MoEFCC in terms of, you know, what else we would need to comply with. We are very encouraged with the fact that we are concluding this now, when MoEFCC has relaxed the requirement in terms of the forestry ratio of 1:2. So against that and the engagements on the ground, Ashish, I don't want to preempt, but we are most hopeful that this would happen in this quarter still. And then in terms of progress on the ground, you know, the team continues within the constraints we have to make overall progress on the project.
I think the project is some 70% complete, of course, within the constraints we have. So once we, you know, once we get the approvals, we'll start to accelerate the rest of the project completion.
Thank you so much, team, and I must congratulate for the team for effective debt management as well as project execution. Thanks and hats off to you guys.
... Thank you. We'll take our next question from the line of Pallav Agarwal from Antique Stock Broking. Please go ahead.
Yeah, good evening. So, you know, the first question was on the timeline. So, we're still showing power business as under continuing operations. So, are we confident that we should be able to get all requisite approvals before, you know, March or April, if you want the full demerger to be effective?
Okay, do you want to take that question in terms of just reiterating the timelines as we understand it for demerger?
Yes, it is just the dates, Pallav. I mean, as we know, the overall, the bigger demerger, the four businesses, the NCLT order, came on December sixteenth, which falls within the third quarter, October, December. The NCLT order for power, the Delhi bench, in fact, came on January seventh. So it is an event post-balance sheet date, and hence, power is part of operations continuation. So in terms of approvals, we intend to demerge all four companies on the same day, and the target right now being in the first April. So they will be all co-terminus on the same day.
Sure. You know, from the perspective of valuing the individual businesses, you know, so how do we know, apportion the portion of debt among the various businesses? So, probably get a you know proper picture of the valuation of the different entities.
Well, as we speak right now, the management is focused similarly, in fact, carving out multiple balance sheets and debt allocation, and many more statutory requirements. So in terms of debt, I think that remains simpler part. When we went to the bankers seeking NOC, in that case, debt allocation was broadly aligned with the bankers as a precondition for granting NOC for demerger approval. So broadly, net debt in Vedanta India consolidated at about $6.7 billion will get apportioned in the ratio of assets that each entity will carry post demerger. One more dimension remains each entity's cash generation and debt-servicing capability. So in summary, a significant portion of debt out of $6.7 billion will go to aluminum, some portion to power and the remainder, Vedanta.
Oil and gas, post demerger, will practically be debt-free and a very small debt in iron and steel. So it is all being worked out, and by end of this March, be it, recast balance sheets, P&L account or debt allocation will be all finalized.
Sure, that will be very helpful. And lastly, on the oil and gas, you know, business, so we adding some reserves, but, you know, production continues to decline. So, like, with some new fields getting added, is there some probability that this can increase going ahead?
So I'm gonna hand over... Thank you, Pallav. I'm gonna hand over to Yasin, our COO, who will take the question. But I just wanted to also, you know, remind the market that we did come in and talk about, you know, three different projects that we were undergoing in Rajasthan, firstly, on ASP, as well as the work that we had to do on tight oil, and then some of the exploration activities in terms of infill drilling. So, Yasin, when you update, I think just because we spoke to the market the last quarter, let's just speak about why the volumes didn't come to plan and what, and what is the recovery plan that we have underway for drafting.
Right. Good afternoon, everybody. So the main reason why volumes are not coming to the level that we expected is actually delaying of the project ASP commissioning and start-up, which is Enhanced Oil Recovery, one of the largest in the world and very expensive technology. However, we are about to finalize commissioning and startup and to pick up the first volumes of the contributions from the reservoir in that way in period of next three months. This is first bucket. Second bucket is tight oil, is immense, basically reserves in place and, resources we are converting to the reserves, and with the intensive recompletion strategy and the drilling new wells, we'll pick up that from the existing 8,000- 15,000.
Basically, that two buckets will stabilize the decline to actually be on the sustainable production delivery and slowly picking up an increase towards 90,000. As you are also aware, in the west offshore, we discovered a recently confirmed reserves on the largest scale in the offshore Cambay. However, that project will be commissioned and start up next year, actually this financial year, 2027 in quarter four, and the first volume will be the stable production rate will be around 13,000 in March next year. On the northeast, biggest prospect, we are in the continual delay for the first and the most important exploratory appraisal project, SP One. It is not easy to operate over there. We are finally coming with all commitments towards the environment and the local government in terms of approvals.
Without that, we cannot ultimately start our drilling program. We hope it will be commissioned end of this financial year, end of March, and then we can drill 2-3 wells, which will discover potential volumes of up to 100 million reserves, which will definitely ramp up production in our entire portfolio, especially from the northeast. That's in a nutshell, everything. We have a couple of more projects which are working for the further development, like heavy oil in the Rajasthan North, like infill on the south satellite fields of oil in the Rajasthan South, and the east coast, very promising big prospects of Allen Backfield offshore, onshore to offshore drilling, which may increase our reserves to 30 million additionally.
So all in all, we expect the next year to stabilize everything and to grow to at least 90,000, and then year after the year, reaching our ultimate target of 150,000.
... Sure, thank you so much for the detailed answer. So, just finally, you know, I think as part of the demerger, there was some guarantee to be provided for the, I think the arbitration dispute. So would that be at the Vedanta Limited, the primary company level or at the, you know, the oil company level?
You are replying probably.
Thank you, Yasin. Yes, Talwandi, that's already been dealt with at the current structure. So when we demerge, that will be without the obligation sitting at the entity level.
Sure. Yeah. Thank you so much. That's it.
Thank you. We'll take our next question from the line of Ritesh Shah from Investec. Please go ahead.
Yeah, hi. Thanks for the opportunity. A few questions. One is for Ajay. Sir, we had a certain outgo commitment at VRL with respect to interest in ICL. Any update on that? Because honestly, we are expecting some payout to fund that. So if that thing is something which has been taken care of, how was it funded? That's the first question.
Yeah, sure. So in fact, all of the ICL is on track as we have committed or as in fact is contracted. As of now, out of $1 billion ICL advanced in 2019, $417 million remains outstanding, and practically, $200 million is due on January 31, in three or four days from now. And the balance of $200 million, sometime in Q1, which is end of May. So out of $200 million ICL due in January, $50 million, in fact, we have prepaid in December. So $150 million now remains pending in January, and the balance, $200 million, in May. The entire ICL, $50 million, will be paid on time.
Right. So this balance, INR 150, and there was an interest payment, I presume, INR 270, INR 280. So, the idea is to still fund it via dividends?
So if you look at the fourth quarter, Jan- March, so almost $150 million is the ICL. There is no other debt due in the fourth quarter. So $150 is ICL, and the balance, $125 million, is the interest. So overall, $275 million. Now, how do you fund it? Again, the option remains, the mix of refinancing and repayment. Now, dividend, as you would appreciate, Ritesh, is a board matter. But we have in the past been committing about 6% of dividend yield, and what we have paid in the current fiscal is almost 3%. So a payment of a dividend in the fourth quarter is likely, subject to board approvals. In that case, the entire dues, almost $275 million in the fourth quarter, will be addressed through dividend.
Amazing. Thank you. Thank you so much for a detailed answer. My second question is, how should we read into confidential filing for Copper Tech Metals? So I'm reading it more from the VRL debt profile, and the recent OFS that we have in Hindustan Zinc. How should we read into promoters holding into Vedanta and Vedanta holding into Hindustan Zinc? Like, how should we look at a broader top-down thought process from the company?
I think from a, Ritesh, from an overall corporate deck point of view, there is no link, right, with Vedanta Limited and anything below VRL. This is a separate entity sitting above Vedanta Resources Limited, as we told the market. And that entity today will be holding 80% of our KCM interest, that as we've told the market, that we have filed an S-1, that we're going through the process with now, with the SEC, in terms of this, in terms of next steps. But there is no link.
Please correct me if I'm wrong, so it's VRL which holds 80% into the entity, right?
Yes. It is VRL that currently holds 80% of our KCM interest, with 20% being held by the local government entity in Zambia.
Correct. So, would it be possible for you to give some color on what is the thought process? I appreciate it had nothing to do with Vedanta, but it will impact the debt profile at the VRL level. So that's where the interest is from.
Ritesh, Ritesh, sorry, I'll have to intervene here. We are in the silent period with respect to having done the S-1, S-1 filing. So we can't speak anything until the process is continuing.
As we already guided in the last results call as well.
Okay. I'll just move to the next question.
Thank you.
Thank you. I'll just move to the next question. Thanks, thanks for detailed disclosures with respect to the different entities. But if we had to understand the element of accumulated losses, unabsorbed depreciation, tax efficiencies, is there a way in which you can help us, we can, we can appreciate these variables?
That is a work, Ritesh, right now is underway, as I mentioned. So over the next eight weeks, two months or so, recasting multiple balance sheets for each of our resulting entities, get a location in terms of, in terms of finalization. Structure of the management in place, all will be worked out. Allow us maybe almost two months' time, we'll have all the numbers. One thing I can confirm to the entire audience and through you to the stakeholders at large, that demerger, in fact, becomes an opportunity across the areas.
Take an example, the offshore right now in the play, the value is almost INR 3,000 crore, and that also gives us a reason to fast-track the entire deleveraging. As I earlier mentioned, our intent is to make oil and gas business debt-free, pre-demerger, and also our Arcel business almost debt-free. So many of this structuring will be in Vedanta opportunity from taxation viewpoint and otherwise.
Thanks for that. I didn't get the INR 3,000 crore number, sir.
So the offer for Zinc right now, we are looking at almost 1.1% as the bidding, both by retail-
Oh, okay.
And extension got closed at, say, 2:30. It's about 1.1% stake sale, and that's INR 3,000 crore roughly, and the entire amount will be used for deleveraging.
Sure. Last question: in notes to accounts, we have mentioned a claim of $512 million. How should we look into this? I understand it's subsidized, but under which entity will this fall, and how should we look at this variable going forward?
That's an ongoing matter with the MoPNG. It pertained to oil and gas, and the matter is in arbitration. In fact, all the judgments in the past have been in Vedanta's favor, and in our assessment, that matter is a medium to low risk.
If there is a windfall gain, where will it fall?
Right now, it is arbitration in play, and the next date of hearing is sometimes in the middle of March, and that will determine any gain, if at all. Any accounting implications, gain or otherwise, will go in oil and gas business, post-demerger.
Right.
It's being sent to oil and gas, whatever the decision will be.
Okay, perfect. Thank you so much for the detailed answers. Wish you all the very best. Thank you again.
Thank you. We'll take our next question from the line of Raashi Chopra from Citigroup. Please go ahead.
Thank you. Just on Zinc International, how do we think about the cost in the fourth quarter and the next year?
Thank you so much, Rashi. In terms of current cost levels have become higher for a couple of reasons. You know, as we continue to do the waste stripping in the mine, we now move some of those costs from capital into OpEx. So that's one of the movements we've seen. Of course, the exchange rate in South Africa has not worked in our favor. That's also contributing to some of the dollar cost movement in the quarter. And then we also have slightly higher TCRCs, quarter on quarter, which is the other big decider. And then, although the Gamsberg mine and plant did very well in terms of 40,000 in this quarter, our Black Mountain mine, because of the deep decline, is actually coming to the end of its life.
Without the Black Mountain tons and the associated, copper, and so what we get as a by-product, that's also affected the overall cost structure. A good cost structure, post ramp-up of our, Gamsberg project, that actually should be in the range of about $1.1-$1.2. So $1,100-$1,200 dollars per ton. But that will be patchy as we ramp up and with some of the headwinds that I've just mentioned in terms of TCRCs, as well as our waste stripping moving into cost. I hope that gives you some indication.
Yes. Thank you. On the interest cost, switching here, you've mentioned that this year, the fourth quarter, the balance interest payment is about $125 million. What is— Is that $400 million for FY 2027 and FY 2028?
Okay.
So from VRL viewpoint, Rashi?
Yes. Yes. Sorry, VRL.
So let me, let me give you slightly detailed answer in terms of the VRL requirement on maturities, both principal and interest, for next fiscal. So interest, you're right, the number is almost $450 million for the next fiscal at VRL on full yearly interest cost basis. So $450 million is interest. In terms of principal, the actual debt is $450 million, and ICL $200 million, $650 million. $650 million and $450 million is almost $1.1 billion. Now, how one should look at in terms of debt servicing, there are two source of cash for VRL, the brand fee, let's say $400 million-$450 million, and the remainder, even if we pay 5% or lesser dividend, $650 million.
So net, net, as we've been saying in the past, Vedanta Resources will be self-sufficient, self-funded, to a 5% dividend and the brand fee going forward.
Got it. Thank you. Just to clarify once again, on hedging, what was the aluminum hedge volume for this fourth quarter and for the next year?
The current quarter is almost 125 KT at a price of $2,640. For next year, FY 2027, it's about 490 KT, and the pricing is more or less the same. It's $2,625. So, 125 and 490 KT, Q4 next year, pricing is roughly $2,625 on both the cases.
Understood. Just last question for me, your captive alumina target for 1Q 2027 is 80%, right?
Yes, Rashi, that's right.
Okay. Thank you.
Thank you. Ladies and gentlemen, we'll take that as the last question for today. I now hand the conference over to Mr. Charanjit Singh for closing comments. Over to you, sir.
So thank you, everyone, for taking out the time to join us. For any unanswered questions, feel free to get in touch with the IR team. So with this, we conclude our call, and we look forward to reconnecting with you in April, for our Q4 results. Goodbye and good day, everyone.
Thank you, members of the management team. On behalf of Vedanta Limited, that concludes this conference. Thank you for joining us, and you may now disconnect your lines.