Ladies and gentlemen, good day, and welcome to Vedanta Limited 4Q FY 2023 and full year 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. I now hand the conference over to Ms. Prerna Halwasiya, Deputy Head, Investor Relations and Company Secretary, Vedanta Limited. Thank you, and over to you now.
Thank you, Siddhant . Good evening, everyone, and welcome to our fourth quarter of the financial year FY 2023 earnings call. I'm Prerna Halwasiya. On behalf of the entire team of Vedanta Limited, I would like to thank you all for joining us today to discuss our financial results and business performance. The transcript and audio of this call will be made available on our website. The financial statements, press release, and the presentation are already published on the website. Today, from our leadership team, we have with us Mr. Sunil Duggal, our Group CEO, Mr. Ajay Agarwal, Acting Group CFO. We also have few leaders from a couple of our key businesses, Mr. Arun Misra, CEO, Zinc Business, and Mr. Rahul Sharma, Deputy CEO, Aluminium Business. Please note that today's entire discussion will be covered by the cautionary statement on slide number two of the presentation.
We will start with the update on our operational and financial performance, and then we'll open the floor for the Q&A. Now, I would like to hand over the call to Mr. Duggal.
Thank you, Prerna. Good evening, everyone, thank you for joining our call today. Amidst rising interest rates, the Indian economy thrived in FY 2023, powered by strong macroeconomic fundamentals and domestic conventions. Nevertheless, the global economic climate presented macroeconomic hurdles that led to a moderation in commodity prices. Despite this challenging scenario, our team implemented strategies to ensure consistent operational performance and stringent cost control, optimizing working capital and ultimately resulting in impressive financial performance. FY 2023 was a year of remarkable progress on ESG front, led by our transforming for good purpose. We received validation for our progress on ESG from top rating agencies like MSCI, DJSI, Sustainalytics, and CDP, which confirms that we are moving in the right direction. We finalized 1,826 MW of RE power agreements and turned four of our businesses water positive, progressing on our aim of transforming the planet.
Through our CSR initiatives, we were able to positively impact the lives of 34 million people. Our dedication and efforts towards CSR have allowed us to make a significant difference in the communities in which we operate, empowering individuals and contributing to the betterment of society. We believe in creating a brighter future by empowering the most marginalized communities. Our initiative, Project Panchhi, is a testament of this philosophy. By educating and enabling 1,000 girls from underprivileged rural communities, we aim to bridge the gap of gender inequality and provide them with equal opportunities for growth and success. Our vision goes beyond just diversity as we strive to create a more inclusive workplace that reflects the rich and vibrant diversity of our society. Vedanta was honored with the highly acclaimed Kincentric Best Employer India Award, distinguishing us as the sole manufacturing conglomerate in India to receive this esteemed recognition.
Our people are the greatest assets, and our strong operational performance is a testament to the same. We delivered highest ever annual production at Aluminium, Hindustan Zinc International, and ESL Steel. Commercial production started at Nicomet, India's only nickel- cobalt operation. Production also commenced from Liberia mines, expanding our iron ore capacity and global footprint. New 60 KTPA furnace at FACOR was commissioned, taking total capacity to 140 KTPA. We operationalized Chotia mine and started Jamkhani coal mine. We further added Ghogharpalli and Barra blocks to our coal portfolio. Ghogharpalli has massive 1.2 billion tons of reserves, and Barra is an unexplored block with 900 million ton of estimated resources. These mines together would make our expanded operation more than 100% secure for coal. We were also declared successful bidders for Sijimali bauxite mine.
With 311 million ton reserve, it is a strategic fit for our size, location, and bauxite quality, and is key to strengthening our raw material security. We fully ramped up Barbil ore mine in Odisha and were declared successful bidders for Bicholim mine in Goa. Augmenting our resource base. In line with our steadfast focus on augmenting capacity and vertical integration, we spent around INR 10,000 crore on capital projects this year. Our financial delivery has been equally noteworthy, with all-time high annual revenue of INR 1 lakh 45,404 crore and second highest ever annual EBITDA of INR 35,241 crore. We delivered historic high shareholder return with an interim dividend of INR 101.5 per share, and made a record contribution to the exchequer of nearly INR 74,000 crore.
During this year, we made considerable progress on various strategic levers. We received Supreme Court's permission for care and maintenance of our Kothagudem copper smelter. The matter is now listed for final hearing in August. Signed 10-year production sharing contract extension with Government of India for Rajasthan block. Trade barriers were lifted in Karnataka. Marketing freedom for Oil & Gas was given. If I move to our operations. First coming to Aluminium. Aluminium is progressing well on capital projects, focused on making our businesses fully integrated with 100% captive alumina from 5 MTPA Lanjigarh refinery and enhanced coal security from captive mines. At Zinc India, we crossed 1- million- ton milestone metal production. We aim to continue this positive momentum to reach 1.2 million tons. Zinc International is well positioned for long-term value creation.
Gamsberg produced highest ever MIC of 208 KT. Project work on next phase is in full swing to take the total capacity to 400 KTPA. In Oil & Gas, the focus this year is going to be on augmenting reserves and resources through both development projects and exploration. We will undertake high impact exploration program of 10 wells, seismic and studies across various basins in Northeast, Cambay, Rajasthan and Offshore, targeting addition of 55- million- barrel equivalent resources. Iron ore significantly increased its mining portfolio in FY 2023. Total iron ore production in FY 2024 will be more than 50 million tons from Karnataka, Western Cluster Liberia, Barbil, Odisha, and Bicholim mine in Goa put together. ESL Steel increased hot metal capacity to 1.7 million tons and would expand to 3 million tons by early FY 2025.
Operations are now fully integrated with Barbil mines to meet ore requirement. FACOR is further planning to add 300 KTPA capacity for ferrochrome production by FY 2025 to take the total to 450 KTPA in two years. To summarize, we made good progress on our strategic priorities in FY 2023 and are eager to build on this momentum in the current year. We remain optimistic about the commodity markets and are confident of our ability to navigate the ever-evolving business environment. We look forward to work together with all the stakeholders and larger communities, and thank them for their persistent trust and support. Before we move ahead, I want to take this opportunity to thank Mr. Ajay Goel our former Acting Group CFO for his unwavering dedication and incredible contribution during his association with Vedanta. I wish him the very best for his future endeavors.
I am pleased to announce that Sonal Shrivastava will be joining us as Group CFO very soon. She has extensive experience working with global organizations and large Indian corporates. In her previous role, she was CFO for Asia Pacific at Holcim. Her expertise in financial services and manufacturing sectors make her an invaluable addition to our leadership team. To take you through financial performance today, I have with me Ajay Agarwal, who is acting as Group CFO. Over to you, Ajay.
Thank you, Mr. Duggal, and very good evening to all. I'm here to mainly talk about the Q4 FY 2022- 2023 financial performances. We witnessed the global economy to recover from the lackluster 2022 with a positive bias for economic growth.
Despite the global crisis, India's resilient economy, we believe, has shown better performance than the rest of the world, particularly in the manufacturing sector. The RBI expects India's GDP to grow at the rate of 6.5% in financial year 2022, 2023, 2024, which is certainly reassuring. We also anticipate that the global commodity demand to perform better than expected due to improving global economic outlook. Boosted by revival of Chinese economy, improvement in real estate market, automobile sector, and coupled with the fact that European economy recovery is also quite strong from the impact of inflation. Speaking of financial year 2022, despite the macroeconomic challenges, we have delivered our all-time high full- year revenue of INR 1 lakh 45,404 crore.
We delivered second highest EBITDA of INR 35,241 crore in the fiscal year 2022-2023, which helped us to generate record free cash flow, pre-growth CapEx of INR 28,068 crore. All this is nothing but our demonstrate our financial success that our underlying fundamental of business remains robust, we have once again achieved a year of consistent, dependable and operational performance across our businesses. This allows us to make a substantial contribution to the exchequer, which stood at close to about INR 74,000 odd crore during the financial year ended 2023. We also returned a record INR 101.5 per share to our shareholders during the fiscal year 2022-2023.
Our continuous focus on operational excellence and cost control measures has enabled us to minimize the impact of inflation, which we witnessed during fiscal year 2022, 2023, on our cost structure, and also helped us to generate robust cash flows. Combination of these enabled us to deliver another impressive quarter performance and some of the key financial highlights for the quarter ended 31st March 2023 are as our consolidated revenue stands at INR 37,225 crore. On a quarter-on-quarter basis, this is up by 10% and largely it is driven due to higher sales volume and improved LME.
We also delivered an EBITDA of INR 9,362 crore, which is 32% higher than quarter-on-quarter, with a strong margin of 29% supported by easing of input commodity inflation, volume growth and various cost saving initiatives the Group undertook during the last quarter. Our profit after tax stood at INR 3,132 crore, which increased marginally quarter-on-quarter. We continue to maintain a strong double-digit return on capital employed to the tune of 21% throughout the year. We have a income statement in Appendix, which is page number 27, where you will find details against each head of the profit and loss account. Let me move to the EBITDA bridge slide number 21. When comparing the EBITDA performance quarter-on-quarter, the largest driver was the lowest input commodity costs and improved LME.
Beyond these external factors, we are pleased that we have delivered higher volumes through improved operational efficiencies, further supported by initiatives on cost and marketing efforts. Our key businesses, mainly Zinc and Aluminium, achieved record operational performances and lower cost of production. Besides business performances as a result of several improvement initiatives undertaken across various businesses which the Group has. On a full- year basis, our EBITDA was down due to lower LME and higher input commodity costs, which was partly offset through increased volume, strategic hedging initiatives and forex gain. Moving to slide number 22 on net debt bridge. During Q4 FY 2023, our net debt as on March 31 stands at INR 45,260 crore.
In the quarter, our business demonstrated the robustness of our performance by generating a healthy, operational free cash flow, pre-growth CapEx of approximately INR 7,211 crore, which is 11% higher quarter-on-quarter. The net debt increased overall due to the allocation of funds towards capital expenditure and the significant amount of shareholders return, which is all-time high for the Group. Moving on to the balance sheet now, page number 23. We remain committed to our capital allocation framework, which encompasses robust balance sheet, a healthy payout ratio with solid dividend yield, and flexibility for investing in discretionary capital options, including organic and inorganic opportunities, as well as providing additional shareholder returns. Our net debt-to-EBITDA stands at 1.3x, and is maintained at comfortable level.
We ended the quarter with INR 20,922 crore on healthy cash and cash equivalent. Our average debt maturity continues to be maintained at 3.5 years with average cost of borrowing at 7.8%. I also would like to mention that our Holdco has also made considerable progress towards its commitment to reduce debt by $4 billion over the course of three years. They have already delivered by $3 billion payback, out of which $2 billion was achieved during the fiscal year 2022-2023 itself. With our strong and flexible balance sheet, we are well positioned to continue disciplined investment in our pipeline for various value-added growth. In fiscal year 2023, we invested approximately $1.2 billion in growth-oriented capital expenditures, which brought several projects close to completion.
As a result, we are now committing to allocate $1.7 billion towards growth CapEx in the current fiscal year. We have maintained our commitment of providing our stakeholders with strong and consistent performance and attractive return, even in the face of volatile macro environment. Despite the challenges, we have demonstrated resilience throughout the year. The progress we made in the past year is quite noteworthy, and I have full confidence in our ability to execute our business strategy effectively, as well as the finance strategy effectively, which will position us to create value not only now, but also in the foreseeable future. I'll hand it over to now to Prerna.
Siddhant?
Operator?
Thank you very much.
Can we go to question- and- answer?
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 the touch-tone 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. Reminder to the participants, anyone who wishes to ask a question may press star and one at this time. The first question is from the line of Amit Dixit from ICICI Securities. Please go ahead.
Yeah, hi. Good evening, everyone. Thanks for the opportunity.
Mr. Dixit, the audio is not clear from your line. Please use the handset .
Is it better?
Yes, sir. Thank you.
Yeah. Good evening, everyone. Thanks for the opportunity and congratulations for a good set of numbers and very healthy dividend yield this year. I have two questions. The first one is pertaining to Oil & Gas division. Now, if you look at the, I mean, production, it has been declining particularly. The guidance that we have for FY 2024, I know we are targeting, you know, augmenting reserves and resources, but still the guidance is quite low at 135. Now, in our annual report and Investment Day, we had highlighted that, you know, we will reach a much higher production level by FY 2025. Are you shifting that particular production level to, I mean, further or is it that that particular level is still intact?
I will go for this question. We have given a guidance of 135 to 140 KBOEPD. This time we are a bit mindful of giving the guidance because we want to give the guidance and we want to beat the guidance, unlike earlier years. The issues which we are trying to address and the initiatives which are in pipeline is to manage the decline, number one. Number two, there are two, three high-profile projects which are in the pipeline. We are in the process of materializing that. One is the Enhanced Oil Recovery. The government is coming up with a new policy on the Enhanced Oil Recovery, and we are in discussion with the government that our license is valid up to 2030.
The results and the outcome from the existing reserves may go beyond 2030. The government coming up with a new policy of the enhanced incentives and also considering if the contract could be extended beyond 2030. This is one initiative. The other two, three initiatives are the exploration wells around our operations, especially in the offshore, where we feel that the result would come. You probably must have noticed that we have a new CEO in the name of Nick Walker, who has a very rich global experience. He's in the process of evaluating the various opportunities. But apart from that, he has identified 10 high impact wells across offshore Northeast KG Basin.
He particularly believes that the potential in Northeast on the border of Assam and Nagaland is very high, where some disputed area was there. The Government of India has resolved this issue, and we want to start the seismic and the drilling at this operation as soon as possible. He believes that the potential of this area could be as big as it was in the Rajasthan block . This is what we feel we are doing in Oil & Gas. But our belief is very firm, and his belief is very firm that we will get some good discovery from the exploration wells and the couple of projects which I've named.
When we will put the project in the pipeline, it will give us the step jump, if not in the current year, where we want to beat our guidance, but in the next two years it will give us the step jump, from where we are.
Yeah. Just a follow-up on this. What would be your guidance, let us say, in FY 2025? I mean,
We are evaluating that. I don't want to put my words into Nick's mouth. He's evaluating that. Probably in the next quarter call, we may be able to give you a better guidance of what he believes could be the potential in the year FY 2025 and FY 2026, depending on how many projects he is able to conceptualize. Of course, as the year progresses, the 10 high potential exploration wells, if these gives some results, then the visibility could be even better and then we can report back what could be the full potential which we can explore in the year FY 2025 and FY 2026.
Sir, the second question is on ferrochrome. We are targeting 450 KTPA of capacity. This is a very huge capacity. I mean, I don't think at South Africa anybody has this kind of capacity in the world. First of all, where we are getting chrome ore for it from, and ferrochrome being a very high, very power-intensive business, won't it impact your ESG aspirations? What market are we targeting for this? Is it export or domestic? What could be the mix of this particular offtake?
I think you have asked four, five questions in one question. I'll try to answer all those questions. We acquired this business where the capacity was 75 KTPA. There was one unfinished furnace which we have since commissioned. This was 60 KTPA furnace. Now the overall capacity with the commissioning and decommissioning of the new furnaces to a complete 140 KTPA. This is up and running. There are two mines, Kalarangiatta . We are taking the AC for this mine to raise the AC capacity from 50 KTPA to 150 KTPA. There is another mine, Ostapal mine. This mine has been running as an open pit mine. We want to take it underground.
No better experience than Vedanta and Hindustan Zinc to transition from open pit to the underground mine. There is a rich resource lying at depth under this open pit. We want to develop this open pit. We are about to start the process and take the board approval. In the first phase, we want to take this mine to 1.5 million ton, and in the second phase, we want to take this mine to 2.5 million ton. In the first phase, we will add a furnace of 150 KTPA, taking the total capacity to around 300 KTPA. In the second phase, another furnace we want to install of 150 KTPA, taking the total capacity to 450 KTPA.
As far as the carbon footprint is concerned, I mean, we have to go hand in hand in parallel to evaluate the possibility of decarbonizing our assets. You must have seen the aggressive way we have gone. Today, the work is on to install 4 GW of renewable power, and which will give 33% reduction of the carbon footprint from our promise of 25% by 2030. We want to put a plan in place by FY 2025 to have a full visibility of 25% carbon footprint reduction by 2030. We are fully committed. We want to do it even before FY 2030. That is what the internal motivation is. We are fully committed to fully decarbonize our operation by 2050.
Okay. Great, sir. Thanks and all the best.
Thank you. The next question is from the line of Sumangal Nevatia from Kotak Securities. Please go ahead.
Yeah. Good evening, and thank you for this opportunity. Just continuing on Amit's question, I mean, on the delays. I mean, we've seen across businesses there are delays in projects. Aluminium business, for example, the 1-million-ton expansion, earlier we were guiding 1Q 2024, now we've moved to 1Q 2025. Also we are seeing the same in coal mines and ESL Steel as well. Just, sir, if you could just highlight, I mean, over the next two, three years, the key projects and what are the reasons for these execution delays that we are facing?
I would say there are not delays as such in the execution of the project. I mean, the some of the factors which also play a bit of the part is that we some of the technology and the equipment also come from China. Bit of the delay happened because of that. Broadly, all our projects are on schedule. The one of the high-profile project where the maximum returns we expect and where we want to integrate our operations is Aluminium business. Where we are commissioning the train one and train two both this year.
Operationalization of the coal mines, I would say, you know, we may have a record in the country where in such a short span of time we have been able to operationalize Jamkhani mine, and it is up and producing today, the licensed capacity of 2.6 million tons. Now, we have taken the approval to raise the capacity to 3.9 million tons. In the current year, we will make a full production of 3.9 million tons. The one of the other mines, Kuraloi mine, we want to operationalize this year itself. Operationalizing the mines after winning it through auction in a period of one to two years, I don't think there are many people who are able to do it. Even next year we want to operationalize Radhikapur and Ghogharpalli mine.
With all these mine operationalizing, it will provide more than 100% security. Same way we want to go for Sijimali mines, which we have won through auction for bauxite and because this will provide a full bauxite security to us. The R&R is such that when the mine could be fully ramped up with more than 300 million tons of reserve and resources, this mine has a potential to produce 12 million-15 million tons of bauxite, which will provide a full security to us. We want to go this way and integrate our operation. The value-added product is a very important area where we are commissioning the whole product, which is the highest demand growth market in India, and the premiums are very, very high. Similarly in the billet capacity, PFA capacity.
We want to make our Aluminium operation 100% value-added product. Similarly there are projects going on in the other businesses, like ESL Steel, Zinc International, Oil & Gas, where we feel that broadly we are on track to complete our project in time.
Just to, I mean, repeat and get some specifics. Sir, this, BALCO 1-million-ton expansion, there's almost a one-year delay from what we said last year. Can you share some detail as to what is the status and, what is causing the delay? The same with ESL Steel 1.5-million-3 million ton expansion, similar 1.5 year delay. Just some specifics on these two projects.
As I said that, you know, the equipment movement from China caused a bit of the delay. More or less, these projects are in full swing now. Whatever commitment now we have given, we'll be able to complete the project on those timelines.
Okay, got it. My second question is with respect to our capital structure and also pledging. I mean, we've seen that when we read in the news that we are to, I mean, we are pledging Hindustan Zinc shares for incremental loans despite having such a strong balance sheet. We just want to understand, I mean, what are the reasons? Is it because for higher dividends, are we raising these loans? Or because, I mean, the leverage, the lenders are not comfortable lending to us without these pledges? Also in the medium term, what should we expect the capital structure of Hindustan Zinc be, I mean, in terms of debt, and payouts?
Well, from a capital structure of Hindustan Zinc perspective, you know, maybe, you know, when you have this Hindustan Zinc Board meeting and the investors call, probably that may be the right forum for you to ask that question. Speaking from Vedanta standpoint, you know, pledging Hindustan Zinc shares and raising funds, these are, in our view, these are a natural course of business. This is a usual way of sourcing and raising debt. We don't find that to be a extraordinary event which will require a significant, you know, different response to this question.
Got it. Thank you and all the best, sir.
Thank you.
Thank you. The next 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. My first question is, can you help us understand how much is the repayment due at the parent VRL till June and for the next 12 months?
Well, till June, the payment due is about $750 odd million. Maybe, you know, the numbers might not be correct, but near about $750 odd million. For the year, for the balance fiscal year, the amount could be around $2 billion, which includes this $750 million. What's your next part of the question, Indrajit?
My next part, actually a follow-up to that is what is the kind of sourcing we are looking for till June for this $750 million?
Yes. What I can assure you that the Group has always, you know, met its commitment on time, and Group is working towards it to meet its commitment on that before. Whatever the timelines are, like you said, for the June month, for the June quarter, they are working towards it to meet its commitment. Likewise, it will be done for the year end as well.
Sure. Thank you. What is the status on the GR to RE conversion? Where is it stuck, and what is the kind of timeline it should look like?
We are, you know, reaching out to all the lenders to seek their NOC. As you know, this process requires the NOC from the lenders, and the work is ongoing as we speak. The team does not envisage any outflow of cash, and hence, there will not be an impact on the creditors of the company. As and when we get the NOC from the lenders, it should happen.
Getting this NOC, is it more procedural or is there any kind of pushback or any, you know, questions by the lenders that we need to address before we get the NOC?
We are reaching out to the lenders, and, like I said, as we speak, we are talking to them. We want to understand if there are any concerns. In our, in our view, it is a process. It does not envisage any challenges. As and when we get the NOC from the lenders, it will be done.
Any timeline for that you can give at this point?
At this moment, it's difficult to give any timeline. What I can assure you is that the conversations are on, discussions are on with most of them. We are hoping that it should get solved.
Sure. Thank you. I have more questions. I'll join back with you.
Thank you. Ladies and gentlemen, in order to ensure that the management is able to address questions from all participants in the conference, please limit your questions to two per participant. Should you have a follow-up question, we would request you to rejoin the question queue. The next question is from the line of Alok Deora from Motilal Oswal. Please go ahead.
Hi. Good evening, sir. Sir, just for firstly, if you could just in, you know, in your comment, I briefly heard about you mentioning about some slowdown in China and Europe. Just if you could indicate what exactly how are you seeing the demand situation there and what the output, because we are sort of getting mixed signals in some of these geographies on the demand side?
Yeah. I didn't say, about slowdown in China and Europe. That was more to get the delay in the equipment delivery. Some of the equipment.
Sure.
From China.
Mm-hmm.
That was what it is. As far as you see the slowdown in China and Europe is concerned and the commodities and the metals we deal, we feel that the metals we deal, there is an upsurge in demand in India, which gives us the opportunity to serve this upsurge in the demand. These metals we deal have to play a very pivotal and a critical role in decarbonization. The resources today and globally are such that it will be not easy to meet the growth in the demand in this sector. We feel that the...
This sector will always remain as a sunrise sector. The commodity prices always are going to stay at elevated level for the metal we deal with. We are very bullish. We are very confident that we have to play a very critical role to meet the demand of these metals both in India and globally.
Sure. Just one last question. This, this purchase by Hindustan Zinc of the zinc asset, what's the status on that? What we understand is that the timeline for shareholder approval is lapsed. Any update on that? What is the status of this $2.9 million deal?
There is no update as such to be reported at this point of time. I mean, we still believe that it is value accretive to both Hindustan Zinc and Zinc International because the two operations will definitely complement each other because Zinc International has a very rich reserve and resource base, which is even more than Hindustan Zinc. The way the Hindustan Zinc has grown from where it was to what it is today. Zinc International, of course, has also grown, but it has a huge potential. What Zinc International possesses and the geography it is located and the skill it has and the management style which Hindustan Zinc has, we feel that these two businesses coming together can create a wonder. This is what we have been communicating to all our stakeholders.
Sure. No, I understand. The reason I was saying is because there were reports that Hindustan Zinc had around three months to call for the EGM for this, and that those three months lapsed kind of last week. That's why I was just checking on the data creating.
No, we will remain in active discussion with the stakeholders to find out what possibility, in what manner, non-cash deal, what could be the other ways where this alignment could be possible. We still feel that this is a very, very value accretive opportunity for both the businesses.
Sure, sir. That's all from my side. Thank you and have a good day.
Thank you. The next question is from the line of Ritesh Shah from Investec Capital. Please go ahead.
Yeah. Hi, sir. Thanks for the opportunity. Sir, I have two buckets of questions. First bucket has four sub-parts in it. Before I start, I'd like to congratulate the team on better structure at VRL to $6.8 billion. First question has four parts to it. First is, I think we had indicated $2.1 billion of repayment, which was there from January to June. In the earlier call, we had indicated we were looking at $550 million from PSU banks, $150 million from Barclays, $750 million from Oaktree. $300 million was grantred, and there was a balance small amount which was left. The question is that how much have we tapped, and what's the status on that? That's the first question.
Should I, sir, complete, like, the bucket of questions? Four questions?
Yeah, please go ahead.
The second related part over here, part B is, I think, there was the rating agencies were talking about a billion dollar of investment at Zinc International. Just wanted to know your thoughts, whether it has happened, not happened. Is there some probability to the event? That's the second thing. Third is, if you could please clarify what is the exact pledge and encumbrance number at both Vedanta and Hindustan Zinc? I do take a note that the promoter holding in Vedanta has reduced from 69.7% to 68.1%. How should we read this vis-á-vis pledge and encumbrance? That's it. Last question for the first part is what is the retained earnings number on a marginal basis for Vedanta India?
Okay. Let me, you know, make an attempt to answer your questions. The rating agencies have quoted, you know, loan transaction at Zinc International. I think in the previous question, this question was somewhat answered. You know, these are again a very, very specific transaction and routine financing arrangement which the Group undertakes on a year-on-year basis. As and when the transaction gets consummated, we will be able to respond to a very specific question of yours. Coming to the repayment, you know, like I said, the Group is extremely confident to meet its debt obligations, commitments and requirements on a timely basis. We have always met our commitments in the past. I don't see any reason, any risk of not meeting the commitments in the future as well.
I may not have, you know, full details because, you know, it's an investor call of Vedanta Limited and not necessarily VRL. I'm sure that, you know, the team is working, and they have full details in terms of making plans to make their arrangements, whatever the commitments are due from here on till March. Coming to the retained earning numbers, as on 31st March 2023, we have INR 3,843 crore as our retained earnings in the current balance sheet. I hope, Ritesh, I've been able to answer all your questions.
Sir, on the promoter stake which has reduced and on the pledge and encumbrances at Vedanta and Hindustan Zinc, how should we look at this?
In our view, it's a independent transaction done by the promoter entity, and we are not in a place to really speculate, you know, the reduction and where the funds have been used by the promoter entity to date.
Right. Sir, on pledges and encumbrance.
This part of it, I believe from a Hindustan Zinc's perspective, we have pledged 9.21% shares of Hindustan Zinc. We have signed 50.1% as NDU. These are the details with respect to Hindustan Zinc pledge.
Sir, for Vedanta?
Vedanta, you mean to say VRL?
Vedanta India, sir. What quantum of equity is actually pledged or encumbered?
50.1%.
Sir.
Like I said, Vedanta Limited had pledged 9.21% and signed an NDU of 50.1% of Hindustan Zinc.
Okay, sir. Okay. Let me rephrase it. From Vedanta Resources into Vedanta, that 70% stake which has reduced to 68.1%, what is the status of that 68.1%? What part of it is pledged or encumbered?
It's a fully encumbered, and it is kind of an NDU which I just explained to you from a Hindustan Zinc point of view. It's a similar arrangement.
Okay. Sir, sorry if I'm just dragging a bit. If the stake is fully encumbered, then how is it that the promoter is allowed to reduce his stake? From a little bit of technicality, what I understand is if it's encumbered, the entity would not have the right to actually, sell it.
Well, I can't really you know, speculate how they were able to sell. I'm sure, as you know, that in the last year, they have reduced the debt also. I'm sure that some part would have been unencumbered and would have allowed the free share to trade.
Sure, sir. I just have one question for Mr. Duggal, sir, and probably I'll join back the queue. Sir, any update on the semiconductor foray, whether it is at Vedanta level or VRL level? Any color over there? Thank you so much.
Yeah. As of now, the semiconductor is not under the banner of Vedanta Limited, so it will not be possible for me to make any comment at this point in time.
Sure, sir. This is very helpful, sir. I'll join back the queue. Thank you so much.
Thank you very much. Thanks.
Thank you. The next question is from the line of Ashish Kej riwal from Nuvama Institutional Equities. Please go ahead.
Yes. Hi. Good evening, everyone. My question is on Aluminium business. you know, is it possible to share what kind of materialization of linkage coal happened this quarter, and how you are expecting your cost of aluminium to fall in next quarter?
I have with my colleague, Rahul Sharma on the call, but I'll give you a bigger perspective of the coal linkage. The coal linkage has improved because the coal position in India has eased out. You must have also seen that the coal stocks in India, in IPPs are above 15 days compared to six, seven days last year at this point of time. With this, the upstream premiums are down, which will be the better. The coal production has gone up from Coal India. Last year the production growth in Coal India was 12%. Captive mines coal production went up by 35%. Overall the production grew in India by 15%.
The power demand is not rising at this speed, and because of the renewable capacities also getting commissioned on the overall pie, the renewable the contribution of the renewables in the meeting the power demand is also going up. This is all easing out the stress on the coal availability in India. With this, we feel that from now on, the position will ease more and more. Similarly, the race availability from the railway also is becoming better and better. Exactly on the aluminium cost, Rahul, if you are there, kindly make your comments on how the cost is progressing and what are the levers and what do you feel going forward.
Thanks, Mr. Duggal. I think the important part is that if you see from a, you know, coal, which I will talk linkage and captive because now we have opened up the Jamkhani mine in last quarter, so I'll, you know, club both. What I'm trying to make a point is that if you see that in Q4, we were at a 66% of linkage plus captive, and materialization was 82%. The good news is that this year we are starting with 80% of security and target remains more than 90% of materialization. From a coal security and the, you know, the materialization, I think we are in much better position. That is point number one.
The second important point, which I'm very pleased to know that if you remember the last year when we started the year, our coal inventory was four to five days before the monsoon. This year when we are starting the year, we have in our plant close to 14 days of inventory and another 11 days at our captive mine. Totally we have 20 days-25 days of inventory, which we are very comfortable before monsoon of the Q1. Coming to the point in terms of the cost, from the Q1 point of view, I think for a year guidance has already been given in our presentation. But Q1 our target remains what we said last quarter was in Q4, we were absolutely there in around 4% reduction.
Same way we are looking 5%-6% reduction in Q1. That's why, you know, from the cost side. I hope I have answered your question.
That's very clear, sir. Second thing is, because, you know, in earlier calls we have indicated the estimated coal cost of different mines at peak capacity. Is it possible to share that, like, you know, Jamkhani, Kuraloi, Radhikapur? I'm just trying to compare it from the existing cost, where we can have going forward.
No, no. I can, I can only answer that, you know, if you see that the coal bucket as we, as Mr. Duggal said initially, the coal mine we have more than, you know, more than 100% of the, you know, the capacity requirement of the capacity is there. Overall cost we have estimated it will be less than INR 70 paisa. It can be between INR 65-INR 70 paisa. That's what, or, you know, the projection for that. We are absolutely on that point.
Which works out to, say, a total power cost of $400-$450 per ton.
Sure. Sure. Sir, secondly, have we done any further hedging in our any of the businesses?
Not at this point in time.
Sure. Thank you, and have a good day.
Thank you. Ladies and gentlemen, we will take the last question from the line of Rahul Jain from Systematix. Please go ahead.
Yes, sir. Thanks for the for the for helping me ask the question. On the cost side, I think your guidance appears to be very conservative because given the coal price, which actually has, you know, crashed 70% and, you know, we are using so much coal across our businesses, I think it's more than 35 million tons.
Sir, your audio is slightly muffled from your line. Please use the handset.
One second.
Yeah.
Okay.
You gave a elaborate answer, but your guidance appears to be very muted in terms of, you know, the cost deflation that we have seen. If I'm not mistaken, you know, which has been down 70% from its peak and, you know, we should see a much better delivery from Coal India. Are we conservative on our numbers on both on the Hindustan Zinc as well as the alumina, the Aluminium business? Because you have just given I think a $200 kind of a cost reduction, whereas in the past we have reached about $1,400- $1,500 for aluminium. Are we being very conservative on this?
I think you may be right because we would like to definitely beat the guidance of what we have given in this call today. We have given a guidance of $1,800-$1,900 per ton of hot metal. I think if we are able to meet around $1,800 per ton of cost in this year. Let us suppose even if the aluminium prices stay between $2,300-$2,400, and NSR of, say, $2,600 and the cost stays at $1,800. It will give us a very good EBITDA margin of say around $600-$700. Which is good for the business.
We wish to, and we aspire to beat the target. The overall objective of the business of having a EBITDA margin of $600 per ton is met at this cost, even at the minimum prices of, say, average of $2,350 - $2,400.
Right. Right. Sir, also we have stepped up the CapEx guidance across all the businesses. I think this is the highest CapEx that we're going to do in the last five years. In terms of, say, if there is some, you know, commodity price crunch or, you know, there is some weakness in price which persists. Which are the key priority, so which are the ones which we are going to pursue no matter what? I mean, which are the top projects that we are looking at in the next two years?
Basically all these projects are very, very important. The major CapEx spending of $0.7 billion is in Aluminium. This is on the vertical integration, adding the value at the power plant, operationalization of mine. These CapEx are going to make us smarter and smarter. Every CapEx commission is going to add dollars to the bottom line. These CapEx are very, very important as far as the Aluminium business is concerned. Similarly, the other CapEx, if there are, you know, the opportunity to debottleneck the low-hanging fruits in Hindustan Zinc to take the full capacity to 1.2 million ton, we are very excited about this CapEx. Similarly, in ESL Steel, it is unfinished project. We want to complete this project as soon as possible.
Similarly, in Zinc International, the way the Zinc business is and the way the projections of the zinc commodity prices are there for the future, we want to complete this project as soon as possible. All these projects are very, very value accretive to us, and we are very excited and we want to finish these projects as soon as possible because all these projects are going to increase our revenues, cut down the cost, and make our position much, much more fundamentally, more stronger. We are very excited and these are the project where, you know, these are all brownfield expansions.
Right. Right. That was a very elaborate answer. Just a related one. Should we expect the dividend payouts to? We have been very generous in the dividend the last one and two years. Should we expect it now to be more moderate, in line with your earnings or how should we see the dividend in the next coming years?
Rahul, I think, you know, I answered this question. Ritesh also asked the same question. You know, dividend is a Board matter, and I'm sure Board will consider all parameters.
Right.
Before really, you know, ensuring that the shareholders are rewarded.
Mine was just related because our CapEx is going up significantly, obviously cash allocation should be different. That is coming from more from that side. Anyway, thank you so much.
Thank you. Ladies and gentlemen, I now hand the conference over to Ms. Prerna Halwasiya for closing comments.
Thank you, Siddhant, and thank you all for taking the time to join us. I hope we were able to answer most of your questions. In case you have any further questions, please feel free to reach me or my colleagues at the IR team. This concludes the today's call. We look forward to reconnecting with you for our next quarterly call. Thank you everyone. Have a good day.
Thank you. Ladies and gentlemen, on behalf of Vedanta Limited, that concludes this conference. Thank you for joining us, and you may now disconnect your lines.