Ladies and gentlemen, good day and welcome to Vedanta Limited fourth quarter and full-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 touch- tone phone. Please note that this conference is being recorded. Participants connected on webcast link may change the quality settings to 1080p to watch the proceedings on best quality. I now hand the conference over to Mr. Charanjit Singh, Group Head, Investor Relations, Vedanta. Thank you, and over to you.
Thank you, Yash. Good evening, everyone, welcome to Vedanta Limited's Q4 and full-year FY 2026 earnings call. On behalf of team Vedanta, I thank you all for joining us today. I hope you had an opportunity to look at the result releases that we have made. Also we have uploaded a presentation on our website under the investor presentation's tab outlining the medium-term outlook for the demerged Vedanta, covering all business segments, which is primarily Zinc India, Zinc International, Copper, Ferrochrome, and Nickel. Kindly take a look at it if you haven't had the time to already see it. On the call today we have with us Ms. Deshnee Naidoo, our Group CEO, Mr. Arun Misra, our Executive Director, Mr. Ajay Goel, our Group CFO, Mr. Anup Agarwal, CFO, Aluminium, and Mr. Jasmin Sahurity, COO, Oil & Gas.
We will begin the call with a business update from Ms. Naidoo, followed by an update on financial highlights by Mr. Ajay Goel, after that we will open the lines for Q&A. With that, I now hand over the call to Ms. Naidoo. Over to you, Deshnee.
Thank you, Charanjit. Good evening, good day, everyone, and thank you for joining us today. This will be our final results call ahead of demerger. Starting next quarter, each of the demerged entities will conduct its own earnings calls as separate companies. Before I reflect on the year's performance, I want to take a moment to speak about the tragic incident that unfolded at our Athena Power Plant in Chhattisgarh on the 14th of April. I want to begin by expressing my deepest condolences to the families of those who lost their lives in the tragic incident. Across Vedanta, there has been an outpouring of grief and solidarity. I want to acknowledge the efforts by the teams on the ground. Our thoughts remain firmly with the families who are grieving and with those who continue to receive medical care. The plant is run by our O&M contractor, NGSL.
The incident occurred in unit one of the plant involving the boiler, which resulted in the release of pressurized hot water and steam, exposing various people working in that area. These workers were primarily from our contractor and subcontractor organizations who were present in the area carrying out operation and maintenance-related work. We continue with our efforts to provide the best possible medical care and rehabilitation support to impacted families, including monetary compensation, accommodation, and employment opportunities. We are also operating a 24/7 call center to address any queries from affected families. Extending care and support to all our employees at the site and beyond remains our top priority. We are working with all authorities to establish the facts in a transparent and comprehensive manner. We'll take all necessary steps to prevent any recurrence of such incidents.
I also want to take the opportunity to talk to you about the group performance on safety year-on-year. Our lost time injury frequency rate for the year improved 26% to 0.4, with our lost time injuries down 16%. Our total recordable injury frequency rate decreased 3% to 1.3. As part of the group safety improvement plans, we continue to embed and implement our CRM, that's your critical risk management, drive incident corrective and pre-preventative action closeout, and increase our leadership in the field. I want to turn to our FY 2026 performance. The year represented a clear inflection point for Vedanta as strategy and execution converged to deliver the best ever financial performance in the company's history.
We delivered record high annual revenue of INR 1.74 lakh crores, EBITDA of INR 56,000 crore, PAT of over INR 9,300 crore, and our free cashflow pre-tax of INR 26,013 crore. Our return on capital employed for the year of 32%. All of this on the back of volume growth across various businesses and reduced costs driven through structural initiatives.
Our efforts on operational excellence transformed FY 2026 into a year of new milestones where our Aluminium business delivered its record alumina production of 2.9 million tons, up 48% year-on-year, and highest ever aluminium production of 2.46 million tons, while also achieving its lowest annual hot metal cost in the last five years of $1,752 per ton. Our exit run rate of alumina production at Lanjigarh Refinery was close to 4 million tons per annum. Zinc India recorded its highest ever annual mined metal production of 1.1 million tons with silver production of 622 metric tons, while simultaneously achieving the lowest cost of $959 per ton in the last five years.
At Zinc International, mined metal production increased 27% year-on-year to 225,000 tons, led by the Gamsberg volumes rising 39% year-on-year, driven by higher throughput, stable ore delivery, and improved feed grades. Power sales grew 30% year-on-year to 16.4 billion units, with the start of operations at Athena and Meenakshi alongside a 31% increase in our average NSR. The steel unit in Bokaro delivered 1.3 million tons of production, achieving its highest ever annual billet TMT wire rod output of 1,062,000 tons, 525,000 tons, and 444,000 tons respectively. Through improvements in fuel mix and better raw material utilization, the business achieved an overall cost reduction of 10%.
Our pig iron unit in Goa achieved its highest ever pig iron production of 895,000 tons, representing a 10% increase year-on-year. Our iron ore production grew 5% year-on-year to 6.2 million tons, while Iron Ore Goa achieved a 62% year-on-year growth, supported by production ramp-up initiatives and delivering an 18% reduction in operating cost. Our Ferrochrome business delivered a strong turnaround with record ferrochrome production of 101,000 tons, up 21% year-on-year. The restart of the Kalahandi mine enabled availability of high-grade captive ore during the year, thereby materially reducing our cost by 19% compared to FY 2025. At the Copper business, operational delivery remained strong, with Silvassa and Fujairah plants together delivering copper rod production of 282,000 tons, a 10% year-on-year jump.
Silvassa recorded record annual cathode production of 170,000 tons, up 15%, resulting from debottlenecking operational efficiency diversification of raw material resources. I'm now gonna turn to capital. FY 2026 recorded not only new milestones on operational metrics, but also on CapEx execution. During the year, we deployed INR 15,000 crore of growth capital in line with guidance, establishing a new benchmark in Vedanta's journey on project execution as the year marked successful commissioning of various multi-year projects, setting us up on a trajectory of multi-year growth. Some of the key growth projects completed are the expansion of alumina refinery at Lanjigarh of 5 million tons per annum, commissioning of the new 435,000 tons smelter at Korba, with production ramp-up starting from the current quarter.
Commissioning of the 250,000 tons and 210,000 tons per annum of new billet lines at Jharsuguda and BALCO respectively. At start of the 106,000 tons Debari roaster, that's roaster 6, at Hindustan Zinc. Successful debottlenecking at Hindustan Zinc's Chanderiya and Dariba, resulting in an incremental capacity of 21,000 tons per annum. Additionally, the 1.3 GW at Athena and Meenakshi. Other facilities commissioned during the year include the wagon depot facility at Lanjigarh and the crusher at Gamsberg phase II. As we move into FY 2027, the pipeline of projects commissioning remains strong. The Kuraloi coal mine and Sijimali bauxite mines are awaiting for their EC, which will pave the path for starting operations through mines.
Gamsberg phase II is around 94% complete, whilst our fertilizer project in Zinc India has already booked around 75% of total capital. At ESL, plant capacity doubling to 3.5 million tons will take around six months once we receive the EC. All equipment required for the expansion is already in stores and at the project site. Our DI plant in Goa is over 60% complete as of March 26 end. This CapEx is primarily financed through internal accruals. Our free cash flow generation pre-CapEx of around INR 26,000 crore, reflecting the strong operational performance. Vedanta emerged as the second-highest wealth creator amongst the Nifty 100 companies in FY 2026. Just a quick update on critical mineral licenses.
As at FY 2026 close, we had won bids for composite licenses on 10 blocks, which include those are for gold as well as manganese, whilst the remaining eight blocks are for critical minerals. In three of these blocks, the exploration is at an advanced stage, and we are expecting to be in the decision-making position in a year from now.
On ESG, during the year, we continued to make meaningful progress on driving renewable energy consumption across all operations, reaching 3.97 billion units in FY 2026, up 52% year-on-year, thereby resulting in a GHG intensity reduction from 6.02 tons to 5.43 tons of CO2 equivalent per ton of product. With inclusive growth central to Vedanta's purpose, we spent over INR 420 crores in FY 2026 on various CSR initiatives, impacting over 6.9 million people through our various programs in education, healthcare, livelihoods, women empowerment, and community infrastructure. In closing, as we mark our final reporting year ahead of demerger, Vedanta delivered a truly landmark performance, best in the company's history.
The structural improvements made during the year, together with the disciplined capital execution, has resulted in the record level of cash flow generation, which is well reflected in credit upgrades from various rating agencies at the group level. Backed by a tier one asset portfolio, record operational and financial performance in FY 2026, we enter FY 2027 as a more agile, streamlined, and future-ready organization. With over five decades of experience in manufacturing and metals, Vedanta is leveraging its deep technical expertise to expand into a high potential minerals of future and transition itself for the future. Vedanta 2.0 is a strategic transformation designed to align the company's core strengths with India's evolving priorities in energy transition, advancing manufacturing and clean technologies.
As part of this transformation, we are positioning ourselves to meet India's rising need for critical minerals, powering the growth of AI, data infrastructure, and advanced technologies. The demerger is now at its final stage. The effective and record date is set for May 1st. In the next week, we will be filing with the exchanges for listing approvals. The shares of the resulting companies are expected to list and commence trading by mid-June. This marks a new chapter defined by simpler structures, sharper accountability, and focused platforms to drive growth and value creation. This foundational reset is aimed at sustainable growth over the coming decades. With that, I now hand over to Ajay to walk us through the financial performance for the year. Ajay.
Thank you. Good evening, everyone. We ended the fiscal year FY 2026 on a high note, with Q4 marking a pivotal moment for Vedanta. We delivered record financials, our strongest ever, both for the quarter and for the full-year. This also sets the stage for our next growth chapter through Vedanta's demerger. On macro side, despite Middle East volatility, better pricing, currency depreciation, and supply dynamics played to our advantage. We moved quickly to protect supply chains, control cost, and reinforce our balance sheet, all that while staying focused on growth. Starting with demerger. As earlier communicated last week, our board approved Vedanta's demerger effective from 1st May 2026. This will entail creation of five independent sector-specific pure-play companies, allowing each company to chart out their own growth trajectory and attract respective thematic investors. We have set 1st May as a record date for demerger.
Shareholders holding one share of Vedanta as on 29th April, today, will receive four additional shares of the resulting companies. We are targeting listing and commencement of trading of these shares by Q1 FY 2027. The demerger has been architected with precision on capital structure, aligning debt with earning strength and growth stage of each resulting companies. Vedanta Oil & Gas and Iron & Steel will be close to zero net debt businesses. Other three businesses' net debt to EBITDA ratios will be in line with their debt-serving capabilities. At Vedanta group level, pre-demerger, our leverage stands at 0.95x, reflecting resilient EBITDA and disciplined financial structuring. For the Q4 and FY 2026 results, following NCLT approvals, we have followed the demerger accounting as per Indian accounting regulations Ind AS 105.
For clarity and like-to-like comparison, our results discussions are for the combined operations, which is pre-demerger and includes all five businesses. Moving very briefly to performance. We recorded all-time highs in all three metrics, they being revenue, EBITDA, and PAT, both for Q4 as well as for the full fiscal. Our quarterly revenue grew 29% YoY to INR 51,524 crores, supported by positive prices, exchange rate, and a sustained growth across our core businesses. Our quarterly EBITDA grew 59% YoY to INR 18,447 crores, with EBITDA margin expanding sharply, up by 915 bps YoY to 44%. Again, our best ever. Finally, the PAT grew by 89% YoY to INR 9,352 odd crores. For the full-year, we delivered, as earlier guided, our best annual results ever.
Revenue growing 15% YoY to INR 1.74 lakh crores. EBITDA up 29% to INR 55,976 crores. Finally, PAT at INR 25,096 crores, marking a jump of 22% YoY. Let us take a brief look on Vedanta as a portfolio. Key businesses continue to deliver strong annual performance. Aluminium EBITDA for the year, INR 25,502 crores, up 43% YoY with a 38% margin, driven again by positive prices, record production, and lower COP, achieving a five-year low of $1,752 per ton, down 5% YoY. Zinc India EBITDA, INR 22,056 crores, up 27% YoY with best in class margin of 56%, driven by record mined metal, positive pricing, and COP dropping to $959 per ton. Again, lowest since five years, down 9% YoY.
The strength of our diversified business portfolio, coupled with momentum in our growth businesses across Power, Oil & Gas, and Iron & Steel, continued to drive Vedanta on a strong upward trajectory. These businesses are the growth engines and will decisively shape Vedanta's next phase of value creation. I'll move on briefly to allocation of capital and investors' returns. We remained focused on disciplined value accretive growth. In FY 2026, we invested INR 14,918 crores on growth CapEx in strategic projects across Aluminium, Zinc, Oil & Gas, and Power. As these projects come on stream, they will drive higher volumes, margins, and earning visibility across cycles. In Q4 FY 2026, we deleveraged Vedanta India's balance sheet by INR 7,370 crores.
For the full-year at VRL group level, in dollar terms, we have deleveraged about $1.5 billion, including reduction of short-term facilities such as buyers and suppliers credit and export advances. We also rewarded our shareholders with a handsome dividend of INR 34 per share. Vedanta has been amongst top three wealth creators in Nifty 100 companies, delivering a TSR of almost 50%, which is 2.1x over Nifty Metal Index. Notably, the FIIs ownership of Vedanta has rose from around 11% to 14% last year, a clear vote of confidence from investors even in this current tumultuous market conditions. Our balance sheet continues to strengthen in a sustained and visible manner.
As we have earlier guided, our leverage ratio has been brought down to under 1x, 0.95x from 1.22x last year same time. We have brought down VDL's borrowing cost below 9% at about 8.9% as we close the fiscal, and 16% reduction in financing cost, which is more than INR 1,563 odd crores, with further reduction in the borrowing cost in sight in near future. On credit rating, both CRISIL and ICRA has reaffirmed Vedanta's rating as AA with Watch Developing. In addition, Fitch Ratings has augmented VRL's rating to BB-, underscoring confidence in our improved balance sheet, cash flow visibility, and strategic direction. In conclusion, FY 2026 marked a clear defining year for Vedanta with a strong performance and notable advancements across strategic focus areas.
The upcoming demerger marks Vedanta's transition into a future new phase of growth and value unlocking into a powerhouse of critical minerals, energy transition, and technology. Thank you, over to operator for Q&As.
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 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. We will take a first question from the line of Indrajit Agarwal from CLSA. Please go ahead.
Hi. Thank you for the opportunity. I have two questions for Ajay. First, as we split the group into five entities or after the demerger, how would the dividend policy look like for each of the entities?
Indrajit, can you please self-mute? There's a lot of disturbance on your line. Thank you.
Yeah. Yeah. After the demerger, how would the dividend policies look like for each of the entities?
Hello, Indrajit. That is a one change, you know, with that will entail a post a demerger. In that case, a five companies board ran independently will be free to design their own policies. In case of Vedanta Limited, today the board has approved its revised policy on dividend. Basically, there'll be two changes. Currently, Vedanta's policy on dividend is more prescriptive. It will become more descriptive. From rule-based, it becomes principle-based. For example, right now, there is a requirement to pay at least 30% profit as a dividend. Going forward, board will have the flexibility. They can pay 30% or the amount as they deem fit in future. Same way, the zinc dividend we have to pass on within six months.
Going forward, Vedanta board, as in the new Vedanta, Vedanta Continuing, will have the flexibility of this money upstreaming in near future. In summary, five companies will have different policies, but overall they'll be aligned with the current policy thematically overall.
The mandate of upstreaming the dividend of Hindustan Zinc goes away with the new policy, is that correct?
Correct. In that case, the Vedanta Limited board will have the flexibility for passing it on or not passing it on within the timeframe they deem fit looking at multiple factors for the company.
Sure. My second question related to it is, now that we still have about $4.7 billion of debt at VRL, what are the modes of addressing that debt? Earlier it used to be brand fees or dividend. Is selling stake in one or more entities an option that we are considering, or it still remains at, dividend and brand fees?
Right. Maybe I'll start with the first, Indrajit, the current year requirement FY 2027. At Vedanta Resources, the need for the loan in FY 2027 is almost $0.3 billion. Additionally, as we know, an ICL is due as well, which is VRL to VDL. Total combined, $500 million i s a requirement for the principal amount. The interest will be something similar. It is in fact, shy of $500 million . We need $1 billion at Vedanta Resources. In terms of source of money, the brand fee is more or less same, it is $400 million. The balance $600 million receipt means paying out almost $1 billion-$1.1 billion from Vedanta India's side, assuming the half money goes to minorities. With 4%-5% dividend and the routine brand fee, VRL can be managed.
That also means almost $500 million or $0.6 billion will be deleveraging organically. As we demerge all the five companies, additionally we will have the optionality of a differentiated capital structure. In that case, many anchor investors domestically and globally are very keen to come in the capital, that will be additional avenue for deleveraging.
Sure.
Indrajit.
Thank you. That's all from my side.
Thank you. We will take our next question from the line of Amit Lahoti from Aditya Birla Capital. Please go ahead.
Thanks for the opportunity. My questions are on Zinc International and copper segments. The first one on Zinc International. Where are we on this capacity expansion at Gamsberg, and by when do we expect to achieve full ramp-up? Second, on copper, it has not been a profitable unit for us so far. Given the treatment charges continue to be negative, how are we thinking about this segment from here on?
Thank you, Amit. I'll take the VZI question. I'll give Ajay the question on copper. On VZI, the current project, the Gamsberg project, is 94% complete. This is now the doubling of our run of mine from 4 million tons to 8 million tons. We're looking at a capacity from the current around 220,000 tons- 240,000 tons, another 220,00 tons. All in all, about 450,000 tons. The team is anticipating to commission in the next quarter and to have the plant ramped up for the rest of the year. Which is very typical if I look at, you know, other industry curves, McNulty curves. A ramp-up for a plant of this size should be anywhere between 12 months- 18 months.
15 months would be a best-in-class ramp-up. That's how we should look at it. Within the year, you'll see substantial ramp-up from phase II because it's 94% complete. The better part of this year will be to ramp up phase II after the commissioning in this current quarter. I hope that explains it. Ajay, maybe you want to take the copper question in terms of profitability.
Before Ajay starts, Amit, you would have seen that we have released a presentation, which is on the Vedanta's website. If you download that, you can see the trajectory for Gamsberg phase III, including our proposal to build a smelter also. We have given the full details in terms of the ramp-up beyond 500,000 tons also, which is a medium-term outlook spanning next to three years is full completely detailed out. Handing over to you, Ajay, for the copper.
Yeah. Copper, I mean, this copper within the Vedanta portfolio, as we know, is a trading business practically. Over the last couple of years, the margin has been wafer-thin. There's one change, if I may start with the brand fee. Right now, the entire brand fee is for the current Vedanta at about 3%. As we demerge, we have also done a revised benchmarking in an unbundled fashion, so each of the new companies benchmarking is different. The 3% rate continues, and the only change that will be done post-demerger is in the copper brand fee. The brand fee for copper from the current 3% will go down to 0.75%, and that alone from India's viewpoint means higher EBITDA by 2.2%. There are various activities.
Looking at the pricing environment, we do foresee the margin on the copper business going from roughly 1% right now, going to at least 5% in FY 2027.
Amit, does that answer your question?
Sure. That helps. Thank you so much.
Thank you.
Yes, thank you.
Next question is from the line of Sumangal Nevatia from Kotak Securities. Please go ahead.
Yeah, good evening. Thanks. First question is on VRL in FY 2026. Despite the brand fee and the dividend, if you see net debt has just reduced by $200 million. Could you broadly share what was the cash outflow heads there for FY 2026?
In FY 2026, of course, you're right, dividend and the brand fee is almost $ 1.1 billion. There is a funding for KCM last fiscal, Sumangal. It's almost $ 330 million, and hence that is one reason. Secondly, the entire, the intercorporate loan, $ 220 million, has been paid from VRL to VDL. In that case, $5.3 billion has become $5.2 billion in the last fiscal. It's mostly the funding for the KCM.
Okay. We had plans for listing of KCM. Where are we in terms of that? Any guidance?
Deshnee, you want to.
Yeah. We are in a process of having filed our S-1 with the SEC. We're currently in the third round of comments, but I'm sure you would all appreciate that we are in a quiet period in that regard. As soon as we're able to come into the public, we'll actually give you an update on the overall process. We are progressing in terms of the S-1 filing.
Got it. My second question is on the brand fee. If you could just call out, what was the brand fee paid by copper entity in FY 2026. I mean, what's the delta we're looking at? Now once we've relooked, till what year is the brand fee at 3% fixed for other entities?
Maybe, Sumangal, after the call we'll have the numbers shared with you. On a broad basis, about $3.1 billion.
Okay.
$3.2 billion is the copper revenue. On that, last year, the number has been a 3% brand fee. That number will go down to 0.75%. The impact of the brand fee on copper is about $65 million in FY 2026. FY 2027, lower amount. The overall brand fee, looking at the volume increase and the better pricing, will be something similar. From Vedanta's viewpoint, all the five companies combined brand fee, FY 2027 remains similar to last year. The copper impact is mitigated by volume and the pricing.
Okay, that's useful. Ajay, till which year is the rate, freezed, as per the agreement?
The rates are typically, if you look at the last nine odd years. In 2017, the brand fee got commissioned, we look at revised benchmarking every three years. It is for next three years.
Okay. So till FY 2029 it is, I mean, freezed.
That's correct.
Okay. Understood. Understood. I have one question with respect to Zinc International. Now we are guiding for EBITDA increasing from $100 million to eventually $450 million in FY 2028 in the presentation. I mean, in the last many years, we've missed and delayed the guidance for Gamsberg phase II. Just want to understand, last one or two years, what has been the key reasons behind the delay, and how confident are we of commissioning it and then starting to ramp up in the second half of the current year?
Thank you so much for the question. Sumangal, I answered partly, I think when Amit asked the question earlier. Today the project is 94% complete. We're very confident about the ramp-up plan and commissioning in this quarter and ramp-up for the rest of the year. In terms of the reasons for the delays, twofold. You know, firstly, to produce 8 million tons of run of mine, given the stripping ratio of three to four at this moment, we've had a lot to do on catching up of the waste stripping at the Gamsberg open pit, and that took the better part of the last two years to actually catch up. This was almost three years of delayed in stripping, waste stripping. That is now adequately caught up.
In fact, very happy to say that even for the current commissioning and ramp-up, we are sitting with a healthy stockpile in front of the plant. We've also had some delays on the ground. Believe it or not, I mean, it's something I think we as an industry keep talking around, is skills needed for certain types of work, especially in projects. In South Africa, capital has dried up. In fact, we are one of the few companies that are actually building capital projects today, despite it being such a large mining geography. We have had certain skill sets that have been short, and the team has found it hard, even through our business partner onshore. That's created some of the delays on specialized work like piping, instrumentation, et cetera.
Again, I think a lot of time has gone in the last six months almost resetting the project to make sure that we can deliver it on time on the new timelines. Making sure that, you know, keep guiding the team that whilst we might not have built this project as we should, it's still very capital you know, competitive in terms of capital intensity. Now we have to get this plant to a dream start, which I indicated earlier should be a 12 month-15 month type of ramp-up for a plant of this size.
I hope that gives you a good sense of what has happened, why the misses, and why we are confident now given the status of both mining as well as the project that we will deliver this year's ramp-up. You saw last year's numbers, right? From the previous year. The Gamsberg ramp-up in itself, because of the waste stripping that I just mentioned, was almost 40% up year-over-year.
Yep. Yep. That's very elaborate. Thanks. I just have one more question. Can I ask?
Yeah, go ahead, Sumangal.
Okay. Okay, I just, one is, I mean, the resultant entity has still $1 billion of debt. How are we gonna service the debt? Will it be largely through the dividends from Hindustan Zinc and maybe, the leftover is passed out as upstreamed as dividends? Second, the aluminium entity is on the numbers throwing very strong cash flows. Generally, what's our preference there, I mean, in terms of deleveraging and payout? If you could just share some thoughts on capital allocation at the aluminium entity?
Maybe I'll start the first with the five companies. In fact, if you look at Sumangal, in the IR pack there's a page which covers all the five companies in unbundled form, what will be net debt to EBITDA, all of them. If you look at overall Vedanta right now, $ 5.5 billion net debt and debt to EBITDA almost 0.95. Pre-demerger, we have made sure that each of the entities, in terms of their debt and the cash flow, they are in harmony. Even before demerger on 1st of May, Vedanta Oil & Gas will have nil debt, so it'll be debt-free company. Vedanta Iron & Steel will be close to net debt. It will have no debt more than $ 0.2 billion. That leaves Vedanta Aluminium, debt of almost $ 3.5 billion.
In Aluminium, debt to EBITDA ratio almost 1.3. As you rightly pointed out, given their cash flows, that will not be a challenge. That leaves Vedanta Power. There, most of the debt, in fact, is structured in the long term with the PFC and the RECs, and there the debt maturities are, in fact, truly long term, seven-10 years. Vedanta Limited's debt will be almost $1 billion, and their debt to EBITDA will be 0.4x . A combination of profitability at Vedanta Limited through FACOR, through Zinc International and the copper debt can be serviced. Additionally, Zinc India dividend remains additional optionality. In summary, we don't foresee a challenge looking at the current pricing environment, our work on volume, cost, NEP of serving debt of all the five companies.
Thank you.
Got it. Thank you.
Next question is from the line of Ritesh Shah from Investec. Please go ahead.
Yeah. Hi, sir. Congratulations for a good set of numbers and the demerger sailing through. Wonderful job. I have like five bucket of questions. First is starting with Saudi Arabia. I see there's a $2 billion of CapEx indicated over there. I also see there's a EBITDA profile broadly from $90 million FY 2027 to around $200 million FY 2029. Just wanted to understand how this would be funded. That's one. If you can provide us like year-wise, that would be great. The funding of this CapEx, and basically how should we read into the economics of, I see there is a rod mill, I see there's a smelter. Commissioning timelines are not very far, and there's an exciting prospect of the mine as well. I think mine-related CapEx has not been mentioned over here.
If you could just help us understand the economics of how to fund this $2 billion, the timeline, and the underlying economics. That's the first bucket of questions.
Ritesh.
Oh, sorry.
Sorry, no.
Maybe I'll sort of give a quick overview of what we are doing in the kingdom, and then, Ajay, we can talk high level about the funding.
Sure.
As it relates to Vedanta, remain co go forward. As you rightly mentioned, Ritesh, we have the rod mill plant. I mean, this is a $13 million plant, capacity of about 200,000 tons, and this is something that we were contemplating for a while. Good on Puneet and the team for actually putting this on. I think they started last year, broke ground in October last year, and that plant will be ready in September this year. From an economics point of view, right, it's all about supply, demand, as we just discussed on the copper business side, but this plant will have about a margin of 5%. You touched on the mining block that we recently acquired, and that's in Jabal Sayid. It's still very nascent stages.
We're still doing the exploration there. Just given some of the early indications of the grades, et cetera, that we see both on copper as well as in gold, relatively attractive grades of about 1.5%, I think, on the on copper side, which should be maybe north of maybe 2%, which makes it more exciting, and gold of about 3 g per ton. Can you just update on the, on the grades? The exploration is being supported by Hindmetal, so maybe Arun can also help us with the update. The copper smelter project is still the project that we indicated almost 18 months ago now in terms of the MOU we have with the kingdom. We continue to work with them.
The package of incentives that we wanted to make the project work is still under discussions in the kingdom. We haven't actually taken a project decision as of now. Given what I've just said on some of the incentivization, of course, $31 million is largely funded from cash that the copper business, including Fujairah Gold is generating, will actually be funded at that level. The bigger project will actually be funded by some of the incentives that we're likely to get from the government as we continue these discussions. Ajay, anything to add?
Yes. Briefly, Ritesh. I mean, if you look at the kingdom has released a document a couple of years ago, they want to diversify beyond the traditional hydrocarbon oil and gas. In that case, metals and mining is a big priority. It also entails that the kingdom, KSA, will also provide land, power and multiple subsidies, including in terms of funding and lower cost of funding. What we have agreed with the local government, it is still being frozen. The entire funding will be happening in the ratio of 75/25, debt to equity. So 25% will be Vedanta contribution as equity. 75% will be the funding locally at about 2%-2.5% cost of funding.
This 25% funding of the amount you mentioned will be over several years, and that will be managed through Vedanta Limited free cash flows.
This helps. My second question was on Zinc International. Again, a very big CapEx number of $4 billion. The EBITDA is moving from $300 million indicated FY 2027 to around $500 million. How should we read into the funding of the CapEx? Again, it's not an asset which is, at least I understand or appreciate it well. How should we look at the underlying economics of the mine concentrator and the smelter over here? That's the second bucket of questions. The third and fourth will be quick. Yeah.
The good news about Zinc International, after this year it will be a self-generating cash unit, right. Although it does have some debt now on the current project that is executed. The next phase of growth, which is not approved, right, which is basically We've given you guidelines of how to look at the growth, comes from the Gamsberg underground. Gamsberg underground, I think we have given you some updates on the RNR right now. It's almost, and I think Arun can elaborate because he knows the asset well, almost as large from an RNR point of view as Hindustan Zinc, so almost 16 million tons of metal there. The underground material always had a higher grade than actually the open pit. Today it's about 7%.
The reason for that, and the reason why we took the decision to go open pit initially, all those five, six years ago, is because it was lower capital intensity to go open pit, then start small, increase the mine, and then consider the underground opportunities. The capital that you saw will be slightly more because of the underground, but the opportunity we have, if we phase this out well, is to actually use the current cash that will be generated by the business to support the next phase of growth. As we have the 2 million ton target, we're calling it, Arun calls it the 2x project. We do have a 1 million ton goal to take. The current will be around 450,000 tons, 500,000 tons.
If you consider some of the other projects that we are considering as part of the deck that you're looking at in Namibia, gets us to another 500,000 ton expansion in the Gamsberg, which we're calling phase III. Because phase I and II is currently in execution, phase III will be the new project. I think that's how you should look at it. This becomes a very different business, right? You no longer should be looking to fund all of the capital. It'll self-generate a lot of this cash going forward. These kinds of zinc prices, you know, over $3,000 per ton, I think we're quite excited about what that geography can unlock for us.
As Charanjit mentioned earlier, when you start getting into these kinds of capacities, right, you cannot be shipping concentrate of this kind of volume because it's almost double the volume you would need to ship. We are looking at putting in a smelter. It's a project I looked at way back then when I was in South Africa for the business. What makes it more attractive today is South Africa has some five gigawatts of power that's surplus today versus five years ago, and the government is very keen to support businesses like us that continue to spend money or spend capital in the country to incentivize us to make a smelter complex work together with an SEZ. That's what the team is looking at as part of that conceptual study that you saw in the deck.
That helps, Deshnee. Ajay, is it possible to break this $4 billion by years or by the way that you explained the capital structure?
Of course.
What will be the self-generated cash flow which would actually fund it? It will just help us appreciate the cash flow profile because the CapEx number is quite huge over here.
Ritesh, happy to give the details post that call, year-on-year CapEx, what we are doing and also the funding and the sources of fund for the CapEx.
Sure. Quickly, third question. Power assets, we had an unfortunate incident. Are there any timelines on the resumption of that particular unit? Are we looking at three months, six months, any particular timeline? Fourth is, critical minerals, you have given a beautiful slide. There are multiple assets over there. How should we understand the option value over here? Thank you so much.
I think I'll start with the question on power and then hand over to Arun for the critical minerals. Yes, we are incredibly saddened by our incident at Athena. I gave you a very elaborate update on everything that we're doing on the ground. Really want to recognize again the efforts by the teams there. In terms of restart, I think we cannot commit to any timeline at this stage. What we can tell you is that we've only just recently, a couple of days ago, been actually given access back into the site to commence our full assessment work to look at, you know, the activities, rectification, restoring activities on the site.
Once our team is on the ground for another few weeks and we have an expert team that supports, their recommendations, we will then come back into the market in terms of the likely timelines for recommencement, both on the, on the unit one, which is the unit in question, as well as on the unit two project that was ongoing as well. Arun.
Deshnee, let me add on the critical mineral. Out of the seven critical mineral blocks with Vedanta, if you look at the timeline of exploration, three blocks we hope to finish exploration by 2028. Normally we do mine planning one year ahead of finishing of exploration, somewhere in 2027. That means if we add 36 months of putting up projects of mining and smelting, we should look at somewhere around 2030 adding three more metals to the bottom line of Vedanta.
Ritesh, does that answer your question?
Thank you so much. Thank you very much. Thank you.
Thank you. Next question is from the line of Pallav Agarwal from Antique Stock Broking. Please go ahead.
Yeah. Good evening, and congratulations on the demerger. First question was, you know, on the de-leveraging during the quarter. Is part of the Hindustan Zinc, you know, stake sale proceeds also included in this de-leveraging?
Yes, yes, that's right, Pallav. INR 7,370 crore is a deleveraging in the fourth quarter. It includes every aspect, both source and application. Be it paying a dividend in the previous quarter or divesting a 1.5% in Zinc. Yes. Answer is yes.
Okay. Basically, I think the cash flow from operations of, I think INR 14,000 crores, so is that that includes this, the stake sale as well?
No, that is additional. INR 14,000 crore, you are right, is operating cash flows. The working capital is next building block where the number of days is a right metric. From 77 days Q3, it has gone down to almost 70 days. We invested almost INR 5,700 crore in terms of CapEx growth and sustaining. We also paid last quarter a dividend. That is an outflow. Zinc stake sale, INR 3,277 crore is additional. It is about 1.1%. The INR 14,000 crore do not include Zinc stake sale. It is additional. There is a page, Pallav, in the IR deck on the entire cash bridge for the fourth quarter, which covers all these blocks.
Sure. Okay. I'll take a look at that. Also, you know, I think, you know, you all have given a very detailed breakup of the net debt, you know, pre and post-merger. Just wanted to check, you know, even in the entity-wise, you know, net cash, some of the entities like Bloom Fountain. Where exactly, you know, which entity would the debt, you know, of that go to?
Pallav, it's already taken into consideration when we have given the net debt position of a respective entity. It's already factored in.
Yeah. I see that. Bloom Fountain is a holding company. Which, you know, which particular, you know, company of the demerger entity will this debt go to?
Bloom Fountain is a part of Iron & Steel. Pallav, if you look at the IR deck, there is a slide which is quite elaborate. It covers the current Vedanta, where the net debt net of cash is about $5.5 billion, and the leverage 0.95. If you unbundle the current Vedanta monolithic into five companies, it talks about each of the five companies, and their Iron & Steel and Oil & Gas are zero or almost net zero debt companies. Vedanta Power leverage will be 4.7x . Vedanta Limited will have a $1 billion debt, and a significant portion of debt goes to Vedanta Aluminium. Out of $5.5 billion, $3.5 billion goes to Vedanta Aluminium. Looking at the EBITDA of that business, their leverage will be still 1.3.
In summary, even before demerger, all the five companies' balance sheets are that way architected, where their assets and the cash flow will be sufficient to service debt post demerger.
Sure. Okay. Yeah, okay. Thank you. Just lastly on the guidance, FY 2027 guidance. Athena PLF, I think is the, there's nothing over there. Is it because of the accident that's happened?
Yes, Pallav, as Deshnee explained, that we are taking a stock of the situation. Once we do that in the coming weeks, we'll come back to the market to disclose the start or the restart. Thereafter we will be in position to give the details from a PLF perspective.
Okay. The existing, you know, PPAs that we've signed, is there any penalty for not supplying or something?
No, we have insurance in place, to cover us for any gaps or losses, which are there.
Sure. Okay. Yeah. Thank you so much.
Again, I think just give us time to assess the full situation and come back to the market with a comprehensive update as opposed to a piecemeal update that we can provide you with today.
Thank you.
Sure.
Next question is from the line of Kunal Kothari from Nuvama Wealth Management. Please go ahead. Kunal, your line is unmuted. Please go ahead with your question.
Yes, you can move to the next.
Hi, good ev-
Yes, Kunal. Please go ahead.
Sorry. Can I go ahead?
Yes.
Hi, Ashish here. First of all, thank you for the opportunity and many congratulations for the great set of numbers and finally demerger happening. Commendable. In this, I am trying to ask one simple question. Going ahead, because now we have demerged into different entities, obviously every entity has a different scope. But in future, if we want to go for any acquisition, then that acquisition will be related to that particular segment only? You know, we can do something which can club another business, like for example Vedanta Aluminium. Any further acquisition will be only related to Aluminium business only, or it can be sometimes, you know, other zinc vendor or something else also. You know, we have seen plenty. We have seen earlier also that, you know, other business clubbed into different ones.
Just to make it sure that any further acquisition only in a different particular commodity.
I think from an overall M&A, as we've guided the market before, our chairman is still very involved in all M&A across the company. Going forward, whilst it'll be very clear what the focus of the, of the individual businesses are, anything outside of the portfolio would still happen at the whole co level, and whole co will be set up to make sure there is some visibility of capital allocation across all five businesses, but also with its own M&A team to start looking at some of these opportunities. If it makes more sense synergies-wise to go into one of the five companies, it would. If not, you know, as you've seen our chairman from his previous track record, We absolutely have other companies in the businesses to all set up new companies.
That is still very much, that will still be very much the case. The CEOs and their leadership team of the respective companies will be mandated to continue to grow organically in the first instance. As you know, every business has got their own 2x, 3x type growth story. Any M&A, depending on the size, shape, that's very, you know, very in line with the company strategy will happen at the company level. Anything else above would happen at a whole co level together with the chairman.
Okay. Thanks. Thanks. That's very clear. Thanks. Second is.
Wait, excuse me.
Aluminium operations only-
Please go, Ashish.
Sorry. She's going?
No. Because we initially had the call from Kunal and then you came on. Just tell us where you are from, please.
Yeah. I'm from Nuvama only.
Okay. All good. Please.
On Aluminium operations, now we have seen consistent delay in mines, like bauxite, coal mines, and you know, every time we get a new deadline on that. Just wondering where we are on that process in terms of approval. Secondly, in terms of Aluminium smelter also, when we are going to fully commission it. Lastly, when can we start seeing lower alumina cost of production, which will ultimately lead to lower Aluminium production. Thank you.
Yes.
Thank you. I'm gonna hand over to Anup.
Ashish, first let me answer the alumina piece what you said. Ashish, if you recall now, even in the last earnings call, I had said that probably we will see an $50 reduction as we go into the quarter one. Okay. The another thing what I had mentioned was a constant alumina. If you ask me, probably by quarter two we should see alumina cost hovering around $750. It has two parts to it. One, we should also appreciate the Middle East impact that we've had on some of the raw materials like furnace oil and caustic. Had it not been there, probably we would have seen a cost of around $ 710, $ 715.
As of now, based on whatever cost we are seeing, we expect the cost to be around broadly $740-$758 in the quarter two of FY 2027. Probably a $20-$25 reduction from what was the quarter four cost. That is where we are as of now. If we were to remove the Middle East cost implication, probably $700-$710, with probably 80%-85% of the captive alumina. Ashish, that is where we are. As we go into quarter two, quarter three, we expect the cost to be closer to $710-$725. Ashish, hopefully I have answered that question. Let me come to the-
Okay.
Yeah. Now.
Yeah. For aluminium cost of production then?
See, aluminium cost of production, no. Again, if you have seen the guidance, we are guiding $1,650-$1,700. Okay. Now, if I were to talk b ifurcate it into, say, H1, what the H1 cost will be. Maybe compared to quarter four, you can expect flattish to 1% lower. Because of the some of the impact of the raw material that we are seeing, I mentioned some of the raw material on the aluminium side, some of the carbon costs.
So for that the yearly guidance remains $1,650, $1,700, but H1 should be flat to 1% lower compared to quarter four.
Okay. Okay, great.
Now, coming to BALCO expansion. See, 70 of the total 304 pots that we are putting in, okay, we've commissioned by March. Okay. The delay was basically through partner substitution and resource augmentation, we've covered in the last couple of calls. Now, if I were to give you a way forward as we go along, no, quarter one, quarter two, quarter three, quarter four. On a run rate basis, broadly, we will be doing around 105 KT a quarter. Quarter one should be 25%, quarter two ramped up to 50%, quarter three 75%. As we go into the quarter four, it will be 100%, Ashish.
I think, Anup, if I'm not mistaken, Ashish asked about the refinery, I think linked to alumina question. Lanjigarh Refinery for the year.
Ashish, if you were asking about the refinery. As we exited this FY 2026, we exited at a run rate of closer to 4 million tons. If you look at our guidance, we are talking about 4, 4.1. Quarter four broadly, January, February, we should be closer to the rated capacity that we put in. Why the delay? Because the calciners and the boilers that we have put in, they are slightly running at a lower capacity of, say, 75%, 80%. As we ramp up, we will probably achieve the rated capacity in quarter one, there we will achieve the rated capacity. Ashish?
Okay.
Did I answer to your point? Yeah. See, on the coal mine now-
Yeah.
I'll first start with Kuraloi. Kuraloi, we have got the mining lease maybe a week back. From here, probably in a month or so we should start seeing the mining operation. That is on the Kuraloi. Coming to Ghogharpalli, EC has been recommended at the start of this month, the month of April. We are also targeting FC in this quarter, and we remain committed to commission this block in the timeline that we've indicated last two quarters. Last quarter and this quarter we've been consistent in terms of the timeline. Sijimali also, as guided last time, okay, we have got the LOI extension done. FC1 is granted. EC, we're expecting next month. Hopefully in H1 we will see the mines opening.
Sir, in Sijimali, obviously we were expecting earlier in February also. Now we are expecting in May. What is the actual delay which we are facing, and why government is not giving it? We have seen lots of news in the newspaper, something in the local level also is disturbing. Is this the reason because of which we are getting this delay in Sijimali mine?
I'll tell you, Ashish, let me address it in two part. First of all, coming to the regulatory approvals now. See, there was a LOI w hich was, which got expired in the month of March. It was an administrative process, okay. It took some time before that LOI has been extended. We've just got the letter yesterday, so some time has gone into it. Coming to the noise that we're talking about now. See, I'll tell you, we continue to engage closely with the state government, local administration, and surrounding communities, okay. To ensure that we have a smooth and responsible operation. This engagement is driven through focused community development initiatives across healthcare, education, infrastructure, culture preservation, and livelihood generation. Ashish, keep in mind, this is a auctioned mine, okay.
So maybe approval site have taken a little longer time, but we are in touch with the administration, with the community, and we expect to open this mine within the timeline that we have committed.
Ashish, important point to note is.
Great, sir.
When this-
Yeah.
When this auction happened, there was few more mines which were issued to other players also. We are the first one proceeding ahead with who have reached the EC stage, and which is almost at final stages. The process has its own time, particularly, it's a long process of public hearings, FC1, FC2. If the land, if there's a forest land involved which is of the size of few hundred hectares, as is the case with Sijimali, it is likely to take some time. It is the process which is happening. We don't see any challenge in terms of. The noise is there, of course. But I think it's all which is very, again, common with all the infrastructure projects in the country. Nothing very different in terms of the noise.
Understood. No issues, because, you know, these things are obviously there when we already know about these things, you know, the timeline keeps on changing, you know, almost a delay of one year. As you rightly pointed out, regulatory approvals are one thing one can't handle. Anyway, best of luck and best wishes for the future for all the companies. Thank you.
Thank you. Ladies and gentlemen, we will 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.
Thanks, everyone, for joining us. For any unanswered questions, you can get in touch with us, and we look forward to connecting again for the Q1 results, which will be more for the demerged entities. Looking forward to meeting you in the coming weeks. Good day and goodbye.
Thank you, members of the management team. On behalf of Vedanta Limited, that concludes this conference. Thank you all for joining us, and you may now disconnect your lines.