Vedanta Limited (VEDL.NS) Q2 FY2026 Earnings Call Transcript & Summary

Ladies and gentlemen, good day, and welcome to Vedanta Limited Second Quarter and First Half Financial Year '25-'26 Earnings Conference Call. [Operator Instructions] Please note that this conference is being recorded. [Operator Instructions] I now hand the conference over to Mr. Charanjit Singh, Group Head, Investor Relations, Vedanta. Thank you, and over to you, sir.

Thank you, Yashashri. Good evening, everyone, and welcome to Vedanta Limited H1 FY '26 Earnings Call. On behalf of Team Vedanta, I thank you all for joining us today. I hope you had the chance to look at the earnings presentation and the detailed financials that we have released. On this call, I have with me Mr. Deshnee Naidoo, our Group CEO; Mr. Arun Misra, our Executive Director; Mr. Ajay Goel, our Group CFO; Mr. Rajiv Kumar, CEO, Aluminium Business; Mr. Anup Agarwal, CFO, Aluminium Business; Mr. Jasmin Sahurity, COO, Oil and Gas Business; and Mr. Hitesh Vaid, CFO, Oil and Gas Business. We'll begin with an operational and strategic update by Ms. Naidoo, followed by financial highlights by Mr. Goel. And thereafter, we'll open the lines for Q&A. Over to you, Deshnee.

Thank you, Charanjit. Good evening, everybody. It is a pleasure to address you once again as we close the first half of FY '26, a period defined by volatility, resilience and record performance. On the macroeconomic side, the first half of FY '26 unfolded against backdrop of significant global uncertainty. The ongoing tariff disputes and conflicts in the Middle East and Europe created substantial turbulence in the commodity market. Aluminium prices on the LME range between $2,285 and $2,736 per tonne, while zinc fluctuated between $2,521 and $3,019 per tonne, a swing of nearly 20%. In addition, the early onset of monsoons across several operational regions and planned maintenance shutdowns added further complexity to our operating environment. Yet despite these headwinds, we delivered our strongest first half performance on record. Our quarter 2 EBITDA stood at INR 11,612 crores and our H1 EBITDA at INR 22,358 crores, representing year-on-year growth of 12% and 8%, respectively. This outcome underscores the strength of our diversified portfolio, operational discipline and focus on cost efficiency. Turning to the business performance. Our Aluminium business achieved its highest ever quarterly and half year production. Metal output reached 617,000 tonnes in quarter 2 and 1.22 million tonnes for H1. Alumina production also set new records at 653,000 tonnes for the quarter and 1,240,000 tonnes, 1.2 million tonnes for the half year, growth of 31% and 19% year-on-year, respectively. While planned maintenance led to an uptick in power cost versus quarter 1, we achieved a margin of $943 per tonne, the highest in the last 14 quarters. On a half year basis, power costs were reduced to $529 per tonne, the lowest level post-COVID, demonstrating our continued progress towards cost optimization and full year guidance on spot metal cost. Hindustan Zinc delivered a record second quarter mined metal production of 258,000 tonnes and a half year total of 523,000 tonnes. Silver production was at 144 metric tonnes for quarter 2 and 293 metric tonnes for H1, in line with our lower lead volumes, yet silver contributed nearly 40% of total segment earnings. We achieved a 5-year low cost of production at $994 per tonne for quarter 2 and $1,002 per tonne for H1, reflecting year-on-year reductions of 7% and 8%, respectively. Zinc International recorded a 38% year-on-year increase in metal and concentrate production in quarter 2, supported by a 54% increase at Gamsberg. For H1, production rose 44% year-on-year, led by a 63% increase in Gamsberg. The cost of production at Gamsberg declined 8% year-on-year to $1,172 per tonne, driven by higher volumes, though partially offset by elevated treatment charges and currency fluctuations. At Oil and Gas, production stood at 89,000 barrels of oil equivalent per day in the quarter, impacted by natural declines in the MBA fields and delays in ASP Cluster C injection. These were partially offset by new wells at Aishwariya and ABH fields. OpEx decreased 4% quarter-on-quarter due to the optimization of polymer injection and reduced planned maintenance activities. We expect ASP injection to stabilize production volumes from quarter 3 onwards. In power, the early monsoon moderated power demand in some regions, impacting operations at Meenakshi. Nevertheless, the business achieved record high quarterly generation of 3.9 billion units. That's up 8% year-on-year and 4.4% quarter-on-quarter. Quarter 2 EBITDA stood at INR 228 crores, lower than quarter 1, which had included a onetime gain of about INR 160 crores awarded by the Appellant Tribunal for Electricity for the period prior charges. That's between 2016 and 2018. Saleable iron ore production rose 11% year-on-year in H1 despite monsoon-related disruptions. Our value-added business achieved a record pig iron production of 238,000 tonnes in quarter 2 and 451,000 tonnes in H1. We also received the letter of intent for the Janthakal mine in Karnataka, strengthening our resource base. At ESL and FACOR, planned maintenance temporarily impacted volumes. ESL's first half output was at 623,000 tonnes, down 4% year-on-year, while FACOR's H1 production declined 12% year-on-year following a 1-month planned shutdown. With operations now fully resumed and the Kalarangiatta mine reactivated, both businesses are positioned for strong profitability in the coming quarters. On capital projects and capital expenditure, we invested approximately USD 0.9 billion in growth CapEx during the first half of FY '26 and are well on track to achieve our enhanced full year capital guidance of between USD 1.7 billion to $1.9. Key milestones include the commissioning of the 435,000 tonne per annum smelter at BALCO with the first metal production achieved earlier this month. At Lanjigarh, we began commissioning Train 2, which is an additional 1.5 million tonne per annum capacity and produced the first alumina from the new facility earlier this month. Hindustan Zinc commissioned 160,000 tonne per annum Debari roaster, completed debottlenecking at Dariba and secured Board approval for India's first zinc tailings processing -- reprocessing plant at Rampura Agucha. That's at a 10 million tonne per annum capacity, reinforcing both our commitment to capital and our sustainability focus. Internationally, the Gamsberg Phase 2 expansion targeting 220,000 tonnes per annum incremental capacity is now at 80% completion and is on track for commissioning by the end of FY '26. In power, the Meenakshi and Athena plants added a combined 1.3 gigawatts in the first half of the year, bringing our total merchant power capacity to 4.2 gigawatts. These additions underscore our progress towards energy security and portfolio diversification. At Vedanta, responsible growth remains central to our purpose. The safety of our workforce remains our highest priority and a nonnegotiable aspect of our business. We continue to strengthen the safety culture across our facilities through the implementation of critical risk management. Our safety performance metric demonstrates continued improvement with the total recordable incident frequency rate at 1.23 for the first half compared to 1.32 at the end of FY '25 and a lost time injury frequency rate of 0.42, down from 0.52 in FY '25. Tragically, however, during the quarter, we lost a colleague in an incident at our Lanjigarh plant and a detailed root cause analysis has been conducted and the learnings are being implemented across all of our sites to prevent such incidents in the future. We are proud that Hindustan Zinc achieved the first Indian company to join the ICMM, the International Council on Mining and Metals, a global benchmark for responsible mining practices. Our environmental stewardship also advanced meaningfully. Across operations, we planted over 200,000 saplings and harvested almost 0.23 billion liters of rainwater in Barmer, reinforcing our focus on water sustainability. In line with our commitment to inclusive growth, our community development initiatives continued to make a meaningful impact. During the period, our programs reached over 930,000 women and children, while our skilling initiatives benefited about 500,000 families, enhancing livelihoods and promoting self-reliance. Further reinforcing our dedication to cultural preservation and community development, we signed an INR 85 crore MOU to restore heritage sites in Rajasthan, supporting the state's rich culture legacy and fostering sustainable tourism. Our Vedanta 2.0 transformation continues to gain momentum, positioning us to lead India's growth in critical minerals, energy transition and technology. During the first half of FY '26, we secured 3 new strategic mineral blocks under India's Critical Minerals Mission, expanding our portfolio across nickel, chromium, cobalt, vanadium, potash and manganese. This brings the total number of secured blocks to 11. We have also made substantial progress on the proposed demerger, which is a pivotal step towards unlocking further shareholder value. The final NCLT hearing is scheduled for November 12, and we expect approvals to follow. This will set the stage for the listing of all 5 demerged entities by the end of FY '26, enabling greater strategic focus and enhanced value creation for all stakeholders. At the start of FY '26, global markets faced pronounced uncertainty, including a sharp decline in commodity prices, yet our resilience has stood out. Even with lower average prices of most of our key commodities compared to FY '25, we achieved an 8% year-on-year EBITDA growth in the first half of the year. Looking ahead, I am confident that FY '26 will mark Vedanta's strongest year ever surpassing our previous record EBITDA of USD 6 billion in FY '22. This performance will be powered by capacity expansion, production growth across Aluminium, power, zinc international, iron and steel and supported by recovering commodity prices. Thank you for your continued confidence and partnerships as we advance towards another year of records for Vedanta. I will now pass over to Ajay to take us through our financial performance. Ajay?

Thank you, Deshnee, and good evening, everyone. We continue the momentum and carry forward the progress in our operations, financial results, balance sheet and strategic initiatives. The macro environment has improved and still there is uncertainty. Vedanta's diversified business model and disciplined execution has enabled us to deliver our highest ever second quarter revenue of INR 39,218 crores, up 6% year-on-year and a record second quarter EBITDA of INR 11,612 crores, up 12% Y-o-Y. On a half year basis, we delivered our highest ever H1 revenue of INR 76,652 crores and a record H1 EBITDA of INR 22,358 crores, growing 6% and 8% Y-o-Y, respectively, reflecting resilience and consistency across portfolio. Our profitability remains robust. Second quarter PAT before exceptional items stands at INR 5,027 crores, up 13% Y-o-Y, while reported PAT at INR 3,479 crores, impacted by certain onetime exceptional items. This quarter, we have recorded 2 exceptional items of INR 1,547 crores net of taxes. The first matter is regarding TSPL mega matter. Now pursuant to Supreme Court's judgment, we have recognized the impact of INR 1,407 crores provision against accounts receivable in the matter of a dispute with TSPL's claim regarding benefit of custom duty received in TSPL. A review petition has been filed against this order, but on an accounting basis, we have taken the provision. The second matter is regarding SEPCO settlement. As part of demerger proceedings, a full and final settlement of INR 660 crores has been done with SEPCO, thereby resolving a long-standing dispute, paving the way for proposed demerger process. Similarly, in Q2 last year, we have recorded net exceptional income of INR 1,160 crores, mainly on account of oil and gas impairment reversal. Our EBITDA margin expanded to 34%, improving at about 70 basis points Y-o-Y, supported by favorable pricing, marketing premiums, exchange rate gains and continued cost efficiencies. Our large businesses, which together contribute over 90% of Vedanta's EBITDA continue to deliver strong earnings. Aluminium EBITDA at INR 5,532 crores, up 33% Y-o-Y with a 35% margin, driven by record production and cost optimization. Zinc India EBITDA of INR 4,434 crores, up 8% Y-o-Y with a best-in-class 54% margin, driven by record mined metal and a 5-year low cost of production. Similarly, in Cairn Oil & Gas, EBITDA of INR 1,029 crores, maintaining a healthy 44% margin, where operational improvements have offset the natural decline in terms of EBITDA. Other businesses, including power and iron steel are progressing well to accelerate on a strong growth trajectory. Our ROCE improved sharply by 347 basis points Y-o-Y to at about 26%, reinforcing our disciplined allocation of capital and focus on value creation. We remain focused on disciplined growth. In H1, we invested at $0.9 billion in growth CapEx. Multiple growth projects such as new smelter commissioning at zinc and power expansions are progressing collectively to drive future earnings across pricing cycles. On balance sheet side, we have further strengthened our leverage. Our net debt-to-EBITDA ratio stands at 1.37x, improving from 1.49x last year. Both CRISIL and ICRA has reaffirmed Vedanta's rating at AA. We are making solid progress towards attaining AA rating in near future. We closed the quarter with INR 21,481 crores of liquidity, ensuring ample flexibility for growth and contingencies. Further, we paid an interim dividend of INR 16 per share this quarter, delivering a TSR of about 13% on a YTD basis. At Vedanta, we have reduced our interest cost to 9% with average maturity tenure of about 3 years, a direct outcome of our proactive credit management. We are targeting to bring down our average cost of borrowings to below 8% in near term. At our parent company, Vedanta Resources, we have refinanced $550 million of last high-cost debt, reducing the overall interest rate from 11.6% to about 10% and flattening the maturity curves to just $0.5 billion per year in the near future. Over the last 2 years, our average maturity profile at VRL has improved significantly from 1.3 years to now at 4.5 years. With most high-cost debt now retired, VRL is positioned to operate on autopilot mode, supported by a dividend payout of 4% to 5% in future and routine brand. On the demerger, we are at the final stage. We remain confident of completing our demerger by end of this fiscal, unlocking focused value across our 5 verticals. In summary, we remain encouraged about commodity macro fundamentals, operational momentum and strengthened balance sheet. With several growth projects coming online and a stronger expected run rate in H2, we are confident in achieving an annual EBITDA of more than $6 billion in FY '26 at Vedanta India console level, surpassing previous records and supporting Vedanta's transformation into a global leader in critical minerals, energy transition and technology. Thank you, and over to operator for Q&A.

[Operator Instructions] We'll take our first question from the line of Ashish Kejriwal from Nuvama Institutional Equities.

Quickly three questions for me. One, if you can help us understanding about the situation of Jaiprakash Associates deal, which we have done. Is there a possibility of rebidding over there? Or it's just a COC giving the final verdict and then one can go ahead with that? That's my first question. Second is on the demerger. We have seen multiple delays on account of it, especially in the second motion. So do you think that 12th November could be the final hearing and after that, things can be decided?

Thank you, Ashish. Ashish, before I answer the question on Jaiprakash, I just want to remind everyone about our interest in this bid. While Jaiprakash has 5 different segments, as you all know, the key catalyst for us was actually always going to be the power business within Jaiprakash. JP Group has a power portfolio of 2,200 megawatts, which is expandable to 4,000 megawatts, given the availability of land that it has at these 2 power plants. So this acquisition is an important milestone, as you all know, in our journey to increase our merchant power capacity by 20 gigawatts as we have guided previously by 2030. So the current portfolio of 2,200 megawatts includes the 1,800 megawatts of thermal capacity and 400 megawatts of hydro. So that generates about an EBITDA of INR 2,100 crores to INR 2,600 crores. The replacement cost of this 2,200 megawatts is around INR 24,000 crores, which translates into about say INR 6,000 crores for the 24% stake in JAL, which JAL holds in these assets. I just wanted to make that point because considering the cost and time that we know it takes to actually build a greenfield power plant or to restore one, that the cost and time savings from that 1,800 megawatt brownfield expansion at the existing plant sites, the net replacement cost of JP's power portfolio, we work out to be maybe INR 8,000 crores to INR 9,000 crore at our estimates, which is about 70% of our bid NPV. So I wanted to put that into context in terms of the rationale or as I put it, the key catalyst for the acquisition from our side. And I also want to make the point that this bid doesn't impact our deleveraging plan or our demerger plan. And as you rightly said, it's now left to process. Currently, the COC is evaluating this and the resolution will be submitted or the resolution plan will be submitted by the bidders. We will share our way forward post the COC decision. Ajay, would you like to supplement?

Yes. Very specifically, Ashish, in terms of can this bid go for rebidding. You may recollect since IBC enactment in December 2016, it is less than a decade. And hence, the entire legal landscape is still stabilizing in the country. Now there are multiple rulings by the court, which speaks about eventually, it is a wisdom of the committee of the creditors that select the eventual outcome in terms of who is the final bidder. And hence, it may or may not be the H1 bidder. Now having said that, on this today's rebidding news, you may have seen earlier the bid by the same group was rejected by COC. Now somebody may also look at how this INR 18,000 crores will be funded by the same group. So in summary, we think it is highly unlikely that Jaiprakash will go for rebidding, and we feel quite confident that Jaiprakash is coming to us.

Maybe then Ashish, I'll take the other question around demerger time line. Mumbai bench of the NCLT heard the petition on the 29th and has posted the matter for final hearing on the 12th of November. We are confident that the matter will be brought to resolution on the 12th, which will be in time then for what we've already guided the market in terms of getting this done by the end of FY '26. So we believe the 12th of November...

Actually, why I'm asking is because I think we have already submitted the written application, and we have given the response to Ministry of Petroleum and Natural Gas also. So on that basis, do we think that we have given the reasonable satisfaction to those guys?

Yes, we do. Yes, we do. And that is why we believe that, that matter heard on the 12th with MoPNG should be sufficient.

And lastly, my question is on alumina price. When can we see the effect of lower alumina price in our numbers? And have we done any commodity hedges? If yes, how much it will be?

Thank you. Ashish, I think I'm going to go straight to Anup.

So thank you, Ashish. Now coming to your question on alumina. So Ashish, if you will see in quarter 2, our cost in alumina has come down by $50. And as we ramp up Lanjigarh and we have the advantage of lower API, we expect in next 2 quarters, the prices to go down further by $50 range. So as we exit this year, you will see we will be closer to $700 to $710. So Ashish that benefit is going to come from 3 counts. One, the higher captive mix coming from Lanjigarh, where we will ramp up our production to a run rate of, say, 4 million as we exit the year. The second from a lower cost at Lanjigarh and third, as you rightly said, from the lower buying. Now some difference is coming because last time also I had said that some of our third-party purchases are also linked to the LME. And because of the higher LME, it's taking just time to transition. But as we increase our captive cost, you will see that benefit coming in. Ashish, hopefully, I have answered your question.

Yes. So just to make it clear, you said $50 per tonne fall in price in each of the quarter for next 2 quarters for alumina for us.

Yes. From the quarter 2 levels, $50 per tonne in quarter 3 and $50 per tonne in quarter 4.

That's great, sir. That's very helpful. And lastly, on commodity hedges, have you done anything in Aluminium?

Maybe Ashish, I'll give you overall for Vedanta as a group. Yes, I mean, hedging is one area in terms of the margin protection and the cash, we are actively hedging across the portfolio. If I speak of Aluminium for the current year, I mean, FY '26, the quantity hedged is almost 300 kt, and that makes almost 12% of the volume on a full yearly basis. And pricing remains at $1,625 per tonne. We have also hedged almost 470 kt for next year, FY '27. That's about 17% of annual volume. And here, the pricing is about a little over $2,600 per tonne. So in summary, $300 for the current year, $470 for next year, that's about 12% and 17% current year and next year and the pricing a little over $2,625. Our second equally important portfolio is zinc at Zinc India. And there, the quantity hedged is about 97 kt for the current fiscal. It's about 10% for the volume and the pricing is almost $2,900 per tonne. We also hedged silver. It's about 123 tonnes at about 17% volume for the full fiscal. And the pricing is about $37 per ounce. So across the portfolio, we have a reasonable hedge. And this is one area we'll keep watching given the tumultuous pricing in the current fiscal.

Next question is from the line of Indrajit Agarwal from CLSA.

I have a couple of questions. First, on Aluminium, can you help us understand the other costs, the power cost, conversion costs, et cetera, how those will trend in the next couple of quarters? So the point is, would the entire $50 reduction in alumina flow to cash cost or there could be -- that could be offset with other costs? Second is on the other assets of JPA, what kind of road map, what kind of plan do you have? Do you have a time line in mind, whether you want to divest or do you actually want to operate those assets for something? Third, a bookkeeping question. What is the current debt at VRL level?

So let's start first, Indrajit, with the Aluminium cost. I'm going to hand over to Anup, but maybe before I do, so we delivered a COP, hot metal COP of $1,826 per tonne in the quarter. That was versus the $1,765 that we did in quarter 1. And just to reconcile the numbers quickly, the power cost increase of $75 per tonne, as I mentioned as well in my opening remarks, we offset that with -- and carbon increases as well and other costs, I think, increased around $40 per tonne. And then our alumina cost, as Anup just mentioned, was reduced to offset some of that by $53 per tonne quarter-on-quarter. So I think, Anup, when you speak, let's go in terms of quarter 3, just high level what the production numbers will look like and where do we see the cost improvements coming. And I know the one area I do want us to focus on is on power cost. So let's start there, and we'll come back to you on the JP questions. Anup?

Thank you, Indrajit. Thank you, DC. So Indrajit, okay, before I come to your question, so let me reiterate that we are on the track for full year guidance with H2 hot metal cost being sub $1,650. Now I'll cover your power cost. See, we guided last time also in quarter 1, if you would recall, that we had taken some major power shutdowns. Now the timely power plant shutdown will enable us to achieve sub- $500 per tonne power cost in H2 FY '26. We expect average alumina cost, as I said, to be lower $50 each in quarter 3 and quarter 2, okay? Carbon has been slightly rising, around $15 increase from quarter 1 to quarter 2. But on the other operating efficiency, we believe that we should have an advantage of, say, $20, $25. Out and out from quarter 2, as Deshnee said, from a COP of $1,826 per tonne, H2, we expect it to be sub $1,650. Indrajit?

This is very helpful.

Yes.

Thank you so much, I think Indrajit, just on the JAL acquisition, we know the process is still -- there's still a process underway. And only once the COC process has been finally resolved, will we come back to the market with a detailed plan. There's a lot of options within the 5 different business segments, but I tried to upfront explain what the primary catalyst was. On the rest of it, following COC, we will definitely come back to the market. I don't want to be preemptive at this point. Ajay, you take the next one.

Yes. So the third part you asked, Indrajit, debt at Vedanta Resources. So as on September end, it's the external debt at about $4.4 billion. And plus, as you know, from Vedanta, there's an ICL, which is again $400 million. So overall debt internal and external is $4.9 billion. Maybe I also take this opportunity to covering how do we want to look at financing in second half at VRL, next couple of years. So for the current year, between Q3 and Q4, we have no impending maturities. And what remains to be cashed out at VRL in second half is the interest cost at about $270 million, $280 million. And one of the options remain to fund that using dividend. Now over the next couple of years, for example, the next year, the actual maturity is about $300 million, plus $200 million is ICL, the last tranche. Total need for maturity at VRL next year is about $0.5 billion. This number in FY '28 second year is about $450 million. So over the next 3 years, the maturity at VRL will be about $0.5 billion and that can be easily managed by paying 4% to 5% dividend yield. Secondly, the interest cost at VRL, given both deleveraging and lower cost of funding will be almost 400 or thereabouts, and that will be equal to the routine brand fee even at the current levels. So in summary, over the next 3 years, both the maturities and the interest cost at VRL, as earlier mentioned, will be practically on autopilot mode.

Next question is from the line of Sumangal Nevatia from Kotak Securities.

I just wanted the update on the various approvals for the various mines, which we are awaiting. So first is Kuraloi, Ghogharpalli, and Radhikapur, if you can share in the last 1 or 2 quarters, has there been any progress on the pending EC and FC? And also on Sijimali, I read it FY '26 is when we are expecting to start, end of FY '26. So if you could just share what is the status of the EC/FC there?

Thank you, Sumangal. Rajiv, I'll go straight to you.

So we start with Kuraloi FC Stage 1 approval on 12th of May 2025. We are in the last stage of compliance of FC Stage 1 and complying to FC Stage 2, then we get the CTE and then the commissioning of the mine. That's Kuraloi. Radhikapur mine plan is approved. Forest clearance Stage 1 is granted and the submission of Stage 1 compliance is in progress. EC is granted. Ghogharpalli, EC -- for EC, the collector has issued letter to SPCB, the State Pollution Control Board for confirming the time, date and venue for public hearing. Anything else I have answered? And for Sijimali, we -- to get the EC, we have handed over 1,760 acres of compensatory afforestation land to the state. Going by the process, the State Forest Department has taken up the matter with the MoEFCC for the grant of FC1. MoEFCC has sought some clarification from the state, which are being processed. We are hopeful for the mine to become operational in the current financial year.

Thank you so much, Rajiv. Maybe just to add, Sumangal, on the Sijimali, we had previously communicated quarter 4 FY '26. So we are keeping the comments per Rajiv's guidance. On Kuraloi, previously, we had communicated quarter 3 this year. I think given the time lines there, we might push it out by a couple of months to quarter 4 this year. And in Ghogharpalli, we had originally communicated the second quarter of FY '27 that might move out by a quarter, but still positive that, that will be quarter 2, quarter 3 FY '27. So just to reiterate the time lines. Thank you.

Understood. Understood. That's very useful. My second question is on the ICL of around $400 million. If you can share what is our plan to close that? In the past, we've kind of rolled that forward. So what is the latest time line for closing it?

Ajay?

So the remainder part of the ICL is about $417 million, 4-1-7, out of which $200 million is due in January and the balance $217 million sometimes in May next year. We intend to repay it as scheduled. We don't -- we're not looking at any further rollover.

Okay. Okay. Got it. And just one last question on the Power division. Now next year, FY '27, Athena, Meenakshi, both would be fully commissioned. So on a steady-state basis, what is our expectation for the PLF? And in terms of EBITDA per tonne, if you can guide what is the ballpark range that we should bake in?

Thank you, Sumangal. Maybe I'll break it down a little -- make it a little easier. So maybe by the end of quarter 4 for both Meenakshi and Athena, I'll just talk about capacity PLF, maybe cost and realization. And that will give us a better -- give you a better sense. So by quarter 4, Meenakshi capacity will be at the 1 gigawatt, PLF will be around 65%. Cost of generation in rupees per unit, INR 4.7 and the realization will be around INR 5.7. And Athena, we'd have probably both units commissioned then. PLF about 87%. Cost of generation, INR 2.8 per unit and realization at INR 5.7. That should give you a sense of what the profitability would look like by the time both units are ramped up.

Got it. This is exit of fourth quarter or average fourth quarter expectation?

Average fourth quarter.

[Operator Instructions] Next question is from the line of Ritesh Shah from Investec.

First question is for Ajay. Sir, if you could just repeat for FY '27 and '28, what was the maturity and the interest amount that you indicated? I think you did include $200 million of the $417 million for FY '27, and you indicated $217 million in May. If you could just refresh for FY '27 and '28, what you indicated?

Yes, no problem. Yes, Ritesh. So for FY '27 next year, the total debt, which is actionable is about $300 million, plus ICL $217 million, so about $0.5 billion. FY '28, there's no ICL. So $450 million actual debt. So $0.5 billion next year, $450 million the year next. Interest will be almost $450 million next year, FY '27 and $400 million in FY '28. So $0.5 billion next year maturities, $450 million is interest. So give and take, $950 million to $1 billion total requirement. FY '28, $450 million are the maturities and $400 million interest, so about $850 million.

Sure. That's useful. And congratulations for the recent bond issuance, I think $500 million, $550 million. I just wanted to understand the breakup of $4.9 billion, what you indicated because we would have taken out certain high-cost debt at 16%, 18%. So how should one look at the breakup of bonds and loans for the outstanding debt, say $4.5 billion and the balance, I presume is ICL.

Ritesh, Charanjit here. You need to look at the Slide #25. That has all the details with respect to the breakup and also the cost, the new cost.

Sure. I'll just move to the second question. This question was for Deshnee. Ma'am, thanks for explaining the underlying rationale for the JP Group. But just wanted to clarify that the number that you have indicated, is it adjusted for economic interest basically when we say INR 2,100 crores of EBITDA?

Ritesh, these are the reported performance of the company in the past 2, 3 years.

This is JP's numbers.

Yes.

Yes, yes, I appreciate that. But what I'm asking is, if you adjust for economic interest, the actual numbers will be significantly lower. So just trying to understand the rationale behind it. And specifically, you did indicate the amount that we have put on the bid. Just wanted to understand how are we looking at -- there are multiple contingent liabilities on the asset. So how do we plan to take care of it?

Repeating what Deshnee mentioned earlier that we will come up with a very detailed comprehensive explanation business by business segment once the COC decision is made.

Charanjit, what I'm trying to understand is the rationale for bidding the asset, which are several subsets and there is several contingent liability on each of the assets. Vedanta is going full throttle on the right direction right now, then why are we going for JAL only for power assets, wherein the other assets, there are significant issues which are there. So I'm just trying to gauge the risk. And obviously, there would be some quantification of the risk. I'm trying to understand that.

See, I think that's what we have been trying to explain even in the one-to-one meetings and also in this call that we are in position to provide a detailed explanation and our reason once the COC decision is made. Until then, I think you need to understand that we are -- we have our hands tied up with respect to explaining the details.

But we understood the question.

Sir, I'll just take one last question. Can I take one last question?

Yes, you may, please.

So ma'am, we understand that we had settlements on SEPCO. Just wanted to understand that we have this thing with Ministry of Petroleum and Natural Gas and something with Department General of Hydrocarbons. Are we ready to furnish certain bank guarantees? If yes, what is the quantum over there? What we pick up from the last reported numbers in the press was almost $520 million. So I'm just trying to understand, given there's a lot of confidence on the demerger time lines, are we ready to furnish a bank guarantee over here to the extent what I indicated so that the time lines what we have indicated probably we have a far more confidence on that particular variable?

Yes, Ritesh. So you remember, even at the last call, we had taken this question because the subjection was raised then. I just want to confirm to everyone, MOPNG's concern is actually, as you rightly mentioned, the financial risk faced in recovering some of these alleged at this point, alleged claims from the business and basically questioning whether the P&L of the demerged oil and gas business would actually be able to sustain these should they realize. Their concern has been taken care of by us providing a corporate guarantee from Vedanta. So that's already in play.

Ma'am, would it be possible to quantify the amount over here?

It's a guarantee that does cover up -- cover us for any -- for the full extent of the alleged claims at this point, Ritesh. Of course, all of these numbers will be finalized once the demerger is actually finalized, and this is still a matter in progress.

Next question is from the line of Vikash Singh from ICICI Securities.

Just my first question pertains to currently, assuming the JAL is not clear right now and your VAL requirement is very low. So ex of these 2, should we assume that our net debt would see a declining trend from here onwards?

Ajay.

Yes, Vikash, of course, I mean, I'll start with -- look at maybe the past couple of years. And at the parent company, Vedanta Resources, over the last 3-odd years, our debt from $9.1 billion, now down to almost $4.4 billion September end. So it is a decade low debt at Vedanta Resources. We also have publicly committed that from current $4.4 billion, we will go down to $3 billion over the next 2 years. Coming to Vedanta India, the operating company, the way to look at more so when we are in the high-growth path, it is a debt-to-EBITDA ratio, which has improved from almost 1.88 leverage to 1.37 as we closed the previous quarter. And from here, we have committed that at Vedanta India Console, our debt-to-EBITDA will further improve to 1x. So $3 billion Vedanta Resources, 1x leverage Vedanta India. That goal remains unchanged. Any other priority will remain subservient to that goal.

Noted. So absolute debt probably might not go down. My second question pertains to this INR 1 lakh crore investment news in Odisha, which keeps on floating. Could you give us some color on the segments and the time lines for that?

Ajay.

See, the INR 1 lakh crore investment that the Chairman has committed, it, of course, remains Chairman's long-term vision for the state where we operate. And you may have seen even earlier in a couple of large geographies where we operate in terms of zinc, oil and gas and aluminium specifically, the commitment is made. Now you would appreciate, Vikash, these commitments also needs lots of partnership and support from the state government to enable in terms of land allotment and multiple approvals. So at this point in time, it will be very difficult to give a committed time line then at what time frame we do spend INR 1 lakh crores. In the interim, as we have been previously guiding in terms of CapEx for the current fiscal, our range remains INR 1.7 billion to INR 1.9 billion. And over the next 3 years, cumulatively, collectively, it will be about INR 4.5 billion to INR 5 billion.

Maybe just to add there, I mean, on the Chairman's commitment last week, there was a reiteration of a previous commitment that we had made. And really, the collaboration includes the development, as Rajiv has also guided in the market, a 3 million tonne per annum additional Aluminium plant and the Aluminium park that we will be looking to put up, and this will be part of a major hub for downstream producers on Aluminium products within the state as well. So it's part of a larger -- a much larger plan that the Chairman has already spoken in public last year and has reiterated to the Chief Minister in last week's discussions.

Noted. And lastly, any progress has been made on the Northeast or Eastern India side of oil and gas fields, which we have acquired?

Thank you, Vikash. Let Jasmin or Hitesh to take this and also introduce yourself, Jasmin, this will be the first time you're speaking to some of the investors and analysts.

Hello to everybody. I'm Jasmin Sahurity, COO of Cairn Retail Oil and Gas. I've been in this position for the last 6 months. In terms of the Northeast, we had a very fruitful discussions over the last week with Chief Minister, and we confirmed our commitments of investment, especially in the North oil and gas business. So far, plans are to have two discoveries besides of one already confirmed, develop and confirm the hydrocarbons with a potential of 200 million barrels of reserves. And after that, all aside investments into the society, into the future development of the Northeast region will be confirmed. This is so far what I can say. But in a nutshell, first well, which will be confirming the new reserves in the Rudra region will be end of November spudded. Second well in Nagaland region will be spudded in February, and we can expect till end of this financial year, confirmation of the reserves in between 100 million and 130 million barrels producible. Anything else?

No, that's all covered.

We'll take our next question from the line of [ Abhishek Roy from JMF Capital ].

What further recent contact has there been from the Enforcement Directorate? And is the ED aware that Vedanta Resources has no corporate office or staff in London to justify the brand and more importantly, the strategic services agreement.

Sorry, can you repeat the question.

Who is this? Sorry, I didn't catch the name.

What recent contact has there been from the Enforcement Directorate in relation to the recent report in your accounts? And is the Enforcement Directorate aware that Vedanta Resources has no corporate office in London or any staff in London, but they are being paid strategic services agreement fees.

Okay. So maybe just -- so there's no specific engagement, but maybe just to answer the question more broadly first. I mean in the normal course of business, statutory agencies do seek information from us. And as always, we have been very compliant in terms of responding, but we've had nothing specific from ED. That's the first. On the second, in terms of the Vedanta offices, I think everyone understands our very lean corporate center models. And in London specifically, the corporate offices do run out of Hill Street, which again is very well known, and there is a small center there. But that office is also supported by resources dedicated through service agreements from Vedanta Limited as well out of both Mumbai and Delhi. And that's the operating model that's fairly well understood in the market.

Okay. So does that not cause an issue with transfer pricing, if the services are actually being performed in India, but this $400 million, $450 million a year going to London for strategic services. If those services are being delivered in India, then presumably that's a transfer pricing issue that the ED is concerned about, and we know that they were concerned about back in 2023.

Maybe I'll take it, Deshnee. See, the rationale for overall brand fee and strategic services has been also addressed in the past in detail. And overall, the entire contract is monolithic. It is not separable between the usage for the Vedanta brand and the Vedanta name as such and also services we get from the VRL team across many areas. They can be in terms of strategic acquisitions, mergers, capital market and much more. What I can say at the cost of repetition...

None of that team is in London, which is where the money is going.

It don't have to be domiciled at a geography. When we use a logo or a name as Vedanta and get services, it is a service that is being rendered and a service that is being received by Vedanta India entities. That is most important. I may like to also point out that the entire brand fee agreement has been internationally benchmarked. There are multiple studies done by one of the best big 4 firms, the brand fee rate, which is being charged over the last few years, in fact, is lower than the median rate recommended by the Big Four firms. So in summary, I would like to say the entire brand fee has been legally vetted. It has stood the test of scrutiny by multiple regulators, and we don't see a challenge from the legal viewpoint.

Abhishek, I request you to join back the queue please, as we have other participants waiting for their turn. [Operator Instructions] Next question is from the line of Imtiaz Shefuddin from Barclays.

I just have one question, and this relates to KCM. Has there been any progress on the initial funding of the $1 billion over 5 years that you were trying to raise for KCM?

Yes. Thank you for that, Imtiaz. So in the normal course of business and per the shareholder agreements, we remain compliant with what we have agreed with the shareholder agreement year-to-date, okay? That's about $130-odd million in the first half of the year. In terms of the rest of the KCM funding, I think everyone will be very happy to know that KCM is now operating on an integrated metals basis, around 8,500 to 9,000 tonnes per month, which is actually close to numbers that the business last achieved in 2017, and at these copper prices, they've been able to sustain both the operational cash requirements as well as their sustaining capital cash requirements. In terms of the larger investment, KCM is in the process of finalizing the KDMP feasibility study. Once that feasibility study is complete and approved, we will make a funding decision for KCM. In terms of the fundraising for that, I think we find ourselves in a very fortunate position given the current integrated production and hence, the cash flows the asset is generating, given the current price environment and its appetite for anything associated with copper right now, we are very confident that we would have several avenues available once the project is investment ready. So KCM is progressing well.

Okay. And yes, just to follow up, any funding that's going to be done at KCM, I think you mentioned the last time that you will be ring-fenced within KCM, yes. Is that still the case?

That is still the case. In fact, I think I am more positive today than I was a quarter ago, given what's happening on the production ramp-up as well as the copper prices.

Great. And just congrats on your first half performance.

Thank you. Ladies and gentlemen, we'll take that as the last question for today. I now hand the conference over to Mr. Charanjit Singh for closing comments. Over to you, sir.

Thanks, everyone, for taking out the time to join us. Look forward to our Q3 in January when we report our numbers. So thanks, and have a nice weekend, everyone.

Thank you. On behalf of Vedanta Limited, that concludes this conference. Thank you for joining us, and you may now disconnect your lines.