Vedanta Limited ($VEDL)

Ladies and gentlemen, good day, and welcome to Vedanta Limited Fourth Quarter and Full Year '25/'26 Earnings Conference Call. [Operator Instructions] Please note that this conference is being recorded. 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, and welcome to Vedanta Limited Q4 and Full Year FY '26 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 results reasons that we have made. Also, we have uploaded a presentation on our website under the Investor Presentation start outlining the medium-term outlook for the demerged Vedanta, covering all business segments. This is primarily Zinc India, Zinc International, Copper, perorome and nickle. Kindly take a look at it. If you haven't had the time to already see it. On the call today, we have Ms. Deshnee Naidoo, our Group CEO; Mr. Arun Mishra, our Executive Director; Mr. Ajay Goel, our Group CFO, Mr. Anup Agarwal, CFO, Alunium; and Mr. Jasmin Sahurity, CEO Oil and Gas. We will begin the call with a business update from Ms. Naidoo, followed by an update on financial highlights by Mr. Ajay Goel. And 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 [indiscernible] entity will conduct its own earnings call as separate companies. And before I reflect on the year's performance, I want to take a moment to speak about the tragic incident that unfolded at our [indiscernible] power plant in Chhattisgarh on the 14th of April. I want to begin by expressing my deepest condolences, the family with those who lost their lives in the tragic incident. Across Vedanta, there has been an outcall of brief and solidarity. I want to acknowledge the efforts by the team on the ground. Our thoughts remain firmly with the family who are grieving and with those who continue to receive medical care. The plant [indiscernible] by our O&M contractor in DSL. The incident occurred in Unit 1 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, were present in the area carrying out operations and maintenance-related work. We continue with our efforts to provide the best possible medical care and rehabilitation support to impacted family, including monetary compensation, accommodation and employment opportunities. We also operate in a 24/7 call center to address any queries from our effected family, extending care and support to all of our employees at the site and beyond remain our top priority. We are working with all authorities to establish the fact in a transparent and comprehensive manner and will take all necessary steps to present any reoccurrence of such instances. 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 [indiscernible] to 0.4%, with our lost timing release down 16%. Our total recordable injury frequency rate decreased 3% to 1.3%. And as part of the group's safety improvement plan, we continue to invest and implement our CRM [indiscernible] clinical risk management, drive incidents, corrective and preventative action closure and increase our leadership in the period. Now I want to turn to our FY '26 performance. The year represented a clear inflection point for Vedanta, our strategy and execution converged to deliver the best investment performance in the company's history. We delivered record high and revenue of INR 1.7 lakh crores, EBITDA of INR 56,000 crores. PAT of over INR 9,300 crores and our free cash flow pretax of INR 26,013 crores growth. Our return on capital power the year. All of this on the back of volume growth across various businesses and reduced cost driven through structuring initiatives. Our assets on operational excellence transform FY '26 into a year of new milestones, where our aluminum business delivered a [indiscernible] production of 2.9 million tonnes, up 48% year-on-year, and highest ever and union production of 2.46 million tonnes, while also achieving its lowest annual hot metal cost in the last 5 years of $1,752 per ton. Our exit run rate of [indiscernible] production at Langage refinery was close to 4 million tonnes per anum. Zinc India recorded its highest ever annual mined metal production of 1.1 million tonnes, with sale production of 622 metric tonnes while still maintaining to achieving the lowest cost of $950 million per pound in the last 5 years. At Zinc International, mined metal production increased 27% year-on-year to 225,000 tonnes, led by the humps of volume[indiscernible] 9% year-on-year. Given the highest [indiscernible] stable delivery and improved feed cases. Power sales grew 30% year-on-year to 16.4 billion, with the start of operations at [indiscernible] alongside a 51% increase in our average NFR. The steel unit in Bokaro delivered 1.3 million tonnes of production attribute to the highest ever annual billed TMT R output of 106,000 tonnes, 555,000 tonnes and 424,000 tonnes respectively. Through improvements in fuel 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 tonnes, representing a 10% increase year-on-year. Our iron ore production grew 5% year-on-year to 6.2 million tonnes, while Iron Ore Goa achieved a 62% year-on-year growth, supported by production ramp-up initiatives and delivering 18% reduction in operating costs. Our Ferrochrome business achieved delivered a strong turnaround with record telephone production of 101,000 tonnes, up 21% year-on-year. The restart of the [indiscernible] enables availability of high-grade category during the year, yes, thereby materially reducing our cost by 19% compared to FY '25. At the Copper business, operational delivery remained strong, with [indiscernible] plants together delivering copper wall production of 282,000 tonnes, 10% [indiscernible]. So also recorded annual capital production of 170,000 tonnes, up 15%, resulting from debottlenecking, operational efficiency, diversification of raw material resources. Now let me turn to capital. FY '26 required not only new milestones on operational metrics, but also on CapEx execution. During the year, we deployed INR 15,000 crores of growth capital in line with guidance, establishing a new benchmark in Vedanta's journey on project execution as the year marks successful commissioning of various multiyear projects, setting us up on a trajectory of multiyear growth. Some of the key growth projects completed are the expansion of a limiter refinery [indiscernible] of 5 million tonnes [indiscernible] of the 435,000 tonnes smelter or with product ramp-up starting from this current quarter. Commissioning over 250,000 tonnes and 280,000 tonnes per annum of new billet lines adjusted it in bulk, respectively. Staff at start of the 106,000 tonnes the [indiscernible] debooking at Hindustan [indiscernible], Chanderiya and Marisa, resulting in an incremental capacity of [indiscernible] tonnes annum, the 1.3 gigawatts at Athena and. Other facilities is commissioned during the year include the reagent of the facility at Lanjigarh and the pressure at [indiscernible]. As we move into FY '27, the pipeline of project commission remains strong. The coverage coal mine and [indiscernible] a waiting for their EC, which we paid the part of staffing operations environment. [indiscernible] Phase 2 is around 94% complete, whilst our [indiscernible] project in Bank India has already booked around 75% of total capital. At ESL, plant surpass doubling to 3.5 million tonnes [indiscernible] 6 months once we see EC. All equities for the expansion is already in stores and at [indiscernible] site. Our BI plant in Goa is over 60% complete as of March '26 end. This CapEx is primarily financed into an approval. Our free cash flow generation pre-CapEx of around INR 26,000 crores, reflecting this strong operational performance, with [indiscernible] as the second highest we place amongst the 100 companies in FY '26. Just a quick update on [indiscernible] licenses. As a FY '26 close, we had one accompanied licenses on [indiscernible], which includes those of the gold as well as manganese, while the remaining 8 plus after critical lenders. In 3 of the block exploration is in an advanced pace, and we are expecting to be in the decision-making position in a year from now. On ESG. During the year, we continue to make meaningful progress on driving renewable energy consumption across our operations, reaching 3.97 billion units in FY '26, up 42% year-on-year, thereby results in GHG in [indiscernible] from 6.02 to 5.43x of CO2, equivalent per [indiscernible] of product. With increasing growth center to Vedanta [indiscernible] purpose to spend over INR 420 crores in FY '26 and various CSR initiatives, impacted over 6 to 9 million people through our various programming education, health care, lives, women empowerment and community infrastructure. In closing, as we mark our final reporting year end of June merger, Vedanta delivered a truly landmark [indiscernible], best in the company's history. The structural improvements made during the year, together with a disciplined capital execution and result in a record level of cash flow generation, which is well reflected in credit updates on various [indiscernible] agencies at the group level, backed by Tier 1 of the portfolio, record operational and financial performance in FY '26, we enter FY '27 as a more agile, streamlined and future-ready organization. With over 5 decades of experience in manufacturing and methods, Vedanta is leveraging its net technical expertise to expand into a high potential new of future and transition itself for the future. The [indiscernible] in strategic transmission designed to align the company's cost [indiscernible] with India's evolving priorities, an energy transition, advancing manufacturing and clean technologies. As part of this transformation, we are positioning ourselves to meet India's rising needs for pretty tremendous powering the growth of AI, data infrastructure and advanced technologies. The demerger is not in its final stage. The effective and record date is set the main path. In the next week, we will be filing with the exchanges for listing approval. The shares of the voting companies are expected to [indiscernible] and commence trading by mid-June. This more immune chapter, defined by simple structures sharper accountability and focused platforms to drive growth and value creation. This foundational reset is in a sustainable growth over the coming decade. With that, I now hand over to Ajay to walk us through the financial performance for the year. Ajay.

Good evening, everyone. We ended the fiscal year at '26 on a high note, with Q4 marking a little movement for Vedanta. We delivered record financials, our strongest ever, both for the quarter and for the whole 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 at to our advantage. We moved quickly to protect supply chain, control costs and reinforce our balance sheet, all that while staying focused on growth. Starting with the demerger. As earlier communicated last week, our Board approved Vedanta's demerger effective from 1st May 2026. This will entail creation of 5 independent sector-specific pure-play companies allowing each company to chart out their own growth trajectory and attract respective thematic investor stores. We have set firstly as a record date for demerger. Shareholders holding 1 share of Vedanta as on 29th April today, will receive 4 equal shares of the resulting companies. We are targeting listings and commitment of trading of these shares by Q1 FY '27. The demerger has been architected with precision on capital structure, aligning debt with earnings strength and growth stage of each resulting companies. Vedanta Oil and Gas and Iron, Steel will be close to 0 net debt businesses. Other 3 businesses, net debt-to-EBITDA ratios will be in line with their debt serving capabilities. At Vedanta Group [indiscernible] demerger, our leverage stands at 0.95x, reflecting a resilient EBITDA and disciplined financial structuring. For the Q4 and FY '26 results, following NCLT approvals, we have followed the demerger accounting as per Indian accounting regulations in AS 105. Our clarity and like-to-like component, our results, discussions are for the combined operations, which is pre demerger and includes all 5 businesses. Moving very briefly to performance. Recorded all-time highs in all 3 metrics. They being revenue, EBITDA and PAT, both for Q4 as well as for the full fiscal. Our quarterly revenue grew 29% Y-o-Y to INR 51,524 crores, supported by positive prices, exchange rates and sustained growth across our core businesses. Our quarterly EBITDA grew 59% Y-o-Y to INR 18,447 crores, with EBITDA margin expanding [indiscernible] up by 95 bps Y-o-Y to 44%. Again our best ever. And finally, the PAT grew by 89% Y-o-Y to [ INR 9,352 odd crores ]. For the full year, we delivered as earlier guided, our best annual results ever. Revenue growing 15% Y-o-Y to INR 1.74 lakh crores, EBITDA up 29% to INR 55,970 crores and finally PAT at INR 25,096 crores, marking a jump of 22% Y-o-Y. Let us take a brief look on Vedanta as a portfolio and key businesses continue to deliver strong annual performance. Aluminum EBITDA for the year INR 25,502 crores, up 43% Y-o-Y with a 38% margin driven again by positive prices, record production and lower COP achieving a 5-year low of [indiscernible] per tonne, down 5% Y-o-Y. Zinc India EBITDA, INR 22,056 crores, up 27% Y-o-Y. -- with best-in-class margin of 56%, driven by record mined metal, positive pricing and COP dropping to $959 hold to. Again, lowest since 5 years, down 9% Y-o-Y. The strength of our diversified business portfolio, coupled with momentum in our growth businesses across power, oil and 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 investor returns. We remain focused on disciplined value-accretive growth. In FY '26, we invested INR 14,918 crores on growth CapEx and strategic projects across aluminum, zinc, oil and gas and power. As these projects come on stream, they will drive higher volumes, margins and earnings visibility across cycles. In Q4 FY '26, 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 production 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 3 wealth creators and listed 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 [indiscernible] market conditions. Balance sheet. 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, 0.95 from 1.22 last year same time. So we have brought down radials borrowing costs below 9% at about 8.9% as it closed the fiscal and 16% reduction in financing costs, which is more than INR 1,563 odd crores, with further reduction in the borrowing cost in site in near future. On credit rating, both CRISIL and ICRA has reaffirmed Vedanta's rating as a AA with shale. In addition, Fitch rating has augmented, [indiscernible] ready to BB-, underscoring confidence in our improved balance sheet, cash flow visibility and strategic addition. In conclusion, FY '26 marked a clear defining year for Vedanta with strong performance and notable advancements across focus areas. The upcoming demerger marks Vedanta's transition into a future new phase of growth and value unlocking into our house of [indiscernible], energy transition and technology. Thank you. And over to operator for Q&A.

[Operator Instructions] We'll take a first question from the line of Indrajit Agarwal from CLSA.

I have 2 questions for Ajay. First, as we take the group after the demerger, how would the dividend police look like for each of the entity?

Indrajit, can you please repeat, there's a lot of disturbance on your line.

Yes. Yes. So after the demerger, how would the dividend policies look like for each of the entities?

So that is , that is one change that will entail or host a demerger. In that case, our 5 companies both 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 will be 2 changes. Currently, Vedanta's policy and dividend is more prescriptive. It will become more descriptive from rule-based, it becomes principal-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% of the amount as the deal in future. Same way the zinc dividend, we have to pass on within 6 months. Going forward, Vedanta Board as in the new Vedanta, Vedanta continuing, we will have the flexibility of this money upstreaming in near future. So in summary, 5 companies will have different policies. But overall, they will be aligned with the current policy thematically overall.

So the mandate of upstreaming the dividend of Hindustan [indiscernible] Is that correct?

Correct. And in that case, the Vedanta [indiscernible] Board will have the [indiscernible] of passing it on or not passing it on within the time frame, they deem with 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 FBRL. What are the moods of addressing that debt? Earlier, it used to be brand fee per dividend. Is selling stake in one or more entities and option that we are considering or it still remains at dividend and [indiscernible]?

Right. So maybe I'll start with the first in the current year requirement FY '26. With Vedanta resources, the need for the loan in FY '27 is almost [ 0.3 billion ]. Additionally, as we know, and I do as well, which is [indiscernible]. So total company [ $0.5 billion ] is a requirement for the principal amount. The interest will be something similar. It is, in fact, shy of [ 0.5 billion we need $1 billion at ] Vedanta Resources. In terms of source of one, the brand fee is more or less [indiscernible] and the balance [ 600 ] receipt means paying out almost $1 billion to $1.1 billion from Vedanta India side, assuming the half money goes to minorities. So with 4% to 5% dividend and the routine brands fee, VRL can be managed. That also means almost $0.5 billion or $0.6 billion will be deleveraging organically. Now as we demerge all the 5 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, and that will be additional revenue for deleveraging.

We'll take the next question from the line of Amit Lahoti from Aditya Birla Capital.

My questions are on Zinc International and copper segments. So the first one on Zinc International. Where are we on this capacity expansion at Hamburg and by when do we expect to achieve full ramp up? And then second, on copper, it has not been a profitable unit for us so far. And given the treatment charges continue to be negative, how are we thinking about the segment from here on?

Thank you, Amit. I'll take the ITI question, and I will give Ajay the question on copper. So on VDI, the current project from project is 94% complete. And this is now the doubling of our run of mine from 4 million to 8 million tonnes, and we're looking at the capacity from the current around 220,000 to 240,000 tonnes and another number [ 220 ]. So all in all, about 450,000 tonnes. The team is anticipating to commission in the next quarter and to have the plant ramp up for the rest of the year. We see very typical if I look at other industry magical a ramp-up for the plant of this size should be anywhere between 12 to 18 months, 15 months would be a best-in-class ramp-up. So that's how we should look at it within the year, you'll see substantial ramp up on Phase 2 to go in 94% complete, but the better part of this year will be to ramp up Phase 2 after the commissioning in this current quarter. I hope that is [indiscernible]. So again, maybe you want to take a couple of questions in terms of profitability.

Before Ajay starts, Amit, you would have seen that we have released the presentation which is on Vedanta's website. And if you download that, you can see that trajectory for Gamsberg Phase 3, including our proposal to build a smelter also. So we have given the full details in terms of the ramp-up beyond [ 500 ] also, which is a medium-term outlook, spanning next 2, 3 years is full completely detailed. So handing over to you, Ajay, for the copper.

Copper, I mean, this copper within the Vedanta portfo as you know, is a trading business practically. And over the last couple of years, the margin has been for -- there is unchanged if I start with the brand fee. Right now, the entire brand fee is for the current Vedanta at about 3%. Now as we demerge, we have also done a revised benchmarking in an unbundled fashion. So each of the new companies, benchmarking is different. In summary, the 3% rate continues. And the only change that will be done post the merger on the copper brand fee. So the brand per copper from the current 3% will go down to 0.75%. And that alone from India's view point 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 '27.

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

So first question is on VRL in FY '26. So despite the brand fee and the dividend, if you see net debt has just reduced by $200-odd million. So, could you broadly share what was the cash outflow hedge there for FY '26?

In FY '26, of course, you are right, the dividend on the branch is almost [ 1.1 billion ] -- there is a funding for KCM last fiscal, Sumant's almost [ INR 330 million ]. And hence, that is 1 reason. And secondly, the entire -- the interco loan [indiscernible] hasn't paid from VRV [indiscernible] in that case of 5.3% has become 5.2% in the last fiscal. So it's mostly the funding for the KCM.

Okay. And we have plans for listing of KCM, where are we in terms of that? Any guidance?

Deshnee, you want to take?

Yes. So we are in the process of having filed our one with the -- 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. And as to we're able to come in to the public, we'll actually give you an update on the overall process, but we are progressing in terms of the S-1 filing.

Got it. My second question is on the brand fee. So if you could just call out what was the brand fee paid by copper entity in FY '26. So I mean what's the delta we're looking at? And now once we've relooked until what year is the brand fee at 3% fixed for other entities?

Maybe Submangal, after the call we will have the numbers shared with you. But on a broad basis, about [ 3.1 billion, 3.2 billion ] is a copper revenue. And on that last year, the number has been a 3% brand fee. Now that number will go down to 0.75%. So the impact of the brand fee on copper is about [ $65 million ] FY '26. FY '27 [indiscernible]. Now the overall brand fee, looking at the volume increase and the better pricing will be something similar. So from Vedanta, India's viewpoint, all the 5 companies combined brand fee, FY '27 remains similar to last year. So the copper impact is mitigated by volume and the pricing.

Okay. That's useful. Ajay tell which is the rate freeze as per the agreement?

The rates are -- typically, if you look at the last 9-odd years. In 2017, the brand fee got commissioned. So we look at revised benchmarking every 3 years. So it is 6 to 3 years.

Okay. So until FY '29 it is freezed?

That's correct.

Understood. Understood. I have 1 question with respect to Zinc International. Now we are guiding for EBITDA increasing from $100 million to eventually $450 million in FY '28 in the presentation. I mean, in the last many years, we've missed and delayed the guidance for [indiscernible] Phase 2. So just want to understand, last 1 or 2 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?

Yes. Thank you so much for the question. Sumangal, I answered partly, I think that I met asked the question earlier. So today, the project is 94% complete. So we are 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, [indiscernible] to produce 8 million tonnes of [indiscernible] given the stripping ratio of 3 to 4 at this moment, we've had a lot to do on catching up of the waste stripping at the house book open pit, and that's just the better part of the last 2 and 2 years to actually catch up. So this is almost 3 years delayed in [indiscernible] stripping, that is now additively quarter. 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 delay 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 that they're seeing 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 low mining geography. And we have had certain skill sets that have been short in the [indiscernible] hard even through our business partner, onshore for finding. So that's created some of the delays of site work like piping instrumentation, et cetera. But again, I think a lot of time has gone in the last 6 months, almost setting the project, to make sure that we can deliver it on time on the new time lines and making sure that keep guiding the tier, the team that losses but not as both [indiscernible] as we should. It's still very capital competitive in terms of capital intensity. And now we have to get the plant to drill [indiscernible] which I indicated earlier, should be a 12- to 15-month capital ramp-up for the plant of the site. Also gives you a good sense of what has happened, why the miss is and why we are conscious now given the status of both mining as well as the projects that we will deliver this year's ramp-up. And we saw last year's number, yes, from the previous year, the Hamburg ramp-up in the south because of the waste [indiscernible] that I just mentioned, was almost 40% up year-on-year.

That's very elaborate. I just have 1 more question. Can I ask?

Yes, go ahead. Submanhgal.

Okay. So I just -- one is, I mean the resultant entity has still $1 billion of debt. So how are we going to service the debt? Will it be largely through the dividends from Hindustan Zinc? And maybe the leftover is passed out as upstream as dividends. And second, the aluminum entity is so the numbers throwing very strong cash flows. So, generally, what's our preference there? I mean, in terms of deleveraging and payout. So if you could just share some thoughts on capital allocation at the aluminum entity.

Maybe I'll start first with the 5 companies. And in fact, if you look at some in the IR pack, there's a page, which covers all the 5 companies in unbundled form, what will be net debt to EBITDA, all of them. So if you look at overall Vedanta right now, [ $5.5 billion ] net debt and debt-to-EBITDA almost [ 0.95 ]. Now the demerger, we have made sure that each of the entities in terms of their debt and the cash flow, they are in harmony. So even before demerger on 1st of May, Vedanta oil and gas will have mildest will 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 aluminum that of almost $3.5 billion. And in aluminum, debt-to-EBITDA ratio almost 1.3. And as you rightly pointed out, given their cash flows, that will not be a challenge. That leads Vedanta Power. There -- most of the debt impact is structured in the long term with the PSC and the RECs and there, the debt maturities are, in fact, truly long term, 7 to 10 years. Vedanta Limited debt will be almost $1 billion and their debt to EBITDA will be 0.4x. So a combination of profitability at Vedanta Limited, to Paco, through Zinc International and the copper that can be serviced. Additionally, Zinc India dividend remains additional optionality. So in summary, we don't foresee a channel. Looking at the current pricing demand our work on volume, cost NEP observing debt of all the 5 companies.

Next question is from the line of Ritesh Shah from Investec.

I have like 5 [indiscernible] of questions. First is starting with South Arabia. I see there's a $3 billion of CapEx indicated over there. You also see the EBITDA profile broadly from $19 million FY '27 to around $200 million million. I just wanted to understand how this would be funded. That's one. If you can provide us the years, that would be great. And the funding of this CapEx? And basically, how should we read into the economics of -- I see there is normal -- I see there's a smelter. Commission timelines are not very fast. And there's an exciting prospect of the mine as well. I think mine related CapEx has not been mentee over here. So if you could just help us understand the economics of how to fund is $2 billion, the time line and the underlying economics as the first set of questions.

Maybe a overview of what we are doing in the Kingdom -- and then again, we can talk high level about the funding as we release Vedanta remain [indiscernible] go forward. So as you rightly mentioned, Ritesh, we have the [indiscernible] this is a $50 million fund, capacity of about 200,000 tonnes. And this is something that we were contemplating for a while. Good [indiscernible] and the team actually putting this on -- I think they started last year's program in October last year. And that plan to be ready in September this year. From an economic point of view, it's all about supply/demand as we just discussed on the Copper business side, but this plant will have on margin 5%. Then you touched on the mining block that we recently acquired investment in [indiscernible] sill very lace stages were still getting 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, a relatively attractive rate about 1.5%, I think, on copper side, which should be maybe north of maybe 2% perspective more a thing in gold of about 3 grams per tonne. So I can give a date on the grade, the exploration is being supported by [indiscernible]. So maybe on can also as part of the update. The copper smelter project, it's still a project that we indicated almost 18 months ago now in terms of the MOU we have with the Kingdom. We continue to work within the package of incentives that we wanted to make the project work is still under discussions in the king. So we haven't actually taken a project decision as of now. Okay. And given what I just said on some of the incentivization of core $31 million is largely funded from cash, but the copper business, including [indiscernible] generated 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, basically retain I mean if you look at the Kingdom all document a couple of years ago, and they want to diversify beyond addition 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 subsidiaries, including in terms of funding and lower cost of funding. What we have added with the local government, it is still being frozen. The entire funding will be happening in the ratio of 75:25 debt to equity. The 25% will be the data 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. I mean, a very big CapEx number of $4 billion -- the EBITDA is moving from $300 million indicated FY '27 went to around $500 million. How should we read into the funding of the CapEx? Again, it's not an asset which is I understand or appreciate well -- how should we look at the underlying economics of the mine concentrate [indiscernible]? That's the second bucket of questions. The third and fourth [indiscernible]

Yes. So -- the good news was in international after this year, it will be a start generating cash -- [indiscernible] 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 gained guidelines on how to look at the growth comes from the work underground. [indiscernible] underground, I think we have given you some updates on the R&R right now. It's almost -- I think I want to elaborate on the almost as large from an RMR point of view as [indiscernible] 6 million tonnes of Metal there. The underground material always had a higher grade and actually open pit today [indiscernible] and the reason for that and the reason why we took the decision to go open pit initially over 5, 6 years ago because it's for lower capital intensity to go open [indiscernible], start small, increase the mine and then consider the underground opportunities. So the capital that you saw will be slightly more because of the underground. But the opportunity we have is we say in the South wall is to actually use the current cash that will be generated by the business to support the next phase of [indiscernible] as we have the 2 million tonne target, recording it, I would call it the 2x project, we do have a 1 million-ton goal to take the current will be around 40,000 tonnes, if you consider some of the other projects that we are considering as part of the debt that you're looking at in Namibia gets up to another 500,000 tonne expansion in [indiscernible] Hamburg, which we call it Phase 3 because Phase 1 and 2 is currently in execution, Phase 3 will be the new project. So I think that's how you should look at it. This is from a very different business, right? You no longer should be looking to fund all of the capital, it is self generate a lot of this cash going forward, right? And these kinds of big prices over $3,000 per tonne, is quite excited about what that [indiscernible] unlock for us. And as Charanjit mentioned earlier, when we start getting into these kinds of capacities, right, we cannot be shipping concentrate of this kind of volume because normal double the volume we leadership. So we are looking at putting in a smelter. It's a project I looked at the way back then when I was in South Africa for the business. But what makes it more attractive today in South Africa has some 5 gigawatts of power that surplus today versus 5 years ago and the government is very keen to support businesses leap that have continued to spend money or spend capital in the country to incentivize us to make a [indiscernible] complex work together with -- that's what the team is looking at as part of that [indiscernible] study that you saw in the deck.

That helps Deshnee. I just -- is it possible to bring this $4 billion by year or by the way that you explained the capital structure what would the self-generated cash flow, which would actually fund it? It will just help us a [indiscernible] the cash flow profile because items.

Yes, as Happy to give the details post that call year-on-year CapEx, what we are doing and also the funding and the sources of funds for CapEx.

Sure. Quickly, third question. Power assets, we had an unfortunate incident. Are there any time lines on the resumption of that particular unit? Are you looking at 3 months, 6 months, any particular timelines? And 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?

I think I'll start with the question on power and then hand over to Arun for the critical numbers. So yes, we are incredibly saddened by our incident at Athena, and I gave you a very elaborate update on everything that we gain on the ground. They do you want to recognize again the 5 teams there. In terms of restack, I think we cannot comment any time line at this stage. What we can tell you is that we've only recently a couple of days ago being actually given access back into the site. -- to commence our full assessment work to look at the activities, electrification restoring activity on the pipe. One of 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 time line for the comments both on the Unit 1, which is the unit in question as well as in the Unit 2 project that was ongoing as well.

Let me add on the critical mineral out of the 7 critical mineral blocks with Vedanta, if you look at the time line of exploration, 3 blocks, we hope to finish exploration by 2028. And normally, we do mine planning 1 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 3 more metals to the bottom line of Vedanta.

Next question is from the line of Pallav Agarwal from Antique Stock Broking.

So first question was on the deleveraging during the quarter. So as part of the Hindustan Zinc stake sale proceeds also included in this deleveraging?

Yes. Yes, so that's right, Pallav. So INR 770 crores is a deleveraging in the fourth quarter, and it proves every aspect, both source and applications to be paying a dividend in the previous quarter or divesting of 1.5% zinc. Yes, answer is yes.

Okay. So we see, I think, the cash flow from operations of I think, INR 14,000 crores. So is that -- that includes this, this takes sale as well?

No, that is additional. So INR 14,000 crores , you're right, is operating cash flows -- the working capital is the next building block where the number of days is the right metric. So from 77 days, Q3, it has gone down to almost 70 days. Then we invested almost INR 5,700 crores in terms of CapEx growth and sustaining. We also paid last quarter a dividend that's an outflow and zinc sticks, INR 3,277 crores is additional. It's about 1.1%. So the INR 14,000 crores do not include zinc [indiscernible]. 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. Also I think you have given a very detailed breakup of pre and post merger. So I just wanted to check, in the entity-wise net cash -- some of the entities like , [indiscernible]. So where exactly which entity would the debt of that growth?

So Pallav, it's already taken into consideration when we have given the net debt position of respective entity. So it's already factored in.

Yes, I get that. So [indiscernible] is a holding company, which particular company of the emergence with debt go to?

Blue Mountain is a part of iron steel. So 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 out of $5.5 billion and a leverage 0.95. If you unbundle the current Vedanta, monolithic into 5 companies, it talks about each of the 5 companies, their in steel and oil and gas are at 0 or almost net led companies. Vedanta Power leverage will be 4.7x. Vedanta Limited will have $1 billion debt and a significant portion of debt goes to Vedanta aluminum. So out of [ 5.5, 3.5 ] goes to Vedanta Aluminum -- and looking at the EBITDA of that business, the leverage is [ 1.3 ]. So in summary, even before demerger, all the 5 companies' balance sheet are that way architected, where their assets and the cash flow will be sufficient to service debt post demerger.

Sure. Okay. Yes, okay. Lastly, on the guidance, FY '27 guidance. So Tin-PLF,Ithink, there's nothing on there. So is it because of the accessing that's happened?

Yes, Pallav, as Deshnee explained that we are taking a stock of the situation. And once we do that in the coming weeks, we'll come back to the market to disclose the start -- or the restart and thereafter, we will be positioned to give the details from a PLF perspective.

Okay. But the existing PPAs that we've signed is there any penalty for not supplying or some?

We have insurance in place to cover us for any gaps or losses, which are there.

But again, I think just give us time to assess the full situation and come back to the market with a comprehensive update, as well to a [indiscernible] update that we can provide you with today.

Next question is from the line of Kunal Kothari from Nuvama Wealth Management.

In this, I'm trying to ask one simple question, that's going ahead because now we have demerged into different entities. Obviously, bind 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? Or we can do something which can plug on other business like, for example, with Vedanta Aluminum. So any further acquisition will be only related to Aluminum business only or it can be sometimes other zinc vendors or something else also? Because we have seen -- we have seen earlier also that other business clubbed into different ones. So just to make it sure that any further acquisition only in a different particular commodities.

Yes, I think from an overall M&A as we guided the market before, our Chairman is still very involved in all M&A across the company. Going forward, whilst it will be very clear about the focus of the individual businesses are anything outside of the portfolio would still happen at the whole core level. And [indiscernible] will be set up to make sure there is some visibility of capital allocation across all 5 businesses, but also with its own M&A team to start looking at some of these opportunities. If it makes more sense, synergies right to go into one of the 5 companies goes is up, as we've seen our challenge from his previous track record, we will -- we actually have other companies in the business if you all set up new companies. So that is still very much -- that is to still be very much -- the CEO and the leadership team of the respective companies will be mandated to continue to grow organically in the face, as you know, every business [indiscernible] story. And any M&A, depending on the size hit, that's very in line with the company's strategy. We happen at the company level, anything else above we happen at a whole co level together with the channel.

Okay -- that's very clear. Second is on aluminum operations only -- Sorry, please go ahead.

Because we initially had the call from now and then you came on. So just kind of [indiscernible]

Yes, from Nuvama only. So a -- so on aluminum patients, we have seen consistent delay in mines like bauxite, coal mines, and every time we get a new deadline on that. So just wondering where we are on that process in terms of approval? And secondly, in terms of aluminum smelter also when you are going to fully commission it? And lastly, when can we start seeing lower alumina cost of production, which will ultimately lead to lower aluminum production?

Yes. I'm going to hand over to Anup.

So Ashish, first, let me answer the Algona page, what you said. So recall [indiscernible] the last earnings call, I have said that probably we will see a $5 reduction as we go into the quarter 1. Okay? But the other thing that I had mentioned was a constant [indiscernible] so if you ask me provenly quarter 2, we should see [indiscernible] hovering around $750. It has 2 parts. One, we should also appreciate the idle impact that we've had on some of the raw materials like further are in caustic. Had it not been there, probably we would have seen a cost of around [indiscernible]. As of now, based on whatever cost we are seeing, we expect to be around broadly [indiscernible] in the quarter 2 of financial year '27. Probably at $25 -- $20, $25 reduction from what was the -- the quarter 4 call. That is where we are as of now. And if we were to remove the Middle East cost implications, probably [ 700, 710 ] with probably 80%, 85% of the captive Almena. So I said that is where we are -- so as we go into quarter 2, quarter 3, we expect the cost to be closer to [indiscernible]. So I've answered that question, shall I move to the...

So Aluminum cost of production, then?

See aluminum quarter products are low. Again, if you are seeing the guidance, we're guiding [indiscernible], okay? Now if I were to talk just bifurcate into say H1 where the L cost will be. Maybe compared to quarter 4, you can expect flattish to 1% lower because of the -- some of the impact of the raw mat that we have seen, I mentioned some of the alongside on the carbon cost. So for that, the yearly guidance remains [indiscernible], but certainly probably flat to 1% lower compared to quarter 4. Now coming to Banco expansion, say, suddenly of the total INR 304 crores that we are putting in okay, we are [indiscernible] by March, okay. The delay was basically through partner substitution and resource of mention we covered in the last couple of calls. Now if I were to give you a way forward as we go on quarter 1, quarter 2, quarter 3, quarter 4. On a run rate basis, broadly, we will be doing around 105 Kt a quarter. So quarter 1 should be 25%, quarter to ramp up to 50%, quarter 3, 75%. And that's going to the quarter 4, it will be a 100%.

I think Anup [indiscernible] mean from a core asked about the refineries, I think linked to alumina question. So [indiscernible] for the year...

So aside was asking about the refinery, see, as we exited this FY '26, we exited at a run rate of closer to 4 million tonnes. Now if you look at our guidance, we are talking about [ 4%, 4.1%. ] Now quarter 4 broadly, January, February, we sort to be closer to the weighted capacity that we put in. Now why this delay? Because the calciners and the boilers that we have put in, they are slightly running at a lower capacity of, say, 75%, 80%. And as we ramp up -- so we will probably achieve the rated capacity in the quarter, but where we will achieve the rated capacity.

Okay. Okay. And then lastly, the backside and coal mines.

Hopefully, I answered. If you talk -- See, on the coal mine, say, I'll first start with [indiscernible]. So [indiscernible], we have got the mining lease, maybe a week back. Now from here, probably in a month or so, we shall start seeing the mining operations. So that is only [indiscernible]. [indiscernible], 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 convincing this block in the time line that we have indicated last 2 quarters. Last quarter, this quarter, it will consistently in terms of timeline. [indiscernible] Also has updated last time. Okay. We are -- we have got the LOI extension done. FTN is granted is we are expecting next month. And hopefully, in H1, we will see the mine [indiscernible]

Okay. So sir, in Sejimali, obviously, we were expecting earlier in February also now we are expecting. So what is the actual delay which we are facing why government is not giving it because we have seen lots of news in the new something in the local level also is disturbing. So is this the reason because of which we are getting this delay in say mine?

I'll tell you, let me address it in 2 parts. First, coming to the regulatory approvals. See there was an LOI, which was which not expired in the month of last. It was an administrative process, okay. They took some time before that LOI has been extended. It is just -- we've just got late yesterday. So some time has gone into it. Now coming to the noise that we're talking about now. So see, I 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 operations. This engagement is driven through focused on late development initiatives across health care, education, infrastructure, culture preservation and livelihood base. And I just keep in mind, this is the auctioned mine. So maybe approvals have taken a little longer time, but we are in touch mediation with the community, and we expect to open this line within the time line that we have committed.

Point to note is when this often happened, there were a few more mines which were issued to other players also. And we are the first one proceeding ahead that we have reached the easy stage and which is almost at final stages. So the process has its own time, particularly given the -- it's a long process of public hearings, FC1, FC2. And if the land, if there is a forest land involved, which is of the size 100 acres as is the case with CG Mali, it is likely to take some time. So it is a 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 in common with all the infrastructure projects in the country. So nothing very different in terms of the noise.

Understood. No issue because these things are obviously there when we already know about this thing. But the time line keeps on changing almost a delay of a year. But as you rightly point out, regulatory approvals are 1 thing we can't handle.

Ladies and gentlemen, we'll take that as the last question for today. I now hand the conference over to Mr. Charanjit 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, it would be more for demerged entity. And looking forward to meet 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.