Vedanta Limited Q4 Results

April 25, 2024: Audited Consolidated Results for the Fourth Quarter and Year ended 31^st March 2024.

“Quarterly EBITDA of ₹ 8,969 crore, up 3% QoQ with strong EBITDA margin of 30% up ~75 bps”

“Surge in Quarterly Free Cash Flow (Pre-Capex) of ₹ 9,948 crore by 131% QoQ”

“Deleveraging of ₹ 6,155 crore QoQ, significantly improved Net Debt/EBITDA to 1.5x from 1.7x”

Financial Highlights

• 4QFY24:
  • Consolidated Revenue of ₹ 34,937 crore, flat QoQ.
  • Consolidated EBITDA of ₹ 8,969 crore, up 3% QoQ with EBITDA margin of c. 30%.
  • PAT (excluding exceptional items) at ₹ 2,453 crore.
  • Strong double-digit return on capital employed ~23%, improved QoQ.
  • Net debt/ EBITDA improved to ~1.5x vs 1.7x in Dec’23.
  • Net debt at ₹ 56,338 crore, reduced 10% QoQ.
  • Liquidity improved by 21% QoQ with Strong Cash and Cash Equivalent of ₹ 15,421 crore.
  • Generated robust Free cash flow (pre capex) of ₹ 9,948 crore, up 131% QoQ.

• FY24:
  • Second ever highest annual consolidated Revenue of ₹ 141,793 crore.
  • Second ever highest annual EBITDA of ₹ 36,455 crore, up 3%.
  • EBITDA margin^* improved to 30%, up ~240 bps.
  • Strong double-digit return on capital employed c.23%, up ~240 bps YoY.
  • Successful liability management exercise at Hold Co., resulting in a structural improvement in capital structure.
  • Highest Dividend yield ~17% p.a. (5 Year avg), 10x vs Nifty 50 Cos, Dividend of ₹ 18,572 crore paid in FY24.

Operational Highlights FY24 – 

Key businesses continue to deliver strong operating performance:

• Aluminium

• Highest ever annual aluminium cast metal production at 2,370 kt, up 3% YoY.
• Alumina production at Lanjigarh refinery at 1,813 kt, up 1% YoY.
• Sustained cost reduction for 7th consecutive quarter reaching to $ 1,711/t in Q4, reduced by ~$940/t in last 7 quarters.
• Stands in the first quartile of the global cost curve.
• Commissioned Train-I of 1.5 MTPA Lanjigarh refinery taking total capacity to 3.5MTPA.
• Zinc India

• Hindustan Zinc becomes the 3^rd largest producer of Silver globally.
• Highest-ever annual mined metal, refined metal, and silver production at 1,079 kt, 1,033 kt and 746 mt respectively.
• Strong foothold in the first decile of the global zinc mines cost curve.
• Consecutive 5 quarters of cost optimisation with lowest zinc cost of production in last 3 years, at $1,051/t in 4QFY24.
• 2nd largest zinc R&R base globally with R&R of 456.3 million tonnes as on 31st Mar’24, up by ~35% in last 5 years (net of 65.1 million tonnes of ore production)
• Zinc International

• FY24 Gamsberg CoP lower by 3% YoY.
• Highest quarterly lead recovery in Q4 at BMM for FY24 at 87.5%.
• Highest monthly zinc recovery at Gamsberg of 82.3% in October 2023.
• Oil and Gas

• India’s first Field Development Plan under OALP regime approved for Jaya field, Gujarat. Production commenced with initial plan to deliver > 3kboepd. 
• Average daily gross operated production of 127.5 kboepd, natural decline was partially offset by the infill wells brought online across all assets.
• Iron ore

• Highest ever Karnataka saleable ore production and sales was at 5.6 million tonnes and 5.9 million tonnes respectively.
• Highest ever Pig Iron production at 831kt, up 19% YoY.
• Operationalized the Bicholim mine in Goa (3 MTPA capacity), marking the commencement of first mining operation in Goa region after six years.

• Steel

• Highest ever annual saleable production and hot metal production at 1,386 kt and 1,473 kt, up 8% YoY.
• Highest ever DIP production of 212 kt, up 8% YoY.
• Highest ever annual dispatch at 1,394 kt, up 11% YoY.
• Facor

• Achieved all time high annual Ferrochrome production of 80 kt, up 18% YoY.
• New Briquetting plant installed with 20TPH capacity.
• Highest ever quarterly Ferro Chrome production in 4QFY24 at 27 kt, up 38% YoY and 23% QoQ.
• Quarterly margin at 245 $/t up 68% QoQ.
• Copper India: 

• Highest ever sales at 198 kt since closure of Tuticorin operations.
• Tuticorin Smelting operations have remained halted since April 2018. On 29th February 2024, the Hon’ble Supreme Court dismissed the Special Leave Petitions filed by the Company. The company is evaluating the legal remedies for sustainable restart of Tuticorin plant.

FY24 ESG Highlights:

• Excellence in ESG: Vedanta and Hindustan zinc ranked 3^rd and 1^st respectively among top 10 global diversified Metal & Mining peers in the S&P Global Corporate Sustainability Assessment; Vedanta Aluminium ranked 1^st in among global aluminum peers.
• Gender Diversity: Achieved our workplace gender diversity target for full-time employees 7 years in advance. Gender diversity for full-time employees stands at 20% (FY23: 14%)
• Renewable Energy (RE): Construction against RE Power Delivery agreements (PDAs) of 1836 MW on track and power delivery expected to start from 1QFY25.
• Water Recycling: Achieved water recycling of 30% in FY24.
• Waste Utilization: HVLT waste usage at 90+%; Sustained Fly ash utilization at 100+%
• Tree Plantation: 2 million trees planted as part of commitment to plant 7 million trees by 2030.
• Women & Child Welfare: 6,000+ Nand Ghars created for women and child welfare.
• Exchequers Contribution: ~₹53,000 crore contribution to National Exchequers.
• CSR contribution: Spent INR 438+ crore on CSR initiatives for communities, positively touching over 16 million lives.

Mr Arun Executive Director of Vedanta, “FY 2023-24 has been a remarkable year for Vedanta. We have achieved record production across our key businesses, a testament to our consistent focus on operational excellence. This focus, coupled with our commitment to cost leadership, ensured strong margins even during a challenging commodity market. We’re especially proud of the Lanjigarh refinery expansion to 3.5 MTPA, taking us closer to a fully integrated 3 MTPA aluminum operation. The commencement of operations at the new Bicholim mine in Goa marks a significant step in our growth journey. HZL is now the world’s 3rd largest silver producer. Our commitment to sustainability has been recognized globally – we topped the ESG rankings in India and ranked 3rd worldwide. This focus is further strengthened by securing 1,826 MW of renewable power through PDAs, with the first power delivery scheduled for Q1FY25. As we move forward, operational excellence, continued growth, and ESG leadership remains our strategic priorities. With this commitment, we are confident in delivering significant value for our shareholders in the coming year.”

Mr Ajay Goel, Chief Financial Officer, Vedanta, said “Driven by operational excellence, Vedanta achieved outstanding financial results, marking the second highest annual revenue and EBITDA in our history, reaching ₹1,41,793 crore and ₹36,455 crore respectively. Through continued cost optimization, we achieved a remarkable EBITDA margin of 30% in FY24 with ~240 basis points annual margin expansion, underscoring our efficiency and agility. Moreover, our net debt/EBITDA ratio improved to 1.5x from 1.7x in December 2023. At Holdco, we deleveraged by $1.6bn in FY24 & through successful liabilities management, Vedanta has a balanced capital structure, and will remain committed towards value creation.” 

Consolidated Financial Performance –                                                

(In ₹ crore, except as stated) 

1. Excludes custom smelting at copper business.

2. Exceptional items Gross of Tax

3. Previous period figures have been regrouped or re-arranged wherever necessary to conform to current period’s presentation.

• Revenue:

• 4QFY24 Revenue flat at ₹34,937 crore, despite lower LME and exchange rate fluctuations.
• FY24 consolidated revenue decreased by 2% to ₹ 1,41,793 crore due to lower commodity prices partially offset by higher volume across businesses and favorable exchange rate movement.
• EBITDA and EBITDA Margin:

• 4QFY24 EBITDA increased by 3% QoQ to ₹8,969 crore mainly driven by higher volume and structural cost saving initiatives across businesses partially offset by lower LME and exchange rate fluctuations.
• FY24 EBITDA increased by 3% to ₹ 36,455 crore, on account of structural cost saving initiatives across businesses, easing of input commodity inflation, favorable exchange rate movement and arbitration award received in Oil & Gas business partially offset by lower LME and strategic hedging gains in FY23.
• EBITDA margin¹ stood at c.30% in FY24, improved ~240 bps.
• Depreciation & Amortization:

• 4QFY24 Depreciation & Amortization decreased by 2% QoQ mainly in oil and gas partially offset by increased ore production at Zinc India.
• FY24 Depreciation & Amortization increased by 2%, due to increase in ore production at Zinc India and increased capitalization in Aluminum.
• Finance Cost:

• 4QFY24 finance cost remained flat QoQ.
• FY24 finance cost increased by 52% to ₹ 9,465 crore, due to increase in average borrowings and cost of borrowings.
• Investment Income:

• 4QFY24 investment Income decreased by 25% QoQ to ₹543 crore majorly due to one-time gain in Q3FY24.
• FY24 investment Income decreased by 18% to ₹ 2,341 crore, majorly due to decrease in average investments, partially offset by mark to market movement.
• Exceptional Items:

• 4QFY24 exceptional loss of ₹ 201 crore, due to impairment charge of ₹ 994 crore majorly at Tuticorin, partially offset by Capital creditors written back in Power sector of ₹ 793 crore.   
• FY24 exceptional gain of ₹ 2,803 crore, majorly due to foreign currency translation gain of OCPRS of ₹ 1,825 crore and Capital creditors written back in Power sector of ₹ 793 crore and impairment reversal at Oil and Gas of ₹1,179 crore offset by impairment charge of ₹994 crore majorly at Tuticorin.
• Taxes:

• Normalized ETR for 4QFY24 is 42% vs 30% in 3QFY24. The increase in ETR is majorly due to reversal of deferred tax asset and recognition of additional tax expense due to tax case settlement.
• Normalized ETR for FY24 is 36% vs 30% in FY23 majorly due to change in profit mix and reversal of deferred tax asset.
• PAT before exceptional items:

• 4QFY24 PAT before exceptional items at ₹ 2,453 crore. 
• FY24 PAT before exceptional items at ₹ 11,254 crore.
• Leverage, liquidity, and credit rating:

• Gross debt at ₹71,759 crore as on 31^st Mar’24, reduced by ₹3,468 crore QoQ. 
• Net debt at ₹56,338 crore as on 31^st Mar’24, reduced by ₹6,155 crore QoQ; Net debt to EBITDA ratio improved to ~1.5x vs ~1.7x as on 31^st Dec’23. 
• Cash and cash equivalents position remain healthy at ₹15,421 crore, increased by ₹2,687 crore QoQ. The Company follows a Board-approved investment policy and invests in high quality debt instruments with mutual funds, bonds, and fixed deposits with banks.
• CRISIL Ratings revised the ratings of Vedanta from CRISIL AA to CRISIL AA- and India Ratings revised the ratings from IND AA to IND A+. Both the agencies placed the ratings on Watch with Developing Implications.

Q4FY24 Awards and Recognition:

Taxation: Hindustan Zinc received ‘Tax Transparency Award’ at the 7th edition of Tax Strategy & Planning Summit & Awards 2024

Safety: Vedanta Aluminium Jharsuguda and Vedanta Lanjigarh received British Safety Council Awards 2024.

Business Excellence: 

• Vedanta Lanjigarh ranked in “Excellent and Distinguished Category” at the 37th National Convention on Quality Concepts 2023 by Quality Circle Forum of India.
• BALCO awarded National Certification for ‘Digital Transformation in Manufacturing Process’ by FICCI.

Sustainability:

• Vedanta Aluminium Jharsuguda recognised as ” Best National Water Efficient Plant” and “Best Ash handling plant under 50 MW to 135 MW category” at the National Awards for Excellence in Water and Ash Management by Council of Enviro Excellence.
• Hindustan Zinc won Mission Energy Foundation Award for efficient management of fly ash – captive power plant in Northern Region.

DEI: HZL recognized at the prestigious 3rd National Transgender Awards.