Note: This is a preliminary transcript and may contain inaccuracies. It will be updated with a final, fully-reviewed version soon.
Vedanta Limited (NSE: VEDL) Q4 2026 Earnings Call dated Apr. 29, 2026
Corporate Participants:
Charanjit Singh — Group Head of Investor Relations
Deshnee Naidoo — Chief Executive Officer
Ajay Goel — Group Chief Financial Officer
Arun Misra — Executive Director
Anup Agarwal — CEO – Aluminium Business
Analysts:
Indrajit Agarwal — Analyst
Ashish Kejriwal — Analyst
Amit Lahoti — Analyst
Sumangal Nevatia — Analyst
Ritesh Shah — Analyst
Pallav Agarwal — Analyst
Presentation:
Operator
Ladies and gentlemen, good day and welcome to Vedanta Limited’s fourth quarter and full year 2526 earnings conference call. As a reminder, all participant lines will be in the listen only mode. And there will be an opportunity for you to ask questions after the presentation concludes. Should you need assistance during the conference call, please signal an operator by pressing Star then zero on your touchstone phone. Please note that this conference is being recorded. Participants connected on webcast link may change the Quality settings to 1080p to watch the proceedings on best quality.
I now hand the conference over to Mr. Charanjit Singh, group Head, Investor Relations Vedanta. Thank you. And over to you.
Charanjit Singh — Group Head of Investor Relations
Thank you, Yash. Good evening everyone and welcome to Vedanta’s limited Q4 and full year FY26 earning call. On behalf of team Vedanta, I thank you all for joining us today. I hope you had an opportunity to look at the result releases that we have made. Also we have uploaded a presentation on our website under the Investor presentations tab. Outlining the medium term outlook for the demerged Vedanta covering all business segments which is primarily Zync India, Zynq International, Copper, Ferrochrome and Nickel.
Kindly take a look at it if you haven’t had the time to already see it on the call. Today we have with us Ms. Deshni Naidu. Our group CEO Mr. Arun Mishra. Our executive director, Mr. Ajay Goyal. Our group CFO Mr. Anup Agarwal, CFO Aluminum and Mr. Yasmin Sahurthi, CEO Oil and Gas. We will begin the call with a business update from Ms. Naidu followed by an update on financial highlights by Mr. Ajay Goyal. And after that we will open the lines for Q A. With that I now hand over the call to Ms. Naidu.
Over to you, Deshmi.
Deshnee Naidoo — Chief Executive Officer
Thank you, Charanjeet. 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 demerg entities will conduct its own earnings calls as separate companies. But before I reflect on the year’s performance I want to take a moment to speak about the tragic incident that unfolded at our Athena power plant in Chhattisgarh on 14 April. I want to begin by expressing my deepest condolences to the families of those who lost their lives in the tragic incident.
Across Vedanta there has been an outpouring of grief and solidarity. I want to acknowledge the efforts by the teams on the ground. Our thoughts remain firmly with the families who are grieving and with those who continue to receive medical care. The plant is run by our ONM contractor ngsl. The incident occurred in unit one of the plant involving the boiler which resulted in the release of pressurized hot water and steam exposing various people working in that area. These workers were primarily from our contractor and subcontractor organizations who were present in the area carrying out operation and maintenance related work.
We continue with our efforts to provide the best possible medical care and rehabilitation support to impacted families including monetary compensation, accommodation and employment opportunities. We are also operating a 24,7 call centre to address any queries from affected families. Extending care and support to all our employees at the site and beyond remains our top priority. We are working with all authorities to establish the facts in a transparent and comprehensive manner and will take all necessary steps to prevent any reoccurrence of such incidences.
I also want to take the opportunity to talk to you about the group performance on safety. Year on year our lost time injury frequency rate for the year improved 26% to 0.4. With our lost time injuries down 16%. Our total recordable injury frequency rate decreased 3% to 1.3. And as part of the group safety improvement plans we continue to embed and implement our CRM ADASTIA Critical Risk Management drive Incident corrective and preventative action closeout and increase our leadership in the field.
Now I want to turn to our FY26 performance. The year represented a clear inflection point for Vedanta as strategy and execution converged to deliver the best ever financial performance in the company’s history. We delivered record high annual revenue of 1.74 lakh crores, EBITDA of 56,000 crores PAT of over 9300 crores and our free cash flow pre tax of 26,013 rupees crore. Our return on capital employed ROCE for the year of 32%. All of this on the back of volume growth across various businesses and reduced costs driven through structural initiatives.
Our efforts on operational excellence transformed FY26 into a year of new milestones where our aluminium business delivered its record alumina production of 2.9 million tonnes up 48% year on year and highest ever aluminium production of 2.46 million tonnes while also achieving its lowest annual hot metal cost in the last five years of $1,752 per ton. Our exit run rate of alumina production at Lanjikar refinery was close to 4 million tonnes per annum. Zinc India recorded its highest ever annual mined metal production of 1.1 million tonnes with silver production of 622 metric tons while simultaneously achieving the lowest cost of $959 per tonne in the last five years.
At Zinc International, mined metal production increased 27% year on year to 225,000 tonnes led by the Hamsburg volumes rising 39% year on year driven by higher throughput, stable ore delivery and improved feed grades. Power sales grew 30% year on year to 16.4 billion units with the start of operations at Athena and Meenakshi alongside a 31% increase in our average NSR. The steel unit in Bacaro delivered 1.3 million tons of production achieving its highest ever annual billet TMT wire rod output of 1,062,000 tons, 525,000 tonnes and 444,000 tons respectively.
Through improvements in fuel mix and better raw material utilization, the business achieved an overall cost reduction of 10%. Our pig iron unit in Goa achieved its highest ever pig iron production of 895,000 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 and delivering an 18% reduction in operating cost. Our ferrochrome business achieved delivered a strong turnaround with record ferrochrome production of 101,000 tonnes up 21% year on year.
The restart of the Calangrita mine enabled availability of high grade captive ore during the year thereby materially reducing our cost by 19% compared to FY25. At the copper business, operational delivery remained strong with Sulvasa and Fujairah plants together delivering copper rod production of 282,000 tonnes 10% year on year jump. Silvassa recorded record annual Cathode production of 170,000 tonnes up 15% resulting from debottlenecking operational efficiency diversification of raw material resources.
I’m now going to turn to capital. FY26 recorded not only new milestones on operational metrics but also on CAPEX execution. During the year we deployed 15,000 crore of growth capital in line with guidance establishing a new benchmark in Vedanta’s journey on project execution as the year marked successful commissioning of various multi year projects setting us up on a trajectory of multi year growth. Some of the key growth projects completed are the expansion of Alumina refinery at Langigar of 5 million tons per annuming of the new 435,000 tonnes smelter at COBA with production ramp up starting from the current quarter.
Commissioning of the 250,000 tonnes and 210,000 tons per annum of new billet lines at Jasubudam, Balko respectively Start at start of the 106,000 tons Dabari roaster that’s roaster 6 at Hindustan Zinc successful debottle necking at Hindustan, Zings, Chandaria and the river resulting in an incremental capacity of 21,000 tons per annum. Additionally the 1.3 GW at Athena and Meenakshi. Other facilities commissioned during the year include the Wagon Tuplo facility at Langiga and the Crusher at Hamsburg Phase 2 as we move into FY27 the pipeline of projects commissioning remains strong.
The Corai coal mine and Sigmale box mines are awaiting for their EC which will pave the path for starting operations through mines. Hamsburg Phase 2 is around 94% complete whilst our fertilizer project in Zinc India has already booked around 75% of total capital. At ESL plant capacity doubling to three and a half million tonnes will take around six months. Once we receive the EC all equipment required for the expansion is already in stores and at the project site. Our DI plant in Goa is over 60% complete as of March 26 end this CAPEX is primarily financed through internal accruals, our free cash flow generation pre capex of around 26,000 crores.
Reflecting this strong operational performance, Vedanta emerged as the second highest wealth creator amongst the Nifty 100 companies in FY26. Just a quick update on critical mineral licenses as at FY26 close we had won bids for composite licenses on 10 blocks which include those for gold as well as Benganese, whilst the remaining eight blocks are for critical minerals in three of these blocks. The exploration is at an advanced stage and we are expecting to be in the decision making position in a year from now on.
ESG during the year we continue to make meaningful progress on driving renewable energy consumption across all operations reaching 3.97 billion units in FY26 up 52% year on year, thereby resulting in a GHG intensity reduction from 6.02 to 5.43 tonnes of CO2 equivalent per tonne of product with inclusive growth central to Vedanta’s purpose. We spent over 420 crores in FY26 on various CSR initiatives impacting over 6.9 million people through our various programs in education, healthcare, livelihoods, women empowerment and community infrastructure.
In closing, as we mark our final reporting year ahead of Demerger, Vedanta delivered a truly landmark performance, best in the company’s history. The structural improvements made during the year, together with the disciplined capital execution has resulted in the record level of cash flow generation which is well reflected in credit upgrades from various rating agencies at the group level backed by a tier 1 asset portfolio record operational and financial performance in FY26 we enter FY27 as a more agile, streamlined and future ready organization.
With over five decades of experience in manufacturing and metals, Vedanta is leveraging its deep technical expertise to expand into a high potential minerals of future and transition itself for the future. Vedanta 2.0 is a strategic transformation designed to align the company’s core strengths with India’s evolving priorities in energy transition, advancing manufacturing and clean technologies. As part of this transformation, we are positioning ourselves to meet India’s rising need for critical minerals powering the growth of AI, data infrastructure and advanced technologies.
The Demerger is now at its final stage. The effective and record date is set for May 1st. In the next week we will be filing with the exchanges for listing approvals. The shares of the resulting companies are expected to list and commence trading by mid June. This marks a new chapter defined by simpler structures, sharper accountability and focused platforms to drive growth and value creation. This foundational reset is aimed at sustainable growth over the coming decades. With that, I now hand over to Ajay to walk us through the financial performance for the year.
Ajay,
Ajay Goel — Group Chief Financial Officer
Thank you. Good evening everyone. We ended the fiscal year FY26 on a high note with Q4 marking a pivotal moment for Vedanta. We delivered record financials, our strongest ever, both for the quarter and for the full year. This also sets the stage for our next growth chapter through Vedanta’s Demerger. On macro side, despite Middle east volatility, better pricing, currency depreciation and supply dynamics played to our advantage. We moved quickly to protect supply chains, control cost and reinforce our balance sheet.
All that while staying focused on growth starting with Demerger. As earlier communicated last week our board approved Vedanta’s demerger effective from 1 May 2026. This will entail creation of five independent sector specific pure play companies allowing each company to chart out their own growth trajectory and attract respective thematic investors. We have set 1 May as a record date for demerger shareholders holding one share of Vedanta AS on 29 April. Today will receive four additional shares of the resulting companies we are targeting listing and commencement of trading of These shares by Q1FY27 the demerger has been architected with precision on capital structure aligning debt with earnings strength and growth stage of each resulting companies Vedanta Oil Gas and Iron Steel will be close to zero net debt businesses other three businesses net debt to EBITDA ratios will be in line with their debt serving capabilities.
At Vedanta Group Label pre Demerger our leverage stands at 0.95x reflecting resilient EBITDA and disciplined financial structuring. For the Q4 and FY26 results following NCLT approvals we have followed the Demerger accounting as per Indian Accounting Regulations Indas 105 for clarity and like to like comparison. Our results discussions are for the combined operations which is pre Demerger and includes all five businesses. Moving very briefly to performance, we recorded all time highs in all three matrices they being Revenue, EBITDA and PAT both for Q4 as well as for the full fiscal Our quarterly revenue grew 29% Yui to 51,524 crores supported by positive prices, exchange rate and sustained growth across our core businesses.
Our quarterly EBITDA grew 59% YoY to 18,447 crores with EBITDA margin expanding sharply up by 915bps yui to 44% again our best ever and finally the PAT grew by 89% yui to 9352 odd crores for the full year we delivered as earlier guided our best annual results ever. Revenue growing 15% YoY to 1.74 lakh crores EBITDA up 29% to 55,976 crores and finally PAT at 25,096 crores marking a jump of 22% YoY. Let us take a brief look on Vedanta as a portfolio and key businesses continue to deliver strong annual performance.
Aluminium EBITDA for the year 25,502 crores up 43% yoy with 38% margin driven again by positive prices, record production and lower cop achieving a five year low of $1752 per ton down 5% yoy. Zinc India EBITDA 22056crores up 27% yui with best in class margin of 56% driven by record mined metal, positive pricing and cop dropping to $959 per ton again lowest since five years down 9%. 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 investors returns. We remain focused on disciplined value accretive growth. In FY26 we invested 14,918 crores on growth capexes in strategic projects across aluminium, zinc, oil and gas and power. As these projects come on stream they will drive higher volumes margins and earning visibility across cycles. In Q4FY26 we deleveraged Vedanta India’s balance sheet by 7,370 crores for the full year at VRL group level.
In dollar terms we have deleveraged about $1.5 billion including reduction of short term facilities such as buyers and suppliers, credit and export advances. We also rewarded our shareholders with a handsome dividend of Rupees 34 per share. Vedanta has been amongst top three wealth creators in nifty hull companies delivering a TSR of almost 50% which is 2.1 times over Nifty Metal Index. Notably the FII’s ownership of Vedanta has rose from around 11% to 14% last year, a clear vote of confidence from investors even in this current tumultuous market conditions.
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 we have brought down VDL’s borrowing cost below 9% at about 8.9 as we close the fiscal and 16% reduction in financing cost which is more than rupees 1563 odd crores with further reduction in the borrowing cost in sight in near future. On credit rating, both Krishal and Iqra has reaffirmed Vedanta’s rating as a AA with watch developing.
In addition, Fitch rating has augmented VRL’s rating to BB underscoring confidence in our improved balance sheet, cash flow, visibility and strategic direction. In conclusion, FY26 marked a clear defining year for Vedanta with a strong performance and notable advancements across strategic focus areas. The upcoming demerger marks Vedanta’s transition into a future new phase of growth and value unlocking into a powerhouse of critical minerals, energy transition and technology. Thank you and over to operator For Q&As
Questions and Answers:
Operator
Thank you very much. We will now begin the question and answer session. Anyone who wishes to ask a question may press star and one on the Touchstone telephone. If you wish to remove yourself from the question queue, you may press star and two participants are requested to use handsets while asking a question. Ladies and gentlemen, we will wait for a moment while the question queue assembles. We’ll take a first question from the line of Indrajit Agarwal from clsa. Please go ahead.
Indrajit Agarwal
Hi. Thanks for the opportunity. I have two questions for Ajay. First, as we switch the group five inches or after the demerger how would the dividend policy look like for each of the entities?
Operator
Can you please self mute? There’s a lot of disturbance on your line. Thank you.
Indrajit Agarwal
Yeah, yeah. So after the demerger how would the dividend policies look like for each of the entities?
Ajay Goel
So that is a. Hello Indrajit. That is a one change. You know that will entail post a demerger. In that case a five companies board ran independently will be 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 two changes. Currently Vedanta’s policy on dividend is more prescriptive. It will become more descriptive from rule based. It becomes principle based. For example, right now there is a requirement to pay at least 30% profit as a dividend Going forward board will have the flexibility.
They can pay 30% or the amount as they deem fit in future. Same way the zinc dividend we have to pass on within six months. Going forward Vedanta board as in the new Vedanta Vedanta continuing will have the flexibility of this money upstreaming in near future. So in summary five companies will have different policies. But overall they’ll be aligned with the current policy thematically overall.
Indrajit Agarwal
So the mandate of upstreaming the dividend of Hindustan goes away with the new policy. Is that correct?
Ajay Goel
Correct. And in that case the Vedanta Limited board will have the flexibility of passing it on or not passing it on within the time frame they deem fit. Looking at multiple factors for the company.
Indrajit Agarwal
Sure. My second question related to it is now that we still have about $4.7 billion of debt at DRL, what are the modes of addressing that debt? Earlier it used to be branches as dividend is selling stake in one or more entities an option that we are considering or it still remains at dividend and grant.
Ajay Goel
Right. So maybe I’ll start with the first Indrajit. The current year requirement FY27. So at Vedanta Resources. The need for the loan in FY27 is almost 0.3 billion. Additionally as we know an ICL is due as well which is a VRL to vdl. So total combined half a billion is a requirement for the principal amount. The interest will be something similar. It is in fact shy of half a billion. So we need a billion at Vedanta Resources. In terms of source of money, the brand fee is more or less same. So it is 400 and the balance 600 receipt means paying out almost 1 to $1.1 billion from Vedanta India side, assuming the half money goes to minorities.
So with 4 to 5% dividend and the routine brand fee VRL can be managed. That also means almost half a billion or 0.6 billion will be deleveraging organically. Now as we demerge all the five companies. Additionally we will have the optionality of a differentiated capital structure. And in that case many anchor investors domestically and globally are very keen to come in the captable. And that will be additional avenue for deleveraging.
Ashish Kejriwal
Sure. Thank
Operator
You. That’s
Ashish Kejriwal
All from myself.
Operator
Thank you. We’ll take our next question from the line of Amit Lahoti from Aditya Birla Capital. Please go ahead.
Amit Lahoti
Thanks for the opportunity. My questions are on Zinc International and copper segments. So the first one on Zynq 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 that treatment charges continue to be negative, how are we thinking about the segment from here on?
Deshnee Naidoo
Thank you Amit. I’ll take the VZI question and or I’ll give Ajay the question on Copper. So on VZI, the current project, the Hamsburg project is 94% complete. And this is now the doubling of our run of mine from 4 million to 8 million tons. And we’re looking at a capacity from the current around 220 to 240,000 tons. Another 220. So all in all about 450,000 tons. The team is anticipating to commission in the next quarter and to have the plant ramped up for the rest of the year. Okay. Which is very typical.
If I look at, you know, other industry curves, magnalty curves, a ramp up for a 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 from phase two because it’s 94% complete. But the better part of this year will be to ramp up phase two after the commissioning in this current quarter. I hope that explains it. So Ajay, maybe you want to take the copper question in terms of profitability
Charanjit Singh
Before Ajay starts. Amit, you would have seen that we have released a presentation which is on the Vedanta’s website and if you download that you can see the trajectory for Hamsburg 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 out. So handing over to you Ajay, for the copper. Yeah,
Ajay Goel
Copper. I mean this, this copper within the Vedanta portfolio as we know is a trading business practically. And over the last couple of years the margin has been. There’s a 1 change if I may 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 emerger is in the copper brand fee.
So the brand fee for copper from the current 3% will go down to 0.75% and that alone from India’s viewpoint means higher EBITDA by 2.2%. There are various activities. Looking at the pricing environment we do foresee the margin on the copper business going from roughly 1% right now going to at least 5% in FY27.
Operator
Amit does not help.
Amit Lahoti
Thank you so much.
Operator
Thank you. Yes,
Amit Lahoti
Thank you.
Operator
Next question is from the line of Sumangal Navatia from Kotak Securities. Please go ahead.
Sumangal Nevatia
Yeah, good evening. Thanks. So first question is on VRL in FY26. So despite the brand fee and the dividend, if you see net debt has just reduced by 200 odd million dollars. So could you broadly share what were the cash outflow heads there for FY26?
Ajay Goel
In. In FY26 of course you’re right. Dividend and the branch is almost 1.1 billion. There is a funding for KCM last fiscal Sumangal it’s almost 330 million and hence that is one reason. And secondly the entire the intercom loan to 1221 million has been paid from VRL to VDL and in that case of 5.3 has become 5.2 in the last fiscal. So it’s mostly the funding for the kcm.
Sumangal Nevatia
Okay. And. And we had plans for listing of kcm. Where are we in terms of that? Any guidance
Charanjit Singh
You want to take?
Deshnee Naidoo
Yeah. So we are in a process of having filed our S1 with the SEC. We’re currently in the third round of comments. But I’m sure you would all appreciate that we are in a quiet period in that regard. And as soon as we’re able to come into the public we’ll actually give you an update on the overall process. But we are progressing in terms of the S1 filing.
Sumangal Nevatia
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 FY26? So I mean what’s the delta we’re looking at? And now once we’ve relooked till what year is the brand fee at 3% fixed for other entities?
Ajay Goel
Maybe Sumangal. After the call we’ll have the numbers shared with you. But on a broad basis about 3.1, 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 in FY26. FY27 lower amount. 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 five companies combined brand fee FY27 remains similar to last year.
So the copper impact is mitigated by volume and the pricing.
Sumangal Nevatia
Okay, that’s useful. Ajay, till which year is the rate freezed? As for the agreement,
Ajay Goel
It is the rates are typically if you look at last nine odd years in 2017 the branch fee got commissioned. So we look at Revised benchmarking every three years. So it is for next three years.
Sumangal Nevatia
Okay, so till FY29 it is freezed.
Ajay Goel
That’s correct.
Sumangal Nevatia
Okay, understood, understood. I have one question with respect to Zynq International. Now we are guiding for ebitda increasing from 100 million to eventually $450 million in FY28 in the presentation. I mean in the last many years we’ve missed and delay the guidance for Amber phase two. So just want to understand last one or two years what has been the key reasons behind the delay and how confident are we of commissioning it and then starting to ramp up in the second half of the current year?
Deshnee Naidoo
Yeah, thank you so much for the question. So Mangal, I answered partly, I think when Amit asked the question earlier. So today the project is 94% complete. So we’re very confident about the ramp up plan and commissioning in this quarter and ramp up for the rest of the year. In terms of the reasons for the delays, twofold, you know, firstly to produce 8 million tons of run of mine given the stripping ratio of 3 to 4 at this moment we’ve had a lot to do on catching up of the waste stripping at the Hansberg open pit and that took the better part of the last two years to actually catch up.
So this was almost three years of delayed in stripping, waste stripping that is now adequately caught up. In fact very happy to say that even for the current commissioning and ramp up we are sitting with a healthy stockpile in front of the plant. We’ve also had some delays on the ground, believe it or not. I mean it’s something I think we as an industry keep talking around is skills needed for certain types of work, especially in projects. In South Africa, capital has dried up. In fact we are one of the few companies that are actually building capital projects today despite it being such a large mining geography and we have had certain skill sets that have been short and the team has felt it hard even through our business partner onshore for finding.
So that’s created some of the delays on specialized work like piping, instrumentation, etc. But again I think a lot of time has gone in the last six months almost resetting the project to make sure that we can deliver it on time on the new timelines and making sure that, you know, keep guiding the tier. The team that whilst we might not have built this project as we should, it’s still very capital competitive in terms of capital intensity. And now we have to get this plant to a dream start which I indicated earlier should be a 12 to 15 month type of ramp up for a plant of this, of this size.
So hope that gives you a good sense of what has happened, why the Mrs. And why we are confident now given the status of both mining as well as the project that that we, that we will deliver this year’s ramp up. And you saw last year’s numbers right from the previous year, the Hamsburg ramp up in itself because of the waste tripping that I just mentioned was almost 40% up year on year.
Sumangal Nevatia
Yeah, yeah, that’s very elaborate and thanks. I just have one more question, can I ask?
Charanjit Singh
Yeah, go ahead.
Sumangal Nevatia
Okay. Okay. So I just one is, I mean the resultant Entity has still a billion dollars 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 aluminium entity is on the numbers throwing very strong cash flows. So generally what’s our preference difference there? I mean in terms of deleveraging and payout. So if you could just share some thoughts on capital location at the aluminum entity.
Ajay Goel
So maybe I’ll start first with the five companies and in fact if you look at Sumangal in the IR pack there’s a page which covers all the five companies in unbundled form. What will be net debt to ebitda? All of them. So if you look at overall Vedanta right now 5.5 billion net debt and debt to EBITDA almost 0.95. Now pre 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 Gas will have nil debt so it 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 aluminium debt of almost 3.5 billion and in aluminium debt to EBITDA ratio almost 1.3. And as you rightly pointed out given their cash flows that will not be a challenge. That leaves Vedanta power there. Most of the debt in fact is structured in the long term with the PFC and the rscs and there the debt maturities are in fact truly long term 7 to 10 years. Vedanta Limited’s debt will be almost a billion and their debt to EBITDA will be 0.4 times.
So a combination of profitability at Vedanta Limited through Fakor through Zinc International and the copper debt can be serviced. Additionally Zinc India dividend remains additional optionality. So in summary we don’t foresee a channel looking at the current pricing environment. Our work on volume cost NEP of serving debt of all the five companies.
Operator
Thank you.
Sumangal Nevatia
Got it, thank you.
Operator
Next question is from the line of Ritesh Shah from Investec. Please go ahead.
Ritesh Shah
Yeah hi sir. Congratulations for a good set of numbers and the demergers leading through. Wonderful job. I have like five bucket of questions. First is starting with Saudi Arabia. I see there’s a $2 billion of CapEx indicated over there. I also see there’s a EBITDA profile broadly from 90 million FY27 to around 200 million. FY29 just wanted to understand how this would be funded. That’s one. If you can provide us like nearby that would be great. And the funding of this capec. And basically how should we read into the economics of.
I see there is a normal idea. See there’s a smelter commissioning timelines are not very far and there’s an exciting prospect of the mine as well. I think mine related capitol has not been mentioned over here. So if you could just help us understand the economics of how to fund this $2 billion. The timeline and the underlying economics are the first bucket of questions.
Deshnee Naidoo
Maybe. Oh sorry. Maybe I’ll overview of what we are doing in the Kingdom and then Ajay we can talk high level about the funding as it relates to the Vedanta remain co forward. So as you rightly mentioned Ritesh, we have the Rodmo plant. I mean this is, this is a 30 million dollar plant capacity of about 200,000 tons. And this is something that we were contemplating for a while. Good on Puneet and the team for actually putting this on. I think they started last year, programmed in October last year and that plant will be ready in September this year.
From an economics point of view, right. It’s all about supply, demand as we just discussed on the copper business side. But this plant will have about a margin of 5%. Then you touched on the, the mining, the mining block that we recently acquired and that’s in. Jabal said those it’s still very nascent stages. We’re still doing the exploration there. Just given some of the early indications of the grades etc. That we see both in copper as well as in gold relatively attractive ways. About one and a half percent I think on the, on the grid on copper side which should be maybe north of maybe 2% which makes it more exciting and gold of about 3 grams per ton.
So can just update on the, on the grades. The, the exploration is being supported by HIN Metals. So maybe Arun can also help us with the update. The copper smelter project is still the project that we indicated almost 18 months ago. Now in terms of the MoU we have with the, with the Kingdom, we continue to work with them. The package of incentives that we wanted to make the project work is still under discussions in the Kingdom. So we haven’t actually taken a project decision as of now. Okay. And given what I’ve just said on some of the incentivization, of course $31 million is largely funded from cash that the copper business, including Fujiro Gold is generating will actually be funded at that level.
The bigger project will actually be funded by some of the incentives that we likely to get from the government as we continue these discussions. Anything to add?
Ajay Goel
Yes, briefly, Ritesh. I mean if you look at the kingdom has released document a couple of years ago and they want to diversify beyond traditional hydrocarbon, oil and gas. In that case metals and mining is a big priority. It also entails that the Kingdom KSA will also provide land, power and multiple subsidies including in terms of funding and lower cost of funding. What we have agreed with the local government, it is still being frozen. The entire funding will be happening in the ratio of 75:25 debt to equity but 25% will be Vedanta contribution as equity.
75% will be the funding locally at about 2, 2 and a half percent. The cost of funding this 25% funding of the amount you mentioned will be overall several years and that will be managed through Vedanta Limited free cash flows.
Ritesh Shah
This helps. My second question was on Zync International again a very big capex number of $4 billion. The EBITDA is moving from $300 million indicated FY27 to around $500 million. How should we read into the funding of the capex? Again it’s not a asset which is at least I understand or appreciate it. Well, how should we look at the underlying economics of the mind concentrator and the splinter over here? That’s, that’s the second bucket of questions. The third and fourth will be quick.
Deshnee Naidoo
Yeah. So the good news about Zing International after this year it will be a self generating cash. Self generating cash unit. Right. Although it does have some debt down on the current project that is executed. The next phase of growth which is not approved. Right. Which is basically we’ve given you guidelines of how to look at the growth comes from the Hamburg underground. Hamsburg underground. I think we have given you some updates on the RNR Right now it’s almost and I think Arun can elaborate because he knows the asset well.
Almost as large from an R and R point of view as Hindustan zinc. So almost 16 million tons of metal there. The underground material always had a higher grade than actually the open put today is about 7%. And the reason for that and the reason why we took the decision to go open put initially all those five, six years ago is because it was lower capital intensity to go open put, then 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 if we phase this out well is to actually use the current cash that will be generated by the business to support the next phase of as we have the 2 million ton target, we’re calling it, Arun calls it the 2X project. We do have a 1 million ton goal to take. The current will be around 450,000 tons. 500 if you consider some of the other projects that we are considering as part of the deck that you’re looking at in Namibia gets us to another 500000 ton expansion in the Hamsburg which we’re calling phase three because phase one and two is currently in execution.
Phase three will be the new project. So I think that’s how you should look at it. This becomes a very different business, right? You no longer should be looking to fund all of the capital. It’ll. It’ll self generate a lot of this cash going forward man. And these kinds of zinc prices, you know, over $3,000 per ton. I think we could be quite excited about what that geography can unlock for us. And as Charanjeet mentioned earlier, when you start getting into these kinds of capacities, right, you cannot be shipping concentrate of this kind of volume because it’s almost double the volume you would need to ship.
So we are looking at putting in a smelter. It’s a project I looked at way back then when I was in South Africa for the business. But what makes it more attractive today is South Africa has some 5 gigawatts of power that surplus today versus five years ago. And the government is very keen to support businesses like us that continue to spend money or spend capital in the country to incentivize us to make a smelter complex work together with an acz. That’s what the team is looking at as part of that conceptual study that you saw in the.
In the deck.
Ritesh Shah
Is it possible to bring this $4 billion by years or the way you explained the capital structure, what will be the self generated cash flow which will actually fund will just help us appreciate the cash flow profile because the CAPEX number is quite huge over here.
Charanjit Singh
Yeah. Ritesh, happy to give the details post the call. Year on year capex, what we are doing and also the funding and the sources of fund for the CapEx.
Ritesh Shah
Sure. Quickly. Third question. Power assets. We had an unfortunate incident. Alternative timelines on the resumption of that particular unit. Are we looking at three months, six months, Any particular timeline. 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? Thank you so much.
Deshnee Naidoo
Yeah, I think I’ll start with the question on power and then hand over to Arun for the critical minerals. So yes, we are incredibly saddened by our incident at Athena and I gave you a very elaborate update on everything that we’re doing on really want to recognize again the efforts by the teams there in terms of restart. I think we cannot commit to any timeline at this stage. What we can tell you is that we’ve only just recently, a couple of days ago, been actually given access back into the site to commence our full assessment work to look at the activities, rectification, restoring activities on the site.
Once our team is on the ground for another few weeks and we have an expert team that supports their recommendations, we will then come back into the market in terms of the likely timelines for recommencement both on the, on the unit one, which is the unit in question as well as on the Unit 2 project that was ongoing as well.
Arun Misra
Let me add on the critical mineral, out of the seven critical mineral blocks with Vedanta, if you look at the timeline of exploration, three blocks, we hope to finish exploration by 2028. And normally we do mine planning one year ahead of finishing of exploration somewhere in 2027. That means if we add 36 months of putting up projects of mining and smelting, we should look at somewhere around 2030 adding three more metals to the bottom line of Vedanta.
Operator
Thank you so much. All the very
Ashish Kejriwal
Much. Thank you.
Operator
Thank you. Next question is from the line of Pallav Agarwal from Antique Stock Broking. Please go ahead.
Pallav Agarwal
Yeah, good evening and congratulations on the demerger. So first question was, you know, on the deleveraging during the quarter. So is part of the Hindustan Zinc, you know, stake sale proceeds also included in this deleveraging?
Ajay Goel
Yes, yes, that’s right. So 7,370 crore is deleveraging in the fourth quarter. It includes every aspect, both source and application. So be it paying a dividend in the previous quarter or divesting a 1.5% zinc. Yes. Answer is yes.
Pallav Agarwal
Okay. So basically I think the cash flow from operations of I think 14,000 crores. So is that, that includes this, the stake sale as well?
Ajay Goel
No, that is additional. So 14,000 to your right is operating cash flows. The working capital is 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 5.7 thousand crores in terms of capex growth and sustaining. We also paid last quarter a dividend. That’s an outflow. And Zinc stick sale 3277 crore is additional. It’s about 1.1%. So the 14,000 crores do not include zinc stake salad this additional. There is.
There is a page in the IR deck on the entire cash bridge for the fourth quarter which covers all these blocks.
Pallav Agarwal
Sure. Okay, I’ll take a look at that. Also you know, I think you know you have given a very detailed breakup of the net debt. No pre and post merger. So just wanted to check you know in the entity wise, you know net cash some of the entities like Bloom Bloom found. So where exactly you know which entity would the debt you know of that go to?
Charanjit Singh
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.
Pallav Agarwal
Yes. Bloom Fountain is a holding company which you know, which particular you know company of the demergency will debt go to?
Ajay Goel
Bloom Fountain 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 about 5.5 billion and leverage 0.95. If you unbundle the current Vedanta monolithic into five companies it talks about each of the five companies and their iron, steel and oil gas are zero or almost net zero debt companies. Vedanta Power leverage will be 4.7 times. Vedanta Limited will have a billion dollar debt and 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 their leverage will be still 1.3. So in summary, even before demerger all the five companies balance sheet are that way architected where their assets and the cash flow will be sufficient to service debt post demerger.
Pallav Agarwal
Sure. Okay. Yeah. Okay. Thank you. Lastly on the guidance FY27 guidance. So Athena, PLF I think is. Is. There’s nothing over there. So is it because of the accident that’s happened?
Charanjit Singh
Yes. Deshni explained that we are taking a stock of the situation and once we do that in in the coming weeks we’ll come back to the market to disclose the start or the rest. And thereafter we will be in position to give the details from a PLF perspective.
Pallav Agarwal
Okay. But the existing you know PPA that we’ve signed is there any penalty for not supplying or something.
Charanjit Singh
We have insurance in place to cover us for any gaps or losses which are there.
Pallav Agarwal
Sure. Okay. Yeah, thank you so much.
Deshnee Naidoo
But again, I think just give us time to assess the full situation. Come back to the market with a comprehensive update as opposed to a piecemeal update that we can provide you with today.
Operator
Thank you.
Pallav Agarwal
Sure.
Operator
Next question is from the line of Kunal Kothari from Nuama Wealth Management. Please go ahead. Kunal, your line is unmuted. Please go ahead with your question.
Charanjit Singh
Yes, you can move to the next slide. Hi, good evening.
Operator
Yes, Kunal, please go ahead. Can
Ashish Kejriwal
I go ahead?
Operator
Yes.
Ashish Kejriwal
Yeah. Hi, Ashi here. First of all, thank you for the opportunity and many congratulations for the great set of numbers. And finally demerger happening. Commendable in this. I’m trying to ask one simple question that going ahead because now we have demerged into different entities. Obviously every entity has a different scope. But in future if we want to go for any acquisition then that equation will be related to that particular segment only. Or you know, we can do something which can club another business like for example Vedanta Aluminum.
So any further acquisition will be only related to aluminum business only. Or it can be sometimes no other zinc vendors or something else also. Because we have seen plenty, we have seen earlier also that you know, other business clubbed into different ones. So just to make it show that any further equation only in a different particular commodity.
Deshnee Naidoo
Yeah, I think from an overall M and A as we’ve guided the market before, our chairman is still very involved in all M and A across the company going forward. Whilst it’ll be very clear what the focus of the of the individual businesses are, anything outside of the portfolio would still happen at the whole core level and whole core will be set up to make sure there is some visibility of capital allocation across all five businesses. But also with its own M and A team to start looking at some of these opportunities.
If it makes more sense, synergies wise to go into one of the five companies. It would. If not, you know, as you’ve seen our chairman from his previous track record, we will, we absolutely have other companies in the businesses to all set up new companies. So that is still very much. That will still be very much the case. The CEOs and their leadership team of the respective companies will be mandated to continue to grow organically. In the first instance, as you know, every business has got their own 2x3x type growth story and any M and A depending on the size shape that’s very, you know, Very in line with the company strategy will happen at the company level.
Anything else above would happen at a whole core level together with the chairman.
Ashish Kejriwal
Thanks, thanks. A very clear thing. Second is on aluminum operations only,
Deshnee Naidoo
Please go. Sorry, she’s
Ashish Kejriwal
Going
Deshnee Naidoo
No, because, because we initially had the call from Canal and then you came on. So just tell us where you are from, please.
Ashish Kejriwal
Yeah, I’m from Nuama only.
Deshnee Naidoo
Ah, okay. So.
Ashish Kejriwal
So on aluminium operations now we have seen consistent delay in mines like bauxite, coal mines and you know, every time we get a new deadline on that. So just wondering where we are on that process in terms of approval. And secondly in terms of aluminum smelter also when we 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? Thank you. Yes, thank
Deshnee Naidoo
You. I’m gonna hand over to Anup.
Anup Agarwal
So asis. So first let me answer the albuna piece, what you said. So as if you recall now even in the last earnings call I had said that probably we will see a $50 reduction as we go into the quarter one. Okay, but, but the another thing, what I had mentioned was a constant delme. So if you, if so, if you ask me, probably by quarter two we should see Alvuna cost hovering around 750. It has two parts to it. One, we should also appreciate the Middle east impact that we’ve had on some of the raw materials like furnace and caustic.
Had it not been there, probably we would have seen a cost of around 710, 715. As of now, based on whatever cost we are seeing, we expect the cost to be around broadly 747.5 in the quarter 2 of financial year 27, probably a 25, 20$25 reduction from what was the quarter 4 cost. That is where we are as of now. And if we were to remove the Middle east cost implication, probably 700, 710 with probably 80, 85% of the captive alumna. So I said that is where we are. So. So as we go into quarter 2, quarter 3, we expect the cost to be closer to 7, 10, 720, 725.
So as is. Hopefully I have answered that question. Yeah, so now, now, yeah, for aluminium cost of production, then see aluminum cost of production. No, again, if you have seen the guidance we are guiding 16, 50, 1700. Okay, now if I were to talk, just bifurcate it into say H1, what the H1 cost will be maybe compared to quarter four, you can expect flattish to 1% lower lower because of the some of the impact of the raw material that we are seeing. I mentioned some of the raw material on the aluminium side some of the carbon cost possible.
So for that
Ashish Kejriwal
The
Anup Agarwal
The yearly guidance remains 1650, 1700 but H1 should be probably flat to 1% lower compared to quarter four
Ashish Kejriwal
Now now
Anup Agarwal
Coming to Balco expansion see 70 of the total 304 parts that we are putting in. Okay. We commissioned by March. Okay. The delay was basically through partner substitution and resource augmentation we’ve covered in the last couple of calls. Now if I were to give you a way forward as we go along Quarter one, quarter two, quarter three, quarter four on a run rate basis broadly we will be doing around 105kt a quarter so quarter one should be 25 quarter two ramped up to 50 quarter 375 and as we go into the quarter four it will be 100%
Deshnee Naidoo
I think Anoop asked about the refinery I think linked to alumina question so Lanjiga refinery for the year.
Anup Agarwal
So, so, so asis if you were asking about the refinery see as we exited this FY26 no we exited at a run rate of closer to 4 million. Now if you look at our guidance we are talking about 4.4.1 now Quarter 4 broadly January, February we should be closer to the rated capacity that we put in now. Why, why the delay? Because the calciners and the boiler 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 quarter one there we will achieve the rated capacity.
Yeah see on the coal mine no see I’ll first start with Kurloi. So Kurloi we have got the mining lease maybe a week back now from here probably in a month or so we should start seeing the mining operation. So that is on the Kurloi coming to Gogarpalli. EC has been recommended at the start of this month, the month of April. We are also targeting FC in this quarter and we remain committed to commission this block in the timeline that we have indicated last 2/4 last quarter this quarter we’ve been consistent in terms of the timeline Sigee Valley also as guided last time we have got the LOI extension done FC1 is granted ECE we’re expecting next month and hopefully in H1 we will see the minds open opening.
Ashish Kejriwal
So sir, in CG Mali obviously we were expecting earlier in February also Now we are expecting in May So what is the actual delay which we are facing and why government is not giving it? Because we have seen lots of news in the newspaper. Something in the local level also is disturbing. So is this the reason because of which we are getting this delay in Sigma Lima?
Anup Agarwal
So I’ll tell you Ashes, let me address it in two part. First, coming to the regulatory approvals. See there is some. There was a LOI which was. Which got expired in the month of March. It was administrative process. Okay. It took some time before that LOI has been extended. It is just. We’ve just got the letter yesterday. So some time has gone into it. Now coming to the noise that we are talking about now. So. So see, I’ll tell you. We continue to engage closely with the state government, local administration and surrounding communities, okay.
To ensure that we have a smooth and responsible operation. This engagement is driven through focused community development initiatives across healthcare, education, infrastructure, culture preservation and livelihood generation. And I says keep in mind this is auctioned mine. Okay, so maybe approvals have taken a little longer time but. But we are in touch with the administration, with the community and we expect to open this mind within the timeline that we have have committed.
Charanjit Singh
Ashish important point to notice. When this auction happened there was few more minds which were issued to other players also. And we are the first one proceeding ahead with who have reached the EC 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 of few hundred hectares, as is the case with the CG Mali, it is likely to take some time.
So it is the process which is happening. We don’t see any challenge in terms of the noise is there of course, but, but I think it’s all. Which is very common with all the infrastructure projects in the country. So nothing very different in terms of the noise.
Ashish Kejriwal
Understood. No issues because these things are obviously there when we, we already know about these things. But you know, the timeline keeps on changing, you know, almost a delay of a year. But as you rightly pointed out, regulatory approvals are one thing one can’t handle. Anyway, best of luck and best wishes for the future for all the companies. Thank you.
Operator
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.
Charanjit Singh
Thanks everyone for joining us. For any unanswered questions you can get in touch with us. And we look forward to connecting again for the Q1 results, which will be more for the demerged entities. And looking forward to meeting you in the coming weeks. Good day and goodbye.
Operator
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.