Vedanta Limited (NSE: VEDL) Q2 2025 Earnings Call dated Nov. 08, 2024
Corporate Participants:
Prerna Halwasiya — Deputy Head Investor Relations and Company Secretary
Arun Misra — Executive Director
Ajay Goel — Chief Financial Officer
Anup Agarwal — Chief Financial Officer, Aluminum Business
Hitesh Vaid — Chief Financial Officer, Cairn Oil & Gas
Sunil Gupta — Chief Operating Officer, Vedanta Aluminium and Chief Executive Officer, Vedanta Jharsuguda
Chris Griffith — Chief Executive Officer, Base Metal Business
Analysts:
Amit Dixit — Analyst
Ashish Kejriwal — Analyst
Sumangal Nevatia — Analyst
Ritesh Shah — Analyst
Indrajit Agarwal — Analyst
Raashi Chopra — Analyst
Presentation:
Operator
Ladies and gentlemen, good day, and welcome to Vedanta Limited Quarter Two Financial Year ’24-’25 Earnings Conference Call. [Operator Instructions].
I now hand the conference over to Ms. Prerna Halwasiya, Deputy Head, Investor Relations and Company Secretary, Vedanta Limited. Thank you, and over to you.
Prerna Halwasiya — Deputy Head Investor Relations and Company Secretary
Thank you, Yashasvi. Good evening, everyone, and welcome to Vedanta Limited’s quarter two FY ’25 earnings conference call. I’m Prerna, I’m the Deputy Head, Investor Relations and Company Secretary for Vedanta. On behalf of the entire team, I would like to thank you for joining us today to discuss our financial results and business performance. The transcript of this call will be made available on Vedanta Limited’s website. The press release and presentation are already available on our website.
Today, from our leadership team, we have with us Mr. Arun Misra, our Executive Director; Mr. Ajay Goel, our CFO; Mr. Ajay Agarwal, President, Finance. We have Charanjit Singh, who joins us as our Group Head, Investor Relations. We have also leaders from some of our key businesses: Mr. Sunil Gupta, CEO, Jharsuguda and COO, Aluminum Business; Mr. Anup Agarwal, CFO, Aluminum Business; Mr. Chris Griffith, CEO, Base Metal Business; Mr. Hitesh Vaid, CFO, Cairn Oil & Gas.
Please note today’s entire discussion will be covered by the cautionary statement slide on presentation, on the presentation, Slide number 2, we will start with the update on our operational and financial performance, followed by the Q&A session.
Now I would like to hand over the call to Mr. Arun Misra.
Arun Misra — Executive Director
Good evening, everyone. Thank you for joining today’s quarterly business performance update. I’m pleased to address you today to share Vedanta’s second quarter and first half of FY ’25 performance. The first two quarters of FY ’25 were marked by growth and operational excellence with a strong commitment to sustainability. As a global industry leader, ESG is at the core of our operations. And as you are aware, we have partnered with Serentica Renewables to secure 1,826 megawatt of renewable energy power delivery agreements. Serentica’s ambitious goal of adding 17-gigawatt to 20-gigawatt of renewable energy capacity by FY ’30 aligns with our region.
In the second quarter, Zinc India expanded its renewable energy commitment by an additional 80-megawatt, bringing our total group commitment to 1,900 megawatts. Both Zinc India and our aluminum businesses have already begun utilizing renewable energy. We are determined to extend this initiative to all our businesses in the coming quarters, steadily moving towards our goal of net zero carbon emissions. We successfully hosted the third edition of the Delhi Half Marathon, an event dedicated to support the cause of RunForZeroHunger.
I’m thrilled to announce that our collective efforts have made a strong impact. Together, we have raised 10 million meals to support children and animals in need through Anil Agrawal Foundation. Our commitment to ESG is recognized globally. We are proud to announce that we have once again secured a top three ranking in S&P Global CSA assessment for the year. This marks our second consecutive year of this achievement, highlighting our strong ESG practices and reporting.
Now coming to quarter two FY ’25 key highlights. Moving on quarterly performance. I am pleased to report a strong quarter two performance marked by operational excellence. Our quarterly EBITDA increased by 44% year-on-year to INR10,364 crores. We have delivered our all-time high first-half EBITDA of INR20,639 crores, up 46% year-on-year. Our EBITDA margin increased by 9% from a robust 25% in second quarter of last year to an industry-leading 34% in second quarter of the current fiscal, driven by our structural cost reduction initiatives and operational efficiencies. Our profit after tax before exceptional increased by 230% year-on-year to INR4,467 crores.
Moving on to operational performance. Vedanta’ aluminum and zinc operations continued their industry-leading cost positioning, consistently ranking in the top-quartile and decile of the global cost curve respectively. Aluminum business achieved its highest ever quarterly and half yearly production of 609 kt up 3% year-on-year and 1.205 million tons, up 3% year-on-year respectively. Our quarterly cost of production is lower by 4% year-on-year. Despite rising alumina market prices globally, we maintained hot metal costs flat sequentially, demonstrating the strength of our assets, our operational and buying efficiencies.
Hindustan Zinc achieved its highest ever second quarter mined metal and refined metal production at 256,000 tons and 262,000 tons, respectively. We have delivered lowest first-half cost in the last four years with second quarter FY ’25 Zinc India cost of production being $1,071 per ton. Going forward, we are on a clear trajectory to achieve the lowest full-year cost of production in our last four years of operations.
In Zinc International business, Gamsberg Mine delivered a strong 21% quarter-on-quarter increase in MIC production, reflecting significant progress in operational stability and efficiency. We anticipate MIC production to normalize by the end of this fiscal year, and we are confident in achieving 230,000 tons of total MIC production for the full-year in our Zinc International business.
Our iron-ore business faced some external challenges in the first half of this current fiscal. Bicholim Mine in Goa was unable to dispatch ore due to lack of transportation permits in the first quarter. Heavy rainfall further impacted production in the second quarter. However, we have now secured the necessary transport, transportation permits and Goa’s mining operations are now running at or above our stated capacity. With these developments, we are confident of achieving our annual production guidance of 11 million tons per annum from the iron-ore business in FY ’25.
Regarding growth projects, after delivering a strong performance in the first half of the year, we are optimistic about continued growth and opportunities that lie ahead. In aluminum, ramp-up of Lanjigarh Refinery Train 1 is progressing well. The current total production run rate is 3 million tons per annum as we speak as against 3.5 million tons per annum capacity. We expect to fully ramp-up Train 1 by December 2024. We are also on track to commission Train 2 in quarter three FY ’25 with full ramp-up expected by quarter one of FY ’26.
Balco smelter expansion is advancing steadily with all equipment orders fulfilled and installations under advanced-stage. These development along with some volume debottlenecking projects will enable us to reach a production capacity of 3.1 million tons per annum of aluminum with 90% comprising value-added products and alloys. In Zinc India, 160,000 tons per annum roaster at Debrai and 0.5 million tons fertilizer plant are progressing as planned with final commissioning targeted in the last quarter of this current fiscal and second quarter of the next fiscal respectively.
Zinc International is one of the largest zinc deposits globally. Our Phase 2 expansion project is in full swing with full ramp-up expected during FY ’26. In fact, I am happy to announce that we have received environment clearance for our underground mine expansion and 300 million tons per annum ferrochrome capacity. With this, we are on track to become the India’s largest ferrochrome producer.
In power, this fiscal year will mark the full commissioning of Meenakshi power plant 1,000 megawatt. Our Board has also approved the project capex of INR5,209 crores for 1,200 megawatt Athena power plant. As you are aware, we have already secured INR3,900 crore project financing in this project. With this, we are well-positioned to generate 5 gigawatts of commercial power within the next 18 months to 20 months.
Looking ahead, we remain committed to delivering an outstanding performance in FY ’25, driven by our robust project pipeline and strategic investments. Our integration and growth projects are progressing smoothly and we anticipate achieving these milestones within the next nine months to 12 months. Our focus on cost reduction has been a cornerstone of our profitability. Through our structural interventions and initiatives, we have significantly reduced our cost of production over the past 12 months to 15 months and we are confident in our ability to continue this trend in the coming quarters. Our demerger process is also progressing well with the first NCLT hearing successfully completed.
In summary, we have continued our strong performance. Building on the momentum from the first quarter, we are proud to report our highest ever first half EBITDA of INR20,639 crores in this year. The second half of this year will be a transformative period as our major projects come online and ramp-up going up, going by the historical trends where the first up, capacity, first up typically accounts for 40% of the total annual EBITDA, we anticipate achieving our highest ever annual EBITDA in FY ’25 by delivering the remaining 60% in the second half.
In Vedanta, we remain committed to our long-term vision of sustainable value creation by focusing on our strategic priorities and leveraging our unique capabilities, we are well-positioned to capitalize on the emerging opportunities and deliver sustained growth.
Over to you, Ajay.
Ajay Goel — Chief Financial Officer
Thank you, Arun, and good evening, everyone. This quarter stands out as most remarkable one with considerable advancement in our corporate actions, robust financials and highly effective operations. I’m very pleased to announce that we have achieved our highest ever H1 EBITDA of INR20,640 crores, a 46% growth Y-o-Y and second quarter EBITDA of INR10,364 crores with a 44% Y-o-Y growth. This is driven by structural and sustainable cost optimization and supported by favorable prices.
Our Y-o-Y comparatives focuses on core performance and excludes the one-time gain from cairn arbitration that we recorded Q2 of last year. In this quarter, our PAT before exceptional is INR4,467 crores, reflecting the 230% growth Y-o-Y. So I repeat, it is a 230% growth Y-o-Y. And with the addition of exceptional items, our PAT reported reached INR5,603 crores.
Let us now turn to few of the financial highlights for second quarter. Revenue for second quarter had INR37,171 crores, 10% growth Y-o-Y. EBITDA INR10,664 crores, marking a 44% growth Y-o-Y. EBITDA margin at 34%, an increase of 900 basis points Y-o-Y, which is an industry benchmark. Our net-debt to EBITDA ratio further improved to 1.49x, the best in last six quarters for Vedanta. Also our ROCE stands at 23%, up 152 basis points Y-o-Y. And finally, the free cash flow pre-capex at INR8,525 crores, reflecting a 50% growth Y-o-Y.
Moving on briefly to balance sheet and debt. I’m happy to report that our net-debt as of September end has declined to INR56,927 crores, marking a reduction of INR4,400 crores versus Q1. So this is sequential. We finished the quarter with a liquidity position of INR21,509 crores, reflecting an increase of 30% both Y-o-Y and quarter-on-quarter with an average maturity at three years.
On corporate actions, in July, as you have noted, have raised about $1 billion [Phonetic], INR8,500 crores via QIP, which is the largest issuance in metals and mining in our country. The funds from the QIP will deleverage Vedanta Limited, thereby reducing interest cost by over INR1,000 crore annually. In August, we further augmented our capital base by raising $400 million through offer for sale for Hindustan Zinc Limited. And finally, all this has been well noted by rating companies and ICRA has raised our long-term rating from AA minus to AA and CRISIL revised its outlook to watch with positive implications while reaffirming our AA minus rating.
On VRL, I’d like to highlight the significant progress in deleveraging our parent company, Vedanta Resources Limited, VRL. Over the past two-and-a-half years, we have reduced debt by $4.7 billion, bringing it down to $4.8 billion, which is lowest level in a decade. I repeat, the VRL debt at $4.8 billion is the lowest over a decade. In H1 of the current year, which is April, September, VRL debt has come down by $1 billion. So we are ahead on our commitment of $3 billion over three years. So we are doing more and we are doing earlier.
Additionally, in the current quarter, we refinanced at Vedanta Resources, 1.2 billion bonds of this, the last tranche came at 9.99% yield. Overall, this refinancing is 3% lower cost resulting in annual savings of over INR300 crores. With VRL’s ongoing deleveraging and other actions such as refinancing, the parent company will have a single-digit cost in near future with interest obligations as VRL, will be covered through banking [Phonetic], while the principal will be financed through a routine dividend. This will ensure that VRL in future is self-funded.
On demerger, the demerger, as you may have noted in its final stages with shareholders and the creditors meeting planned in coming months, set to unlock significant value and enhance our leadership in critical minerals. In summary, our EBITDA for the first half at Group level stands at about $2.6 billion. Historically, our second half has accounted for about 60% of our annual performance. So we expect a similar trend in the current year.
Besides the linearity between H1 and H2, there are other key businesses such as Zinc International, Iron Ore and Steel, they will see an improved momentum in the coming months. As you have noted, several major capital projects are set to reach completion across key business segments and our growth momentum will further carry-forward into next fiscal. We will have a monthly EBITDA run rate of more than 650 million as we close FY ’25, the current year. Given these developments, one may expect an even stronger EBITDA in FY ’26 next year. We will share further guidance on our FY ’26 outlook later in the year.
In conclusion, I’d like to reaffirm our commitment to three key areas, which is business delivery, deleveraging and demerging. Thank you.
And with this, I hand over to operator for Q&A.
Questions and Answers:
Operator
Thank you very much. We will now begin the question-and-answer session. [Operator Instructions]. We’ll take our first question from the line of Amit Dixit from ICICI. Please go ahead.
Amit Dixit
Yes. Hi, good evening, everyone and thanks for the opportunity. Congratulations for a good set of numbers in a very trying quarter, I would say. A couple of questions from my side. The first one is essentially on aluminum cost. So, if I look in this quarter, the hot metal cost is $1,734 per ton. Our guidance for the year is lower, but alumina cost has surged. So you know, what confidence we have in meeting the alumina cost guidance, sorry, aluminum cost guidance in this backdrop?
Ajay Goel
Our aluminum CFO, Anup Agarwal to respond.
Anup Agarwal
So, thank you, Ajay. So Amit, to your question now, so you would have seen even in this quarter, while the alumina cost has been higher, you will see that on the power and the other costs, we have shown a lower number. Going forward, the near term opportunity lies in Lanjigarh expansion, the work that we have done on our assets that will give us further reduction in terms of the power cost and the operational efficiency. So Amit, what we’ve done is, we have kept the target the same, $1,725, $1,625 to $1,725. In H1, we have done $1,725, and we believe that in quarter three and quarter four, we will be back to these lower-cost levels, which will retain our cost guidance at the same levels.
Amit Dixit
No, the question was more in the line because alumina prices have surged in the recent times. So maybe the inventory that you might have had for imported alumina would have kept the cost a little bit lower in Q2. But going ahead in Q3 when that complete impact will hit us and coal mines are still some way away. So that’s what I was wondering that how can you maintain the alumina cost at a similar level as Q2?
Anup Agarwal
So Amit, let me reiterate, you’re right. See the alumina prices have increased, bought out alumina. Let me reiterate that as we go into Q3 and Q4, Lanjigarh ramp-up is coming into the field [Phonetic]. Arun ji mentioned that our present run-rate is somewhere around 3 million tons. Almost 30%, 35% higher than what we’ve done in the first two quarters. So the cost opportunity lies in Lanjigarh ramp-up. As I mentioned, on the power side though, first two quarters we’ve done major repairs and maintenance. We will now have the benefit of it, where you will see almost $40, $50 lower.
So Amit, basically, we will see a bought out alumina prices which will be higher, which will be to an extent or mostly offsetted by power costs and the other costs. And of course, on the alumina, let me also tell you that not all our contracts, what our contracts are market-linked or the API current cost linked, there are also some contracts, which are linked to the alumina and that will give us the benefit.
Amit Dixit
Understood. Thank you. The second question is on oil and gas. So is it possible to give some more detail about the progress of ASP injection in Mangala well pads. We have taken some write-back of impairment that we took earlier. So how much more impairment can we write-back based on the current progress? In particular, ASP injection progress would be something that I’m looking for? And also whether we expect this decline in Mangala oil field, MBA oil field rather to be arrested in this year?
Ajay Goel
Sure. So let me start with the first, the gain impairment part and request to my colleague, Hitesh Vaid, Oil and Gas, CFO to comment on the volume one. So as you know, Amit, in terms of impairment exercise across the business verticals between the carrying value on the balance sheet and future cash flows. This exercise is quite routine and is semi-annual. We do it at least twice in a year. So, it is part of the same process, September and the March end.
Now for enhanced oil recovery, Vedanta Oil and Gas has commenced injection of ASP, in few select fields in Mangala field. Now this program of injection of ASP is working out well. It will also probably increased to other areas. This has led to accounting for higher resources in the entire valuation model. That is one part.
Secondly, as we know by looking at the valuation of an asset, there are dozen other factors. Example remains cost of capital, tax rate, discount to brand, gas prices, all of those. Looking at all the factors, we have taken and implement reversal in the current quarter. So while making a provision, one has to be conservative and when we write-back a provision, we are doubly conservative. The entire write-back has a pinch of conservatism on write-back.
And in terms of the volume, I’ll request Hitesh Vaid, ASP [Phonetic] to comment.
Hitesh Vaid
Yeah. Hi, Amit. So ASP has been one of our key projects, which we have been trying to implement. What we have done is, we have started injecting in a couple of well pads in Mangala. In parallel, we have also awarded a contract for large scale execution across a cluster of Mangala well pads. So while we, while the current injection has already started and we start seeing some gains in the next three months to six months, the larger project we take is also on where we will start injecting in around 15 months to 18 months time across all the well pads.
So ASP is one project which, which we were talking about. Now it is being executed on ground. And of course, as we have said earlier, the ASP project is going to lead to an increased recovery of around 10%, which will translate across MBA fields to increase recovery of more than 200 million to 250 million barrels. So that project now is on the ground running and we will start seeing some reversal of the declines which we have seen in the past. But this is one part of the stories as far as oil and gas business is concerned.
So beyond the ASP as well as the infrastructure which we are willing to manage decline, what we are also doing is on the, on the East Coast, we are working on a fiber exploration campaign and that will, we intend to start somewhere in March. On the West Coast, we are again starting a drilling campaign from December 2024 onwards, the rig is being mobilized and that program targets five implements [Phonetic]. In addition, we have a DCS [Phonetic] field in the West Coast, which we had acquired sometime back. So we are trying to put that also into production, which will happen once we complete this five-year program, there will be a continuous drilling program to get that also in line.
In parallel, what we are also trying to do, I mean, one of the most exciting prospect which we have is our Deepwater East Coast prospect. We are looking for partner. It has material volume. We believe it is in excess of 5 Tcf, and that’s why our plan is to spud the well in a year’s time. We have three, four discoveries in that block. So we are trying to monetize that discovery as well as bring in the new partners who can help us with further exploration. So that’s the whole story. But yes, the ASP injection, which is a key we have already started and we will start seeing gains from the project.
Amit Dixit
Great. Thank you so much for the elaborate explanation. Thanks and all the best.
Ajay Goel
Thank you, Amit.
Operator
Thank you. We’ll take our next question from the line of Ashish Kejriwal from Nuvama Institutional Equities. Please go ahead.
Ashish Kejriwal
Yeah, hi. Good evening, everyone, and thanks for the opportunity and many congratulations for the great set of numbers in this time. Sir, again, my question is also on aluminum. You said that we can overpower the alumina, rising alumina price by reducing power cost or increasing our aluminum volume. But even after that, one thing is that, how our power cost will reduce $40, $50 when either you are saying that FSA power will increase or e-auction prices are on a higher side?
And secondly, in terms of alumina, when you are talking that we have delivered around $813 per ton cost in this quarter. So do you think that we can manage going forward also with the help of captive alumina as well as I know you mentioned that we have a contract also in alumina. So this math, you know, if you can explain in detail which can give us a comfort or confidence on maintaining our guidance of overall, $1,725, that will be great sir.
Arun Misra
Hi, Ashish. Arun, this side. So Ashish, first, let me come to the power cost, okay. As I said in the first two quarters, we have done major repair and maintenance in our assets. And as we look at it, there will be a cost to the tune of $40, $50 [Indecipherable]. And to your question on the coal loan [Phonetic], both the linkages and our captive coal loan constitutes around 85% of our total coal consumption. And in MCL, e-auction premiums are mid. So you will see that is what gives us the confidence that once the monsoon is also over, we will get the better coal grade and the coal cost would be $50, $60 lower. So that’s one point.
The second point on your question on the alumina. So I agree that maybe a month or two, we may see a higher alumina cost. But as I said, that as we go-forward in the quarter three and quarter four, the Lanjigarh expansion, we, I will reiterate that we are running at a capacity of 3 million ton, that’s a run rate of 3 million ton and we will also start commissioning the Train 2 in the month of December. So as we exit the year now, we will almost be at a run rate of, you can say 4 million tons with our own alumina. And of course, some long-term contracts at a lower-price, as I said, we believe that quarter four cost would offset, if at all, some cost inflation is there in the quarter three. So that is what, this gives us the confidence that we should be able to meet the, $1,725, $1,750 values what we believe.
Ashish Kejriwal
Okay. So you mean to say that we are already, so October month also we have run at a, run rate of 3 million ton in alumina plant? Or this is as of today’s?
Arun Misra
Yeah. So Ashish, let me tell you, see, and I’ll reiterate what we said in the last call also that we’ve been running with some shared infrastructure, okay. Those shared infrastructure were in terms of red mud handling system, alumina handling system and the bauxite handling system. So in the month of October, one of those have come into the line, that’s the red mud. We will have the alumina handling system coming into line this month, the first mid half, and that is where the capacity has gone up to 3 million tons. So current capacity as we are running today, it’s at 3 million tons, rounded.
Ashish Kejriwal
Sure, sure. That’s helpful. Secondly on coal blocks, because we have been hearing it for last one-year now that we are on the verge of commissioning of this coal block. So is it, is it able to understand that when can we expect now and where we are actually on receiving the approvals?
Arun Misra
Yeah. So our Aluminum sector CEO, Sunil Gupta is on line. I’ll request Sunil to comment on this question.
Sunil Gupta
So for the coal block, like the Kurloi coal block is at advanced stage now. We are on the verge of getting the risk clearance. We have already done the public carrying and everything is done. We have started acquiring the land also. Government land is already allotted. CL [Phonetic] land is already allotted. So Kurloi coal block we are expecting first quarter of ’26, it will get operationalized and which we are trying to ramp-up by third quarter of ’26.
The Radhikapur, we are already, we have already got the forest clearance. We are in the process of land procurement there, and which is also expected that we, we are trying to operationalize the first quarter ’26. And for the Ghoghrapalli, we have already got the vested, vesting order from the government. We have started the approval process from the government, which we are targeting by fourth quarter of ’26 it gets operationalized.
Ashish Kejriwal
Okay. So sir, in terms of —
Sunil Gupta
We are on the current track.
Ashish Kejriwal
So Radhikapur or Kurloi, do you think that any further delay in that, any, any other thing which can struck us and this Q1 can become 4Q FY ’26?
Sunil Gupta
Right now, I have, this is Kurloi mines, I am very, very clear that it will get started in the first quarter of 2026. Radhikapur also, we are on track. And only because of some election, central election, it got delayed some process. Otherwise we, again, it has picked-up. So I don’t see any delay in, further delay in the opening of the coal blocks.
Ashish Kejriwal
Understood, sir. And sir, lastly, about our demerger, where we stand, do we think that we can still manage to complete the process by FY ’25 end or there could be some spillover? Or is there a possibility that we get approval for other companies and not for all and then we can, we can’t demerger all?
Arun Misra
Ajay, you want to answer?
Ajay Goel
Yeah. So, thank you for your question. We are very confident that this whole demerger process is the last leg of completion and we are very confident that this will get done on or before 31st of March 2025. Our scheme is extremely flexible, and it allows us as and when each of these companies gets approval from NCLT and along with creditors and shareholders’ approval has the ability to get listed as and when we have the approval.
Ashish Kejriwal
Okay. Okay. Thank you and all the best, sir.
Arun Misra
Thank you, Ashish.
Operator
Thank you. We’ll take our next question from the line of Sumangal Nevatia from Kotak Securities. Please go ahead.
Sumangal Nevatia
Yeah, good evening, everyone. Thanks for this chance. My first question is on aluminum. So during the quarter, we had an accident at red mud pond at Lanjigarh. Just want to understand what was the impact? Is everything in on, I mean, running regularly now? And what was the financial impact also of some compensation which we read in the news articles?
Sunil Gupta
So [Indecipherable], so for the Lanjigarh water pond bridge, there is no impact on the operation. When it happened, we did not have any interruption in the operation. So we are running our Lanjigarh plant as easier. There was only some part of the land which got affected, which has been already cultivated and it has been given back to the villagers. We had already paid to, we had already reimbursed some compensation as advised by the district administration. As said there is no financial impact because of this pond bridge. Now we have already taken steps to again repair up this pond, water pond and IT [Phonetic] has been engaged in that and we have already engaged one third -party for the review of the design.
Arun Misra
Sunil, Arun Misra here. The first clarification is, it is not the red mud pond, it is an in-process water reservoir.
Sunil Gupta
Correct.
Arun Misra
And these reservoirs are normally empty through the year. It gets filled up only in the monsoon and this thing was an unexpected rainfall over a short period of time that caused the overflow and caused the water to go out. That is what, when our people were so alert, it could be quickly kicked-in time, whatever little damage to the paddy fields happened that could be recovered. And now we are ensuring that, what is the excess amount of rainfall water it can accommodate? To that account, we are putting global experts into the redesigning of this process water pond. Normally, we don’t need to increase the capacity, but we will ensure that last 50 years highest ever rainfall, we should be able to protect ourselves and that is the kind of global standard we are trying to adopt now.
Sumangal Nevatia
Understood. That’s great to hear. Next question is on alumina production, full-year guidance. There has been cut versus what we had guided at the start of the year. So just want to understand, is it because of delay in line to Train 2 or some other reason?
Ajay Goel
Hi, Sumangal. See, as I said in the beginning, that we were running with some shared infrastructure, you’re right. So we had some delays there and not helped by the unprecedented rain that we saw. But I think that is now behind us. And quarter two, we will see almost 30%, 35% better production compared to the H1. But yes, in the beginning of the year, the guidance that we had given, we are now revising our guidance slightly lower.
Sumangal Nevatia
Understood. And given that, sir, you commented that end of fourth quarter, we will be running at 4-odd million ton run rate. So for next year, should we expect, I mean, somewhere in the range of 4 million to 5 million tons of production and do we, I mean what’s our bauxite sourcing breakup for that?
Ajay Goel
So, Sumangal, so let me tell you, as I said that we will start commissioning the Train 2 by end December, early January, and we expect that by June, July, we should be able to fully ramp it up. Okay. So to that extent, the math, if we’ll do, we will get where we will have, are now.
Coming to the bauxite, and we said in the beginning that CG money [Phonetic], we are seeing a good traction now and we expect that in quarter one, next year, we should start demanding. And through the bauxite requirement, we feel that OMC and OMC is also expanding its mine between OMC, Sijimali and maybe some other sources we should be able to tie-up the entire bauxite requirement for the next.
Sumangal Nevatia
Understood. I just wanted some more, I mean, some details on these coal mine. So Radhikapur FC2 was pending as far as I remember. So have we secured FC2 for Radhikapur? And also what is the status of Ghoghrapalli? Is the mining plan or ECFC being secured there?
Arun Misra
Sunil, you want to answer that one?
Sunil Gupta
Going to Radhikapur, FC2 still is in process. We are targeting that within, couple, within one month time we get it. Ghoghrapalli, like I said, we have already received the mining plant and land schedule. Now we have submitted for the approval to the government authorities.
Sumangal Nevatia
Okay. And sir, Sijimali, I think mining plan is approved, but is, what is the status of ECFC at Sijimali?
Sunil Gupta
So further, Sijimali already we have done the public [Technical Issues]. We are, we have applied for the FC1. We are expecting that FC1 is, we get by this month, by 30th of December. So Sijimali is already on track. We have already acquired 800 acres of borrowing led. So this is the status of settle of Sijimali.
Sumangal Nevatia
Understood. May I just squeeze in one more question on VRL. One is, we had the ICL due, I think by end of this year, December. So are we on track to receive that outstanding intercompany loan from VRL, number one? And number two, at $4.8 billion net debt, what is our interest obligation? And also are we looking at ending this year lower or has there been some front-ending of payment, I think from [Technical Issues] perspective in the quarter. So for this year, is it possible to guide what is the end target for net debt at VRLs?
Ajay Goel
Sure. Maybe I’ll start with the last first, Sumangal. And as you will recollect at the year beginning, we guided the market that the VRL debt will further deleveraged $3 billion over three years, starting this year 1st April. And in the first half alone, we have deleveraged by $1 billion. Now how much more we can do? As you know, in the second half, the requirement is almost $220-odd million between now and December and plus interest almost equal values. We believe most of the second half requirement will be met through three operating cash flows. So one may, one may look at a number of more about 4.6 [Phonetic] or so at VRL once the year is closed.
Secondly, in terms of ICL between VDL and Vedanta Resources, the last trench almost $417 million [Phonetic] is due towards year-end. It will get serviced as we come close near the maturity. The past couple of installments have also been serviced. So we’ll address as it becomes due in third quarter. Finally, in terms of interest cost, the second half requirement is almost $190 million and we believe our next year requirement will be almost $550 million-to-$600 million [Phonetic]. I also like to present the bigger picture for Vedanta Resources very briefly. So the $4.8 billion requirement as of now has three components. It has bonds worth $3 billion. It has $1 billion worth of bank loans and the remainder $850 million is PFC, the price, the private facility from Stanchart. We will refinance all the bond stacks between November and January over next three months’ time. The bank loans will get refinanced, repaid as and when they become due.
And finally, the PFC from Stanchart, next instalment is due sometimes in April. It will be addressed half, $400 million by the brand fee in April. So net-net, overall by end of this fiscal or early Q1 next year, the cost of funding at Vedanta Resources will be single-digit debt give-and-take INR4.5 billion. In that period, the interest obligations at VRL will be met through a routine brand fee. And hence, the operating profit and loss account at VRL will be self-funded. With bond refinancing done in the last couple of months and more in the offering, the maturities and VRL going forward will be $700 million or so. And that principal agreement can be easily taken care of by a routine dividend with 5%, 6% yield. Net-net, VRL starting next year will be self-funded in equilibrium both P&L and the balance sheet.
Sumangal Nevatia
Yeah. That’s a great turnaround. So, thanks for this detailed explanation and congratulations on this. I’m done with my questions. All the best to the team.
Ajay Goel
Thank you, Sumangal.
Operator
Thank you. We’ll take our next question from the line of Ritesh Shah from Investec. Please go ahead.
Ritesh Shah
Hi, thanks for the opportunity. Couple of questions. First, I’ll just continue with VRL. Sir, just a clarification, when we say this $4.8 billion, is this including ICD and whatever we have outstanding on KCM? If not including both these variables, what the number would be?
Ajay Goel
Okay. So the $4.8 billion, Ritesh is actual debt. So, it does not include the intercompany loan. And when we speak of numbers of $4.7 billion deleveraging, so it is all happen to others. So $4.8 billion, plus $0.4 billion, $5.2 billion is total debt.
Ritesh Shah
And do we, sir, have anything outstanding at the Konkola Copper Mines? I think there were some operational creditors which were taken care of and there was some initial incremental commitment of $1.2 billion over a few years. Is that a part of debt or something that we have, we are looking at VRL level?
Ajay Goel
No. So the $4.8 billion includes everything you know, Ritesh. So, it includes everything.
Arun Misra
Also, also, Ajay, we have got Chris, who is our CEO, Base Metal. He can give you a better update on the operational status of Konkola Copper Mines and the way forward, Chris.
Chris Griffith
Thanks, Arun. Just for the fundraising for $1 billion over the next five years and that’s still work in progress. So that doesn’t add any debt to VRL. At some point in time, as we raise that to complete the investment, that will be then, that will be debt at the KCM level depending on where the investment comes from. But perhaps I can just mention that as you well know, we got the asset back in, in August. So from September, where we started heating up the plant, we did just over a 1 kilotons of copper in September. October, we were already at 8 kilotons. So this month we should be at 9 kilotons. We should be at a run rate of about 15 kilotons per month by the end of the financial year.
So this year, we should already in eight months of production, produced around 80 kilotons to 90 kilotons of copper and be at a run-rate, an annual run-rate of 150 kilotons already by the end of eight months of production. And that’s kind of the level of production that we were producing before the liquidation five years ago. So very rapid ramp-up on the back of us taking over the production. And as many of you know, this truly is one of the spectacular copper ore bodies globally. So as we finish the investment over the next five years of $1 billion, that’s on top of what has already been invested in KPM of $3 billion. So low capital intensity investment, quick ramp-up in a high-grade long-life ore body.
So as we’re speaking to potential investors in KCM at the moment, so we’re seeing lots of interest in this ore body. There is of course a lot of interest in copper, there’s a lot of interest in Zambia, and even more so fantastic interest into KCM. So all-round actually things are going very nicely, notwithstanding a couple of small hiccups, but really good rapid ramp-up that’s happening at KCM as we speak. Thanks, Arun.
Ritesh Shah
Thank you so much for the detailed answer. So just to come back to VRL, sir, just wanted to, can you highlight the maturity broadly for second half of this fiscal and next three years?
Ajay Goel
Sure. So if you look at the second half between October through March, so October is we’re taking care of. What we need between now and the March end, the principal is almost $0.2 billion, it’s about $220 million requirement and interest almost same number. The requirement at Vedanta Resources in second half is almost $400 million. As I mentioned, we intend to address most of it through operating free cash flows and maybe a very small portion through refinancing. So self-refunding.
If we look at next year, FY ’26, the requirement is almost $820 million in principal and interest. So give-and-take $1.2 billion, $1.25 billion, next year. I would say the outer years, F ’27, let us spark for the moment, because we also intend to refinance the remainder bonds. In that case, the maturities will be decluttered and get flattened out.
Ritesh Shah
And sir ’27?
Ajay Goel
’27, as I mentioned, right now it is about $1.1 billion, but once we refinance the remainder bonds, it will come down to a sub-billion. So $0.4 billion in the current year second half, $820 million next year and about $1.1 billion in FY ’27.
Ritesh Shah
This is useful. So that was the first part of the question. Sir, secondly, would it be possible for you to indicate broadly on what’s happening on bauxite globally, specifically touching upon Guinea, and why, why there is so much of [Indecipherable] global bauxite market. How do you see this playing out over said like this six months to nine months? That’s one.
And second is very encouraging to see that our alumina refinery is ramping-up well. But just wanted to understand what is the sort of comfort that we have on sourcing. Earlier we had indicated OMC can go to from 3-to-6 [Phonetic]. Where are we on that? And if possible, if you could quantify something on the pricing for OMC imports and Sijimali, whenever it comes.
Anup Agarwal
So, hi, Ritesh, Anup, this side. So Ritesh, first on the alumina. Okay. So as I said that we will be probably a 5 million run rate refinery as we end quarter one, beginning of quarter two. Okay. Now what you rightly said is around the bauxite. Bauxite also, I’ll reiterate that Sijimali will be started in say Q1. So we plan to get whatever 4 million, 5 million or 3 million to 4 million next year from there. You know that the peak capacity there is around 9 million.
OMC, if you would have picked it up, they are already into the expansion board, 3 million ton to 4.2 million ton, they are already doing expansion and from there, they will go to 6 million ton. So between these two, we believe it’s mostly, say, 85%, 90%, it should cater to our next year requirement. We also have some other domestic as well as some small tie-up with Guinea, which should cater the balance.
And coming to your, coming to your issues, what we have recently picked-up in Guinea. So we are in touch with EG [Phonetic], which are long-term supplier. We believe that it’s a routine custom matter, nothing to worry. In any case, we have a very small contract, say, around 10%, 15% of our requirement and they should be able to supply it. And Ritesh, on a bigger picture, since everyone was talking about the alumina, let me reiterate, okay, the little bit on the aluminum picture.
Now coming to the volume, we’ve said that we will start commissioning Balco end of this quarter, probably by middle of the next year, we should be around 3 million, 3.1 million ton with some bottlenecking done. The near-term, as I said, the cost opportunity lies in alumina ramp-up at Lanjigarh. The power, the power only from the assets and the efficiency part of it, dematerialization, and whatever our operational excellence we bring into. With that, we believe the LAV [Phonetic] where it is. NEP, we have seen that quarter-on-quarter we are growing in high-teens, and we believe that with the increased WAP [Phonetic] and the domestic sales, we should be doing closer to 300, 320 in Q1. If you do the math at 2,600 LME, 300, 320 of NEP, cost is $1,700, $1,800, we should be at $1,200 and multiplied by 3.1, a $4 billion business maybe in the quarter two.
Ritesh Shah
That’s, that’s encouraging. Is there any hedge positions that we have across businesses right now? If you could quantify volume value that would be great?
Ajay Goel
Sure, sure. So let me just cover two large businesses. Now starting with the Zinc business, Zinc India, the hedge quantity in the current year is about 150 kt and that covers almost over 18%, 18% of the volumes for the full-fiscal. Around 150 kt, 50 kt has already unbound in the first half. And as on September end, about 100 kt remains outstanding. That’s one. So 150 is the hedge for the full fiscal, 50 has unbound, 100 remains outstanding. The hedge value is about $3,000 per ton in case of Zinc.
Now coming to aluminum, the hedge quantity is about 190 kt, and that is about 8% volume on a yearly basis. The hedge price is about $2,550 versus give-and-take $2,600 per ton. Out of 190, about 125 remains outstanding as on September ’24. So about 18% zinc has been hedged in summary at about $3,000 per ton and about 8% aluminum has been hedged at about $2,600 per ton.
Ritesh Shah
This is very useful. Possible, can I squeeze one question?
Ajay Goel
Okay. Sure.
Ritesh Shah
Yes. Sir, the last question. Goel, sir, how are you looking at the capital structure for both Vedanta and Hindustan Zinc? I’m asking this question in conjunction with the reducing promoter holding at both Vedanta as well as Hindustan Zinc. The reason I asked is, I think the deleveraging at VRL has progressed at a pretty good pace and still we are seeing some basically offloading from the promoters for both the entities. So, it gives a bit of a conflicting signal. So how should one look at that particular variable?
Ajay Goel
So, I’ll say it in, at least, it’s a bifocal, Ritesh, at least two dimensions. Firstly, in terms of structuring, holding of VRL as in promoters into Vedanta Limited. And we believe as a group with a current holding of 56.4%. So we are, we are quite comfortable. I don’t think there is an intention right now to dive more or acquire more. So the current stake should continue. One should also look at the current holding in the context of a demerger. And as we all believe there is an, there is a preponderance of opinion where everybody believes post-demerger, the value of the sums will be the part be more than the sum. And hence maybe stake dilution post-demerger perhaps will be more beneficial. So we foresee the holding of VRL into VDL of VDL into Zinc in near future will not materially alter.
Secondly, on the debt side, again, I’d like to also comment at Vedanta Resources, our intent is to go down to $3 billion over three years starting the current fiscal. So from current $5.8 billion at the year beginning will go down to $3 billion by end of 2027. At Vedanta Limited, since it’s an operating company, it will not be appropriate to ascribe an absolute value in the growth environment, and hence, one should look at net-debt to EBITDA at Vedanta Limited. Right now at 1.49x, it is set to go down to less than 1x, where EBITDA at Vedanta will be more than the debt. So in summary, the holding structure will remain more or less same in near future, demergers being the context. Debt viewpoint, VRL will be less than $3 billion debt. At Vedanta Limited, net-debt to EBITDA will be less than 1x.
Ritesh Shah
Thank you so much for the elaborate answers. All the very best. Thank you.
Operator
Thank you. We’ll take our next question from the line of Indrajit Agarwal from CLSA. Please go ahead.
Indrajit Agarwal
Hi, good evening. Thanks for the opportunity and congratulations on a good set of numbers and a challenging quarter. Most of my questions are answered. I have two questions. One on the reversal that we had on Oil and Gas business, is there any tax incidence on it? Or is it just a book entry? Is there any cash tax impact of this?
Hitesh Vaid
So we have to, of course, once we reverse a provision, Indrajit, we also create a deferred DTA on that one. So it’s only a book increase. There is no cash tax implication.
Indrajit Agarwal
Sure, sir. That’s helpful. And second is on your notes to account number six on the advanced rate business where you have bought-out the holding of one of the, of Hoya. So what was the outgo because of this? And you mentioned about you want to reorganize the capital structure. So what could be the payout on this? What is the intent and capex that we can have here?
Hitesh Vaid
Yeah, sure. So you’re right. Having said, it used to be almost 51% holding until the remainder stake by our Guinea partner, Hoya, we bought sometimes in the current fiscal. With Hoya stake buyback, our holding at AvanStrate ASI is almost 10%, it’s around 9.9%. The total payout is about $88 million, out of which $66 million have been paid by sale of materials at ASI, AvanStrate. So ASI was holding some metals, which have been locally sold and paid to Hoya out of $88 million. Balance $22 million is paid by ASI’s holding company, CIHM. So cash $22 million, $66 million [Phonetic] is to metal sales.
Indrajit Agarwal
Sure. And you talk about next strengthening the capital structure. So if you can lay out some plans in the next two years, three years, what kind of capex you can see over there?
Hitesh Vaid
I believe really the glass business will be a wonderful business. And right now there are four large players globally. And Vedanta, post the entire state acquisition, we want to recapitalize the business, rebuild the furnace more so in our Taiwanese operation, and that more actions we will see in the current quarter. From incremental profit viewpoint, this business has great potentials.
Secondly, as you have seen in terms of our domestic application with the government on the display side, so between ASI, AvanStrate and the VDL glass business will have great synergies in the future.
Indrajit Agarwal
Sure. That’s all from my side. Thank you so much.
Hitesh Vaid
Thank you.
Operator
Thank you. We’ll take our next question from the line of Raashi Chopra from Citigroup. Please go ahead.
Raashi Chopra
Thank you. Just, I just wanted to reconfirm some of the numbers that you gave at the debt for the debt at the parent level. Now the $220 million of debt and $220 million of interest payment is due for the remaining FY ’25. In FY ’26, you said that the loan amount due is $820 million and $1.1 billion in FY ’27. Is that correct?
Ajay Goel
That’s correct. So current year second half, Raashi, the principal is at $220 million, interest almost $200 million. The total requirement about $400 million. FY ’26 next year, the principal loan is $820 million, and interest we believe $550 million, so about $1.3 billion. And FY ’27, about $1.1 billion principal. And I will urge that let us not look at right now FY ’27. For Vedanta Resources, multiple refinancing of bond has taken place in the previous quarter and more will come. So the entire debt wall at Vedanta Resources will be far more decluttered in near future. But as of now, number is $1.1 billion in FY ’27.
Raashi Chopra
Okay. That’s fine. And essentially you said that the, in the repayment that you have that the $4.8 billion has broken up $3 billion is bond, which you will refinance. $1 billion is bank loans, which will be a mix of refinance and repayment and $850 million is the private facility. So out of that $850 million, that is due in April ’25, is that correct?
Ajay Goel
So, out of $850 million, $400 million is due in April, and that also is a link with a brand fee that is anyways due in April. So out of $850 million, $400 million gets paid in April. And thereafter this loan also has make hold clause, the lock-in, which is set to end sometimes in August next year. So we intend and this is a high-cost debt, Raashi. So we intend to repay this once make hold gets over sometimes August next year.
Raashi Chopra
Got it. And just for essence, not only in FY ’27, in FY ’26, the $820 million plus the $550 million, what is the funding breakup for this, planned funding breakup, in the sense how much is from bank, brand fee, how much is dividend, et cetera?
Ajay Goel
I would say, if you look at brand fee, what we paid in the current year FY ’25, it is almost $400 million. Now with the higher volumes and hopefully the better pricing, that $400 million can become $450 million or thereabouts. So almost half will be met to brand fee and the remainder will be dividends. So as I mentioned, going forward, brand fee should be equal to the interest cost at Vedanta Resources. And with the flattened maturities, a routine dividend thereby the receipt as VRL give-and-take $70 million should take care of principal. So it will be a mix of brand fee and a normalized dividend next year.
Raashi Chopra
Got it. Thank you. And at the India level, your repayment due for the remaining part of FY ’25 is how much, in the number India?
Ajay Goel
If I just speak of Vedanta Limited standalone. So it is about INR2,700 crores in current quarter and about INR5,800 crores in the fourth quarter, so total about INR8,000 crores, $1 billion in the second half. Now as you know at Vedanta Limited, almost entire debt is secured. And with our current operating free cash flows, repaying and refinancing, knowing it is secured is an option. So medial [Phonetic] debt in terms of debt maturity servicing is far different than Vedanta Resources.
Raashi Chopra
Correct. Thank you. And just lastly on alumina, I just wanted to check that when you go to the run rate of about $3 million for alumina, that would be, that would make you captive at about 60%, 65%. So for the remaining 35% or so, how much is spot, and you said you don’t have much spot purchase. So between spot and long-term, what is the split, very roughly?
Ajay Goel
60%-40%, 60% would be long-term.
Raashi Chopra
Got it. Okay. Thank you.
Arun Misra
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 Ms. Prerna Halwasiya for closing comments. Over to you.
Prerna Halwasiya
Yashasvi, I would like to thank you all for taking time to join this call today. I hope we were able to answer most of your questions. In case you have any further questions, please feel free to reach out to us. This concludes today’s call. Thank you, everyone.
Arun Misra
Thank you.
Operator
[Operator Closing Remarks]