Vedanta Limited (NSE: VEDL) Q3 2026 Earnings Call dated Jan. 29, 2026
Corporate Participants:
Charanjit Singh — Group Head, Investor Relations
Deshnee Naidoo — Chief Executive Officer
Ajay Goel — Chief Financial Officer
Anup Agarwal — Chief Financial Officer, Aluminum Business
Rajiv Kumar — Chief Executive Officer
Rajinder Ahuja — Chief Executive Officer, Power
Jasmin Sahurity — Chief Operating Officer, Oil and Gas
Analysts:
Amit Lahoti — Analyst
Dhananjai Bagrodia — Analyst
Sumangal Nevatia — Analyst
Ashish Kejriwal — Analyst
Pallav Agarwal — Analyst
Ritesh Shah — Analyst
Raashi Chopra — Analyst
Presentation:
operator
Ladies and gentlemen, good day and welcome to Vedanta Limited’s third quarter financial 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. Charanjeet Singh, Group Head Investor Relations Vedanta. Thank you. And over to you sir.
Charanjit Singh — Group Head, Investor Relations
Thank you, Yash. Good evening everyone and welcome to Vedanta Limited Q3FY26 earnings call. On behalf of Team Vedanta, I thank you all for joining us today. I hope you had the chance to look at a press release earning presentation and the detailed financial statements. On this call from Vedanta side we have with us Ms. Deshnin Aidu Group CEO Mr. Arun Mishra. Our Executive Director, Mr. Ajay Goyal Group CFO Mr. Rajiv Kumar, CEO Aluminum Business. Mr. Anup Agarwal, CFO Aluminium Business. Mr. Yasmin Sahorti, CEO Oil and Gas. And Mr. Rajinder Singh Ahuja CEO Power Business. We will begin with the business and operational update from Ms.
Naidu followed by an update on the financial highlights by Mr. Ajay Goyal. And thereafter we’ll open the lines for Q and A with this. I now hand over the call to Ms. Naidu. Over to you Deshti.
Deshnee Naidoo — Chief Executive Officer
Thank you, Charanjeet. Good evening everyone.
It is a privilege to address you once again as I present our performance for the third quarter of FY26. A period marked by record operational achievements. Key Key transformational milestones. In Vedanta’s 2.0 journey, we achieved our best ever quarterly EBITDA of 15,171 rupees crore. While also recording our lifetime high revenue and PAT of 45,899 and 7,807 respectively. Notably, two of our businesses delivered the best ever EBITDA resulting in a consolidated EBITDA margin of 41%. A historic high for Vedanta. Representing a year on year increase of 629 basis points. Quarter three has truly been one for the books with Vedanta recording significant milestones on all fronts.
Operational capital related and corporate action. Firstly, the key operational milestones we delivered our Highest ever quarterly and nine month alumina and aluminium production. With quarterly alumina output rising 57% year on year to around 0.8 million tonnes, we are well on track to deliver our full year volume guidance of around 3 million tonnes, a new record in Vedanta’s history. Our aluminium business recorded its lowest hot metal cost of the last 17 quarters at $1,674 per tonne better than our full year guidance of $1,700 to $1,750 per tonne. This improvement is primarily driven by the $110 per tonne quarter on quarter decline in power cost after the maintenance of our captive power plant in quarter two aid, the DAL recorded its highest ever mined metal and refined metal output with both items registering 79% increase quarter on quarter and 4% year on year.
Like our aluminium business, Hindustan Zinc also delivered its five year lowest production cost at $940 per tonne, 6% better than our cost guidance for FY26. At our zinc international business, the Hamsburg mine delivered its best ever recovery at around 85% in December with the third quarter production surging 28% year on year and nine month volumes increasing 38% year on year. In line with our full year guidance, our power business is on track to deliver an outperformance against our annual guidance with Athena recording a PLF of 72% in quarter three which is an 11% increase over guidance.
Our iron and steel businesses delivered a record nine month pig iron production of 680,000 tonnes. That’s an 11% increase year on year and billet production of 775,000 tonnes, 13% increase year on year. In oil and gas, our average gross production stood at 85,000 barrels of oil equivalent per day. Owing to various interventions across our wells, the decline in the rate of base volume at our existing oil fields has dropped from 18% to 13% over the first nine months. These achievements were aided by strategic capacity additions and the completion of debottlenecking initiatives reflecting our strong commitment towards achieving the guidance given at the beginning of the year.
Again these milestones have been achieved across all five businesses. Our aluminium business reported three major commissionings. First, the addition of the 1.5 million tonnes per annum train 2 at our refinery in Landigar, thereby taking our total alumina production capacity to 5 million tonnes per annum. Second, the production of first metal from the new 435,000 tons per annum bulk or smelter. And third is the commissioning of the first 125,000 ton per annum billet line as part of the 250,000 tonnes per annum project at the Jasuguddha plant. Zinc India business commissioned its 160,000 tonnes per annum debary roaster and completed the debottlenecking projects at Chanderia and Dariba smelters which added 21,000 tons per annum to our refined zinc capacity.
The Hamsburg Phase 2 project at our Zyng International business is almost 90% complete with commissioning being targeted in the next quarter. The power business added 1.3 gigawatts of new capacity at Meenakshi and Athena power plants. Currently Meenakshi has entered into a short and medium term supply contract for 750 megawatt capacity while Athena has signed supply contracts for its entire first unit of 600 megawatts. Our ferrochrome business reported the start of Kalangrita mines and the approval for the enhanced production from Ostapal mine up to 530,000 tons at our Mangla oil field, one of the large ASP implemented implementations globally on a single field is reaching its final stage of commissioning and is expected to open up additional reserves of 50 million barrels for the company.
We have made, as you would have seen, a gas discovery in the ambay field awarded to us in September 2022 through the competitive bidding process. Evaluations are underway to assess the potential of the discovery. In the initial nine months we invested around $1.3 billion in growth capex in various projects across all five businesses and we are on track to achieve our full year guidance of around $1.7 billion. On the corporate action front, a significant milestone in this quarter has been the approval of our Demerger Scheme. This marks a defining moment in our journey, one that empowers our businesses to sharpen their strategies, strengthen their balance sheets and accelerate growth with the aim of unlocking shareholder value.
On 16th December the NCLT approved our demerger scheme and on 21st January we received the certified copy of NCLT’s order. We are now progressing towards implementation and targeting 1st of April as the effective date with listings in the same quarter turning to ESG and CSR at Vedanta. Responsible growth is at the heart of everything we do. The safety of our workforce remains our highest priority and non negotiable aspect of our operations. Through various initiatives at a group level including the implementation of critical risk management, we continue to strengthen the safety culture across our facilities. However, much more needs to be done on a year to date basis.
Our metrics do show an improvement however, with our lifetime injuries down 20% and our TFIR FR down 13%. Sadly we lost three of our colleagues in this year ending quarter three. This is incredibly painful for the team and I and hence we continue to redouble our efforts on safety. During the quarter we made various strides in our sustainability journey too. Pidantha Aluminium once again demonstrated its ESG leadership, securing a second rank in the S and P Corporate Sustainability Assessment for the third consecutive year.
Our oil and gas business made a remarkable debut in its very first participation in the S and P assessment, ranking in the top five companies globally in the Oil and Gas Upstream and Integrated sector and emerging as the highest score in India in the CDP ratings.
Vedanta maintained a strong climate score of B while our water rating improved from B to A. Besides ratings, we also achieved other recognitions reflecting progress across our sustainability commitments. Hindustan Zinc’s Kayad mine was recognized for excellence in energy and water efficiency. Balco’s Low Carbon Aluminium Product Restorer recorded GHG emissions lower than 4 tonnes of CO2 equivalent per tonne of product. Reaffirming our unwavering commitment to inclusive growth, we continued our initiatives of empowering communities with investments of around 268 crore in the initial nine months of FY26 towards various CSR initiatives that positively impacted over 5.5 million lives.
These milestones are proof of our values in action, of the responsibility we carry towards our communities and the planet and our vision for a sustainable Future. To summarize, Quarter 3 is registered as a landmark quarter in Vedanta’s history. The company recorded its lifetime best revenue EBITDA and pat on on the back of expanded volumes and sustained cost optimization across all businesses alongside improvement in metal prices during the quarter we also achieved commissioning of new aluminium smelter and a refinery train. These are significant milestones that will drive business growth in the coming quarters. We received the NCLT’s approval for a historic demerger and approval to acquire in CAB industries another strategic move aligned with our vision of unlocking downstream synergies and broadening our market presence to enhance profitability.
With our Quarter four performance likely to surpass Quarter three levels, we are on track to deliver what will become a lifetime high annual ebitda of over $6 billion surpassing the guidance given at the time of the 81 results progressing into FY27, we are targeting commissioning of the Sigmali Bauxite mine Having received FC1 earlier this month, the start of operations at Gogopali Coal mines commissioning of the second 600 megawatt turbine at Athena, our 510,000 ton per annum fertiliser project at Hindustan Zinc and our 250,000 ton and 510,000 ton VAB projects at both Jasivida and BALCO Phase 2 Commissioner Hamsburg and our 420,000 tonnes per annum di pipe plant in Goa. These projects will further enhance volumes and deliver significant cost reductions through to FY27. We thank you for your continued support and trust in us.
Ajay will now provide a summary of our financial performance. Ajay.
Ajay Goel — Chief Financial Officer
Thank you Deshti and a very good evening everyone.
The quarter bygone Q3FY26 has been a quarter of immense significance for Vedanta marked by remarkable performance both operationally and financially and crucial progress made on demerger and capital structure. The macro environment is supportive with a strong demand and pricing being favorable and we expect these conditions to sustain going forward. On results presentation following NCLT order on 12-16-25 the demerger accounting under Indian Accounting Standards India 105 has been incorporated in Q3 results filed with the regulators. These results shows aluminium, oil and gas and iron steel businesses separately in a summary one line form for clarity and for like to like comprehension.
Below results are for combined operations which is pre demerger and for all Vedanta existing businesses. On performance we delivered our highest ever quarterly revenue of 45,899 crores up 19% yoy with our portfolio strength supported by pricing which is favorable and strong operational execution and sustained growth across our core businesses. We also this quarter delivered our best ever quarterly EBITDA of 15,171 crores growing 34% YUI with EBITDA margins expanding sharply by 629 basis points YUI to 41%. Finally the PAT grew 60% YUI to 7,807 crores marking our highest ever quarterly PAT in Vedanta history. Overall on a nine monthly basis the performance remains equally strong.
We delivered our record best 9 months revenue of more than 1.2 lakh crores up 10% YoY and best ever 9 months EBITDA of 37,529 crores up 18% YoY 9 months back at about 15,744 crores, our second best ever on growth CAPEX. We remained focused on disciplined and value accretive growth over the first nine months. We invested about 1.3 billion in strategic projects across aluminium, zinc, oil, gas and power and remain on track to invest about 1.7 billion in for the full year as we have earlier guided. As these projects come on stream they will drive higher volumes, margins and earnings visibility across pricing cycles.
Briefly moving on to the balance sheet, our balance sheet continues to strengthen in a sustained and visible manner. Net Debt stood at about 60624 crores with cash and cash equivalents 20085 crores. Our net debt to EBITDA ratio leverage improved to 1.23x from 1.4x in third quarter further strengthening our position in terms of debt to ebitda. We have brought down V Deal’s cost of borrowings to below 9% in third quarter with further finance cost reduction in sight in near future offer for Sale offers. You also may have noted on January 27th we launched zinc India offer for sale which has seen strong demand and broad based investor interest.
Post completion our shareholding in LDL will be around 60.7% from 61.8% so about 1.1% will be the stake dilution in Zinc as we close transaction over today and tomorrow. The transaction will further strengthen the balance sheet through fast track deleveraging and capital structure optimization aligned with companies long term interest on the credit rating. The improving financial performance continued to get noticed and recognized by the rating companies following the Demerger order. Both Crisil and ICRA has reaffirmed Vedanta’s rating as AA with watch developing implications. In addition we got upgrades from snp, Moody and Fitch for VRL rating rating outlook changing from stable to positive and that indicates there’s a room for rating augmentation in near future. This underscores confidence in our improved balance sheet, cash flow visibility and strategic direction clarity.
Moving on to Demerger and value unlock, it is about time for Vedanta 2.0 as we advance on Demerger execution. With the NCLT order in place and key regulatory and operational, we remain committed of completing the Demerger as earlier guided targeting April 1st as effect date of demerger with listing of the demerge entities in the same quarter around mid to end of May. This structured transformation will unlock further value and improve capital efficiency across verticals. You also may have noted that Vedanta delivered a TSR of almost 30% in third quarter alone representing 5x of the index overall and 2.7 times of Nifty Metal index.
In conclusion Q3FY26 marks a clear defining part of Vedanta with a strong performance and notable advancements across our strategic focus areas with supporting macro environment and Operating rigor, we are confident of delivering record EBITDA in FY26 surpassing 6 billion at Vedanta India console level. Finally, the demeasure marks Vedanta’s transition into a new phase of growth and value unlocking into a powerhouse of critical minerals, energy transition and technology.
Thank you. A nd back to operator for Q and A.
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 our first question from the line of Amit Lahoti from MK Global. Please go ahead.
Amit Lahoti
Thanks for the opportunity and congratulations on a good set of numbers and I’m really sorry for the loss of Mr. Agnivesh Agarwal. So my first question is on Demerger. As we have classified the businesses as discontinued operations in the financial statements, is it fair to say that all the approvals and name transfer on the assets are in place for demerger to go through?
Deshnee Naidoo
Amit, thank you so much for the question and thank you so much for your condolences. Amit, now that we’ve had the formal order in hand, we will start with actually the various CPS we have and then all of the necessary steps actually give effect to the corporate restructuring will happen.
But Ajay, do you want to add anything to that?
Ajay Goel
Sure. So Amit, the entire Demerger accounting follows the Indian Accounting regulation, specifically India’s 103 and 105. And under that guidelines, in case the demerger is more likely over next 12 months then you have to account the way we have accounted. Now obviously we have to work through a couple of CPs and other statutory approvals. But as we earlier mentioned, we are committed and confident making first April as a date on which demerger becomes effective.
Amit Lahoti
Okay. And then my second question is on aluminium hot metal cost. So where we have alumina cost which is still at $800 per ton and the cost of alumina production is clearly higher than the market price which is now close to $300 in the international markets. So what would be the mix of captive production versus imports going ahead? So basically the question is, is there any incentive for increasing captive production at all given that the market price is lower than what we are producing at?
Deshnee Naidoo
Thank you so much for that question. I’m actually going to shoot this straight to Anoop and Rajiv but Anup so.
Anup Agarwal
Thank you Amit for that question. So Amit on your first question on the captive mix see as we are ramping up Landingar and Disney covered it. We did about 800kt in quarter three and we are expecting 900kt plus in quarter four. So that means 60% in quarter three captive 70% in quarter four and going forward quarter one, quarter two it should be 80%. Now coming to your second question on the alumna cost being closer to 800. See I’ll tell you as I said on the bottom what happens is on the pricing month we actually lock in the LME and as you are seeing with the LMA in surge you know we are not getting the benefit that we are intended.
Now if you’ll see quarter three the LME was closer to 2600. Now 2800 and as we speak it is closer to 3100. And that is the reason last time we said you will see a $50 lower cost quarter on quarter. What we are seeing is a $2022 in quarter three and maybe a $25 in quarter four. Probably as we go into the quarter one you will see a cost sub 750 but the main driver remains the captive and as I said we will be closer to 80% as we go into the quarter one. Amit, hopefully I have answered your question.
Amit Lahoti
Yes sir. Just to follow up on this what is the contract as percentage of your total total alumina consumption as in contract related to LME price of aluminum.
Anup Agarwal
See Amit as I said no be it API be it lme whenever we are buying, whenever that material is getting priced. No we lock in the LME. So that that has been our policy.
Amit Lahoti
Okay, got it. Thank you so much.
operator
Thank you. We’ll take our next question from the line of Dhananjay Bagodia from Alchemy Capital. Please go ahead.
Dhananjai Bagrodia
Hi. Congratulations to everyone. Hi, can you hear me? Just wanted to ask you sir firstly congratulations on a fantastic. Congratulations, fantastic set of numbers in an environment. I just want to ask you for aluminum capacities for production. How much do we see the 600 plus KT be let’s say in a year from today. Hello. Hello.
Deshnee Naidoo
Thank you for that. I’m actually going to hand over to Rajiv but just very quickly the increase in aluminium production is coming from our BALCO project. So let Rajiv update on the BALCO project and talk about the ramp up that we’ll see over the coming 2/4 Rajeev.
Dhananjai Bagrodia
Thank you Dhananjay. We are just now at 20 parts in the new 435kt smelter at Balco. We intend to increase to about 1 lakh ton by this year end March end and then next three to six months we’ll ramp up the rest of the pots. There are 304 pots divided into four years. So the first set of 76 pots would be online by March and the rest of the numbers would be on by in the next three to six months and we will ramp it up from there. We have taken a best benchmark number of ramping up of the pots anywhere in the world for this kind of smelter.
Deshnee Naidoo
So thank you so much for that Rajiv. Just to summarize on that, we will get to 2.8 million tons of aluminium post our Balco project ramp up. The team is working on a set of debottlenecking exercises to close the gap from 2.8 to 3 million tonnes which is what we’ve guided in the market over the next 18 months. But in addition to that our Langar refinery will get up to 5 million tonnes. We’re already close to those run rates. So as Anup just explained that is what gives us the integrated or the captive benefit there.
And but the other opportunity right now on aluminium is actually our value added. So we have value added projects both at Balco and Jasavida. So in addition to the volume uplift which you’ll see in the next year, you’re also going to see a margin increase from us in terms of bab which the team is working on, how much more we can actually sell in the domestic market. So I just wanted to give you the full aluminium growth and margin story to expect over the next one year.
Dhananjai Bagrodia
Fantastic.
Deshnee Naidoo
435. Sorry.
Dhananjai Bagrodia
No sir. And in power, where do we see a capacity, let’s say a couple of years or three years from hence? How do we see that ramping up our power capacities?
Deshnee Naidoo
Certainly. So in terms of current projects, we have another unit in Athena to go which is another 600 megawatts. But I have Rajendra Awuja, our power CEO on the line. So Rajendra, I think it’ll be good for you just to talk through where we are today, the current projects and of course you know, somewhat of the strategy around power post the next three years.
Rajinder Ahuja
Thank you Desni and hi Mr. Bagodia, just wanted to tell you that you know as of now we recently have commissioned around 1.6 gigawatt of capacity at Athena Minakshi. So total capacity as of now up and running is 4.2 gigawatt. This is expected to go to around 5 gigawatt 4.8 nearly gigawatt by end of H1 of the next year. And as we demerge we really want to be a growth company and write the India’s growth story on energy. So we are having a plan in place to put additional 10 to 12 gigawatt. That’s a plan being made and you will really see that you know this company will be on continuous growth chart for the next five to seven years as India needs more thermal power capacity.
Dhananjai Bagrodia
But sir, for this do we have tie ups to the fight to reach from 5 to 10? Are there even equipments available? Everything is available or how is that coming along on ground.
Rajinder Ahuja
So we are keeping all options open. Indian players. Yes, there is a definitely capacity constraint from Indian manufacturers. But we are exploring India as well as you know, outside India. All who can surprise us and we have a good discussion going on. Maybe at right time we will come out with the, you know, concrete numbers on that.
Deshnee Naidoo
Okay, so the focus right now, right to get us to the 5 gigawatts as soon as that’s the focus. And the focus there is also to look at how we tie up most of that into contracts as we saw with the current PPAs that we just landed for both Athena and Meenakshi. So that’s the focus when we have the rest of the plans in terms of how to grow the power sector, especially now with the demerger, we will come back to the market.
Rajinder Ahuja
Sure. And lastly thank you to Charanjeet and the IR team for such strong disclosures. It’s been really, really helpful for us as investors. So thank you to Charanjeet and the team. Thank you guys.
Charanjit Singh
Thank you.
operator
Thank you. Take a next question from the line of Sumangal Nivatia from Kotak Securities. Please go ahead.
Sumangal Nevatia
Yeah. Good evening. Thank you for the chance. I have a few questions. I got disconnected in between so please excuse if it’s repeated. Firstly I wanted to know hedging volumes. What proportion is hedged for fourth quarter and mainly for FY27 across divisions, mainly aluminum, silver and zinc. And what sort of policy are we? Policy or strategy are we following as far as hedging is concerned?
Ajay Goel
Sure. Sumangal, we haven’t covered hedging so I think it’s all right. Hedging, I think all of you would agree in the current environment is highly tumultuous. It makes sense to hedge. Hedging as a policy is dynamic. It is a real time and we map the market impact practically on time real time basis. We also have a global expert at all of Vedanta advising Vedanta risk committee on the hedging. So it is a joint call that we all take. That’s the policy in terms of how much we have hedged across the key commodities. The silver hedging for the current fiscal as of now it’s about 68 tonnes and it’s about 10% volume of the current fiscal.
Additionally about 50 tonnes is covered for next year about 7%. So overall 10% for the current fiscal and 7% for the next year 17% is a hedged quantity. The average rate is about $45 per troy ounce. In case of zinc the hedging is almost 50kt each both for the fourth quarter and next year so almost 100kt. Almost 9% volume for the full fiscal is hedged. The average value the price locked is almost $3,000 per ton across Q4 and next year. And finally in terms of aluminium 8% about 125kt for the fourth quarter and almost 490 10% is the next year hedging. So net net 18% quantity hedge for aluminium the average pricing is about 2650. So in summary about 10% for the current fiscal and 10% for the next year has been hedged.
Sumangal Nevatia
Thanks Ajay. Can you just give FY27 what the price hedge price the average price is 4th quarter and FY27 right?
Ajay Goel
That’s correct. That’s right. In fact for the next year the numbers are much higher, slightly higher. Silver at about $55 per ton about the. The quantity is 48 tons exactly. In case of zinc it is 43 tons and the price is about 3072 and aluminium is is about 10% 490 or so and the pricing about 2625.
Sumangal Nevatia
Understood. That’s, that’s very clear. Second question is on the aluminium cost. Wanted to understand what sort of cost changes are we expecting over the next one or two quarters? And from BALCO smelter what sort of ramp up schedule can we expect over FY27 do we expect? I mean what utilization could we achieve in FY27 on an average?
Deshnee Naidoo
Thank you Samanga. We did already answer the BALCO ramp up but we can certainly resummarize for you. But maybe anup you can start with the cost over the next two quarters.
Anup Agarwal
So as you would have seen in quarter three our hot metal cost reduced by 8% compared to the last quarter while answering the Albuna cost. Now I had guided that next quarter Alvuna cost will be lower $25 almost. We have a planned maintenance of one of our bigger power plant units and there you will see a higher cost. So both will tend to offset each other. So next quarter broadly we are seeing costs will remain flat at the constant elevator maybe half a percent here and there because of the inflation inflationary pressure that we are seeing on the carbon commodity. Coming to quarter one. Coming to quarter one. With the ramp up in Langigarh and the bauxite that we are expecting from Sri G Mali, we believe we should have a $50 $60 cost reduction compared to where we are today.
Sumangal Nevatia
Understood. And just very. Lastly, any new deleveraging targets for both Vedanta Resources in India given the cash flows and the commodity prices?
Ajay Goel
Yeah, sure. I mean overall what we committed last time, we as a group at VRL level almost half a billion deleveraging and given the current offers in the play again another half a billion. So roughly about 0.8 to 1 billion will be deleveraging across the group in the current fiscal year. With that the VEDL India debt will come down by almost 0.7 billion in the current year and almost 300 at VRL level. At Vedanta India we track debt to EBITDA. So compared to 1.23x as on third quarter we’ll be closing the fiscal at about 1x and that will be I think lowest in the last many, many years.
operator
Understood. Thank you so much. I’ll join the queue back. Yeah.
Deshnee Naidoo
Thank you.
operator
Thank you. Take our next question from the line of Ashish Kejriwal from Nuama Wealth Management. Please go ahead.
Ashish Kejriwal
Yeah. Hi. Thank you for the opportunity and many congratulations the entire team. My question is on the alumina part. Anoop sir, you mentioned that you know we try to purchase alumina at a percentage to lme. So because you know our alumina production is increasing. So do you think that whatever is requirement for FY27 we can’t go for spot basis because as a percentage of LME we are not getting any benefit. In fact if I do the calculation third quarter purchased alumina cost seems to be higher than third second quarter and obviously it will continue to go higher because of the aluminum price. So for the strategy part can’t we go for spot purchase or is it not available itself? That’s my first question.
Anup Agarwal
So as is see last time I had said that we had some LME link contract. Okay. But as we go into the next financial most of our contracts are API limp. That’s the. That is what you call the Almuna price index if not elevated the point that I had covered in the pricing month and we’ve explained it time and again that there is a 45 to 60 days lag. So what we did do is when the in the month of pricing no we actually lock in the LME beat API be it LME and in a LME rising scenario which you have seen almost 10% rising two months you see that gap and if the LME was a constant I am again repeating you would have. You could have seen almost a 40$45 reduction in Algona this quarter and the next quarter. So at some point of time in the constant LME you will see that big gain coming in. But LME linked contracts are almost not there for the next financial year. Very small quantity.
Ashish Kejriwal
So is it safe to say that from first quarter FY27 when we are expecting 50 to 60 fall in hot metal cost we are saying that entire alumina purchase or maximum alumina purchase is API link Not aluminum price LinkedIn.
Anup Agarwal
Yes, so. So that’s a fair point on a constant LMA is something which I mentioned. Keep that in mind.
Ashish Kejriwal
NThis is somewhat confusing actually because the spot prices which we look at is that is something like 310, 315 per ton of alumina Whereas if I link with aluminum and even if you got 12, 13% as a percentage of eliminate it will be much higher $400 plus. So what you are trying to say is that. Yeah.
Anup Agarwal
No Ashish, I’m only trying to say that. See suppose if I had bought a Almuna at 310 as you rightly said and there is a lag of 60 days. So when I’m pricing the alumna the LM is 3000 in the consumption month. If it is 3200 you only have that lag. Otherwise there is absolutely no lag because as a policy we lock in the LME in the month of pricing. It’s not LME linked.
Deshnee Naidoo
I think it’s very clear Ashish. It’s price is API linked consumption in the month. Right Would be LME linked. But that’s just, that’s just the way we account for it.
Ashish Kejriwal
Okay, I’ll try to take it offline. Second thing is in terms of our cold block Kurlowi which we are saying that we are going to start in fourth quarter so have we received all regulatory clearances and now we are on ground because we are already at end of Jan. So how comfortable we are in that cold block for Kull Loi and as well as Sigmali we have received stage one false clearance but even after that we need to explain other local bodies clearances. How comfortable we are saying that you know Sejimali we can start before monsoon this year.
Deshnee Naidoo
Rajiv, I think you can give a full update on both the coal as well as all our boxes plots.
Rajiv Kumar
So thank you for the question. Ashish on Kurloi, as you rightly said we got the FC stage one on 12th of May 2025 and FC stage two clearance we got on 12th of January this month 2026 and TTO and some approvals. Mine means opening as well as escrow account opening. All that is running in parallel and we are quite hopeful. We have already put in the MDO and the team is on ground and we are ready. We have already shifted our offices in that area on Kodulai and we are very hopeful of commissioning the Kodloy mine by quarter four of FY26 which has been the guidance as far as Sizimali is concerned.
FC Stage 1 was obtained on 3112, 2025. EC we are expecting by February 26 and we are quite hopeful of operationalizing the mine as you rightly said in the monsoon ballot. So we are, we are quite there and we are very hopeful of doing both as far as Gogarpalli is concerned. We have also made headway and my plan is already approved and the public hearing we Got it in January 26th done, completed EC we are expecting by May 26th and FC by July 26th again commissioning as we have guided we will stick to that commissioning so we are in control. And the last leg of approvals as far as furloughing and operationalizing seasonally by quarter one FY27.
Ashish Kejriwal
That’s great. And lastly on steel we have not heard anything on the grading clearances for our expansion from 1.5 to 3 and obviously every quarter or half yearly we keep on postponing that, you know, final date. So where we are do we think that that 1.5 to 2 or 3 million ton approval from the government or the regulatory authorities we are going to get in this year or actually where we are on that process.
Deshnee Naidoo
Thank you, thank you so much for the question. So we have completed the acquisition of our 913 hectares of forest land that we’ve already handed over to the forest department. The team on the ground has been engaging with the MOEFCC in terms of what else we would need to comply with. We are very encouraged with the fact that we are concluding this now when MOEFCC has relaxed the requirement in terms of the forestry ratio of 1 to 2. So against that and the engagements on the ground, Ashish, I don’t want to preempt but we are most hopeful that this would happen in this quarter still. And then in terms of progress on the ground, the team continues within the constraints we have to make overall progress on the project. I think the project is some 70% complete of course within the constraints we have. So once we get the approval we’ll start to accelerate the rest of the project completion.
Ashish Kejriwal
Thank you so much team. And I must congratulate for the team for effective debt management as well as project execution. Thanks and hats off to you guys.
operator
Thank you. We’ll take our next question from the line of Pallav Agarwal from Antique Stockbroking. Please go ahead.
Pallav Agarwal
Yeah, good evening. So you know the first question was on the timeline. So we’re still showing power business as under continuing operations. So are we confident that we should be able to get all requisite approvals before March or April? If you want the full demerger to be effective.
Deshnee Naidoo
Ajay, do you want to take that question in terms of just reiterating the timelines as we understand it for demerger?
Ajay Goel
Yes, it is just the dates Pallav. I mean as we know the overall the bigger demerger the four businesses the NCLT order came on December 16th which falls within the third quarter October December. The NCLT order for power, the Delhi bench in fact came on January 7. So it is an event post balance sheet date and hence power is part of operations continuation. So in terms of approvals we intend to demerge all four companies on the same day and the target right now being in the 1st of April. So they will be all CO terminals on the same day.
Pallav Agarwal
Sure. You know, from the perspective of valuing the individual businesses, you know so how do we know apportion the portion of debt to among the various businesses. So probably a proper picture of the valuation of the different entities.
Ajay Goel
As we speak right now the management is a focus similarly in fact carving out multiple balance sheets and debt allocation and many more statutory requirements. So in terms of debt I think that remains simpler part when we went to the bankers seeking noc in that case debt allocation was broadly aligned with the bankers as a precondition for granting NOC for demerger approval. So broadly the net Debt in Vedanta India console at about 6.7 billion we get apportioned in the ratio of assets that each entity will carry. Post demerger, one more dimension remains each entity’s cash generation and debt serving capability.
So in summary, a significant portion of debt out of 6.7 billion will go to aluminium, some portion to power and the remainder Vedanta oil and gas post demerger will practically be debt free and a very small debt in iron steel. So it is all being worked out and by end of this March, be it recasted, balance sheets, penal account or debt allocation will be all finalized.
Pallav Agarwal
Sure, that would be very helpful. And lastly on the oil and gas business, so we are adding some reserves but you know, the production continues to decline. So like with some new fields getting added, is there some probability that this can increase going ahead?
Deshnee Naidoo
So I’m going to hand over. Thank you. I’m going to hand over to Yasmin, our coo who will take the question. But I just wanted to also remind the market that we did come in and talk about three different projects that we were undergoing in Rajasthan. Firstly on ASP and as well as the work that we had to do on tight oil and then some of the exploration activities in terms of infill drilling. So Yasmin, when you update, I think just because we spoke to the market the last quarter, let’s just speak about why the volumes didn’t come to plan and what is the recovery plan that we have underway for crafting.
Jasmin Sahurity
Right, Good afternoon everybody. So the main reason why volumes are not coming to the level that we expected is actually delaying of the project ASP commissioning and startup, which is enhanced oil recovery, one of the largest in the world and very expensive technology. However, we are about to finalize commissioning and startup and to pick up the first volumes of the contributions from the reservoir in that way in period of next three months. This is first bucket, second bucket is tight, oil is immense. Basically reserves in place and resources that have we we are converting to the reserves and with the intensive recompletion strategy and the drilling new wells will pick up that from the existing 8,000 to 15,000.
Basically that two buckets will stabilize the decline to actually be on the sustainable production delivery and slowly picking up an increase towards 90,000. As you are also there in the west offshore, we discovered recently confirmed reserves on the largest scale in the offshore shallow Ambi. However, that project will be commissioned and start up next year, actually this financial year 27 in quarter four and the first volume will be the Stable production rate will be around 15,000 in March next year. On the Northeast biggest prospect, we are in the continental delay for the first and the most important exploratory appraisal project SP1.
It is not easy to operate over there. We are finally coming with all commitments towards the environment and the local government in terms of approvals. And without that, we cannot ultimately start our drilling program. We hope it will be commissioned end of this financial year, end of March. And then we can drill two to three wells which will discover potential volumes of up to 100 million reserves, which will definitely ramp up production in our entire portfolio, especially from the Northeast. That’s in the nutshell. Everything.
We have a couple of more projects which are working for the further development, like a heavy oil in the Rajasthan north, like infill on the south, satellite fields of oil in the Rajasthan south and the east coast. Very promising. Big prospect of Allen backfield onshore to offshore drilling which may increase our reserves to 15 million additionally. So all in all, we expect the next year to stabilize everything and to grow to at least 90,000 and then year after the year reaching our ultimate target of 150,000.
Pallav Agarwal
Sure. Thank you so much for the detailed answer. So just finally, I think as part of the demerger, there was some guarantee to be provided for the, I think the arbitration dispute. So would that be at the Vedanta Ltd. The primary company level or at the, you know, the oil company level.
Jasmin Sahurity
You are referring? Probably.
Deshnee Naidoo
Thank you. Yasmin. Yes, Talab. That’s already been dealt with at the current structure. So when we demerge, that would be without the obligation sitting at the entry level.
Pallav Agarwal
Sure. Yeah. Thank you so much. That’s it.
operator
Thank you. We’ll take our next question from the line of Ritesh Shah from Investech. Please go ahead.
Ritesh Shah
Yeah, hi. Thanks for the opportunity. A few questions. One is for Ajay sir. We had a certain outgo commitment at VRL with respect to interest in icl. Any, any update on that? Because honestly, we’re expecting some payout to fund that. So if that thing is something which has been taken care of, how was it funded? That’s the first question.
Ajay Goel
Yeah, sure. So in fact all of the ICL is on track as we have committed or as in fact is contracted as of now. Out of a billion ICL advanced in 2019, 417 million remains outstanding and practically 200 is due on January 31st in three, four days from now. And the balance of 200 sometimes in Q1, which is end of May. So out of 200 ICL due in January, 50 million. In fact we have a prepaid in December. So 150 now remains pending in January and the balance 200 in May. The entire ICL 50 million will be paid on time.
Ritesh Shah
Right. So this balance one hundred and fifty. And there was an interest payment I presume two hundred and seventy. Two hundred and eighty. So the idea is to still fund it via dividends.
Ajay Goel
If you look at the fourth quarter Jan to March, so almost 150 million is the ICL. There is no other debt due in the fourth quarter. So 150 is ICL and the balance 125 million is the interest. So overall 275 million. Now how do you fund it? Again the option remains the mix of refinancing and repayment. Now dividend as you would appreciate is a board matter. But we have in the past been committing about 6% dividend yield and what we have paid in the current fiscal is almost 3%. So a payment of a dividend in the fourth quarter is likely subject to board approvals. In that case the entire dues, almost 275 million in the fourth quarter will be addressed through dividend.
Ritesh Shah
Amazing. Thank you. Thank you so much for a detailed answer. My second question is how should we read into confidential filing for Copper Tech Metals? So I’m reading it more from the VRL debt profile and the recent that we have in Hindustan Zinc. How should we read into promoters holding into Vedanta and Vedanta holding into Hindustan Bank? Like how should we look at a broader top down thought process from the company?
Deshnee Naidoo
I think from a overall corporate point of view there is no link. Right. With Vedanta Ltd. And anything below VRL. This is a separate entity sitting above Vedanta Resources Ltd. As we told the market. And that entity today will be holding 80% of our KCM interest. That as we’ve told the market that we have filed in S1 that we’re going through the process with now with the SEC in terms of terms of next steps. But there is no link.
Ritesh Shah
Please correct me if I’m wrong. So it’s a VRL which holds 80% into the entity, right?
Deshnee Naidoo
Yes, it is VRL that currently holds 80% of our KCM interest with 20% being held by the local government entity in Zambia.
Ritesh Shah
Correct. So would it be possible for you to give some color on what is the thought process? I appreciate it. Nothing to do with Vedanta but it will impact the debt profile at the VRL level. So that’s where the interest Is from.
Charanjit Singh
Sorry, I’ll have to intervene Here we are in the silent period with respect to having done the S1 filing. So we can’t speak anything until the process is continuing.
Deshnee Naidoo
In the last results policy.
Ritesh Shah
Okay, I’ll just move to the next question. Thank you. I’ll just move to the next question. Thanks. Thanks for detailed disclosures with respect to the different entities. But if we had to understand the element of accumulated losses, unabsorbed depreciation, tax efficiencies. Is there a way in which you can help us? We can. We can appreciate these variables.
Ajay Goel
That is a work Ritesh right now is underway as I mentioned. So over the next eight weeks, two months or so, recasting multiple balance sheets for each of resulting entities. Debt allocation in terms of finalization structure of the management in place, all will be worked out. Allow us maybe almost two months time. You will have all the numbers. One thing I can confirm to the entire audience and through you to the stakeholders at large, that demerger in fact becomes an opportunity across the areas. Take an example, the office right now in the plague the value is almost rupees 3000 crore. And that also gives us a reason to fast track the entire deleveraging. And as I earlier mentioned, our intent is to make oil and gas business debt free and also our iron steel business almost debt free. So many of this structuring will be an Vedanta opportunity from taxation viewpoint and otherwise.
Ritesh Shah
Thanks for that. I didn’t get the 3,000 crore number, sir.
Ajay Goel
So the offer for Zync right now we’re looking at almost 1.1% as the bidding both by retail and extension got closed at 230. It’s about 1.1% stake sale and that’s Rs. 3000 crores broadly. And the entire amount will be used for deleveraging.
Ritesh Shah
Sure. And last question. In notes to accounts we have mentioned a claim of $512 million. How should we look into this? I understand it’s subsidized, but under which entity builders fall. And how should we look at this variable going forward?
Ajay Goel
That’s an ongoing matter with the mopg. It pertains to oil and gas and the matter is in arbitration. In fact, all the judgments in the past have been in Vedanta’s favor. And in our assessment that matter is medium to low risk.
Ritesh Shah
So if there is a windfall gain, where will it fall?
Ajay Goel
Right now it will. It is. Arbitration is in the play and the next date of hearing is sometimes in the middle of March. And that will determine Any gain, if at all, any accounting implications, gain or otherwise, we go in oil, gas business p ost emerge.
Deshnee Naidoo
I t’s oil and gas, whatever the decision.
Ritesh Shah
Okay, perfect. Thank you so much for the detailed answers. Wish you all the very best. Thank you again.
operator
Thank you. Take our next question from the line of Rashi Chopra from Citigroup. Please go ahead.
Raashi Chopra
Thank you. Just on Zync International, how do we think about the cost in the fourth quarter and next year?
Deshnee Naidoo
Thank you so much, Rashi. In terms of current cost levels have become higher for a couple of reasons. As we continue to do the waste stripping in the mine, we move some of those costs from capital into opex. So that’s one of the movements we’ve seen. Of course the exchange rate in South Africa has not worked in our favor. That’s also contributing to some of the dollar cost movements in the quarter. And then we also have slightly higher TCRCs quarter on quarter which is the other big cider. And then although the Hamsburg mine and plant did very well in terms of the 50,000 in this quarter, our Black Mountain mine because of the deep decline actually coming to the end of its life and without the Black Mountain tonnes and the associated copper and silver we get as a byproduct that’s also affected the overall cost structure. A good cost structure post ramp up of our Hamsburg project, Rashi should be in the range of about 1.1 to 1.2. So $1,100 to $1,200 per tonne. But that will be patchy as we ramp up and with some of the headwinds that I’ve just mentioned in terms of TCRCS as well as our waste stripping moving into cost. I hope that gives you some indication.
Raashi Chopra
Yes, thank you. On the interest cost switching here, you mentioned that this year for the fourth quarter the balance interest payment is about $125 million. Is that $400 million for FY27 and FY28?
Deshnee Naidoo
Okay.
Ajay Goel
From VRL viewpoint.
Raashi Chopra
Yes, yes, sorry.
Ajay Goel
Let me, let me give you slightly details answer in terms of the VR requirement on maturities both principal and interest for next fiscal. So interest you write the number is almost 450 million for the next fiscal at VRL on full yearly interest cost basis. So 450 is interest in terms of principal. The External debt is 450 and ICL 200. 650. 650 and 450 is almost 1.1 billion. Now how one should look at in terms of debt servicing, there are two source of cash for VRL, the brand fee let’s say 400 to 450 and the remainder even if you pay 5% or lesser dividend, 650. So net net. As we’ve been seeing in the past, the Vedanta Resources will be self sufficient, self funded to a 5% dividend and within brand fee going forward.
Raashi Chopra
Correct. Thank you. And just to clarify once again on hedging, what was the aluminium hedged volume for this fourth quarter and for the next year?
Ajay Goel
So the current quarter is almost 125 for KT at a price of 2640 for next year FY27 it’s about 490kt and the pricing is more or less same. It’s a 2625. So 125 and 490kt Q4 next year pricing roughly 2625 on both the cases.
Raashi Chopra
Understood. And so just last question for me. Your captive alumina target for 1Q27 is 80%, right?
Ajay Goel
Yes Raji, that’s right.
Raashi Chopra
Okay, 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
Thank you everyone for taking out the time to join us for any unanswered questions. Feel free to get in touch with the IR team. So with this we conclude our call and we look forward to reconnecting with you in April for our Q4 results. Goodbye and good day everyone.
operator
Thank you members of the management team. On behalf of Vedanta Limited that concludes this conference. Thank you for joining us. And you may now disconnect your lines.