Vedanta Limited (NSE: VEDL) Q3 2026 Earnings Call dated Jan. 29, 2026
Corporate Participants:
Charanjit Singh — Group Head of Investor Relations
Ajay Goel — CFO
Deshnee Naidoo — CEO
Anup Agarwal — CEO – Aluminium Business
Rajiv Kumar — CEO – Aluminium Business
Rajinder Ahuja — CEO – Power
Jasmin Sahurity — Chief Operating Officer Oil 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 ’25-’26 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. [Operator Instructions] Please note that this conference is being recorded. [Operator Instructions]
I now hand the conference over to Mr. Charanjit Singh, Group Head, Investor Relations, Vedanta. Thank you, and over to you, sir.
Charanjit Singh — Group Head of Investor Relations
Thank you, Yash. Good evening, everyone, and welcome to Vedanta Limited Q3 FY26 earnings call. On behalf of Team Vedanta, I thank you all for joining us today. I hope you had the chance to look at our press release, earnings presentation, and the detailed financial statements.
On this call, from Vedanta side, we have with us Ms. Deshnee Naidoo, Group CEO; Mr. Arun Misra, our Executive Director; Mr. Ajay Goel, Group CFO; Mr. Rajiv Kumar, CEO- Aluminum business; Mr. Anup Agarwal, CFO – Aluminum business; Mr. Jasmin Sahurity, CEO, Oil & Gas; and Mr. Rajinder Singh Ahuja, CEO Power business. We will begin with the business and operational update from Ms. Naidoo, followed by an update on the financial highlights by Mr. Ajay Goel, and thereafter, we’ll open the lines for Q&A.
With this, I now hand over the call to Ms. Naidoo. Over to you, Deshnee.
Ajay Goel — CFO
Thank you, Charanjit. 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 transformational milestones in Vedanta’s 2.0 journey. We achieved our best-ever quarterly EBITDA of INR15,171 crores while also recording a lifetime high revenue and PAT of INR45,899 crores and INR7,807 crores, 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 was truly — has truly been one for the books with Vedanta recording significant milestones on all fronts, operational, capital-related and corporate actions. Firstly, the key operational milestones. We delivered our highest ever quarterly and nine-month alumina and aluminum production with quarterly alumina, upward 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 Aluminum 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 movement 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. HZL recorded its highest ever mined metal and refined metal output with both items registering 7% to 9% increase quarter-on-quarter and 4% year-on-year.
Like our Aluminum business, Hindustan Zinc also delivered its 5-year lowest production cost at $940 per tonne, 6% better than our cost guidance for FY26. At our Zinc International business, the Gamsberg 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 9-month pig iron production of 680,000 tonnes, that’s an 11% increase year-on-year, and billet production of 775,000 tonnes, a 13% increase year-on-year.
In Oil & 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 field has dropped from 18% to 13% over the first 9 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 5 businesses.
Our Aluminum business reported 3 major commissionings. First, the addition of the 1.5 million tonne per annum Train-2 at our refinery in Lanjigarh, thereby taking our total alumina production capacity to 5 million tonnes per annum. Second, the production of first metal from the new 435,000 tonnes per annum BALCO smelter. And third is the commissioning of the first 125,000 tonnes per annum billet line as part of the 250,000 tonne per annum project at the Jharsuguda plant.
Zinc India business commissioned its 160,000 tonne per annum Debari roaster and completed the debottlenecking projects at Chanderiya and Dariba smelters, which added 21,000 tonnes per annum to our refined zinc capacity. The Gamsberg Phase 2 project at our Zinc 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 contracts 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 Kalarangiatta mine and the approval for the enhanced production of — from Ostapal mine up to 530,000 tonnes.
At our Mangala oil field, one of the large ASP 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 Ambe 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 9 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 the 16th of December, the NCLT approved our demerger scheme. And on the 21st of 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 nonnegotiable aspect of our operations. Through various initiatives at a group level, including critical — 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 lost time injuries down 20% and our TFIR/FR down 13%. Sadly, we lost 3 of our colleagues in this year ending quarter three. And 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. Vedanta Aluminum once again demonstrated its ESG leadership, securing a second rank in the S&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&P assessment, ranking in the top 5 companies globally in the oil and gas upstream and integrated sector and emerging as the highest scorer in India. In the CDP ratings, Vedanta maintained a strong climate score of B, while our water rating improved from B to A minus.
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 aluminum product Restora recorded GHD 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 INR268 crores 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 three is registered as a landmark quarter in Vedanta’s history. The company recorded its lifetime best revenue, EBITDA and PAT 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 aluminum 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 Incab 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 H1 results.
Progressing into FY27, we are targeting commissioning of the Sijimali bauxite mine having received FC1 earlier this month. The start of operations at Ghogharpalli coal mines,,commissioning of the second 600-megawatt turbine at Athena, our 510,000 tonnes per annum fertilizer project at Hindustan Zinc and our 250,000 tonnes and 510,000 tonnes VAB projects at both Jharsuguda and BALCO. Phase 2 commissioning at Gamsberg 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? Thank you, Deshnee, and a very good in, everyone. The quarter bygone Q3 FY26 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 Deshnee’s presentation, following NCLT order on December 16, ’25, the demerger accounting under Indian accounting standards, Ind AS 105 has been incorporated in Q2 results filed with the regulators. These results shows Aluminum, Oil & Gas and Iron Steel businesses separately in a summary one-line form. For clarity and for like-to-like comparison, 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 INR45,899 crores, up 19% Y-o-Y, 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 INR15,171 crores, growing 34% Y-o-Y with EBITDA margins expanding sharply by 629 basis points Y-o-Y to 41%. Finally, the PAT grew 60% Y-o-Y to INR7,807 crores, marking our highest ever quarterly PAT in Vedanta history. Overall, on a 9 monthly basis, the performance remains equally strong. We delivered our record best 9 months revenue of more than INR1.2 lakh crores, up 10% Y-o-Y and best over 9 months EBITDA of INR37,529 crores, up 18% Y-o-Y. 9 months PAT at about INR15, 744 crores, our second best ever. On growth CAPEX, we remain focused on disciplined and value-accretive growth. Over the first 9 months, we invested about $1.3 billion in strategic projects across aluminum, zinc, oil and gas, and power, and remain on track to invest about $1.7 billion 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 INR60, 624 crores with cash and cash equivalents of INR20,085 crores. Our net debt-to-EBITDA ratio leverage improved to 1.23 times from 1.4 times in third quarter, further strengthening our position in terms of debt to EBITDA. We have brought down VEDL’s cost of borrowings to below 9% in third quarter with further finance cost reduction inside in near future. Offer for sale, OFS. You also may have noted on January 27, we launched Zinc India offer for sale, which has seen strong demand and broad-based investor interest. Post completion, our shareholding in HZL 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 to fast track deleveraging and capital structure optimization aligned with company’s 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 S&P, 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 [Technical Issues] we remain committed of completing the demerger as earlier guided, targeting April 1 as effective date of demerger with listing of the demerged entities in the same quarter, around mid- to end of May. This structural 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 5 times of the index overall and 2.7 times of NIFTY Metal index. In conclusion, Q3 FY26 marks a clear defining quarter 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 consol level. Finally, the demerger 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, and back 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 Lahoti from Emkay Global. Please go ahead. 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 Ind AS 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. And 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 1st April as a date on which demerger becomes effective.
Amit Lahoti
Okay. And then my second question is on aluminum hot metal costs. So where we have alumina cost, which is still at $800 per tonne, 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 Anup and Rajiv. But Anup?
Anup Agarwal
So thank you, Amit, for that question. So, Amit, on your first question on the captive mix. See, as we are ramping up Lanjigarh, and Deshnee covered it, we did about 800 kt in quarter three and we are expecting 900 kt 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 alumina cost being closer to $800. See I’ll tell you, as I said, on the bought out alumina what happens is on the pricing month, we actually lock in the LME. And as you are seeing, with the LME in surge, we are not getting the benefit that we had intended. Now if you’ll see quarter three, the LME was closer to $2,600, now $2,800 and as we speak, it is closer to $3,100, 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 $20, $22 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’ve answered your question.
Amit Lahoti
Yes. So just a follow-up on this. What is the contract as a percentage of your total alumina consumption as in contract related to LME price of aluminum?
Anup Agarwal
See, Amit, as I said, be it API, be it LME, whenever we are buying, whenever that material is getting priced, we lock in the LME. So that has been our policy.
Amit Lahoti
Okay, got it. Thank you so much.
Anup Agarwal
Thank you, Amit.
Operator
Thank you. We’ll take our next question from the line of Dhananjai Bagrodia from Alchemy Capital. Please go ahead. Hi, congratulations to everyone. Hi, can you hear me? Just wanted to ask — firstly, congratulations on a fantastic set of numbers in an environment. I just wanted to ask you for our aluminum capacities for production, how much do we see the 600-plus kt be, let’s say, in a year from today? Hello?
Deshnee Naidoo
Thank you for that. I’m actually going to hand over to Rajiv. But just very quickly, the increase in aluminum 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 two quarters. Rajiv?
Rajiv Kumar
Thank you, Dhananjai. We are just now at 20 pots in the new 435 kt smelter at BALCO. We intend to increase to about 1 lakh tonne 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 zones. 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 our best benchmark number of ramping up of the pots anywhere in the world for this kind of a smelter.
Deshnee Naidoo
Thank you so much for that, Rajiv. Maybe just to summarize on that, we will get to 2.8 million tonnes of aluminum post our BALCO project ramp-up. The team is working on a set of debottlenecking exercises to close the gap from 2.8 million to 3 million tonnes, which is what we’ve guided in the market over the next 18 months. But in addition to that, our Lanjigarh refinery will get up to 5 million tonnes. We already closed those run rates. So as Anup just explained, that is what gives us the integrated or the captive benefit there.
But the other opportunity right now on aluminum is actually value added. So we have value-added projects, both at BALCO and Jharsuguda. 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 VAB, 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 aluminum growth and margin story to expect over the next 1 year.
Remember, the BALCO project is 435.
Dhananjai Bagrodia
Sure. And in Power, where do we see our 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 Rajinder Ahuja, our Power CEO on the line. So Rajinder, I think it would be good for you just to talk through where we are today, the current projects and, of course, somewhat of the strategy around Power post the next three years.
Rajinder Ahuja
Thank you, Deshnee. Hi, Mr. Bagrodia. Just wanted to tell you that as of now, we — this year, we have commissioned around 1.6 gigawatt of capacity at Athena and Meenakshi. So total capacity as of now up and running is 4.2 gigawatts. 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 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 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 reach from 5 to 10? Are there even equipment 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’s definitely capacity constraint from Indian manufacturer, but we are exploring India as well as outside India, all who can supply us, and we have a good discussion going on. Maybe at the right time, we will come out with the concrete numbers on that.
Deshnee Naidoo
But the focus right now, right, Rajinder, is 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 plants in terms of how to grow the Power sector, especially now with the demerger, we will come back to the market.
Dhananjai Bagrodia
Sure. And lastly, thank you to Charanjit and the IR team for such strong disclosures. It’s been really, really helpful for us as investors. So thank you to Charanjit and the team. Thank you, guys.
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. 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?
Deshnee Naidoo
Ajay?
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 real time. And we map the market impact practically on-time, real-time basis. We also have a global expert at our 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 50 kt each, both for the fourth quarter and next year. So almost 100 kt, almost 9% volume for the full fiscal is hedged. The average value — the price locked is almost $3,000 per tonne across Q4 and next year.
And finally, in terms of aluminum, 8%, about 125 kt for the fourth quarter and almost 490, 10% is next year hedging. So net-net, 18% quantity hedged for aluminum. The average pricing is about $2,650. So in summary, about 10% for the current fiscal and 10% for the next year has been hedged.
Sumangal Nevatia
Ajay, can you just give FY27, what the price — hedge price? The average price is fourth 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 tonne, about — the quantity is 48 tonnes exactly. In case of zinc, it is 43 tonnes and the price is about $3,072 and aluminum is about 10%, 490 or so and the pricing about INR2,625.
Sumangal Nevatia
Understood. That’s very clear. Second question is on the aluminum cost. I just wanted to understand what sort of cost changes are we expecting over the next 1 or 2 quarters. And from BALCO smelter, what sort of ramp-up schedule can we expect over FY27? Do we expect — I mean what utilization could be achieve in FY27 on an average?
Deshnee Naidoo
Thank you, Sumangal. 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 2 quarters.
Anup Agarwal
So Sumangal, as you would have seen in quarter three, our hot metal cost reduced by 8% compared to the last quarter. While answering the alumina cost, I had guided that next quarter, alumina 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 costs. So both will tend to offset each other. So next quarter, broadly, we are saying costs will remain flat at the constant LME. Maybe 0.5% here and there because of the inflationary pressure that we’re seeing on the carbon commodity. Coming to quarter one, with the ramp-up in Lanjigarh and the bauxite that we’re expecting from Sijimali, 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
Yes. Sure. I mean, overall, what we committed last time, Sumangal, we as a group at VRL level, almost $0.5 billion deleveraging and given the current OFS in the play, again, another $0.5 billion. So roughly about $0.8 billion to $1 billion will be deleveraging across the group in the current fiscal. With that, the VEDL India debt will come down by almost $0.7 billion in the current year and almost $300 million at VRL level. At Vedanta India, we track debt-to-EBITDA. So compared to 1.23 times as of third quarter, we’ll be closing the fiscal at about 1 times, and that will be, I think, the lowest in the last many, many years.
Sumangal Nevatia
Understood. Thank you so much. I’ll join the queue back.
Deshnee Naidoo
Yeah, thank you.
Operator
Thank you. We’ll take our next question from the line of Ashish Kejriwal from Nuvama Wealth Management. Please go ahead.
Ashish Kejriwal
Yeah, hi, thank you for the opportunity, and many congratulations to the entire team. Many congratulations to the entire team. My question is on the alumina part. Anup sir, you mentioned that we tried to purchase alumina at a percentage to LME. So because 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
Sure. Ashish, see, last time I had said that we had some LME-linked contracts, okay? But as we go into the next financial, most of our contracts are API-linked. That’s the — that is what you call the alumina price index is not LME-linked. 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 do is when we — in the month of pricing, we actually lock in the LME, be lit API, be it LME. And in an LME rising scenario, which you have seen almost 10% rising 2 months, you see that gap. And if the LME was a constant, I’m again repeating, you could have seen almost a $40, $45 reduction in alumina this quarter and the next quarter. So at some point of time in the constant LME, you will see that 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 part metal cost, we are saying that our entire alumina purchase or maximum alumina purchase is API-linked, not aluminum price linked?
Anup Agarwal
Yes. So that’s a fair point. On a constant LME, something which I mentioned. Keep that in mind.
Ashish Kejriwal
Sir, this is somewhat confusing actually because the spot prices which we look at is that is something like $310, $315 per tonne of our alumina, whereas if I link with aluminum and even if you got 12%, 13% as a percentage of LME, it will be much higher, $400-plus. So what you’re trying to say is that…
Anup Agarwal
No. Ashish, I’m only trying to say that, see, suppose if had bought alumina at $310 as you rightly said and there is a lag of 60 days. So when I’m pricing the alumina, the LME is $3,000. In the consumption month if it is $3,200 crores, 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 the way we account for it.
Ashish Kejriwal
Okay. I’ll try to take it offline. Second thing is in terms of our coal block, Kuraloi, 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 coal block for Kuraloi? And as well as Sijimali, we have received Stage 1 Forest Clearance. But even after that, we need Stage 2 clearance and other local bodies clearances, how comfortable we are saying that Sijimali 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 bauxite blocks.
Rajiv Kumar
So thank you for the question, Ashish. On Kurloi, as you rightly said, we got the FC Stage 1 on 12th of May 2025. And FC Stage 2 clearance, we got on 12th of January this month, 2026. And CTO and some approvals, mine lease 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 Kurloi. And we are very hopeful of commissioning the Kurloi mine by quarter four of FY26, which has been the guidance.
As far as Sijimali is concerned, FC Stage 1 was obtained on 31/12, 2025. EC, we are expecting by February ’26, and we are quite hopeful of operationalizing the mine, as you rightly said, in the monsoon month. So we are quite there, and we are very hopeful of doing both.
As far as Ghogharpalli is concerned, we have also made headway and the mine plan is already approved. And public hearing, we got it in January ’26 done, completed. EC, we are expecting by May ’26 and FC by July ’26. Again, commissioning, as we have guided, we will stick to that commissioning. So we are in control and last leg of approvals as far as Kurloi and operationalizing Sijimali by quarter one FY27.
Ashish Kejriwal
That’s great. And lastly, on steel, we have not heard anything on getting clearances for our expansion from 1.5 million to 3 million. And obviously, every quarter or half yearly, we keep on postponing that final date. So where we are, do we think that, that 1.5 million to 3 million tonne 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 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 MoEF&CC 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 MoEF&CC has relaxed the requirement in terms of the policy ratio of 1:2. So against that and the agents 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 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 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 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 the 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 time lines as we understand it for demerger?
Ajay Goel
Yes. It is just — it is just the dates, Pallav. As we know, the overall — the bigger demerger, the 4 businesses, the NCLT order came on December 16, 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 is 1st April. So they will be all coterminus on the same day.
Pallav Agarwal
Sure. For the perspective of valuing the individual businesses, so how would we apportion the portion of debt 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 focused 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 consol 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 aluminum. Some portion to Power and the remainder Vedanta. Oil & 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, P&L account or debt allocation will be all finalized.
Pallav Agarwal
Sure. That would be very helpful. And lastly, on the Oil & Gas business. So we’re adding some reserves, but production continues to decline. So like with some new fields getting added, is there some probability that this can increase going ahead?
Deshnee Naidoo
Yes. So I’m going to hand over — thank you. I’m going to hand over to Jasmin, 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, as well as the work that we had to do on tight oil and then some of the exploration activities in terms of meaningful drilling. So Jasmin, 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 across.
Jasmin Sahurity
Right. Good afternoon, everybody. So the main reason why volumes are not coming to the level that we expected is actually dealing of the projects, 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, is basically reserves in place and the resources that we are converting to the reserves. And with the intensive recompletion strategy and the drilling of new wells, we’ll pick up that from the existing 8,000 to 15,000. Basically, that 2 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 aware, in the West offshore, we discovered the recently confirmed reserves on the larger scale in the offshore shallow Ambe. 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 13,000 in March next year.
On the Northeast, biggest prospect, we are in the continual delay for the first and the most important exploratory appraisal project, SP1. It is not easy to operate over there. We are finally come 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 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 [indecipherable] onshore to offer drilling which may increase our reserves to 50 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
So just finally, I think as part of the demerger, there was some guarantee to be provided for, I think, the arbitration dispute. So would that be at the Vedanta Limited, the primary company level, or at the oil company level?
Jasmin Sahurity
You are reaffirming, probably.
Deshnee Naidoo
Thank you, Jasmin. Yes, Pallav, that’s already been dealt with at the current structure. So when we demerge, that will be without the obligation sitting at the entity level.
Pallav Agarwal
Sure, yeah, thank you so much.
Operator
Thank you. We’ll take our next question from the line of Ritesh Shah from Investec. 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 update on that? Because honestly, we are expecting some payout to fund that. So if that thing is something which has been taken care of, how was that funded? That the first question.
Ajay Goel
Yes. 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 $1 billion ICL advanced in 2019, $417 million remains outstanding. And practically, $200 million is due on January 31, in three, four days from now, and the balance of $200 million sometimes in Q1, which is end of May. So out of $200 million ICL due in January, $50 million, in fact, we have prepaid in December. So $150 million now remains pending in January and the balance $200 million in May. The entire ICL $50 million will be paid on time.
Ritesh Shah
Right. So this balance, $150 million, and there was an interest payment, I presume, $270 million, $280 million. So the idea is to still fund it via dividends?
Ajay Goel
So 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 million 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, Ritesh, 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 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
My second question is, how should we read into confidential filing for CopperTech Metals? So I’m reading it more from the VRL debt profile and the recent OFS that we have in Hindustan Zinc, how should we read into promoters holding into Vedanta and Vedanta holding into Hindustan Zinc? Like how should we look at a broader top-down thought process from the company?
Deshnee Naidoo
I think from — Ritesh, from an overall CopperTech point of view, there is no link, right, with Vedanta Limited and anything below VRL. This is a separate entity sitting above Vedanta Resources Limited as we told the market. And that entire today will be holding 80% of our KCM interest that, as we’ve told the market that we have filed an S-1 that we’re going through the process with the SEC in 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 owls 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 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
Ritesh — Deshnee, sorry, I’ll have to intervene here. We are in the silent period with respect to having done the S-1 filing. So we can’t speak anything until the process is continuing.
Deshnee Naidoo
As we guided in the last results policy.
Ritesh Shah
Okay. I’ll just move to the next question. 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 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 our 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, we 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 OFS right now in the play, the value is almost INR3,000 crores, and that also gives us the reason to fast track the entire deleveraging. And as I earlier mentioned, our intent is to make Oil & Gas business debt-free through demerger and also our Iron & Steel business almost debt-free. So much of this restructuring will be in Vedanta opportunity from taxation viewpoint and otherwise.
Ritesh Shah
I didn’t get the INR3,000 crores number, sir?
Ajay Goel
So the OFS for zinc right now, we’re looking at almost 1.1% as the bidding both by retail and extension got closed [indecipherable]. It’s about 1.1% of stake sale, and that’s INR3,000 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 subjudized, but under which entity will this fall? And how should we look at this variable going forward?
Ajay Goel
That’s an ongoing matter with the MoPNG. 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 is there a windfall gain, wherever that falls?
Ajay Goel
Right now, it will — it is arbitration is in the play. And next set of hearing is sometimes in the middle of March and that will determine any gain, if at all. Any accounting implications, gain or otherwise, will go in Oil & Gas business post demerger.
Deshnee Naidoo
It’s ring-fenced to Oil & Gas whatever the decision is.
Ritesh Shah
Okay, perfect. Thank you so much for the detailed answers. Wish you all the very best. Thank you.
Operator
Thank you. We’ll take our next question from the line of Raashi Chopra from Citi Group. Please go ahead.
Raashi Chopra
Thank you. Just on Zinc International, how do we think about the cost in the fourth quarter and next year?
Deshnee Naidoo
Raashi, in terms of current cost levels have become higher for a couple of reasons. As we continue to do waste stripping in the mine, we can 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 had slightly higher TcRcs quarter-on-quarter, which is the other big decider.
And then although the Gamsberg mine and plant did very well in terms of the 40,000 in this quarter, our Black Mountain mine because of the deep decline is 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 Gamsberg project, Raashi, 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 TcRc as well as our waste stripping moving into cost. I hope that gives you some indication.
Raashi Chopra
Yes. On the interest cost switching, you mentioned that this year, the fourth quarter, the balance interest payment is about $125 million. What is — is that $400 million for FY27 and FY28?
Deshnee Naidoo
Ajay?
Ajay Goel
From VRL viewpoint, Raashi?
Raashi Chopra
Yes. Yes. Sorry, VRL
Ajay Goel
So let me give you a slightly detailed answer in terms of the VRL requirement on maturities, both principal and interest for next fiscal. So interest, you’re right, the number is almost $450 million for the next fiscal at VRL on a full yearly interest cost basis. So $450 million is interest. In terms of principal, the actual debt is $450 million and ICL $200 million, $650 million. $650 million and $450 million is almost $1.1 billion.
Now how one should look at in terms of debt servicing, there are two sources of cash for VRL, the brand fee, let’s say, $400 million to $450 million. And the remainder, even if we pay 5% or lesser dividend, $650 million. So net-net, as we’ve been saying in the past, the Vedanta Resources will be self-sufficient, self-funded to a 5% dividend and retain brand fee going forward.
Raashi Chopra
Got it. And just to clarify once again, on hedging, what was your aluminum hedged volume for this fourth quarter and for the next year?
Ajay Goel
So the current quarter is almost 125 kt at a price of $2,640. For next year, FY27, it’s about 490 kt and the pricing is more or less same. It’s $2,625. So 125 and 490 kt Q4 next year, pricing roughly $2,625 on both the cases.
Raashi Chopra
Understood. And sir, just last question for me. Your captive alumina target for 1Q ’27 is 80%, right?
Ajay Goel
Yes, Raashi, 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
So 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 Closing Remarks]