Completion of Acquisition of a Controlling Stake in Cairn India Ltd. 8 December 2011

Transcription

1 Completion of Acquisition of a Controlling Stake in Cairn India Ltd. 8 December 2011

2 Cautionary Statement and Disclaimer The views expressed here may contain information derived from publicly available sources that have not been independently verified. No representation or warranty is made as to the accuracy, completeness, reasonableness or reliability of this information. Any forward looking information in this presentation including, without limitation, any tables, charts and/or graphs, has been prepared on the basis of a number of assumptions which may prove to be incorrect. This presentation should not be relied upon as a recommendation or forecast by Vedanta Resources plc ("Vedanta"). Past performance of Vedanta cannot be relied upon as a guide to future performance. This presentation contains 'forward-looking statements' that is, statements related to future, not past, events. In this context, forward-looking statements often address our expected future business and financial performance, and often contain words such as 'expects,' 'anticipates,' 'intends,' 'plans,' 'believes,' 'seeks,' or 'will.' Forward looking statements by their nature address matters that are, to different degrees, uncertain. For us, uncertainties arise from the behaviour of financial and metals markets including the London Metal Exchange, fluctuations in interest and or exchange rates and metal prices; from future integration of acquired businesses; and from numerous other matters of national, regional and global scale, including those of a environmental, climatic, natural, political, economic, business, competitive or regulatory nature. These uncertainties may cause our actual future results to be materially different that those expressed in our forward-looking statements. We do not undertake to update our forward-looking statements. This presentation is not intended, and does not, constitute or form part of any offer, invitation or the solicitation of an offer to purchase, otherwise acquire, subscribe for, sell or otherwise dispose of, any securities in Vedanta or any of its subsidiary undertakings or any other invitation or inducement to engage in investment activities, nor shall this presentation (or any part of it) nor the fact of its distribution form the basis of, or be relied on in connection with, any contract or investment decision. 2

3 Highlights Acquired 58.5% of Cairn India Ltd. for a total consideration of $8.67bn Acquisition completed on 8 December % stake held by Vedanta plc and 20% stake held by Sesa Goa Acquisition funded c. 50% from own resources and balance c. 50% from acquisition debt Cairn India largest private crude producer in India (>20% of India s production) World class assets at Rajasthan (>6.5 bn boe in place, with substantial upside) Low cost operations at Rajasthan and potential to produce 240,000 bopd Recent exploration success in Sri Lanka Strong, experienced management team Enhances and diversifies Vedanta s strong growth pipeline Two major investment decisions made by major companies BP and Vedanta... have reestablished faith in the hydrocarbon potential in India Mr Jaipal Reddy, Minister of Petroleum and Natural Gas on 5 Dec 2011 at World Petroleum Congress Notes: All % shareholding in Cairn India is on a fully diluted basis Transaction immediately earnings accretive 3

4 EBITDA Growth and Diversification H1 FY2011 H1 FY2012 Proforma H1 FY2012 with Cairn India Iron Ore 32% Power 2% Aluminium 11% Copper 21% Iron Ore 18% Power 3% Aluminium 5% Copper 24% Oil & Gas¹ 35% Power 2% Aluminium 3% Copper 15% Zinc-Int. 12% Zinc-India 34% Zinc-India 38% Iron Ore 12% Zinc-Int. 8% Zinc-India 25% EBITDA: $1.3bn EBITDA: $1.7bn EBITDA: $2.6bn Notes: 1. EBITDA from Cairn India before exceptional items and foreign exchange gains 4

5 Cairn Acquisition Funding Consideration ($bn) 20% stake acquired by Sesa Goa % stake acquired by Vedanta plc 5.79 Total Consideration 8.67 Funding Sesa Goa Own resources 2.88 Sr. Secured Bank Term Loan - Tranche A (18 months) 1.47 Sr. Secured Bank Term Loan - Tranche B (36 months) 1.31 Bonds (Maturing 2016 and 2021) 1.65 Own Cash 1.36 Bridge to Equity never drawn, cancelled - Vedanta plc Total 5.79 Total Funding 8.67 c. 50% Funding from own resources and balance c. 50% from acquisition debt 5

6 Credit Metrics Proforma 30 Sep 2011 (including Cairn) in $ mn Debt Cash and Liquid Investments Net Debt Vedanta plc 9, ,949 Vedanta Consolidated 16,620 6,438 10,182 Credit Metrics FY2011 LTM H1 FY2012 Proforma LTM H1 FY2012 (incl. Cairn) Covenant Net Debt/EBITDA 0.55 x 1.82 x 1.64 x < 2.75 x EBITDA/Gross Interest Expense x 4.3 x 5.29 x > 4.0 x Net Assets/Debt 2.61 x 2.05 x 2.43 x > 1.75 x Gearing 2 13% 37% 36% Notes: 1. Interest includes Capitalized Interest 2. Gearing is calculated as Net Debt divided by the sum of Net Debt and Equity 6

7 Cairn India A World Class Asset Base Production Blocks 10 blocks in the Portfolio Exploration Potential Rajasthan (RJ-ON ON-90/1) Cairn (Operator) 70% ONGC 30% Cambay (CB/OS-2) Cairn (Operator) 40% ONGC 50% Tata Petrodyne 10% Ravva (PKGM-1) Cairn (Operator) 22.5% ONGC 40% Videocon 25% Ravva Oil 12.5% East Coast KG-DWN-98/2 WI 10% KG-ONN-2003/1 WI 49% PKGM-1 (Ravva) WI 22.5% KG-OSN- 2009/3* Rajasthan RJ-ON-90/1 WI 70% Sri Lanka WI 100% PR-OSN-2004/1* WI 35% West Coast CB/OS-2 WI 40% KK-DWN-2004/1 WI 40% MB-DWN- 2009/1* WI 100% SL WI 100% * Under Force Majure Q2 FY : Average Daily Gross operated production at 169,944 boe; Cairn (Working Interest) at 99,220 boe 7

8 Financial Highlights Price Realization (USD/boe) Gross Production (Kbopd) Q2 FY Q1 FY Q4 FY Q3 FY Q2 FY Revenue USD Million Q2 Q1 FY12 Q4 FY11 Q3 FY11 PAT Cash Flow from Operations Q2 FY USD Million USD Million *PAT and CFFO are without adjusting one time exceptional item of past Rajasthan royalty costs Net Cash as on 30 September 2011 was USD 1,458 million

9 Rajasthan Update Mangala production ~125,000 bopd; reservoir performance as per expectations MPT Produced and sold >60 mmbbls of crude to Indian refiners; gross cumulative field revenue in excess of USD 5 billion to date Bhagyam ready to commence production, subject to GoI approval Pipeline Expect to exit FY at 175,000bopd with the support of JV and GoI Total Pipe Diameter 790 mm (32 ) Development of Aishwariya underway; plan to commence production in H2 CY 2012, subject to JV and GoI approval High Density Polyethylene Wrap Significant part of currently envisaged basin potential of 240,000 bopd to be met from MBA fields Heat Tube Augmentation of processing capacity and pipeline infrastructure to deliver currently envisaged basin potential in CY 2013 Poly Urethane Foam Insulation Notes: Data as per 20 Oct 2011 press release of Cairn India Ltd 9

10 Rajasthan Royalty Payable at 20% of the post well-head value of the crude oil produced (on an ex-royalty basis); translates to ~15% of the sale value Post the acceptance of pre conditions royalty becomes part of the contract cost for the cost recovery purpose and the calculation of profit petroleum The cost recoverability is effective on a retrospective basis since the production startup Cairn India has taken the impact of total past royalty in its Q2 FY financial results Q2 FY Including net Q2 FY Rajasthan royalty estimate adjustment Net Rajasthan royalty one-time estimate up to Q1 FY (net of Profit Petroleum) PAT (USD million) EPS (INR/share) Reported

11 Rajasthan - Future Resource And Value Potential Gross Initial In Place Volumes ~6.5 Billion boe ~2.5 Billion boe in 35+ prospects ~4 Billion boe Gas GIIP Most Likely Prospectiv e In Place Gross Reserves, Resources 1 and Potential BH + Others 250 Risked Prospective Resource 2.1 Billion boe 20 additional discovered fields including Barmer Hill Oil STOIIP Contingent In Place R & S STOIIP 707 R & S 12 A 66 B 151 MBA EOR 1 The independent estimates of Reserves and Contingent Resources recently carried out by D&M are in line with the CIL estimates 2 Top 35 prospects audited by D&M risked resource 178 mmbbls MBA Fields, Raageshwari and Saraswati FDP approved 1,293 M 468 B A R & S mmbbls Contingent Resource MBA STOIIP M 477 2P+2C MBA EOR Barmer Hill +Other Fields mmbbls Risked Prospects, Leads & Concepts Notes: Data as per 23 Mar 2010 press release of Cairn India Ltd 11

12 Exploration Programme Major long term player Large proprietary database Experienced team Successful exploration over 10 years: Success ratio ~50% Play based approach to building portfolio Diversity of basin, plays and environments Ongoing regional petroleum system studies Drill Bit exploration : >190 exploratory /appraisal wells RJ-ON-90/1 Assessing new plays, generate new prospects MB-DWN-2009/1 Under Force Majeure KK-DWN-2004/1 I N D I A KG-ONN-2003/1 Nagayalanka-1Z discovery; Phase II Exploration & Appraisal well drilling in progress RAVVA Infill drilling completed OPERATED NON-OPERATED Acquired 300 km 2 3D; data processing in progress SL exploration well program: 1 st & 2 nd wells encountered hydrocarbons, 3 rd well drilling in progress SRI LANKA KG-DWN-98/2 3 appraisal wells drilled PR-OSN-2004/1 Under Force Majeure KG-OSN-2009/3 Under Force Majeure 12

13 Exploration - Sri Lanka Block (SL ) Cairn Lanka 100% Working Interest (NOC back-in 15%) Cairn India s first overseas venture Block Area: ~3,000 km 2 Water depth: 400-1,900m India Under explored, frontier basin with multiple plays Exploration Program 3 well drilling campaign commenced in August 2011 Successive discoveries in the two exploration wells drilled Establishment of working hydrocarbon system in the basin 3rd exploration well drilling in progress SL SRI LANKA 50km 13

14 Summary Immediately earnings accretive World class asset and management team Common operating philosophy focus on delivery and costs Maintain strong credit metrics funded through c.50% own resources and c.50% debt Unique opportunity to create value - enhances and diversifies Vedanta s strong growth profile 14

15 Appendix

16 The Transaction Description Date Sesa Goa Vedanta plc Total Purchase from Petronas 19-Apr 10.4% % Open Offer 30-Apr 8.1% - 8.1% Purchase from Cairn Energy 12-Jul % 10.0% Purchase from Cairn Energy 7-Dec 1.5% 28.5% 30.0% Total 20.0% 38.5% 58.5% Accounting Treatment Associate Accounting for Vedanta: 11-Jul to 7-Dec Accounting from 8-Dec: Consolidation by Vedanta Associate Accounting by Sesa Goa Notes: All % shareholding in Cairn India is on a fully diluted basis 16

17 Debt Maturity Profile $5.9bn of cash and liquid investments as of 30 Sep FY2012 maturities largely tied up Credit ratings of BB/Ba2/BB 1 Debt Maturity Profile 2 (in $bn) Debt at Vedanta Plc Debt at Subsidiaries Proforma Addn Debt at VED plc for Cairn Acquisition FY 2012 FY 2013 FY 2014 FY 2015 FY 2016 FY 2017 and later³ Notes: 1. Issue credit Ratings as per S&P, Moody s and Fitch respectively 2. Maturity Profile as of September 30, Convertibles at Vedanta plc of $1,250 million due in FY2017 (with a put option in FY2015) is included at book value of $988mn Convertibles of $883 million due in FY2017 (with a put option in FY2013) is included at book value of $666mn 17

18 Vedanta Group Structure Vedanta Resources (Listed on LSE) 79.4% 70.5% 54.6% 94.8% 55.1% 38.5% 1 Konkola Copper Mines (KCM) Vedanta Aluminium (VAL) 29.5% Sterlite Industries (Listed on BSE, NSE and NYSE) 3.6% Madras Sesa Goa 20% 1 Cairn India Ltd Aluminium (Listed on BSE (Listed on BSE (MALCO) and NSE) and NSE) 51.0% 64.9% 100% 74% 100% 100% 51% Bharat Aluminium (BALCO) Zinc-India(HZL) (Listed on BSE and NSE) Skorpion and Lisheen Black Mountain Sterlite Energy Australian Copper Mines Liberia Iron Ore Assets Zinc-International KEY Aluminium Copper Iron ore Power Zinc-India Notes: 1 On a fully diluted basis Structure as at 30 September 2011 updated for Completion of Acquisition of a Controlling Stake in Cairn India Ltd. 18