I have a couple of questions. First, on aluminum, can you help us understand the other costs, the power cost, conversion costs, et cetera, how those will trend in the next couple of quarters? So, the point is, would the entire $50 reduction in alumina flow to cash cost or that could be offset by the other cost? Second is on the other assets of JPA, what kind of roadmap, what kind of plan do you have? Do you have a timeline in mind whether do you want to divest or do you actually want to operate those assets for some time? Third, a bookkeeping question, what is the current debt at VRL level?
Thank you, Indrajit. Thank you, Deshnee. So, Indrajit, okay, before I come to your question, so let me reiterate that we are on the track for full-year guidance with H2 hot metal cost being sub $1,650. Now I cover your power cost. See, we guided last time also in Quarter 1, if you recall, that we had taken some major power shutdown. Now the timely power plant shutdown will enable us to achieve sub 500 per ton power cost in H2 FY '26. We expect average alumina cost, as I said, to be lower $50 each in Quarter 3 and Quarter 4. Okay. Carbon has been slightly rising, around $15 increase from Quarter 1 to Quarter 2. But on the other operating efficiency, we believe that we should have an advantage of, say, $20, $25. Out and out from Quarter 2, as Deshnee said, from a COP of $1,826 per ton, H2, we expect it to be sub $1,650. Deshnee Naidoo: Thank you so much, Anup. I think, Indrajit, just on the JAL acquisition, we know the process is still, there is still a process underway. And only once the COC process has been finally resolved, will we come back to the market with the details and there is a lot of options within the five different business segments. But I tried to upfront explain what the primary catalyst was. And the rest of it, following the COC, we will definitely come back to the market. I don't want to be preemptive at this point. Ajay Goel: Yes. The third part that you asked, Indrajit, debt at Vedanta Resources. So, as on September end, it's the actual debt at about $4.4 billion. And plus, as you know from Vedanta, there is an ICL, which is, again, 400. So, overall debt, internal and external, is $4.8 billion. Maybe I will also take this opportunity covering how do we want to look at financing in second half at VRL and a next couple of years. So, for the current year, between Q3 and Q4, we have no impending maturities. And what remains to be cash out at VRL in second half is the interest cost at about $270 million-$280 million and one of the options remain to fund that using dividend. Now over the next couple of years, for example, the next year, the actual maturity is about 300 plus 200 is ICL, the last tranche. Total need for maturity at VRL next year is about $0.5 billion. This number in FY '28, second year, is about $450 million. So, over the next three years, the maturity at VRL will be about $0.5 billion and that can be easily managed by paying 4% to 5% dividend yield. Secondly, the interest cost at VRL, given both deleveraging and lower cost of funding, will be almost $400 million or thereabouts, and that will be equal to the routine brand fee even at the current levels. So, in summary, over the next three years, both the maturities and the interest cost at VRL, as I earlier mentioned, will be practically on autopilot mode.
This question was for Deshnee. Ma'am, thanks for explaining the underlying rationale for the JayPee Group. We just wanted to clarify that the number that you have indicated, is it adjusted for economic interest, basically, when we say INR 2,100 crores of EBITDA? Also I wanted to ask about the SEPCO settlement and MoPNG bank guarantee for the demerger.
Charanjit Singh: Ritesh, these are the reported performance of the company in the past two, three years. Deshnee Naidoo: This is JayPee's reported number. Charanjit Singh: Repeating what Deshnee mentioned earlier, that we will come up with a very detailed comprehensive explanation, business by business segment, once the COC decision is made. Yes, Ritesh. So, you remember, even at the last call, we had taken this question because the objection was raised then. I just want to confirm to everyone, MOPNG's concern is actually, as you rightly mentioned, the financial risk in recovering some of these at this point, alleged claims from the business and basically questioning whether the P&L of the demerged oil and gas business would actually be able to sustain these should they realize. Their concern has been taken care of by us providing a corporate guarantee from Vedanta. So, that is already in place. Ritesh Shah: Ma'am, would it be possible to quantify the amount over here? Deshnee Naidoo: I'd say it is a guarantee that does cover up, cover us for the full extent of the alleged claims at this point, Ritesh. Of course, all of these numbers will be finalized once the demerger is actually finalized.
So, absolute debt probably might not go down. My second question pertains to this INR 1 lakh crores investment news in Odisha, which keeps on floating. Could you give us some color on the segments and the timelines for that?
So, the INR 1 lakh crores investment that Chairman has committed, it, of course, remains Chairman's long-term vision for the states where we operate. And you may have seen even earlier in couple of large geographies where we operate in terms of zinc, oil and gas and aluminum specifically, the commitment is made. Now you would appreciate, Vikas, these commitments also need lots of partnership and support from the state government to enable in terms of land allotment and multiple approvals. So, at this point in time, it will be very difficult to give a committed timeline then at what time frame we do spend INR 1 lakh crores. In the interim, as we have been previously guiding in terms of CAPEX for the current fiscal, our range remains $1.7 billion to $1.9 billion. And over the next three years, cumulatively, collectively, it will be about $4.5 billion to $5 billion. Deshnee Naidoo: Just to add there, I mean, on the Chairman's commitment last week, there was a reiteration of previous commitment that we had made and really the collaboration to development as Rajiv has also guided in the market of 3 million tons per annum additional aluminum plant and the aluminum park that we will be looking to put up. And this would be part of a major hub for downstream producers on aluminum parks within the state as well. So, it is part of a larger, a much larger plan that the Chairman has already spoken in public last year and has reiterated to the Chief Minister in last year's discussion.
What further recent contact has there been from the Enforcement Directorate? And is the ED aware that Vedanta Resources has no corporate office or staff in London to justify the brand and more importantly, the strategic services agreement?
So, there is no specific engagement, but maybe just to answer the question more broadly first, so in the normal course of business, secretarial agencies just seek information for us. And as always, we have been very compliant in terms of responding, but we have had nothing specific from ED. That is the first. On the second, in terms of the Vedanta offices, everyone understands our very lean corporate center model. And in London specifically, the corporate offices do run out of Hill Street, which, again, is very well known, and there is a small center there. But that office is also supported by resources dedicated through service agreements from Vedanta Limited as well out of both Mumbai and Delhi. And that is the operating model fairly well understood in the market. Ajay Goel: Maybe I will take it, Deshnee. See, the rationale for overall brand fee and strategic services has been also addressed in the past in detail. And overall, the entire contract is monolithic. It is not separable between the usage for the Vedanta brand and the Vedanta name as such and also services we get from the VRL team across many areas. They can be in terms of strategic acquisitions, mergers, capital markets, and much more. It don't have to be domiciled at a geography. When we use a logo or a name as Vedanta and get services, it is a service that is being rendered and a service that is being received by Vedanta India entities. That is most important. I may like to also point out that the entire brand fee agreement has been internationally benchmarked. There are multiple studies done by one of the best Big Four firms. The brand fee rate, which has been charged over the last few years, in fact, is lower than the median rate recommended by the Big Four firms. So, in summary, I would like to say the entire brand fee has been legally vetted. It has stood the test of scrutiny by multiple regulators, and we don't see a challenge from the legal viewpoint.
Quickly, three questions from me. One, if you can help us understand about the situation of Jaiprakash Associates deal, which we have done. Is there a possibility of rebidding over there? Or it is just a COC giving the final verdict, and then one can go ahead with that? That is my first question. Second is on the demerger. We have seen multiple delays on account of it, especially in the second motion. So, do you think that 12th November could be the final hearing, and after that, the things can be decided?
Thank you, Ashish. Before I answer the question on Jaiprakash, I just want to remind everyone about our interest in this. While Jaiprakash has five different segments, as you all know, the key catalyst for us is actually always going to be the power business, to bid Jaiprakash. JP Group has a power portfolio of 2,200 Megawatts, which is expandable to 4,000 Megawatts, given the availability of land that it has at these two power plants. So, this acquisition is an important milestone, as you all know, in our journey to increase our merchant power capacity by 20 Gigawatts as we have guided previously by 2030. So, the current portfolio of 2,200 Megawatts includes 1,800 Megawatts of thermal capacity and 400 Megawatts of hydro. So, that generates an EBITDA of INR 2,100 crores to INR 2,600 crores. The replacement cost of this 2,200 Megawatts is around INR 24,000 crores, which translates into about, I think, INR 6,000 crores for the 24% stake which JAL holds in these assets. I just wanted to make that point because considering the cost and time that we know it takes to actually build a greenfield power plant or to restore one, that is the cost and time savings from that 1,800 Megawatt brownfield expansion at the existing plant site, the net replacement cost to JayPee power portfolio will work out to be maybe Rs. 8,000 crores to Rs. 9,000 crores at our estimate, which is about 70% of our bid NPV. I wanted to put that into context in terms of the rationale or as I put it, a key catalyst for the acquisition from our side. And I also want to make the point that this split doesn't impact our deleveraging plan or our demerger plan. And as you rightly said, it's now led to process. Currently, the COC is evaluating this and the resolution will be submitted or the resolution plan will be submitted by the bidders. We will share our way forward post the COC decision. Ajay, would you like to supplement? Ajay Goel: Yes. Very specifically, Ashish, in terms of can this bid go for rebidding, you may recollect since IBC enactment in December 2016, it is less than a decade, and hence, the entire legal landscape is still stabilizing in the country. There are multiple rulings by the court, which speaks about eventually, it is the wisdom of the committee of the creditors that selects the eventual outcome in terms of who is the final bidder, and hence, it may or may not be the H1 bidder. Now having said that, on today's rebidding news, you may have seen earlier the bid by the same group was rejected by COC. Now somebody may also look at how this Rs. 18,000 crores will be funded by the same group. So, in summary, we think it is highly unlikely that Jaiprakash will go for rebidding, and we feel quite confident that Jaiprakash is coming to Vedanta. Deshnee Naidoo: Maybe then again, Ashish, I will take the other question around demerger timeline. The Mumbai Bench of the NCLT heard the petition on the 29th and that posted the matter for final hearing on the 12th of November. We are confident that the matter will be brought to resolution on the 12th, which will be in time then for what we have already guided the market in terms of getting this done by the end of FY '26.
And lastly, my question is on alumina price. When can we see the effect of lower alumina price in our numbers? And have we done any commodity hedges? If yes, how much it could be?
So, thank you, Ashish. Now coming to your question on alumina, Ashish, you can see in Quarter 2, our cost in alumina had come down by $50 . And as we ramp up Lanjigarh and we have the advantage of lower API, we expect in the next two quarters, the prices to go down further by $50 each. So, actually, exit this year, you will see, we will be closer to $700 to $710. So, that benefit is going to come from three counts. One, the higher captive mix coming from Lanjigarh, where we will ramp up our production to a run rate of, say, 4 million as we exit the year. The second from a lower cost at Lanjigarh and third, as you rightly said, from the lower buying. Now some difference is coming because last time also, I had said that some of our third party purchases are also linked to the LME. And because of the higher LME, it is taking this time to transit. But as we increase our captive mix, you will see that benefit coming. Ashish, hopefully, I have answered your question. Ashish Kejriwal: Yes. Sir, just to make it clear, you said $50 per ton fall in price in each of the quarter for next two quarters for alumina for us? Anup Agarwal: Yes, from the Quarter 2 levels, $50 per ton in Quarter 3 and $50 per ton in Quarter 4. Ajay Goel: Maybe, Ashish, I will give you overall for Vedanta as a group. Hedging is one area in terms of the margin protection and the cash we are actively hedging across the portfolio. If I speak of aluminum, for the current year FY '26, the quantity hedged is almost 300 Kt, and that makes almost 12% of the volume on a full yearly basis. And pricing remains $2,625 per ton. We have also hedged almost 470 Kt for next year FY '27. That is about 17% of annual volume. And here, the pricing is about a little over $2,600 per ton. So, in summary, $300 for the current year, $470 for next year. That is about 12% and 17% current year and next year, and the pricing little over $2,625. Our second equally important portfolio is zinc at Zinc India, and there, the quantity hedged is about 97 Kt for the current fiscal. It is about 10% for the volume, and the pricing is almost $2,900 per ton. We also hedged silver. It's about 123 tons at about 17% volume for the full fiscal, and the pricing is about $37 per troy ounce. So, across the portfolio, we have reasonable hedge, and this is one area we will keep watching given the tumultuous pricing in the current fiscal.
I just wanted the update on the various approvals for the various mines, which we are awaiting. So, first is Kuraloi, Ghogharpalli and Radhikapur, if you can share in the last one or two quarters, has there been any progress on the pending EC and FC? And also on Sijimali, I read that FY '26 is when we are expecting to start, end of FY '26. So, if you could just share what is the status of the EC, FC there?
So, we will start with Kuraloi, FC Stage 1 approval on 12 th of May 2025. We are in the last stage of compliance of FC Stage 1 and complying to FC Stage 2, then we get the CTE and then the commissioning of the mine. That's Kuraloi. Radhikapur, mine plan is approved. Forest clearance Stage 1 is granted, and the submission of Stage 1 compliance is in progress. EC is granted. Ghogharpalli, for EC, the collector has issued letter to SPCB, the State Pollution Control Board, for confirming the time, date and venue for public hearing. And for Sijimali, to get the EC, we have handed over 1,760 acres of compensatory afforestation land to the state. Going by the process, the State Forest Department has taken up the matter with the MOEFCC for the grant of FC1. MOEFCC has sought some clarification from the state, which has been processed. We are hopeful for the mine to become operational in the current financial year. Deshnee Naidoo: Thank you so much, Rajiv. Maybe just to add, Sumangal, on Sijimali, we have previously communicated Quarter 4 FY '26, so we are keeping the commissioning per Rajiv's guidance. On Kuraloi, previously, we had communicated Quarter 3 this year. I think given the timelines there, we might push it out by a couple of months to Quarter 4 this year. And then Ghogharpalli, we had originally communicated the 2nd Quarter of FY '27, that might move up by a quarter, but still positive. So, that will be Quarter 2, Quarter 3 FY '27. So, just to reiterate the timeline.
My second question is on the ICL of around $400 million. If you can share what is the plan to close that? In the past, we have kind of rolled that forward. So, what is the latest timeline for closing it?
So, the remainder part of the ICL is about $417 million, out of which $200 million is due in January, and the balance, $217 million, sometimes in May next year. We intend to repay it as scheduled. We are not looking at any further rollover.
And just one last question on the Power division. Now next year, FY '27, Athena, Meenakshi, both would be fully commissioned. So, on a steady-state basis, what is our expectation for the PLF? And in terms of EBITDA per unit, if you can guide what is the ballpark range when that we should bake in?
Thank you, Sumangal. Maybe I will break it down a little, make it a little easier. So, maybe by the end of Quarter 4 for both Meenakshi and Athena, I will just talk about capacity PLF, maybe cost and realization. I mean, that will give you a better sense. So, by Quarter 4, Meenakshi capacity will be at 1 gigawatt. PLF will be around 65%. Cost of generation in rupees per unit, 4.7, and the realization will be around 5.7. At Athena, we would have hopefully both units commissioned then. PLF about 87%. Cost of generation, Rs. 2.8 per unit and realization at 5.7. That should give you a sense of what the profitability would look like by the time both units are ramped up. Sumangal Nevatia: This is exit of 4th Quarter or average 4th Quarter expectation? Deshnee Naidoo: Average 4th Quarter.
First question is for Ajay. Sir, if you could just repeat, for FY '27 and '28, what was the maturity and the interest amount that you indicated? I think you did include $200 million of the $417 million for FY '27, and you indicated $217 million in May. If you could just refresh for FY '27 and '28 what you indicated?
Yes, Ritesh. So, for FY '27 next year, the total debt which is external is about $300 million plus ICL, $217 million, so about $0.5 billion. FY '28, there is no ICL, so $450 million external debt, so $0.5 billion next year, $450 million the year next. Interest will be almost $450 million next year, FY '27 and $400 million in FY 28. So, $0.5 billion next year maturities, $450 million is in interest. So, give and take, $950 million to $1 billion total requirement. FY '28, $450 million are the maturities and $400 million interest, so about $800-850 million.
Just my first question pertains to currently assuming the JAL is not clear right now and your VRL requirement is very low. So, ex of these two, should we assume that our net debt would see a declining trend from here onwards?
Yes, Vikas, of course. I mean, I will start with the look at, let's say, maybe the past couple of years. And at parent company, Vedanta Resources, over the last three odd years, our debt from $8.9 billion now down to almost $4.4 billion September end. So, it is a decade low debt at Vedanta Resources. We also have publicly committed that from current $4.4 billion will go down to $3 billion over next two years. Coming to Vedanta India, the operating company, the way to look at more so when we are on the high growth path, it is debt to EBITDA ratio, which has improved from almost 1.88x leverage to 1.37 as we closed the previous quarter. And from here, we have committed that at Vedanta India consol, our debt to EBITDA will further improve to 1x, so $3 billion Vedanta Resources, 1x leverage Vedanta India. That goal remains unchanged. Any other priority will remain subservient to that goal.
And lastly, any progress has been made on the Northeast or Eastern India side of oil and gas fields, which we have acquired?
I am Jasmin Sahurity, COO of Cairn Oil and Gas. I have been in this position for the last six months. In terms of the Northeast, we had very fruitful discussions over the last week with the Chief Minister and we confirmed our commitments of investment, especially in the Northeast oil and gas business. So, far plans are to have two discoveries, besides the one already confirmed, develop and confirm the hydrocarbon with the potential of 200 million barrels of reserves. And after that, all aside investment into the society, into the future development of the Northeast region will be confirmed. This is so far what I can say. But in nutshell, first valve which will be confirming the new reserves in the Rudra region will be end of November spudded. Second well in Nagaland region will be spudded in February, and we can expect till end of this financial year confirmation of the reserves in between 100 million and 130 million barrels usable.
I just have one question, and this relates to KCM. Has there been any progress on the initial funding of the $1 billion over five years that you were trying to raise for KCM?
Thank you for that, Imtiaz. So, in the normal course of business and for the shareholder agreement, we remain compliant with what we have agreed with the shareholder agreement. That is about $150-odd million in the first half of the year. In terms of the rest of the KCM funding, I think everyone will be very happy to know that KCM is now operating on an integrated vessels basis around 8,500 to 9,000 tons per month, which is actually close to numbers that this business last achieved in 2017. And at these copper prices, they have been able to sustain both the operational cash requirements as well as the sustaining capital cash requirements. In terms of the larger investment, KCM is in the process of finalizing the KD MP feasibility study. Once that feasibility study is complete and approved, we will make a funding decision for KCM. In terms of the fundraising for that, I think we find ourselves in a very fortunate position given the current integrated production and hence the cash flows the asset is generating, given the current price environment and an appetite for anything associated with copper right now, we are very confident that we would have several avenues available once the project is investment ready. So, KCM is progressing well. Imtiaz Shefuddin: And just to follow-up, any funding that is going to be done at KCM? I think you mentioned the last time that it will be ring fenced within KCM, yes? Is that still the case? Deshnee Naidoo: That is still the case. In fact, I think I am more positive today than I was a quarter ago, given what is happening on the production ramp up as well as the copper prices.