Upload
ramanandiyer
View
262
Download
3
Tags:
Embed Size (px)
DESCRIPTION
Vedanta Resources has acquired 58.5% stakes of Cairn India Ltd. for a total consideration of $8.67bn. The Acquisition completed on 8 December 2011. 38.5% held by Vedanta & 20% held by Sesa Goa.
Citation preview
Completion of Acquisition of a Controlling Stake in
Cairn India Ltd.
8 December 2011
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 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.
2ACQUISITION OF A CONTROLLING STAKE IN CAIRN INDIA LTD. (8 DEC 2011)
Highlights
� Acquired 58.5% of Cairn India Ltd. for a total consideration of $8.67bn
− Acquisition completed on 8 December 2011
− 38.5% 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− 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 re-
established faith in the hydrocarbon potential in India”
− Mr Jaipal Reddy, Minister of Petroleum and Natural Gas on 5 Dec 2011 at World Petroleum Congress
3ACQUISITION OF A CONTROLLING STAKE IN CAIRN INDIA LTD. (8 DEC 2011)
Notes: All % shareholding in Cairn India is on a fully diluted basis
Transaction immediately earnings accretive
Aluminium3%
Copper15%
Oil & Gas¹35%
Power2%
EBITDA Growth and Diversification
H1 FY2011 H1 FY2012Proforma H1 FY2012
with Cairn India
Aluminium5%
Copper24%
Iron Ore18%
Power3%Aluminium
11%
Copper21%
Iron Ore32%
Power2%
Zinc-India25%
Zinc-Int.8%
Iron Ore12%
EBITDA: $1.3bn EBITDA: $1.7bn EBITDA: $2.6bn
Notes: 1. EBITDA from Cairn India before exceptional items and foreign exchange gains
4ACQUISITION OF A CONTROLLING STAKE IN CAIRN INDIA LTD. (8 DEC 2011)
Zinc-India38%
Zinc-Int.12%
Zinc-India34%
Cairn Acquisition Funding
Consideration ($bn)
20% stake acquired by Sesa Goa 2.88
38.5% 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
5ACQUISITION OF A CONTROLLING STAKE IN CAIRN INDIA LTD. (8 DEC 2011)
Sr. Secured Bank Term Loan - Tranche A (18 months)
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
Credit Metrics
Credit Metrics FY2011LTM H1 FY2012
ProformaLTM H1 FY2012 (incl. Cairn) Covenant
Net Debt/EBITDA 0.55 x 1.82 x 1.64 x < 2.75 x
Proforma 30 Sep 2011 (including Cairn) in $ mn DebtCash and Liquid Investments Net Debt
Vedanta plc 9,127 178 8,949
Vedanta Consolidated 16,620 6,438 10,182
6ACQUISITION OF A CONTROLLING STAKE IN CAIRN INDIA LTD. (8 DEC 2011)
Net Debt/EBITDA 0.55 x 1.82 x 1.64 x < 2.75 x
EBITDA/Gross Interest Expense1 5.0 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
Gearing2 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
Cairn India – A World Class Asset Base
Cambay (CB/OSCambay (CB/OSCambay (CB/OSCambay (CB/OS----2)2)2)2)
Cairn (Operator) 40%
ONGC 50%
Rajasthan (RJRajasthan (RJRajasthan (RJRajasthan (RJ----ONONONON----90/1)90/1)90/1)90/1)
Cairn (Operator) 70%
ONGC 30%
Production Blocks Exploration Potential
East CoastEast CoastEast CoastEast Coast
KG-DWN-98/2 WI 10%
KG-ONN-2003/1 WI 49%
PKGM-1 (Ravva) WI 22.5%
KG-OSN-2009/3*
WI 100%
RajasthanRajasthanRajasthanRajasthan
RJ-ON-90/1 WI 70%
10 blocks in the Portfolio
7ACQUISITION OF A CONTROLLING STAKE IN CAIRN INDIA LTD. (8 DEC 2011)
ONGC 50%
Tata Petrodyne 10%
Ravva (PKGMRavva (PKGMRavva (PKGMRavva (PKGM----1)1)1)1)
Cairn (Operator) 22.5%
ONGC 40%
Videocon 25%
Ravva Oil 12.5%
Sri LankaSri LankaSri LankaSri Lanka
SL 2007-01-001 WI 100%
PR-OSN-2004/1* WI 35%
West CoastWest CoastWest CoastWest Coast
CB/OS-2 WI 40%
KK-DWN-2004/1 WI 40%
MB-DWN-2009/1*
WI 100%
Q2 FY 2011-12: Average Daily Gross operated production at 169,944 boe;
Cairn (Working Interest) at 99,220 boe
* Under Force Majure
Financial HighlightsFinancial HighlightsFinancial HighlightsFinancial Highlights
165
174
161
172
170
68
74
92
104
100
0 50 100 150 200
Q2 FY11
Q3 FY11
Q4 FY11
Q1 FY12
Q2 FY12
Price Realization (USD/boe) Gross Production (Kbopd)
577
691
808
830
578
0 200 400 600 800
Revenue
USD Million
341
448
543
610
461
0 200 400 600 800
Q2 FY11
Q3 FY11
Q4 FY11
Q1 FY12
Q2 …
PAT
USD Million
337
455
577
576
428
0 200 400 600 800
Cash Flow from Operations
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
ACQUISITION OF A CONTROLLING STAKE IN CAIRN INDIA LTD. (8 DEC 2011)
Rajasthan Update
� Mangala production ~125,000 bopd; reservoir
performance as per expectations
� 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
� Expect to exit FY 2011-12 at 175,000bopd
with the support of JV and GoITotal Pipe Diameter
790 mm (32”)
MPT
Pipeline
with the support of JV and GoI
� Development of Aishwariya underway; plan to
commence production in H2 CY 2012, subject
to JV and GoI approval
� Significant part of currently envisaged basin
potential of 240,000 bopd to be met from
MBA fields
� Augmentation of processing capacity and
pipeline infrastructure to deliver currently
envisaged basin potential in CY 2013
9ACQUISITION OF A CONTROLLING STAKE IN CAIRN INDIA LTD. (8 DEC 2011)
790 mm (32”)
Poly Urethane
Foam
Insulation
Heat Tube
High Density
Polyethylene Wrap
Notes: Data as per 20 Oct 2011 press release of Cairn India Ltd
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 2011-12 financial results
10ACQUISITION OF A CONTROLLING STAKE IN CAIRN INDIA LTD. (8 DEC 2011)
� Cairn India has taken the impact of total past royalty in its Q2 FY 2011-12 financial results
Q2 FY 2011-12PAT
(USD million)EPS
(INR/share)
Including net Q2 FY 2011-12 Rajasthan royalty estimate adjustment
461 11.13
Net Rajasthan royalty one-time estimate up to Q1 FY2011-12 (net of Profit Petroleum)
294
Reported 167 4.01
Rajasthan - Future Resource And Value Potential
Gross
Initial
In Place
Volumes
20 additional20 additional20 additional20 additional
discovereddiscovereddiscovereddiscovered
fields including fields including fields including fields including
Barmer HillBarmer HillBarmer HillBarmer Hill
~4 Billion boe~4 Billion boe~4 Billion boe~4 Billion boe
~6.5 Billion boe~6.5 Billion boe~6.5 Billion boe~6.5 Billion boe
ContingentIn Place
In Place
Prospective
Most Likely
GasGasGasGas
GIIP GIIP GIIP GIIP
OilOilOilOil
STOIIPSTOIIPSTOIIPSTOIIP
R & S 12R & S 12R & S 12R & S 12
707707707707MBA MBA MBA MBA EOREOREOREOR
308308308308
140140140140
BHBHBHBH+ Others+ Others+ Others+ Others
Risked
Prospective
Resource
250250250250
~2.5 Billion boe in~2.5 Billion boe in~2.5 Billion boe in~2.5 Billion boe in
35+ prospects35+ prospects35+ prospects35+ prospects
Gross Reserves,
Resources1111 and
Potential2222
1111 The independent estimates of Reserves and Contingent Resources recently carried out by D&M are in line with the CIL estimates
11ACQUISITION OF A CONTROLLING STAKE IN CAIRN INDIA LTD. (8 DEC 2011)
Notes: Data as per 23 Mar 2010 press release of Cairn India Ltd
mmbblsmmbblsmmbblsmmbblsmmbblsmmbblsmmbblsmmbbls
MBA Fields,MBA Fields,MBA Fields,MBA Fields,
Raageshwari Raageshwari Raageshwari Raageshwari
and and and and
SaraswatiSaraswatiSaraswatiSaraswati
FDP FDP FDP FDP
approvedapprovedapprovedapproved
2.1 Billion boe2.1 Billion boe2.1 Billion boe2.1 Billion boe
MBAMBAMBAMBASTOIIPSTOIIPSTOIIPSTOIIP
R & S STOIIP
1,2931,2931,2931,293
MMMM
468468468468
BBBB
293293293293
AAAA
78787878
R & SR & SR & SR & SContingentContingentContingentContingent
ResourceResourceResourceResource
R & S 12R & S 12R & S 12R & S 12
MMMM477477477477
BBBB151151151151
A 66A 66A 66A 66
2P+2C2P+2C2P+2C2P+2C MBA EORMBA EORMBA EORMBA EORBarmer HillBarmer HillBarmer HillBarmer Hill
+Other Fields+Other Fields+Other Fields+Other Fields
RiskedRiskedRiskedRisked
Prospects, Prospects, Prospects, Prospects,
Leads & Leads & Leads & Leads &
ConceptsConceptsConceptsConcepts
in line with the CIL estimates
2222 Top 35 prospects audited by D&M risked resource 178 mmbbls
Exploration Programme
KG-ONN-2003/1
Nagayalanka-1Z discovery; Phase II Exploration & Appraisal well drilling in
progress
RJ-ON-90/1
Assessing new plays, generate new prospects
� 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
12ACQUISITION OF A CONTROLLING STAKE IN CAIRN INDIA LTD. (8 DEC 2011)
RAVVAInfill drilling completed
progress
PR-OSN-2004/1
Under Force Majeure
SL-2007-01-0013 exploration well program: 1st & 2nd wells encountered
hydrocarbons, 3rd well drilling in progress
SRI LANKA
KK-DWN-2004/1
Acquired 300 km2 3D;data processing in
progress
NON-OPERATED
OPERATED
I N D I AI N D I AI N D I AI N D I AMB-DWN-2009/1
Under Force Majeure
KG-DWN-98/2
3 appraisal wells drilled
KG-OSN-2009/3
Under Force Majeure
Exploration - Sri Lanka Block (SL 2007-01-001)
� Cairn Lanka 100% Working Interest (NOC
back-in 15%)
− Cairn India’s first overseas venture
− Block Area: ~3,000 km2
− Water depth: 400 -1,900m
� Under explored, frontier basin with multiple
plays
India
� 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
13ACQUISITION OF A CONTROLLING STAKE IN CAIRN INDIA LTD. (8 DEC 2011)
SRI LANKA
50km
SLSLSLSL----2007200720072007----01010101----001001001001
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
14ACQUISITION OF A CONTROLLING STAKE IN CAIRN INDIA LTD. (8 DEC 2011)
Appendix
The Transaction
Description Date Sesa Goa Vedanta plc Total
Purchase from Petronas 19-Apr 10.4% - 10.4%
Open Offer 30-Apr 8.1% - 8.1%
Purchase from Cairn Energy 12-Jul - 10.0% 10.0%
Purchase from Cairn Energy 7-Dec 1.5% 28.5% 30.0%
Total 20.0% 38.5% 58.5%
16ACQUISITION OF A CONTROLLING STAKE IN CAIRN INDIA LTD. (8 DEC 2011)
Total 20.0% 38.5% 58.5%
Notes: All % shareholding in Cairn India is on a fully diluted basis
Accounting Treatment
� Associate Accounting for Vedanta: 11-Jul to 7-Dec
� Accounting from 8-Dec:
− Consolidation by Vedanta
− Associate Accounting by Sesa Goa
1.3
5.9
Debt at Vedanta Plc
Debt at Subsidiaries
Proforma Addn Debt at VED plc for Cairn Acquisition
Debt Maturity Profile
� $5.9bn of cash and liquid investments as of 30 Sep
� FY2012 maturities largely tied up
� Credit ratings of BB/Ba2/BB1
Debt Maturity Profile2
(in $bn)
1.0 0.5 0.1 0.2
4.6
2.4
1.5
0.40.9
0.1
1.5 1.3
2.42.8
2.32.6
0.3
FY 2012 FY 2013 FY 2014 FY 2015 FY 2016 FY 2017 and later³
17ACQUISITION OF A CONTROLLING STAKE IN CAIRN INDIA LTD. (8 DEC 2011)
Notes: 1. Issue credit Ratings as per S&P, Moody’s and Fitch respectively
2. Maturity Profile as of September 30, 2011
3. 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
Vedanta Group Structure
Konkola Copper
Mines (KCM)
54.6%
Vedanta Resources(Listed on LSE)
Madras Aluminium (MALCO)
94.8%70.5%
29.5% Sterlite Industries(Listed on BSE, NSE and NYSE)
VedantaAluminium
(VAL)
79.4%
Sesa Goa (Listed on BSE
and NSE)
55.1%
3.6% Cairn India Ltd(Listed on BSE
and NSE)
38.5%1
20%1
18ACQUISITION OF A CONTROLLING STAKE IN CAIRN INDIA LTD. (8 DEC 2011)
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.
Zinc-IndiaCopperAluminium Iron ore Power
KEY
51.0% 100%64.9%
Zinc-India(HZL)(Listed on BSE
and NSE)
AustralianCopper Mines
Bharat Aluminium (BALCO)
Sterlite Energy
100% 51%
Skorpion and Lisheen
Black Mountain
100% 74%
Zinc-International
Liberia Iron Ore Assets