“Vedanta Resources FY2014 Interim Results Conference Call” · 11/15/2013 · page 1 of 21 “vedanta resources fy2014 interim results conference call” november 15, 2013 management:

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“Vedanta Resources FY2014 Interim Results Conference Call”

November 15, 2013

MANAGEMENT: MR. ANIL AGARWAL – EXECUTIVE CHAIRMAN MR. NAVIN AGARWAL – DEPUTY EXECUTIVE CHAIRMAN MR. D.D. JALAN – CHIEF FINANCIAL OFFICER MR. MS MEHTA – CHIEF EXECUTIVE OFFICER MR. P. ELANGO – CHIEF EXECUTIVE OFFICER, CAIRN INDIA MR. P.K. MUKHERJEE – CHIEF EXECUTIVE OFFICER, IRON

ORE BUSINESS MR. S.K. ROONGTA – CHIEF EXECUTIVE OFFICER, ALUMINIUM AND POWER BUSINESS MR. KISHORE KUMAR – CHIEF EXECUTIVE OFFICER –BASE

METALS AFRICA,IRELANDAUSTRALIA

MR. ASHWIN BAJAJ – SENIOR VICE PRESIDENT, INVESTOR

RELATIONS

Vedanta Resources Plc.

November 15, 2013

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Ashwin Bajaj Welcome to Vedanta's FY2014 Interim results. I will now hand it over to our Chairman – Mr. Anil

Agarwal.

Anil Agarwal Good Morning, Ladies and Gentlemen. It is really a privilege to be here for the 10th year of our being

to form our Vedanta Resources. Gives me really great pleasure and I hope that we have come to the

expectation when we formed our company 10-years back and listed the company and what we are

today.

Vedanta, as you know, is a mainly Indian resource company. 97% business of the company is in

India. India, as you know, 20% population of the world lives in India. And we are the only resource

company in India and we have done 10-years as much as whatever we can do in largest democracy of

the world, as much as we can do to make sure to develop the resources of India in the most

appropriate and the best manner possible.

As we promised, we have completed our merger which was a great achievement we believe, and

going forward we are also looking forward, the Hindustan Zinc should happen, we will engage with

the government to buy back the share of Hindustan Zinc and BALCO and it should happen, we are

getting the indication, is a democratic process, sometimes it gets delayed but it will happen.

We are in amazing 5 businesses. Oil and gas – we produce almost 30% of oil produced in India. We

have a very good resource. Our cost of production of oil is only $3 which may be among the lowest in

the world.

We also have one of the best Crude which is a Sulfur-Free Crude which also is a very Premium Crude

what we produce. Just tip of the iceberg exploration work has happened. We have engaged with the

government to allow us and they have been very cooperative to come with us to do the more

exploration, more production on this field. We are very proud that we are increasing our production.

We are also talking to give some of our relinquished area giving back to us. So India needs the energy

security and we can be part of it.

We had some difficult time because of Iron Ore. We are the largest Iron Ore producer in the country.

We had a ban on our Iron Ore production. Supreme Court has taken a view – Karnataka mine has

opened, Goa has also opened to move our stock, and we believe in very short time, we will be able to

run our full production of Iron Ore, and we are very excited; the exploration work is going on, and

India needs huge iron ore and it will be great benefit for us to take it there.

Aluminum again we invested almost $10 billion, we are still very bullish in Aluminum because these

all 1.2 billion people, local consumption, by and large is growing about double-digit so this will be

great if we can take forward Aluminum also. We had the bauxite issue, rest of the things going on.

India has a lot of bauxite. We are engaged with the government and we believe we will be able to

resolve our bauxite issue and we will be in position to run our 2.7 million ton facilities which we have

created.


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Copper also very important. We have custom smelter in India which runs well. We have an Australian

production which is doing well. We have invested in $2.8 billion in Zambia – sunk one of the best

shaft, created a huge smelter. We have almost 17-18,000 people, we need to rationalize the people, we

are engaged with the government, as in a couple of years how we can address to reduce some of the

people. We are engaging with the government to bring it because now it is completely mechanized,

we have to address that to make sure we come as a world-class producer.

Zinc, as you know, we are one of the very good producers in the world. With the production of Silver

if you see the net cost we can produce almost close to $400 to the net of Silver production. We are

very excited we have a mine life on the average of 25years, so zinc is in a great shape. We have also

engaged with Tom Albanese, who is the Ex-CEO of Rio, and he is personally working with me on the

strategy with his experience on how we take forward our company.

I am here for all the answer, Navin will take you through and MS will take you through with all the

detail, thanks.

Navin Agarwal Good Morning Ladies and Gentlemen. It has been extremely busy 6-months for Vedanta and let me

begin by walking you through some of the key highlights of the first half of financial year 2014. In

August of this year we crossed a significant milestone in the history of Vedanta with the completion

of the Sesa Sterlite merger. This is a transformational step forward for the Group and we believe it

will better position Vedanta to deliver value for all our stakeholders going forward. We delivered an

EBITDA of $2.2 billion at a strong EBITDA margin of over 45% despite the challenging environment

currently faced by our sector globally. The underlying attributable profit was lower due to the profit

mix at Iron Ore and Copper India operations were affected by regulatory constraints. However, with

volume ramp ups and disciplined CAPEX spend, our free cash flow after growth CAPEX were more

than $400 million and we reduced our net debt by $200 million taking the total reduction in debt to

$1.6 billion over the last 18-months.

We have maintained a progressive dividend policy since our IPO and the board has approved an

interim dividend of 22 cents per share, 5% higher than last year.

We delivered a strong operating performance despite volatile commodity prices and markets. We

achieved production growth at our two largest divisions, i.e. Oil and Gas and Zinc India.

Our Iron Ore operations were affected by statewide mining restrictions but recent developments have

been positive and we soon expect to restart mining in Karnataka.

Our focus on operational excellence continues to drive strong cost performance despite industry-wide

inflationary pressures, for example, we delivered cost in the lower half at our Aluminium Smelters

even without captive bauxite.


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We received final approvals and completed the Sesa Sterlite merger in August. This has consolidated

our holdings into one subsidiary called Sesa Sterlite – one of the top 5 companies in India by

EBITDA, and more importantly, one of the largest contributors to the Indian exchequer.

As expected, the simplification has delivered significant financial synergies in line with our earlier

guidance. We have now begun to assess the potential operational synergies as well. The simplification

has also significantly reduced the annual interest cost at Vedanta PLC from $500 million to

approximately $200 million a year.

As you can see on our asset portfolio this consists of world-class assets the structural advantages in

terms of costs, size, scalability and mine life and is well diversified across commodities. These

structural advantages have helped us to deliver strong performance across business cycles despite

volatile markets. Firstly, and critically our assets are favorably located in the cash cost curve. In fact,

more than 75% of our EBITDA is generated by assets that have been consistently operating at the

lowest quartile cost. In addition, with the relatively new asset base we have low sustaining capital

expenditure requirements which we believe provide us with the competitive advantage and help

support strong free cash flow generation. We have material upside in a number of our assets where the

majority of CAPEX has largely been invested and production is now ramping up to a full capacity.

Most of our assets have over 15 to 25-year mine life and our focus has been on adding more reserves

than we mine out.

On this slide you see that over the last few years and through the global financial crisis we have

invested significantly across our businesses optimizing our assets by extending the reserve life,

increasing production capacity, reducing operational cost and building optionalities for future growth.

We delivered positive free cash flow after growth CAPEX and we remain focused on disciplined

capital allocation. We expect this strong performance to continue into the second half of this financial

year where we have historically generated a greater proportion of our free cash flows. Further, as we

continue to ramp up annual production, we expect to deliver significant growth in free cash flows.

Here, on this slide, you see that the diversification of our portfolio and our relentless focus on

sustaining low all-in costs have helped us to preserve our high and remarkable stable margins and

strong cash flows through the cycle. For the first 6-months of Financial Year ’14 we achieved a strong

EBITDA margin of 45% and this performance positions us at the high end relative to our peers and

we expect to maintain this performance as we restart and ramp up our Iron Ore operations.

Now, on our near-term opportunities and challenges. As mentioned in the beginning the first 6-

months of financial year have been busy for the management team, and we have achieved a number of

key milestones. Firstly, of course the completion of the Sesa Sterlite merger and where we have

already realized substantial synergies. Secondly, we started the Tuticorin Copper Smelter and quickly

ramped up operations to full capacity. This has been timely given the high current TC/RCs. Thirdly,

we have continued to make progress in realizing the potential of our world-class Rajasthan block. The

Government of India’s recent policy on Integrated Block Development Plan will help us to bring

existing and new discoveries to production in a quicker time frame to help secure India’s future


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energy requirements. Going forward, we want to build on this momentum and work with our

stakeholders to find solutions to other priorities and challenges facing some of our other operations in

India. It is generally recognized that the domestic mining industry is a significant contributor to

India’s GDP and that sustainable mining by large and responsible miners such as Vedanta is critical to

the country’s future and economic prosperity. More specifically, we are focused on completing the

minority buyouts of Hindustan Zinc and BALCO. We have recently renewed Vedanta shareholder

approval and we remain engaged with the Government of India.

Restarting our Iron Ore operations at Goa wherein interim orders were recently issued enabling the

sale of Iron Ore from inventory as well as providing a clear direction on the way forward to resume

mining. We continue to remain engaged with the Government of Odisha and other stakeholders to

obtain captive bauxite.

KCM has high quality resources and discussions are currently ongoing with various stakeholders

including the Government of Zambia as we continue to work on the operational turnaround of the

business and this asset.

And finally, in summary, let me reiterate our key strategic priorities. We continue to see an

opportunity to grow profitable production in a disciplined manner by realizing the full potential of our

past investments, by carefully allocating capital to high return projects that exceed return hurdles and

by relying on phase development to minimize risk.

Our relentless focus on cost management and active engagement with the governments and

stakeholders will help us to realize the full potential of our portfolio of our world-class assets. We

continue to work towards further strengthening and de-leveraging our balance sheet as we ramp up

production at our well-invested assets and deliver strong positive free cash flows at each of our

businesses. We have a strong track record in exploration and our focus is to add reserves and

resources to more than replace production to drive long-term value.

And finally we are working to realize the full potential of Sesa Sterlite merger synergies beyond what

has already been announced. And with that I will ask D.D. Jalan to run you through the financial

results for the period. Thank you.

D.D. Jalan Thanks Mr. Agarwal and good morning to you Ladies and Gentlemen. I am pleased to announce a

good set of financial results for the first 6-months of FY-’14. Our headline EBITDA decreased by

14% as a result of decline in commodity prices and higher payment of profit petroleum to the

Government of India at Cairn. Loss in EBITDA from Iron Ore ban and Sterlite Copper closure were

largely offset by higher volumes in our other businesses and lower cash cost of production.

Our margins continue to remain strong at 45%. It is worth noting that our margins are one of the

highest in the sector despite lower commodity prices and disruption in Iron Ore operations. We

generated strong free cash flow of $470 million even after the growth CAPEX. As you can see by the

debt numbers the cash flow has helped reduce our net debt. I would expect this trend to continue for


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the full year as well. Despite a decrease in our net debt during the period the gearing level has

increased marginally because of reduction in shareholders equity as a result of depreciation in rupee.

Our underlying EPS was lower at 29 cents; this was mainly due to lower EBITDA, adverse profit mix

and higher interest expense. The interest expense was higher due to lower capitalization of interest at

our subsidiaries particularly at Aluminium operation.

We are declaring an interim dividend of 22 cents per share in line with our progressive dividend

policy.

In terms of EBITDA dynamics, as you can see on the slide, the three biggest factors that impacted our

EBITDA were largely outside our control, namely – decline in commodity prices, increased profit

petroleum to Government of India from 20% to 30% and negative variance from iron ore ban at

Karnataka and Goa.

Despite the industry wide cost pressures witnessed during the year our focused approach to cost

control has enabled us to maintain our competitive cost positioning in most of our businesses. This is

evident by a net positive contribution of $13 million from cash cost reduction. There was also a net

positive contribution of $106 million primarily from higher volume at Cairn and Zinc India operation.

On this Slide I wanted to give you an update on the progress and implications for Vedanta from the

merger of Sesa Sterlite and some color on impact of currency movement on our financials. The

merger led to a transfer of 6 billion of debt from PLC to Sesa Sterlite and resulted in a serviceable net

debt of $4.4 billion at PLC. As a result, the debt servicing cost, as also pointed out by Mr. Agarwal at

Vedanta PLC has now been halved from $500 million to $200 million. In addition, the simplification

exercise has created a platform that will deliver financial and operational synergies. We expect to

deliver financial synergies of c. $200 million p.a. for the next few years and are currently in the

process of evaluating potential operational synergies also from the simplification.

Our effective tax for the first 6-months is lower at 6.8%, primarily due to reversal of tax charge from

group simplification. However, we expect the tax rate to be in the range of 10 to 15% for the full year.

I also wanted to cover the impact of depreciation of rupee against the dollar on our financials. As you

know that rupee has depreciated roughly by 15% against the dollar between March and September.

On the P&L you can see the impact in two places; #1 favorable impact on EBITDA by c.$48 million

as bulk of our cost base is in rupee. And #2, c.$429 million of MTM losses from our dollar debt at

Indian subsidiaries. Currently, the dollar-denominated debt affected by the MTM losses at our

subsidiaries is roughly $2 billion. In general, rupee depreciation in the long run is beneficial to the

company as most of our sales in India are based on shadow prices linked to US dollar prices and

significant part of cost is in India rupee.

We remain comfortable with the liquidity and maturity profile of loans particularly given the fact that

we are and expect to be a strongly cash generative. We ended the period with a substantial cash

balance of $8.1 billion and additional undrawn facilities of $0.9 billion. We take a proactive approach


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in ensuring that appropriate actions are in place to manage our near-term maturities in a timely and

efficient manner. We have successfully refinanced $3.5 billion of debt in H1 and as a result have

increased average maturity profile of term debt to 4-years from 3.3-years previously. There is $0.8

billion of additional debt maturity in the current year; this is largely at PLC and subsidiaries; the PLC

debt of $500 million maturing in January has already been tied up and the debt at subsidiaries will be

repaid from the internal generation or will be refinanced through the bank.

Vedanta continues to have a diversified funding profile and a proven track record of raising funds

from a number of different sources. We have raised over $10 billion in debt market in last 2-years and

continue to have a strong access to bank loans, bonds, convertibles and other types of debt for the

future needs if any and when required.

Turning to our CAPEX profile, the expenditure has declined across the board as no major new

projects other than Zinc India mining expansion have been announced. Most of the future CAPEX

spend will be at Zinc India and oil and gas operations which are funded from their strong internal cash

generation. For the full year, we expect the CAPEX to be $1.6 billion compared to earlier guidance of

2.2 billion largely due to lower CAPEX at Cairn India, Aluminium and Power businesses. We expect

to spend a further $2.3 billion in FY-’14 and $1.3 billion in FY-’16 most of which are at Cairn India

operations and partly at Zinc India.

In summary, we expect cash flows to increase as we ramp up production and reduce mining CAPEX.

These cash flows will provide us to further strengthen and de-leverage the balance sheet. With that, I

will request M.S. to talk about the business. Thank you.

M.S. Mehta Thank you, D.D. Good Morning Ladies and Gentlemen. We delivered growth at major profitable

operations, while some operations were affected by regulatory hurdles. Oil & Gas, Zinc India,

Aluminium businesses delivered strong production results contributed to over 80% of our Group’s

EBITDA. Copper India resumed operations in end of Q1 and ramped up to full capacity in Q2. We

expect to further ramp up volumes during the year at Oil & Gas, Zinc India and power. We delivered

a strong cost performance overall; around 7-8% reduction in Aluminium and Power cost. A major

profitable operations namely Oil & Gas and Zinc India maintained lowest quartile cost.

Moving on, sustainability remains integral to our business and everything that we do. We consistently

improved our safety performance in terms of LTIFR by more than 50% over last 5-years. However,

we are very disappointed with 6 fatalities in H1 and extend our deepest condolences to the affected

families. We need to further to eliminate fatalities and remain focus on eliminating high impact, low

probability situations by structured programs to eliminate any potential unsafe conditions in our plants

and operations, while equally focusing on behavioral training.

Managing our environmental footprint remains a priority and we have been focused on furthering a

successful track record of producing specific water and energy consumption. Our sustainability

program has three pillars. In terms of building strong relationship, we have been actively engaging

with our stakeholders and currently have more than 250 partnerships with various stakeholders.


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In terms of adding and sharing value, we contributed $2.5 billion to the exchequer in first half and

more than 3.7 million people were benefited by Corporate Social Responsibility (CSR) initiatives in

H1.

On assurance, we launched a special program called Vedanta Sustainability Assurance Program

(VSAP) which is in its second year of implementation and that continues to help us to ensure that we

embed well our sustainability framework across our operations. Let me now review our business and I

would request first Elango to cover Oil and Gas.

P. Elango Thank you Mr. Mehta. Ladies and Gentlemen, Good Morning and I would like you to look at Slide

#21 of the presentation. During the first half of this fiscal year 2014 we delivered gross operated

production of around 213,000 boepd and are on track to achieve the financial year end production

target of over 225,000 boepd across all our producing assets.

We remain one of the lowest cost operators with the field direct operating cost at less than US$3/bbl.

This comes against a backdrop of facility and well uptime of over 98%. The operational efficiency

places the company within the top design amongst our global peers. We continue to align with our

partners with focus on growth by seeking to adopt advanced technologies in two key areas; #1

enhanced oil recovery and #2 monetizing the low permeability reservoir such as Barmer Hill.

Exploration is a key to long term production growth. We are actively pursuing exploration and

appraisal activities across the portfolio. In the Rajasthan block 6 exploration wells have been drilled

since the approval for exploration came in end of Financial Year ’13, of which 4 wells have found

hydrocarbons including 1 discovery announced. This was the 26th discovery in the block and

declaration of potential commerciality has been submitted. In the East Coast, in Krishna Godavari

basin onshore block post 3 successful fracs productivity of one of their appraisal wells increase three-

fold, and has significantly improved commerciality of the second discovery in the block. A

declaration of commerciality is expected to be submitted in this financial year. We continue to explore

in other blocks in our India as well as international portfolio.

Coming to the next slide on the Rajasthan asset, Rajasthan is a world-class asset with a gross resource

potential of 7.3 billion boe in place. Rajasthan is a low cost oily basin with substantial potential that is

yet to be monetized. We continue to actively pursue exploration and development drilling program

with more than 450 exploration appraisal and development wells planned over the next 3 years. The

exploration in this block is to enable early monetization of 530 million boe of gross risk recoverable

prospective resources. This is part of the 1.76 billion boe of gross expected ultimate recovery in the

block. The block is currently producing well and is on target to achieve over 200,000 boe by end

Financial Year 2014.

Moving to Slide #13, at current gross production level, we contribute over 25% of India’s Crude Oil

production. In first half of this financial year, our gross contribution to the exchequer was around $2

billion. In fact, the profit petroleum that we share with the government on a gross basis accounts for

over 75% of the total profit petroleum received by the government.


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On the regulatory front, we remain confident that government will do its best in the interest of all to

secure the energy requirements of India. In this context, the Government of India recently issued the

Integrated Block Development Plan which is expected to shorten the time taken to bring hydrocarbon

discoveries to production. This would go a long way to help secure the important energy security

requirements of the country at the earliest.

In another significant development, the government has formulated a committee to review the

associated matters and recommend a policy on production sharing contract extension.

In conclusion, I would say, #1 we are confident of delivering on the year-end production target of

over 225,000 boepd from all our producing assets. #2, we continue to focus on the production

sustenance through the use of advanced technology such as enhanced oil recovery application, infill

drilling, and work to monetize the low permeability reservoir such as Barmer Hill. #3 we are pursuing

aggressive exploration program in Rajasthan, KG Onshore and Ravva Offshore besides other Indian

and international block. Finally, our robust financials and healthy cash balance give us the confidence

to adopt long-term CAPEX plan for organic and inorganic opportunities in the Oil & gas sector.

Thank you, Mr. Mehta.

M.S. Mehta Thank you, Elango. Moving on, at Zinc India, mined and refined metal production in H1 was

22% and 18% higher respectively year-on-year. The increase in volume was driven by various

debottlenecking and continuous improvement initiatives at our mines and smelter. We

implemented advanced process control and grinding and floatation circuit at Rampura Agucha,

which improve the consistency of operations. We improved Silver and Lead recovery by using

specialty reagents and improved technology in floatation. At smelters, we improved equipment

availability, drove focused debottlenecking initiative, improved recovery of metals and by

products significantly supported by stabilization of additional roaster installed in March ‘13.

The cost remains in lowest quartile without considering credit for silver. For the full year basis

we expect to deliver about 950,000 tons of mined metal and about 10.6 million ounces of

saleable silver. Refined metal provision we expected to stay or improve in the second half due

to the initiatives taken in the first half.

On Zinc International – we delivered stable operation in Q2 after disruptions in Q1. The

volume in Q1 was lower. It led to increase in COP in the H1 . We remain on track to deliver

about 390,000 tons in the full year basis in line with the earlier guidance.

Moving on – here is an isometric view of world’s largest zinc-lead-mine Rampura Agucha

mine. For next 4 years, Agucha will be producing using a combination of open cast and

underground mining method, before moving to 100% underground operations. Production

from the newly developed Rampura Agucha underground mine facility has already

commenced using the ramp while shaft sinking has also commenced to support larger volume

in future. We expect Rampura Agucha underground future cost of production to be similar to

the current cost as the current strip ratio of the open cast mining is high, close to almost 14 or


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15 on account of pre-stripping. As you can see the ore body remains same thus the grade and

the recovery efficiency of the mineral.

Overall, we have progressed well to expand the mine metal capacity of Hindustan Zinc to 1.2

million tons and we are on track to commence on production also from the Kayad mine which

is close to Agucha mine in the current financial year.

Moving on to Iron Ore – at Karnataka mine, the Supreme Court has allowed mining to resume

and we expect the final clearance shortly though this has taken longer than what we

anticipated, but we are positive to restart mining operations immediately thereafter.

Regarding mining in Goa – Supreme Court completed the hearings and recently passed an

interim order allowing the sale of inventory of iron ore with certain conditions. Court has also

directed the state government to set up a panel to review and decide by February 2014 on a cap

for Iron Ore production capacity in the state.

At Liberia, as you know, we confirmed a deposit of 1 billion ton with tremendous future

upside as we go forward in drilling. We plan to develop this project in a phased manner and

are currently reviewing the first phase of 2 mtpa.

Moving on to Copper India – the Tuticorin copper smelter as I mentioned before, restarted

after National Green Tribunal’s order and we ramped up the capacity to full efficiency. I am

happy to share with you that we will be operating this smelter to fullest capacity in the second

half of the year as a result of shifting of the biennial shutdown which was earlier planned in

current year, in the following year that is FY15.

As you might be knowing, TC/RC’s are favourable for the smelters at this moment and that is

going to reflect in the improved stronger annual TC/RC for the next season. However, I see

acid prices continue to be weak as we have seen in the last few quarters.

The 80 MW unit of 160 MW power plant is operating at its fullest capacity and delivered an

EBITDA of about 12 million in H1.

On Copper Zambia, mined metal production was lower in H1 as mining in the COP-F&D open

cast mine remain suspended from January onwards. However, cost remain stable despite the

overall volume being lower as the operations that were suspended had high costs. We know

that KCM is a world-class asset with high grade deposit and it has a set of well-invested assets

and has excellent potential. Having said that, we do recognize few challenges. We are working

on fixing the operational performance of the asset and delivering on operational turnaround. As

we have already mentioned, we are also engaging with the stakeholders including Government

of Zambia to improve productivity in the context of mechanized mining as against low level of

mechanization in the past. Cost optimization ought to be achieved for long term sustainability

and overall turnaround in the Copper Zambia business. As you can see, we have invested 2.8


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billion in the last few years in developing world-class mining infrastructure at KCM and that

establishes confirms the commitment to the copper belt in Zambia. Overall, we are now

working to ensure that we realize the potential and generate return for all shareholders and

remain committed to Zambian copper belt.

Moving on to Aluminium, Aluminium operations continue deliver strong volume and cost

performance. We maintained the aluminum cost in the lower half of the global cost curve

despite having procured most of our alumina and bauxite from third party. We sustained and

improved the operating performance of our aluminium smelter, mainly Jharsuguda smelter

operated at current efficiency and amperage ,better than the designed at the back of process

optimization. Recorded significant improvement in current efficiency in BALCO over the prior

period. Efficient operations from Jharsuguda CPP supporting aluminium smelter in terms of

specific coal consumption continue to show good trends and better management of coal

procurement further help us to optimize the cost performance of aluminium smelter.

Just to share with you, CII, a premier industry body in the country in India conferred this

power plant the National Award for the Energy Efficiency in 2013.

One million ton Alumina refinery restarted the operations in July and we expect it to produce

at its full capacity of 1 million ton in H2. We are happy to share that in alumina refinery, the

innovative technical feature of redmud filtration facility which will generate almost dry red

mud, besides other benefit , it will also reduce caustic consumption by 10 to 12 kg per ton. We

remain committed to integrated aluminum strategy and working with the Government of

Odisha for allocation of bauxite mines.

In summary – we are positioned to sustain cost level of $1600 per ton to $1650 per ton in the

current situation in Odisha and we do see the captive bauxite as an upside where we stand

today. As you can see, we are also able to realize good premiums over LME which was also

supported by very good product mix offerings.

At BALCO, we are planning to tap the first metal of 325 metric tons of smelter in Q3 and first

unit of 1200 MW power plant to be expected to commissioned, synchronized in Q4 of current

year. At Jharsuguda 1.25 million ton smelter, with the change in the relative dynamics of

Power and Aluminium and our strong cost performance in the Aluminium business, we are

evaluating the start up of one pot line of nearly 312,000 tons.

Moving to Power – 2400 MW power plant operated at PLF of 43% as compared to 41% last

year. It was largely impacted by the low offtake, low demand of power. We expect the power

demand to pick up in Q4 and expect PLF of 50% in H2. Going forward, PLF will not be

constrained by demand or evacuation once the new smelter gets operational. We have a strong

competitive positioning in terms of power cost that can be seen in the chart. It essentially

brings out strategic locations of our power plant close to the pit head. Our Punjab power plant


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is reaching close to commissioning and we plan to synchronize the first unit in the current

quarter.

In summary – Overall we delivered strong operating performance. Going forward we expect to

improve volumes, sustain and improve our cost performance. And with that I would like to

open the floor for the questions. Thanks.

Ashwin Bajaj Thanks, Mr. Mehta. We will take questions from the room first. So I would ask that you please

introduce yourself when you ask a question.

Roger Bell This is Roger Bell from JP Morgan. Two- questions from me. First of all, a very boring

question on payable. What was behind the $800 million increase in payable? And secondly, I

think most of us were quite surprised that the appointment of Tom Albanese as Chairman of

Vedanta Resources Holdings. Could you just explain from your thinking, why did you think

Mr. Albanese was needed in a role, what impact have we had so far, and how do you see his

role evolving overtime with the company?

Anil Agarwal I will ask Mr. Jalan to answer about $800 million and then I will come back to you.

D.D. Jalan Basically, the movement in payable was on account of number one, there was some increase in

capital creditors by somewhere around $400 million and the FX liability and deferred tax

liability that provided for this movement in creditors.

Anil Agarwal Tom Albanese is working with me personally on the strategy. He has the experience to run

various capacity as a copper smelter and then running the Iron Ore and the Aluminium and we

thought it would be most appropriate for me as I am taking forward the company to be by the

side of me to work on the strategy matter.

Roger Bell What impact did you have so far?

Anil Agarwal He has just joined about a month, month and a half back, so I think he is trying to understand

how we work, we are very hands on and with what experience he has I think 2 and 2 is going

to be 5.

Anna Mulholland This is Anna Mulholland from Deutsche Bank. Two questions, the first thing on how you are

thinking about potential takeover or buyout of the government stake in the HZL and BALCO,

how do you think about it as you are trying to deleverage the balance sheet. And the second

question is you mentioned couple of times potential operational synergies that you are looking

at. Could you give us some color on what sort of things you are thinking you could achieve

there?

D.D. Jalan Basically, we are looking into various part of synergies than this is providing a plethora of

opportunities and opportunity what we look at is, you know that we are producing power

somewhere we are generating power and somewhere we are consuming. So we are just trying


November 15, 2013

Page 13 of 21

to see how we can optimize the power balance. And similarly in banking and treasury side,

there is lot of opportunities and we see that already we have started getting benefit in the

interest rates. There are opportunities in the procurement side; there are opportunities in

creating shared service. I think these are early days but we know that with creating Sesa

Sterlite a platform, I think there will be a good opportunities which will be emerging.

Navin Agarwal And on the funding of Hindustan Zinc and BALCO, we have stated this in the past many times

that as and when this goes through there might be a need for some kind of bridge financing and

as the transaction goes through, the cash at the Hindustan Zinc will be available to us.

Liam Fitzpatrick This is Liam Fitzpatrick from Credit Suisse. Two-three questions. First question is on net debt,

I know you have not wanted to in past but do you have a gearing level on absolute net debt

level that you would like to achieve by the next one to two years? Secondly on KCM, you have

stopped giving any production and cash cost guidance. Do you have a view over the next one

to two years what the production will be or should we just assume it will be stable and then

finally just on Cairn, the CAPEX numbers that are given, are they fairly concrete or is that

very much subject to approval?

Navin Agarwal We will go in a particular order. We will get Elango to respond the Cairn CAPEX question.

Elango you got the question?

P. Elango Yes, I have. Our CAPEX plan is on an annual basis, the work program and budget would be

approved at the management committee level. With that in view, we have a broad plan of what

we stated as $3 billion, 80% going to Rajasthan, but each year plan would be approved by both

the corporate board as well as by the management committee.

MS Mehta We have given the guidance for the current year. As you know that it is a well-invested asset

and we also acknowledged that we do have production operational challenges. So right now

we are working on resolving those issues and largely it falls in the bracket of getting the right

people for operations and that is what we are focusing at this moment. Particularly for the

Konkola deep operations, where we feel that we have not been able to ramp up the way that we

thought for the last one year. We are in the process of ensuring that we get handle on that and

having said we have done well on the cost side. As mentioned by all of us that we remain

engaged with the key stakeholders to ensure that KCM delivers its potential because our

commitment while it is pretty clear from the $2.8 billion investment, but you need to start

generating the volume that whole infrastructure deserves. Though on the specific issues of next

year guidance; I think we would like to wait for few more months before able to give you any

number for the coming year. This year we said 140,000 tons at a cost of about 220cents in H2.

D.D. Jalan On net debt, as we shared at the time of preliminary announcement in May, we continue to

remain confident that our net debt will come towards 25% in next two to three years’ time.

That is the virtually gearing target what we are looking at.


November 15, 2013

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Menno Sanderse I am a little bit confused about your statement on strategy. You said out very clearly what you

want to do - delever, progressive dividend, buyout the minorities, CAPEX in Hindustan Zinc,

Cairn and Liberia. That is an awful lot to do in the next 2 to 3 years with the cash flow that you

have. So when you are thinking about strategy can you help us understand about timeframe

you think of and do you think within the current context of the group or are you thinking about

going into different segments, and different commodities?

Anil Agarwal We are very clear. We are almost all the CAPEX program is getting over and at the moment

Liberia is absolutely we are talking 2 million ton and they are talking $100 to $200 million that

is nothing. Apart from that as you heard from the Cairn they have their own drilling program

and investment program. And then we have Hindustan Zinc which is going from open cast to

underground. And they have their normal CAPEX and very well within reach. At the moment,

we do not have any major CAPEX program around. So the strategy is very clear that we have

completed all our projects. This is the time to move forward, to churn the asset and get

maximum out of that.

Menno Sanderse Do you think about commodities, what do you think about new countries, what are you talking

about going more aggressive on your existing assets?

Anil Agarwal We are fundamentally India based business, 96% of our business is in India. India has

tremendous resource but they do not have enough company. In comparison to even China, we

are one-tenth producer of our resource. So we have enough in India, but we have looked at

Africa and we are doing well there. At this point of time, we have no other target to acquire or

to go any other country.

Menno Sanderse Second question on iron ore, it is taking a little bit longer in Karnataka to get down to actual

mining and digging out the ground. Let us say the state commission comes back on Feb 14 you

can go into the industry, how many licenses do you need to get, the water license,

deforestation, how much time will pass before you can actually start digging?

Anil Agarwal Even I have taken 100 licenses and I thought it must be over and they still say another 100 to

take. So in a democratic country I cannot say where it stops, but we understand India and the

government is very favorable and we only produce 135 million ton of iron ore. There is a

potential to produce 600 million ton and all are there to support us as much as possible. We are

the largest producer of iron ore and we will work with the government to make sure that we are

together and we believe that this year we will have the production of iron ore.

Menno Sanderse And Goa it is safe to put in our models for the second half of next calendar year?

Anil Agarwal Yes, this is again very democratic country. If we get clearance, we will move. I only can say

that they moved off court, they want to do the right thing. If somebody made a complaint that

the water is polluting or something is happening, they have to look into. And they are looking

into and we are very confident that we are working together and it should happen. But we can


November 15, 2013

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be the fastest in coming to the action if required. So I am very confident. You will see, we will

be a good iron ore producer in the country.

Menno Sanderse On KCM, actually for the EBITDA development in the first half was quite good, but again

what happened to the revenue? Was there anything special in the operating cost in the first half

that was one-off in nature and will not recur or was it just genuine good cost cutting.

MS Mehta I think guidance for the second half is also similar to what we delivered in the past are better.

So we also clarified that operation that is suspended were high cost operations. So what we are

operating right now is generically more cost efficient so there is no miracle in that we are

performing better in the second half also.

Menno Sanderse Finally, I don’t totally understand the CAPEX push out, so 2.2 goes down to 1.6 it is being

pushed into next year was referred to earlier as well. Is that driven by regulatory issues or you

don’t have the license, it is a pure decision based on profitability/cash flow or it is something

else behind it?

D.D. Jalan The basic movement is there in Cairn India, in Cairn India over a period of 3 years they have

invested $3 billion and they are still expecting 3 billion spent over a period of 3 years. There is

some movement from H1 to next year. So that is again because of how the CAPEX profile is

taking shape.

Participant But it is not because certain licenses are not been given

D.D. Jalan No it is not because of that.

Jatinder Goel Jatinder Goel from Citi Group. Firstly on Talwandi Sabo what are the power tariff you are

likely to get, is there any discounted power you need to sell to the utilities within the state and

then you get the merchant tariff from the remaining and how should we think about the cost

structure? Are there any benefit the government has offered while you started putting that

power plant in that state and secondly on the dividend policy on Sesa Sterlite, we have seen the

announcement in Sesa Sterlite about the dividend declaration but what is your thought process

on a formal dividend policy, are you likely to go with the payout policy which you have in

Hindustan Zinc and Cairn India or given the debt situation you would be more comfortable

with more base dividend and try to top it up with the special divided if and when you get a

chance?

Navin Agarwal On the dividend policy at this point of time, the Sesa Sterlite board has not taken final decision

on the policy; however, as per our discussion our current thinking is to move towards the

payout ratio dividend policy for Sesa Sterlite.

Anil Agarwal Talwandi Sabo it was an open tender, we have participated. We are looking to complete one

project now, it is very crucial for the Punjab Government to have this power plant. This is not

as lucrative as our other business, but we are working with them, engaging with them on the


November 15, 2013

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few clarifications which makes this project more viable and we expect that it will generate

some revenue for us.

Jatinder Goel It is not similar to what we have in Jharsuguda?

Anil Agarwal Jharsuguda has a more captive as we are producing aluminium. This is a merchant power plant

which we are building up as PPA and the PPA had a lot of coal variation, it has a lot of

assumption on the foreign exchange. We still believe it is not as lucrative as our other business,

but it is going to have a return on our capital marginally. That is how we are looking.

SK Roongta I may just add that under this PPA for the Talwandi Sabo coal is within the scope of the

procurer and any fuel related escalation will be to the Punjab government or PSPCL.

Moderator Ladies and gentleman, we will now begin with the question and answer for participants on the

audio bridge. We have the first question from Varun Ahuja from JP Morgan. Please go ahead.

Varun Ahuja I just want to have a clarification on the iron ore in Goa, given that the Supreme Court has said

that the ore which is already mined it can be sold through eAuctions, what is the guidance for

that in the current year and also regarding Liberia, what is the guidance? When are you to start

the production from Liberia and whether the current CAPEX that you had given, it includes the

CAPEX which is going to be spent in Liberia as well? Secondly, could you give some color on

the refinancing plans of your January 2014 bonds and also more broadly would you look to cap

the debt level at the PLC level which is there at current 4.4 billion going forward and most of

the debt raising or refinancing would now be done at Sesa Sterlite level?

PK Mukherjee Regarding Goa eAuction, it is expected that 11 and odd million tonnes of inventory which state

government has submitted to the Supreme Court will be cleared by the end of this year. Our

figure is about little above 2 million ton of ROM that is unprocessed stone. And again, little

above 2 million ton of processed stone. So expected that this inventory will be sold by 31st of

March. So far the Liberia is concerned, right now as we have stated already during this

presentation earlier by my seniors that the project is still being evaluated as to the timing. So

this CAPEX is yet not firmed up.

D.D. Jalan So coming back to the refinancing plan, as I mentioned that in past two years we have raised

successfully over $10 billion of funds through various means of debt financing like bank loans,

bonds and we are open to any of these financing plan for the ‘put’ option in the event it

becomes due in the next year and we shall try to see that the financing is in place much ahead

of time. And coming back to your second point about the debt level at PLC, as you have seen

that basically now whatever cash flow is going to get generated largely it is going to be used

for deleveraging and eventually the whole purpose of Sesa Sterlite creation was that debt and

cash should be aligned and the debt should be where the cash is there. So, going forward, in

the eventuality I think if there is any debt raising required it will be at the operational level.


November 15, 2013

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Varun Ahuja Just one last follow-up. Regarding the debt that was transferred to Sesa Sterlite, can you just

confirm that even the current interest expense on that debt it can be directly paid by Sesa

Sterlite as a receivable and there is no leakage out there in terms of any withholding tax or

anything?

D.D. Jalan Eventually, the current debt servicing will be made by the intermediary company where the

debt has been taken. That is at TSMHL, Mauritius Company, and there is no impact of

withholding tax over there.

Varun Ahuja So if let us say $100 is being paid by Sesa Sterlite the entire is receivable for payment of

interest, etc.?

D.D. Jalan That’s right.

Moderator Thank you. The next question is from the line of Pradeep Mohinani from Nomura. Please go

ahead.

Pradeep Mohinani I have got three very quick questions for you, maybe four of them. First, I just wanted to

reconfirm your CAPEX numbers that you just provided for ‘14-15 & ‘16 was 1.6, 2.3 and 1.3.

Second question was just around KCM itself. There have been obviously a number of very

negative headlines that have come out in the last few days on Bloomberg with regards to

KCM. Can you please talk about what is happening in that level with regards to disruptions in

terms of labor force, and workers being laid off, also, there is a number of headlines come

through in the past few months with regards to tax issues for the government as well, can you

provide some clarity around that? And the third question is just around your refinancing, I

know you talked about it some point in the last few minutes as well. Can we safely assume that

you will be looking to come to the market just because you got this reasonable financing that

you have got coming up in slice financing coming up in July next year which you will be

looking to come through the bond loan market itself on back of that? And last but not least just

in terms of the $3.9 billion of intercompany receivable you have created, is that reflected on

Sesa Sterlite’s balance sheet as well?

D.D. Jalan So basically this $3.9 billion loan which has been transferred from PLC to Sesa Sterlite, it is

essentially for the Cairn India financing, and this loan is going to be serviced by Sesa Sterlite,

is that the question?

Pradeep Mohinani Yes, where you reflect on Sesa Sterlite’s balance sheet basically?

D.D. Jalan That is on the Sesa Sterlite balance sheet. There was a question on the refinancing. I think as I

addressed that we have got the various options for refinancing of the ‘put’ option in the event it

falls due in the next year and those options could be bank loan, bonds or various other means

of debt instrument. So, we are evaluating and then we shall take the appropriate call much

ahead of the ‘put’ option getting exercised.


November 15, 2013

Page 18 of 21

Pradeep Mohinani So you are already evaluating something as we speak right now I presume?

D.D. Jalan Yeah, as I said that in past two years we have already raised $10 billion of fund and we know

that we are in a position to raise the funds at much attractive cost for refinancing.

Anil Agarwal On the KCM, we have a CEO of KCM, Kishore Kumar on the line, so he may reply you.

Kishore Kumar Thank you, Chairman, and thank you for the question, Pradeep. On KCM, as we had earlier

briefed, that the entire process of project having been completed, we have been in engagement

with the government for the last six months about the need for some amount of restructuring of

the employees, because that is automation as well as the need to bring the cost management

again in place. And these discussions have been going on and it is unfortunate that there has

been some misunderstanding which we later on clarified that there has been no layoff of the

laborers unilaterally by the company it was an engagement process in which there has

obviously been some amount of misunderstanding. And the operations of the ground are very

well managed by our operational team and there has been no disruption directly as a result of

this event on the production numbers that have been forecasted. The issues on tax which you

have raised was relating to Section S.I. 89, which was issued by the government, but that

largely was tax issue raised for export of concentrates from the country and it was not directly

affecting KCM by any which way because KCM beneficiates the cathodes and we do not have

any exposure to the tax that has been imposed. I hope that clarifies the position.

Pradeep Mohinani Yes, thank you. On the last question if you could clarify the CAPEX numbers as well, just

reconfirm this 1.6, 2.3 and 1.3 is what you have just provided for the next three years?

D.D. Jalan I will just give the broader details like in the current year we are going to spend around $750

million at Cairn and then there are some expenses on the Aluminium and Power sector of

around $400 million, at Zinc sector it is $250 million. So these are the broad numbers and

similarly in the next year it is in the Cairn we are going to spend about $1.3 billion and in the

Aluminium sector and Talwandi Power it is going to be around $600 million, and in Zinc it is

going to be $250 million and similarly in ‘15-16 at Cairn India, we are going to spend $780

million, in Zinc it is going to be $250, and in Aluminium it is going to be $200 or $300

million. So this is the broad breakdown. Is that answers?

Pradeep Mohinani And this does not include sustenance or maintenance CAPEX which should grow still by

another $300 million, is that right?

D.D. Jalan This is basically just the growth CAPEX and the sustaining CAPEX is part of the free cash

flow that is somewhere around $300 to 350 million a year.

Ian Rossouw This is Ian Rossouw from Barclays. Just wanted to follow up on KCM and the discussions

with the government. It seems like the President was quite adamant that they did not want any


November 15, 2013

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layoff at the operations. Do you think there is a risk of you getting to your sort of long-term

cost and productivity target if you are not able to layoff people?

Anil Agarwal That is a very small cost but we have mechanized all our plant and a world-class equipment

has come. We have to engage with the government. It is in the interest of the government and

we are not saying anything to layoff tomorrow. This is the plan for a couple of years. So we

are working and we are not adamant that we have to take the people out, it is just we have

started engaging saying this is the position on the ground and we have to work together, and

they have to understand this is a national asset, and we have to run efficiently, that is how they

will get tax, that is how they will get revenue. There is nothing hard and fast and unless the

engagement is done, we will not move on. It is a program for a couple of years, and we are

working with the Government.

Ian Rossouw And just one question on Liberia. Given what you are saying the ramp up including the 2

million ton is under review, does that mean you will not be able to produce I guess you told

that the plan was to produce by the year end, right, has that been delayed now?

Anil Agarwal Yes, it is purely on trial basis; we have not firmed up our capital expenditure, we are

evaluating what we need to do, we understand the country, it is a large resource but we have

not committed any capital expenditure at this point of time. We are working on, but on trial

basis we have said that we will be able to develop 2 million tons and ship it and that does not

require much cost.

Moderator We have the next question from the line of Richard Lange from Stone Harbor, please go ahead.

Richard Lange Two questions please. I think you mentioned that you had arranged financing for the January

maturity the 500 million. If you could please be specific and tell us exactly what has been

arranged? And if you could please go over again the impact of the depreciation of the rupee on

your P&L, I think you mentioned two areas of impact?

Navin Agarwal Your first question is around the refinancing of 500 million which was recently completed?

Richard Lange January 2014, there is $500 million that is still here. I would like to know how it is being

refinanced.

D.D. Jalan The January refinancing of $500 million has been done from the bank market, and this has

been done at a very attractive rate of LIBOR plus 400 basis points, that results into saving a of

almost $25 million to $30 million from the current interest outgo on that particular piece.

Secondly, coming back to ….

Richard Lange That was done at Sesa, or was that done at PLC, what is the maturity of financing?

D.D. Jalan That is at PLC level and the maturity is 4 years. Coming back to your second question in

which I talked about the impact of depreciation of rupee in P&L account, as I said that this you


November 15, 2013

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can see at two places, #1 there is a favorable impact as far as the EBITDA is concerned, and it

is $48 million because bulk of the cost is in rupee, and the #2 was $429 million as MTM loss

on our dollar-denominated debt in the Indian subsidiaries, and the current amount of dollar-

denominated debt at the subsidiary is about $2 billion.

Moderator Thank you. We have the next question from the line of Aditya Garg from Goldman Sachs,

please go ahead.

Aditya Garg Could you walk us through the adjustment against $5.9 billion of debt which was supposed to

be transferred to Sesa Sterlite, Cairn India’s stake transfer, the receivables are for $3.9 billion

from Sesa Sterlite so how balance $2 billion dollars have been adjusted? And second question,

how does these receivables $2.9 billion rank at Sesa Sterlite balance sheet, are they pari passu

to secured debt, will Sesa Sterlite have to service its own secured debt first before paying to

Vedanta PLC on these receivables?

D.D. Jalan Aditya your line was not very clear, so I have not been able to understand your second

question, but as far as first question, if you just try to look at, it is the intercompany debt plus

there is a loan of $1.2 billion dollars at TSMHL level and since the company has been acquired

by Sesa Sterlite so by that acquisition it gets transferred to Sesa Sterlite, so that is how $6

billion dollars of Cairn acquisition loan is getting transferred to Sesa Sterlite.

Aditya Garg My second question was does this receivables of $3.9 billion ranked pari passu to secured debt,

will Sesa Sterlite have to service its own secured debt first before paying to Vedanta PLC?

D.D. Jalan In fact $3.9 billion dollars Sesa Sterlite loan can be repaid by Sesa Sterlite based on the cash

flows what Sesa Sterlite has got and there is no covenant that this $3.9 billion loan will be paid

only after repayment of Sesa Sterlite loan or it can be paid independently also.

Moderator Thank you. That was the last question that we had on the audio conference.

Participant Sorry I missed a bit of background here, so this may be obvious to everybody else, my

apologies. What are the continuing hurdles in terms of bauxite? You said that are a lot of it,

makes sense for the company to produce it, so what hold you back and if you can and I realize

it is certainly possible to give us some timeline. Can you give some gut feel when you think

you will get some?

Anil Agarwal We set up this plant on the Odisha Bauxite, Odisha has one of the finest low silica bauxite, last

25 years no mine has taken place, government is fully committed and we are engaging with

them and I am very confident that the bauxite will be provided to us, I cannot give you

timeline, there is election going on, a lot of other activities going on. We are dependent on the

Odisha bauxite. If you look at most of our business what we have, has a world-class reserve of

all these raw materials, and even if you take Zinc, if you take Oil and Gas, you take Copper,

you take Iron Ore, you take Bauxite. Bauxite, we are very confident it will happen. But I


November 15, 2013

Page 21 of 21

cannot give you the timeline, whether three months or six months, it will take another year or

year and a half to develop the open cast.

Participant Say, in a scenario where you will not get it, you will just run refinery as it is not very

profitable, but not loss making either is that a fair bear case scenario.

Anil Agarwal I do not think so. India as I said, largest country, largest having reserves, not to open up, just

producing 1 million or 1.5 million tons of Aluminium, in five years time they will be needing

10 million tons of aluminum, so they need to produce. So there is no question that such a

situation will come.

Ashwin Bajaj Thanks, ladies and gentlemen for joining us today, and feel free to contact us if you have any

more questions. Thanks.

For further information, please contact:

Investors Ashwin Bajaj Senior Vice President - Investor Relations Vedanta Resources plc

[email protected] Tel: +91 22 6646 1531

Media Gordon Simpson Finsbury

Tel: +44 20 7251 3801

About Vedanta Resources plc

Vedanta Resources plc (“Vedanta”) is a London listed FTSE 100 diversified global natural resources major. The group produces aluminium, copper, zinc, lead, silver, iron ore, oil & gas and commercial energy. Vedanta has operations in India, Zambia, Namibia, South Africa, Ireland, Liberia, Australia and Sri Lanka. With an empowered talent pool globally, Vedanta places strong emphasis on partnering with all its stakeholders based on the core values of entrepreneurship, excellence, trust, inclusiveness and growth. For more information, please visit www.vedantaresources.com. Disclaimer This transcript is provided without express or implied warranties of any kind, and should be read in conjunction with materials published the company on the same date. This document 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,” “should” 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 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.

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