Vedanta Ltd
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Vedanta Ltd
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Ladies and gentlemen, good day, and welcome to 3Q FY '23 Vedanta Limited Earnings Conference Call. [Operator Instructions].I now hand the conference over to Mr. Sandep Agrawal, Group Head, Investor Relations, Vedanta Limited. Thank you, and over to you, sir.
Thank you, Prasanth, and hello everyone. I am Sandep Agrawal. On behalf of Vedanta Limited, I am delighted to welcome you to our third quarter of this financial year earnings call. A transcript of this call will be made available on our website, as well as audio. The financial statements, press release and presentation are already available on the website. Today, from our leadership team, we have with us Mr. Sunil Duggal, our Group CEO; Mr. Ajay Goel, Group CFO. We are also joined by leaders from a couple of key businesses, Mr. Arun Misra, CEO of Zinc Business; and Rahul Sharma, Deputy CEO, Aluminium business.Please note, today's entire discussion will be covered by the cautionary statement on Slide 2 of the presentation. We will start with update on our operational and financial performance and then we'll open the floor for questions and answers.Now, without further ado, I would like to hand over the call to Mr. Duggal.
Thank you, Sandep. Good evening, everyone, and welcome to quarter 3 conference call. During the third quarter, the Indian economy remained strong and resilient on sound macroeconomic fundamentals and healthy domestic consumption. Despite rising interest rates, robust growth was witnessed in metal consuming sectors like housing, automobile, consumer durables. However, the global economy continued to grapple with multiple headwinds like monetary tightening, high inflation, geopolitical instability and volatility in financial markets.Commodity prices also witnessed sluggishness. In this macro environment, our team has performed commendably. We stood several initiatives, achieved strong operational performance. We delivered good set of financial results despite weaker commodity prices. Our third quarter EBITDA stood at INR7,100 crore. Free cash pre CapEx for the quarter stood at INR6,500 crore, with focus on working capital and cost optimization.In line with our re-purposed ESG strategy, we worked to uplift the quality of life of communities through various initiatives around drinking water, sanitation, healthcare, community infrastructure, children wellbeing and education among others. We spent more than INR216 crore in the first 9 months of the year and positively touched 3.14 plus million lives. Our ESG focus and action have been recognized by several major ESG rating agencies. Vedanta Limited is now ranked 6th globally among top 10 diversified metals and mining peers in DJSI. It has been inducted into Dow Jones Sustainability Emerging Market Index. Our MSCI ESG rating has improved from CCC in 2020 to BB now, and Sustainalytics have also improved our risk score by 4.5 points. Across the Board, improvement in our ESG's risk ratings is a testimony of our team's diligent effort to become an ESG leader in the industry.Furthering on our goal to deploy 2.5 gigawatt of round the clock renewable energy for our operation by 2030, I'm delighted to share that we have approved plans for another 941 megawatt RE power under group captive RE power development program for our operations across India, including Hindustan Zinc. During the quarter, our Aluminum business procured 390 million units of RE power and are conducting biofuel trials as green alternative for ladle pre-heating and heavy vehicles. We've successfully conducted biomass trials at [ zinc ] and ESL to explore alternative sources of clean energy.We have also joined HZL, Cairn India and Iron Ore Businesses in Net Water Positive operation, and signed MOU with Gujarat State Forest Department for development of 60 hectare Mangrove Forest, 50,000 saplings in coastal area of Surat, in our effort to promote biodiversity and preserve environment. We introduced a industry-leading EV policy for all our employees. The policy will lead to increased adoption of EVs amongst employees and drive the mindset change aiding India's green mobility push for a sustainable future.When I come to operations and first on Aluminium. Our quarterly COP further reduced by 12% to $2149 per tonne on account of operations and buying efficiencies. Our linkage coal materialization improved to 66%. We have commenced operation at Jamkhani mines to continue to focus on volume growth and vertical integration project to unlock its full potential. Zinc India achieved best ever mine and refined metal production in 9 months. It's quarterly refined metal production improved 5% Q-o-Q. With better plant and mine metal availability, it continues to be first quartile of global cost curve.Zinc International Operations are now steady at 280 plus KTPA MIC production number. It achieved best ever MIC production in 9 months. Gamsberg cost for production excluding TcRc in this quarter decreased 12% Y-o-Y with operational efficiency and higher production volumes. Gamsberg Phase 2 expansion is progressing well. In Oil and Gas business, our average gross production increased 3% Q-o-Q to 145 kboepd as metal production decline was offset by infill wells in MG and RDG fields. We have successfully drilled 1 exploration well in Ravva and have put that to production, adding close to 5 kboepd. We commenced first Gas & Condensate facility in gas field, which is OLAP. An you know, that the government has extended the PSC for 10 years and we have signed the addendum to extension with effect from May 2020.In Iron ore business, our production of saleable ore in Karnataka increased by 32% Q-o-Q. Shale was sluggish due to government imposed duty and exports, but now it has picked up. Pig iron production was up by 66% Q-o-Q to 200 kt, as all our furnaces were online for post-maintenance shutdown in the previous quarter. However, we saw a quarterly decline in pig iron margin owing to price escalation. Our Liberia operation achieved first ever export shipment in this month.In Steel, one of our blast furnace was put on maintenance shutdown, resulting in a 6% quarterly production decline. Our quarterly COP including -- excluding the impact of iron ore mine cost, improved on account of lower coking coal cost. However, ESL's margin was impacted by decline in steel prices and high cost of production. The newly acquired iron ore mine owing to regulatory charges to be paid on iron ore production. In FACOR, 9-month ore production grew 15% Y-o-Y due to operational efficiency. Our 60ktpa furnace is undergoing test run and we are on track to get first production in the month of February current quarter.Overall, we have made significant progress across our strategic priorities, creating value for our stakeholders. Our world-class assets have delivered outstanding financial results driven by operational efficiency. I would also like to share that Vedanta Board has approved the sale of its ZI assets to HZL at valuation of $2.98 billion. Consolidation of ZI under HZL will fast-track ZI's growth by using HZL best-in-class expertise in underground mining, banking and metal marketing. HZL's combined R&R would be 1 billion tonne plus and it would have benefit of improved access to developed markets and strong foothold in African subcontinent for expansion. This monetization will provide greater flexibility to Vedanta for future growth projects and manage leverage at group level. This transaction is win-win transaction and will unlock significant value for both HZL and Vedanta shareholders.Moving forward, we are optimistic on the commodity market and macro data that we see now is improving. China's reopening post-Zero COVID policy property market stimulus and front-loading of infrastructure investment to expand is another positive for metals global demand. At the same time, India's economic situation is expected to be better than the rest of the world due to strong domestic consumption. Moreover, this is seasonally a good quarter for commodity demand in India. India being our largest market, it's continued strength augured well for our business performance. With our outstanding portfolio of low cost effects, multi-commodity projects, strong balance sheet and a commitment to ESG leadership, we are well positioned to deliver value to our shareholders and our communities.With this, now I would like to hand over to our CFO, Mr. Ajay Goel for financial performance. Over to you, Ajay.
Yes. Thank you, Sunil, and good evening, everyone. Third quarter witnessed a falling inflation and improving the sentiments, which has driven recent metal outperformance. Indian economy remained buoyant and saw strong growth in metal consuming sectors and India's manufacturing sector ended 2022 on a strong note, with the manufacturing PMI rising to 2-year highs of almost [ 57.8 ]. India's inflation eased below RBI's upper tolerance level for the first time in December to 5.7%. We believe that the commodity prices are now under the influence of demand recovery and will stay elevated in calendar 2023 and beyond.This quarter performance witnessed steady production, easing of inflation, that help in a lower operating cost. At the same time, the profit was impacted by further softening of commodity prices. Numbers for the Q3, are a reflection of continuing our various improvement initiatives in terms of enhancing production, lowering operating costs, and focus on free cash flow.I want to share some of the highlights for the current quarter. Leading, the console quarterly revenue stands at about INR33,691 crore, down 7% quarter-on-quarter, impacted by lower LME and Brent. The quarterly EBITDA at INR7,100 crore, with a margin of 24% supported by easing of input inflation and also strategic hedging. The highlight -- the main highlight for the current quarter remains our profit after tax, PAT, which is at about INR3,090 crore, which increased by 15% quarter-on-quarter. Healthy free cash flow pre CapEx INR6,504 crores and also we continue to maintain strong double digit ROCE of almost 23%. You heard that we also declared INR12.5 per share, fourth interim dividend, that makes total for the full fiscal at about INR81 per share YTD. And that also makes Vedanta the highest dividend paying Company amongst its peers in India.Before I move ahead further in Q3 performance, I would like to also highlight that our key metal businesses, that is Zinc India, Zinc International and Aluminum, recorded highest ever MIC and metal production in the last 9 months. This demonstrates that our long-term fundamentals remain strong and we will deliver a robust year in terms of operational growth. We have an income statement in appendix where you'll find details against each head of profit and loss account.I now move to EBITDA bridge. When compared with third quarter EBITDA to the second quarter, the largest driver was the lower input inflation and ForEx gain, which was partly offset by lower metal and Brent prices. Further if you look at items that were under our control during the quarter, we did well in terms of operating performance on cost front, which was the outcome of various implement initiatives, earning across the businesses, and to some extent strategic hedging in Q3 as well. But if you compare last quarter, the benefit of hedging was lower comparatively and therefore it also impacted the EBITDA for the quarter.Moving on to next Page on net debt bridge. Net debt as on December 31 stand at about INR38,000 crore, with net debt to EBITDA, the leverage ratio at 0.96x, which was maintained at low levels amongst Indian peers. The increase in the debt in the current quarter is a result of spending on various sustaining and the growth CapEx at businesses and also the money returned to shareholders that resulted in better debt mix at overall Vedanta Group level. As we are committed, earlier our net debt to EBITDA level remained comfortable and well within the range of our capital allocation framework.Moving onto the balance sheet. We have built a more harmonious balance sheet with assets and liabilities moving towards better equilibrium and by which I mean to say the overall debt at holding company has come down significantly in the current fiscal. We are well positioned to address our current maturities, focusing on driving improvement. We also continue to have solid balance sheet with our net debt to EBITDA maintained at comfortable low levels, and we finished the quarter with almost $2.8 billion of healthy cash and cash equivalents. Our average maturity is maintained at about 3.7 years, with average cost of borrowings at about 7.7%. Our credit rating continues to be at AA with a stable outlook both by India Ratings and CRISIL.We moved a step closer to our commitment of reducing HoldCo debt by $4 billion over 3 years. In the first 9 months, which is April to December, in the first 9 months, we deleveraged HoldCo by $1.7 billion. Finally, we are confident in our ability to close the year with a strong performance as we have expertise to drive improvements across businesses, while successfully weathering macroeconomic uncertainties. We have numerous initiatives that support our strategic priorities and collectively, these will position us to meet growing demand for net-zero transition, at the same time returning capital to shareholders.With this, I now hand over to operator for Q&A. Thank you.
[Operator Instructions] The first question is from the line of Pinakin Parekh from JP Morgan.
Sir, my first question is on the proposed transaction with Hindustan Zinc. Now given that in the past the government apparently did not approve the transaction back in 2012 when it was proposed to buy. What gives us confidence this time that the government representatives will be on board to approve the transaction?
See this transaction is value-accretive for both the organizations. So, on the kind of reserve and purchase the ZI has at that point of time and now it have, on the other Gamsberg has been put up as well as already ramped up to almost the full production, second project is in pipeline. So, that means the business is on track to deliver 600 ktpa of volume in the next 2 years' time. Along with that, a lot of exploration success has come. And from the time then to now, you can see that the total contained metal in ZI is more than Hindustan Zinc at this point of time.So, it creates a huge synergy and the success of Hindustan Zinc transitioning to underground, putting up the smelting capacity, integrating the operation. So, I think it is a winning combination and with that winning combination, the government gains and you can see that ONGC Videsh, other government company. Now the government has setup KABIL to acquire the asset abroad which is under the mine government ministry today. So, there the government is looking at the global footprint. We believe that this proposal could be exciting for the country and the government and why should government not support it.
And my last question is that with the expected proceeds, I think $2.4 billion upfront and then the remaining over the -- over a timeframe, what does Vedanta India plan to do with the cash? Would that be entire amount be distributed as dividends or will it look at some kind of acquisitions?
Ajay?
So, Pinakin, I mean, you remember our policy on allocation of capital of 8% and the entire proceeds of $2.4 billion plus $0.5 billion in [ use of ] time will be used and it is guided by our policy on allocation of capital. Now, it may have multiple usages, example remains using that the money for funding our project in terms of growth CapEx and including the payment of the dividend and the deleveraging both VEDL and also via HZL.
But any deleveraging at VRL would be done via dividends from Vedanta Limited or can we expect inter-Company loans or asset buybacks from Vedanta Resources to Vedanta Limited?
Any kind of IC with the intercorporate loan is out of question. And I covered this point also in a couple of the earlier calls. There is a new ICD plant. And in terms of how this money we can repatriate, be it dividend or other means, I think that is something we are working on, Pinakin. But as I mentioned, the allocation of capital policy remains the working team. So it is used -- it will be used for funding our growth CapEx, any acquisitions, at the same time payment of dividend and deleveraging VEDL or VRL.
ICL, we have spoken at many fronts and many times.
The next question is from the line of Prashanth KP Kota from Emkay Global.
Congratulations, sir, for the deal with HZL. And it's really reassuring that you've committed again that there'll be no ICDs, et cetera. It's reassuring. But now couple of questions, on Aluminum business, how do we expect the COP to progress in Q4 FY '23, assuming the coal linkage materialized at 65%, 70%? And all other sources of coal are priced at where they are today, what is the COP you expect -- that we can expect in Q4?
So, I have colleague in the name of Rahul Sharma is the CEO of Aluminum Business, with me. But in the meantime, you can appreciate that we reduced the cost by say around $300 in quarter 3 compared to quarter 2. But we feel that broadly the journey could continue depending on how much of the coal realization, linkage coal realization and the moment would come, but there are lot of levers in hand and we believe that we may have good cost reduction.So, any guidance, Rahul, you want to give?
I think, first I would just like to -- just to take you flashback in terms of in Q2, if you recall, we have said that we will reduce our cost by $200 and that was a H2 guidance. If you see in Q3 itself, we have reduced $280 which is 12% reduction and that is purely comes from 3 factors. One is for sure is the coal cost, improved operational KPIs and also the mine efficiency. But coming to the Q4, I think we see that it's going to be better from here, and especially the lever which we'll see, because we are going to have 100% coal metallization. And also, our Jamkhani coal mine which started in December, we are looking quantity from them on the mine and also soften the commodity price. We see that there is going to be further reduction and maybe around 5% to 7%.
And sir, my second question is on the Oil & Gas business. Sir, am I missing something here the realizations Q-o-Q are lower because of the lower crude prices. The volumes are same, COP is same, however EBITDA and revenue are same, despite lower realizations. So, is there any mix issues there or what is that I'm missing?
See, the volumes are up slightly. The volumes are up by 3%, cost is down by $1 per barrel also. So, there are positive levers around the operation because of which -- what is the percentage increase in EBITDA from Oil & Gas?
It is flat, sir. It is flat Q-o-Q despite much lower crude prices and realizations you have.
You can see that the volume has gone up to 145 kboepd, 146 kboepd and the cost has also reduced.
If there is any other minor thing, I'll try to consult with your team.
The next question is from the line of Ritesh Shah from Investec.
Sir, couple of questions. First is, I just wanted to have a sense and understanding of the debt maturity profile at Vedanta Resources. Please correct me if I'm wrong. But what I understand is, we have an total outgrow from $2.5 billion. I think we are trying to tap into PSUs probably look to rollover at Barclays and even potentially looking to top-up at Oaktree. So, I just wanted to understand how should one look at the cash flows from now till June, if one has to take care of the cash flow requirement at the parent level?
So, if you look at maybe the 2 quarters, the one is the fourth quarter, the current quarter, Jan, Feb, March. The need for the funding at VL is about $550 million. And with the current dividend of INR12.5 and the remainder amount. So, we are fully covered. So the entire cash deployment in terms of source and application are fully in equilibrium for the current quarter. If you look at the Q1 of next fiscal, which is April to June, the total requirement at Vedanta Resources is almost $2.1 billion, in fact $2,050 million I think precise.Now again, multiple discussions, you are right, are going on. I would say 3 large bucket of to meet $2.1 billion. First of all, the Oaktree upsizing by almost $750 million is one event. Secondly, we are in talks with the various banks, be it PSC or multinational banks and at least $0.5 billion we assume we'll get from there, so $1.2 billion. Remainder amount is a combination of, I guess subbrands which was paid in the first quarter in dividend. So, both for Q4, we are fully locked in and Q1 we are in advanced stages of closing all of those over next 2 weeks' time.
Sir, if I just go by the numbers what you indicated assuming OP at $750 million, brand fee at $300 million, PSU is $550 million, BARCAP at $150 million, it still leaves with a gap of nearly $750 million. So is this what you are saying is, that could be by way of dividends and or we pretty much okay, that the cash flows from India operations will be able to cover up for this post CapEx?
Well, I think those are the ones which were already in the pipeline [ out of this ] and even the numbers can go hard. But with the combination of [ $750 million ], $0.5 billion and the brand fee, we'll be covering almost $1.7 billion or so. And that is a small number and even that we can cover. Any additional payment of dividend always an option in Q1.
Sure. And sir, I just wanted to understand we were striving for GR to RE, which I think the court has actually put a spanner. How does your thinking change basically when we are looking at cash flows for the next year, specifically, given that is again upwards of $2.5 billion plus of maturity for Vedanta Resources? So, I'm just trying to understand your thought process when it comes to matching the cash flows, cash flow requirement at the parent?
So, the whole the proposal as you remember, we spoke in last also couple of investors call. The whole movement from GR to RE was futuristic, knowing that the whole GR concept is basically passed under new companies act, including I would think in very contemporary technical accounting, and the companies are doing it even to manage things for the future. Amount that we paid in the last fiscal, including the today's amount is from the current reserve and profitability. The hearing at NCLT has taken place and all the hearing by both the parties have been switched. Now the order is reserved and we are expecting the order to come over next 4 to 6 weeks' time. What we are looking right now is to get entry from the bankers and we have significant portion, more than 50% bankers have given NOC. So, we expect that the whole GR to RE closures will be happening within the fourth quarter.
And we are quite hopeful about it.
Sir, last question, sir, are there any covenants that one has to be mindful of? We understand Vedanta India balance sheet is pretty much okay, but when we look at the bond documents, we have in past taken leeway to actually basically soften out the covenants. Are there any hard covenants that one needs to be watchful, sir?
I think all the covenants even at Vedanta Resources are quite I think rating is standard. Nothing that I think we need to -- we need to worry about.
[Operator Instructions]. The next question is from the line of Indrajit Agarwal from CLSA.
Two questions from my side, both again on the transaction. First, what would be the tax incidence of this inflow that we will get about $2.98 billion? So, what is the kind of cost on the books that we have? And if there is any tax incidents on this?
So, again, Indrajit, in terms of taxation, one should look at in fact 2 aspects. One is the international one, and the entire transaction from the international tax viewpoint is a fully taxed agnostic. So, the $2.98 billion, one would receive the full consideration, there is no tax implication. Secondly, from the Indian tax perspective, I think that's where we are still evaluating certain tax optimization ideas.
So even if we upstream this as dividend, will there be a tax incidents thing or that is still under consideration?
That we are still working on, Indrajit.
My second question is on the first trans payment of $2.5 billion or $2.4 billion. So, what are the milestones or approvals that we are awaiting post which we will see that this amount will be upstream to us? What kind of numbers are we looking at or what kind of milestone we have?
So, in terms of approvals, this is an RPT as we move and that too also material RPT which is crossing the INR1,000 crores. So in terms of approvals, it is the Audit Committee of both the companies, Zinc and Vedanta Limited, which is done. Board of both the companies also has cleared the transaction. And the third step of course is sending a postal ballot and getting the approval by the shareholders. There we need the majority of the minority. The entire process both from the Zinc side and from the Vedanta side will be finished over next 6 weeks' time. So, early March it will be finished. Thereafter, the $2.4 billion same consideration leaving that deferred consideration can finish pretty quickly over next 1 month time.
So, we don't want to wait for...
We don't have to wait for?
Any government approvals either in India or overseas?
No, it's a Board matter. So, the Board has already approved this and post that, we have to get the shareholder approval as explained by Ajay.
The next question is from the line of Rahul Jain from Systematix.
Sir, I had a couple of questions. Firstly on, can you give some update on the expansion of alumina and aluminum at Lanjigarh and what is the status over there? When can we see additional output coming from that?
So, the erection work is in full swing. So, the expansion is on 2 part. One is 1.5 million tonne train 1, 1.5 million tonne train 2. So, as we speak, the train 1 chemical completion is getting over and by this quarter-end or the early quarter, next quarter the plant will be fired and we are hopeful that in the next 1 to 2 quarter it should ramp-up to the full volume. That is train 1. And the second train, I think by the mid of the next year, mechanical completion will be over and then thereafter it will take 1 quarter, 1.5 quarter to fully ramp-up. So, by the end of the next year our exit, the total alumina refinery up to a capacity of 3 million tonne could be up and running.
And then sir on the sale of the transaction, whatever [Technical Difficulty].
Rahul Jain from Systematix, please repeat your question, sir.
I was asking that whatever dividend payment we will get from the sale of the conclusion of the transaction, whatever money we will get, will be paid out as dividend?
I covered this early in the call, so I think, in terms of this entire money, $2.4 billion plus $0.5 billion. In terms of its addition will be guided by Company's policy and allocation of capital and it can be used for funding our CapEx, both growth and sustaining. At the same time, payment of dividend and deleveraging for VEDL and VRL. But substantial portion we intend to use for deleveraging at a Group level.
[Operator Instructions] The next question is from the line of Ritesh Shah from Investec.
Duggal sir, question for you. Sir, how should we look at incremental capital allocation? I think we have been awaiting clarity, specifically on the semiconductor foray. If you can provide some color over there? I think secondly after Athena, we have gobbled another asset Meenakshi at pretty attractive valuations. So, I was just trying to get a sense on incrementally on capital allocation and how are we marring this decision specifically with the ESG target that we have already stated?
You are asking about the semiconductor business?
Yes, sir.
So, semiconductor business as of now is not under ambit of Vedanta, so if any call will be taken, so we'll discuss this question at that point of time.
Sir, if I may, just if one had -- if hypothetically it goes at the parent or at Vedanta India listed entity, how should we look at the financials or if you can -- if it's possible, if you can indicate what is the quantum of CapEx which is required? I assume that the JVs at Foxconn 50-50 and there might be 30-70. So, the effective outgo might be a bit low. Can you give us some comfort with some numbers over here? So, basically we can take -- we can understand it better.
So, Ritesh, you have to appreciate that once this transaction is not approved, I am not supposed to discuss this numbers also at this point of time, but you can do your math. Some of the numbers you are doing in your mind is also right, but it would not require much of a CapEx with the participation of Foxconn and the government subsidy, you understand, and there is a state subsidiary also over 50% subsidy from the center. Beyond this, it will not be possible for me to comment.
No problem. And sir, on power and secondly basically Hindustan Zinc, incremental basically OFS if at all. So, after Athena we had Meenakshi, anything on that side? Specifically, we have steep targets even on ESG?
See, as far as ESG is concerned, we made the 10 commandments declaration to market that what are we going to do. Now one of that was that 25% of our operations will be decarbonized by 2030. And there are various approvals, projects, initiatives, various entities are taking. And the plan is that we put 4 gigawatt of the capacity in the pipeline this quarter itself. So, even when we take the PLF of 4 gigawatt, it will reduce the carbon footprint by 15% from our current level. So, against our overall declaration of 25%, we are able to decarbonize 15% in the next 2 years' time. I think we should pat ourselves on the back, number 1.Number 2, as far as Athena and Meenakshi is concerned, see the -- the power demand in country, you must have seen last year has gone up by 8% to 10% and the way the GDP growth is projected and the way the standard of living of the people is going up, I feel that the power growth -- the power demand growth is going to be 8% to 10% in the next few years' time. So, these are idle assets. It is in the best interest of the nation that the idle assets should be slipped into operation. So, from that point of view, our footprints are not increasing from our operations. But this is an initiative I think which is in the best interest of the society and the country and that is why we think that what we are doing is the right thing to do.
And sir, on the Hindustan Zinc or if is any update on the status?
You want to share some Hindustan Zinc, Arun, you -- you are a party to road show, if you can comment on that?
So, we have -- so, thank you for the question. We have conducted a road show extensively spanning many countries along with Government of India. And there are very positive feedback from the potential buyers. So, which I think government is working out in what form, how many tranches they would do. And let's wait for that.
[Operator Instructions]. We'll take the next question from the line of Alok Deora from Motilal Oswal.
Sir, just a question on Aluminum growth outlook on the volume side, if you could just highlight how is the demand scenario looking and what kind of volume growth we could look at on the Aluminum side?
While the world is very excited about the green metal and the demand is going to grow, but Rahul, over to you for the detailed information from your side.
I think Aluminum is a strategic metal and we know that this calendar year CY '22, primary demand was [ 17 million ] and we see that there's going to be a CAGR of 4% to 5% as a growth which is likely to happen. And if I talk about India per se, India demand actually see that on the backdrop of 17% Y-o-Y growth has been seen in the last 9 months and we see that the demand for the country, especially for India last year was 3.9 million and this year it's going to touch 4.5 million. So, we can see that there is a very strong demand, especially, India is -- demand has been increase in Electrical and Power sector. And other sector also, China is coming back and we see that China is also growing 4.4% year-on-year growth. So, overall demand is quite robust and is strong and that's what I think as -- on the same line, we are also looking to expand our capacity from 2.3 million to 2.8 million, then we're taking up to 3 million.
And also, sir, on realization, how do you see the realization moving now going forward? Because the prices started to go up. So, just your thoughts on that from a near-to-medium term perspective?
Go ahead, Rahul.
Again, the price point of view, I can only say that key indicator which breads the growth and I have said few, but important is that I think China removal of COVID-related restriction, that's one. Second is, India which I have already spoken. Third is that U.S. inflation dropped by 6.5% in December from vis-a-vis 7.1% in November. US dollar index also dropped from 115 to 102. And other side if I see that the kind of production cut, which is 2.5 million in China and 1 million in Europe and there is also, if you see the inventory level which is I think the lowest since 2002 is 1.4 million. All the indicators, you'll see that, that is a very strong indicator to have the better level from the current which was may be has gone to [ 2,200 ] kind of a number on that part.
Just last question. So this you mentioned during the call that even the Iron ore after this export ban removal is just the exports are picking up. So has it normalized now or it will take -- still take 1 quarter?
No, the export last quarter we see when the ban was removed and we took a conscious call of slowing down the domestic sale, because there were -- there is a increase of EBITDA by around $8 to $10 per tonne. So, as we speak, we have been able to move some shipments already and I assume that will be -- from the current month it will be the dispatch and this sure will come up to the normal level. So, that means around 0.6 million tonnes this month itself, it will take. So that is what the story is. Although we still have some inventory at the end of this month, which we'll be able to capitalize in the current quarter.
The next question is from the line of Suman Kumar from Antique Stock Broking Limited.
I had a small question, so could you please elaborate on the amount of consume rates specifically we had in this quarter, and if at all some portion we have that can come in, in Q4?
So, the hedging gain in the third quarter is almost INR475 crore. And if you look at maybe for the first 9 months, it is in fact almost touching INR3,000 crore, the number exactly is at INR2,945 crore. So, almost INR3,000 crores for the full 9 months, and the INR475 for third quarter. The quantum of hedge impact is a tad low for the fourth quarter and we also can evaluate taking further hedging, specifically in the Aluminum side. But right now, if you look at the mark-to-market for the quantity hedged, the gain is almost still about $50 million-odd for the fourth quarter. So, the answer to your question is specifically the INR475 crores for third quarter.
Ladies and gentlemen, that was the last question for today. I would now like to hand the conference over to Mr. Sandep Agrawal for closing comments. Thank you, and over to you, sir.
Thank you. Thanks everyone.
Thank you. Ladies and gentlemen, on behalf of Vedanta Limited, that concludes this conference call. Thank you for joining us, and you may now disconnect your lines.