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An
Assignment
On
The company-Vedanta
Submitted to
Prof.v skhekar
Submitted by
Group 5
Vijay Singh
Priyanka Raghunandan
Thriveen VC
Khoma
Adril Almeida
Sumeet Rungta
Date of submission-10/11/2009
http://images.google.co.in/imgres?imgurl=http://www.hzlindia.com/common/pdf/mediakit/vedanta_logo.jpg&imgrefurl=http://www.hzlindia.com/media_kit.aspx&usg=__ohCsi0GDrHC6WiwdtzFzurWa1zo=&h=603&w=2362&sz=230&hl=en&start=6&tbnid=R3ezLuZYwgPRAM:&tbnh=38&tbnw=150&prev=/images?q=vedanta+logo&gbv=2&hl=en&sa=G8/14/2019 Vedanta Report
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Table of ContentsIntroduction ...................................................................................................................................... 4
Portfolio of product and services ....................................................................................................... 5
Copper .......................................................................................................................................... 5
Zinc ............................................................................................................................................... 6
Aluminium ..................................................................................................................................... 7
Iron ore ......................................................................................................................................... 9
Commercial power generation business ........................................................................................ 9
People and process strength ........................................................................................................... 10
People ......................................................................................................................................... 10
Recruitments ........................................................................................................................... 10
Growth and Development........................................................................................................ 10
Labour rights ........................................................................................................................... 10
Vedanta Bal Chetna Anganwadi Project ................................................................................... 11
Safety ...................................................................................................................................... 11
Pricing, Distribution & Advertising10
Process ........................................................................................................................................ 11
Energy ..................................................................................................................................... 11
Climate change ........................................................................................................................ 11
Raw material consumption ...................................................................................................... 12
Water management ................................................................................................................. 12
Waste management ................................................................................................................ 12
Biodiversity .............................................................................................................................. 12
Competitive strength ....................................................................................................................... 13
Sustainability ................................................................................................................................... 15
Nurturing People ..................................................................................................................... 15
Empowering Communities ....................................................................................................... 15
Health and Safety .................................................................................................................... 15
Environmental Stewardship ..................................................................................................... 15
Core competency ............................................................................................................................ 15
Strategy ........................................................................................................................................... 16
Integral to the business philosophy .......................................................................................... 16
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Conservation of natural resources ........................................................................................... 16
The local communities ............................................................................................................. 16
The people............................................................................................................................... 17
Health and safety ..................................................................................................................... 17
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Introduction
Vedanta Resources is a London-based FTSE 100 metals and mining group, diversified in
operations and inclusive in scope. Currently operate in India, Zambia and Australia, with
extensive interests in aluminium, copper, zinc and lead. Employ over 29,000 people in the
various locations. In December 2003, became the first Indian company to be listed on theLondon Stock Exchange.
Vision: achieving and sustaining a global leadership position in non-ferrous metals.
The mission is to become a million-ton per annum producer at the lowest decile costs in
aluminium, copper and zinc. In so doing, will put India on the global metals and mining map.
Vedanta has undertaken several Greenfield and Brownfield expansion projects in a number of
locations in order to achieve this goal. The capital expansions completed in the first phase
involved fairly complex project technologies, and an investment of $2.2 billion. It hascompleted these expansions in record time, at costs significantly lower than international
benchmarks, and now, the next phase of the expansion pipeline is currently underway.
They believe that 'India is a fast-emerging and attractive resource destination, and they
believe the strategy and business objectives will harness India's high-quality wealth of
mineral resources at low costs of development, positioning it as a leader on the global metals
and mining map.' Chairman, Anil Agarwal
For thirty years, they have continually demonstrated ability to deliver major value-creating
projects, offering unparalleled growth at lowest costs and generating superior financial
returns for the shareholders. At the same time, they continue to ensure that expansion projects
meet high conservative financial norms and do not place an unwarranted burden on the
balance sheet and financial resources.
They develop and manage a diverse portfolio of mining and metals businesses to provide
attractive returns to the shareholders, whilst always carrying out activities in a socially and
environmentally responsible manner, creating value for the communities where they operate.
As one of the largest metals and mining groups in India, they remain continually committed
to managing the business in a socially responsible manner. The management of environment,employees, health and safety and community issues, in respect of the operations is central to
the success of the business.
The majority of operations are certified to the International Management Systems Standard
ISO 14001. They have also won numerous awards for safety and environment: won the 2005
Recognition of Commitment Award from the Institute of Internal Auditors, USA, for the
demonstrated strengths and continued focus on achieving operational efficiencies and process
improvements. Vedanta is the only manufacturing company out of a total of four Indian
companies to have ever received this award; the other recipients from India are in the
technology and banking sectors.
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Portfolio of product and services
Copper
The copper business is comprised of operations in India, Zambia and Australia.
The Indian copper business is principally one of custom smelting and is operated by Sterlite,
while the Zambian copper business is owned and operated by KCM. They own 59.9% of the
share capital of Sterlite and 79.4% of the share capital of KCM. Sterlite was Indias largest
metals and mining company based on net sales in fiscal 2008. In addition, they own the Mt.
Lyell copper mine in Tasmania, Australia, which provides a small percentage of Sterlites
copper concentrate requirements.
The Zambian operations are comprised of four mines, one at Konkola, two at Nchanga and
one at Nampundthey, a tailings leach plant at Nchanga and a smelter at Nkana. The copper
cathode production increased from 436,827 tonnes in fiscal 2006 to 489,782 tonnes in fiscal
2008, representing a CAGR of 5.9%. The production increases, together with higher copper
market prices, drove revenue of the copper business from $2,241.3 million in fiscal 2006 to
$4,221.9 million in fiscal 2008, representing a CAGR of 37.2%.
KCM is also installing a new smelter at Nchanga, which is scheduled for commissioning in
mid-2008. The smelter, with a total capital outlay of approximately $372 million, is expected
to have a capacity to produce 300,000 tpa of copper anode and 1,850 tonnes per day of
sulphuric acid. Feed concentrates are expected to be primarily from KCMs own mines.
KCM also announced the Konkola Deeps Mining Project or KDMP, approved KCMs board
of directors in July 2005. KDMP will unlock the potential of the 215mt Konkola ore body.
Mid-shaft loading is expected in early 2009 with full commissioning in late 2010. Post
completion of KDMP, ore production from the Konkola mine will increase from 2.0 mtpa to
7.5 mtpa. The estimated project cost is $674 million. Work on the KDMP, including the
sinking of the main hoisting shaft and other auxiliary shafts, is progressing on schedule.
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Zinc
The fully integrated zinc business is owned and operated by HZL, Indias leading zinc
producer with a 79.7% market share by volume of the Indian zinc market in fiscal 2008,
according to the Indian Lead Zinc Development Association. HZL was the worlds fifth
largest zinc mining company in 2007 based on mine production and is also one of the top tenlead mining companies by production volume worldwide, according to Brook Hunt. Sterlite
owns 64.9% of the share capital of HZL.
HZLs operations include three lead-zinc mines, three hydrometallurgical zinc smelters, one
lead smelter and one lead-zinc smelter in Northwest India and one hydrometallurgical zinc
smelter in Southeast India. HZLs zinc production increased from 283,698 tonnes in fiscal
2006 to 426,323 tonnes in fiscal 2008, representing a CAGR of 22.6%. The production
increases, together with higher zinc market prices, drove revenue of the zinc business from$875.5 million in fiscal 2006 to $1,941.5 million in fiscal 2008, representing a CAGR of
48.9%.
HZL has recently announced expansion projects that will take its total integrated zinc-lead
capacity to 1,065,000 tonnes per annum with fully integrated mining and captive power
generation capacities, thereby making it the worlds largest integrated zinc-lead producer by
2010. HZL will continue to maintain its superior cost leadership position among the zinc
producers in the world. Two brownfield smelter projects, which will increase the production
capacities of zinc and lead by 210,000 kt and 100,000 kt respectively, will be undertaken atRajpura Dariba in Rajasthan, India.
HZL expects to increase its silver production from the current levels of approximately 100-
120 tonnes per year to a level of approximately 500 tonnes per year in the form of silver and
silver bearing residue. A large part of this increase would be from the Sindesar Khurd mine
where silver occurrences are approximately at levels of 200 ppm and from the use of
appropriate technology in the new smelters.
The expansion is supported by HZLs strong reserves and resources of 232.3 million tonnes
containing 27.5 million tonnes of zinc-lead metal at 31 March 2008. The reserves andresources position have been earlier independently reviewed and certified as per the JORC
standard.
To support the increased smelting capacities, HZL will expand its ore production capacity at
the Rampura Agucha mine from 5 mtpa to 6 mtpa. Further, ore production at the Sindesar
Khurd mine, the new star in HZLs mining portfolio, will be increased from 0.3 mtpa to 1.5
mtpa. HZL will also start mining activity at the Kayar mine which will have a production
capacity of 0.3 mtpa.
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expected make us Asias largest and among the top 5 integrated producers of aluminium
worldwide.
India is positioned to become one of the worlds largest producers of aluminium, with the
6th largest reserves of bauxite globally of c2.3 billion tonnes and the 4th largest reserves of
coal worldwide of over 250 billion tonnes. Of these reserves, over 1.4 billion tonnes of
bauxite and 62 billion tonnes of coal reserves are co-located in the State of Orissa alone.
Vedantas existing presence in the region, together with its excellent track record of
executing projects ahead of time and at low capital costs, make it ideally placed to lead the
development of these abundant bauxite and coal reserves.
India also has the benefit of a fast growing domestic market with close proximity to the high
growth markets of Asia and the Middle East. Demand for aluminium globally is projected to
grow strongly at a compound rate of 5.7% between 2007 and 2020, with India and China
projected to grow at 8.2% and 9.7%, respectively in the same period.
The next phase of brownfield growth projects comprises a 1,250 kt aluminium smelter
project in Jharsuguda, Orissa (the Jharsuguda II Project), as well as a 325 kt aluminium
smelter project together with an associated 1,200 MW captive thermal power plant in Korba,
Chattisgarh (the Korba III Project). Correspondingly, they will also increase the alumina
production capacity at Lanjigarh from 1.4 mtpa to 5 mtpa.
The Jharsuguda II Project will comprise four pot lines, each containing 336 cells. The first
three pot lines with a total capacity of 937.5kt are scheduled to produce first metal by March
2010 and will be fully commissioned by September 2011. The fourth pot line with a capacity
of 312.5kt will be fully commissioned by September 2012. The associated captive thermal
power plant will comprise three units of 660 MW each. The commissioning of the power
plant units is being scheduled to meet the power requirement of the new Jharsuguda smelter.
The Korba III Project will comprise one single pot line containing 336 cells and is expected
to produce first metal by October 2010. It will be fully commissioned by September 2011.
The associated captive thermal power plant will comprise four units of 300 MW each. The
commissioning of the power plant units is being scheduled to meet the power requirement of
the new Korba smelter.
The increase in alumina production capacity will be achieved by debottlenecking the capacity
of the existing 1.4mtpa alumina refinery by an additional 0.6 mtpa by March 2010 and
building three new production streams of 1 mtpa each. The first stream of 1 mtpa is
scheduled for commissioning by mid 2010 and all three streams are expected to be completed
by mid 2011.
The experienced in-house project management teams that implemented the earlier 245 kt
brownfield aluminium smelter project at Korba, the 1.4 mtpa Lanjigarh alumina refinery, and
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the 500 kt greenfield aluminium smelter project at Jharsuguda (one year ahead of schedule),
will manage these projects.
The estimated investment in the aluminium smelter projects is $5.65 billion for the
Jharsuguda II Project and $2.0 billion for the Korba III Project, to be phased over four years.
The total additional investment in Lanjigarh is estimated at $2.15 billion and is expected to be
phased over three years. This investment includes the cost of building the aluminium
smelters and the alumina refinery, the associated power facilities and all necessary
infrastructure including railway networks and water pipelines. The investment will be funded
through a combination of existing cash, internal cash accruals and external financing.
Iron ore
The iron ore business is owned and operated by Sesa Goa, Indias largest producer-exporterof iron ore in the private sector by volume in fiscal 2007, according to the Federation of
Indian Mineral Industries. In April 2007, they acquired a 51% ownership in Sesa Goa, which
owns 88.3% of the share capital of SIL. Sesa Goa is engaged in the exploration, mining and
processing of iron ore. Sesa Goa owns or has the rights to proved and probable reserves
which consist of an estimated 180.5 million tonnes of iron ore at an average grade of 61.1%.
In fiscal 2008, Sesa Goa produced approximately 12.4 million tonnes of iron ore fines and
lumps, of which 11.5 million tonnes were produced after the acquisition of Sesa Goa in April
2007. Sesa Goas mining operations are carried out in the Indian States of Goa, Karnataka
and Orissa. In addition, Sesa Goa manufactures pig iron and metallurgical coke. Revenue of
the iron ore business for the post-acquisition period of eleven months ended 31 March 2008
was $888.9 million.
Commercial power generation business
They are developing a commercial power generation business in India that leverages theexperience in building and managing captive power plants that support the primary
businesses. As of 31 March 2008, the total power generation capacity of the ten captive
power plants and wind power plants was 1,383 MW, including four thermal coal-based
captive power plants with a total power generation capacity of 849 MW that they built within
the last four years.
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Pricing, Distribution & Advertising:
1. Pricing: From Global Metals Price Index2. Distribution: Iron ore is exported
Zinc, Aluminium & Copper have both global and Indian buyers
All this is done by CFAs(carrying and forwarding agents)
3. Advertising: Almost no advertising
Reason: Commodity market and brand value of Vedanta
People and process strength
People
Recruitments
Vedantas operations have grown several folds over the last few years and so has its demand
for high quality human resources for its operations and up coming projects. Every individualwho joins the organisation has the right to grow is the fundamental principle that drives the
Talent Engagement Process at Vedanta. They believe in inducting large number of freshers
from campus and provide them with accelerated global career opportunities. They hire
science graduates, engineers, qualified finance professionals and other functionally qualified
professionals directly from reputed campuses. They have also initiated special recruitment
drive of Ex-Servicemen from Defence Forces for various roles in security, administration and
core and strategic support roles.
Growth and Development
The Group has a unique and well demonstrated track record of providing career opportunitiesfrom within. Hiring predominantly freshers and grooming them to take leadership roles.
Employees with a performance track record and high potential are identified through a well
structured and transparent development process and are given accelerated growth with
specialized technical and general management training, periodic job rotations and leadership
guidance.
Labour rights
At Vedanta, they ensure that all our businesses are in compliance with all labour regulations
of the land and they strive to uphold all labour rights. They proactively and frequently meet
with representatives of labour unions at all sites to deliberate on employee concerns and
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evolve pragmatic solutions that are progressive in nature for long term well being of both
employees and all stake holders associated with the group.
Vedanta Bal Chetna Anganwadi Project
The project being conducted in partnership with the State Governments Integrated Child
Development Services program and the Vedanta Foundation, in 937 centers, currently
reaches out to 30,347 children at BALCO, Korba, HZL and VAL, Lanjigarh
Safety
Safety continues to be a focus and a subject matter of continuous improvement. During the
year they deployed external consultant like E.I DuPont de Nemours and British Safety
Council, to help upgrade the safety performance. The Loss Time injury frequency Rate
(LTIFR) during the year continued to show an improving trend.
The LTIFR for 2008-09 at 1.67 translates to reduction of 13% over the previous year and
over 56% during the last three years.
They regret to inform that the total number of fatalities this year was 22, which is
unacceptable. These accidents have been thoroughly investigated and corrective measures put
in place. As a first step DuPont and British Safety Council were engaged to conduct a safety
assessment across all locations and their recommendations are in the process of being
implemented.
Process
Energy
Energy is one of the principal resources and the focus is on its conservation and efficient use.
They use energy in its different forms like coal, coke breeze, pet coke, fuel oil, LPG, diesel,
and electricity, besides energy from renewable sources like biomass, and through recovery of
waste heat. Specific energy consumption continued to show an improving trend during the
year. Against target reduction of 5%, the actual reductions for the year at Sesa, HZL and
Balco were 28%, 9% and 4% respectively.
On the Green energy front they have increased the installed capacity of the wind farms from
107 MW to 123.2MW. The same are operating at design levels.
Climate change
They utilize carbon intensive fuels, generate captive power for all the major operations and
also import electricity which contribute to direct and indirect carbon dioxide emissions. They
have strengthened the focus and are getting independent carbon foot-printing done. This year
HZLs Wind Power Plants, at Gujarat and Karnataka were registered as CDM projects by the
UNFCCC, with CER potential of 2, 23,164 per annum. About 58,000 CERs realised from the
earlier registered waste heat recovery projects were also sold during the year.
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Raw material consumption
They continue to manufacture metals by extraction of ore from the mines and then processing
the same in the smelting operations. This year the focus was on productivity and process
improvement, benefits of which will be reflected in the forthcoming quarters.
Water management
Similar to energy, water is another crucial resouece in the operations. They have put in
structured efforts to reduce fresh water consumption and increasing the recycle and reuse of
treated effluent. Across the operations, they have taken forward host of initiatives, notably
being reduction of specific water consumption at the zinc operations by 18%.
Waste management
They focus on a 4R waste strategy Reduce, Recycle, Reuse and Reclaim. They believe
that actions to reduce waste, either by encouraging material efficiency, reducing the
generation of waste, or enabling the recovery and reuse of discarded material is a criticalelement of sustainable development.
Biodiversity
They conduct an environmental impact assessment study for all the projects as well as the
expansion activities. They strive to take the utmost care to protect the biodiversity which may
be affected by or is adjacent to any of the operating locations.
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Competitive strength
They believe that they have the following competitive strengths:
A leading diversified and the largest non-ferrous metals and mining company in India
Vedanta is a leading diversified and the largest non-ferrous metals and mining company in
India based on revenue. They have substantial market share across the copper, zinc and
aluminium markets in India. They are Indias largest iron ore producer-exporter by volume in
the private sector. Specifically,
Sterlite is the leading custom copper smelter in India based on production volume in fiscal2008, and according to International Copper Promotion Council, India had a 42.6% primary
market share by sales volume in India in fiscal 2008; HZL is Indias only integrated zinc producer, had a 79.7% market share by volume in India
in fiscal 2008, according to ILZDA, and was the worlds fifth largest zinc mining company
in 2007 based on mine production and is one of the top ten lead mining companies by
production volumes worldwide, according to Brook Hunt;
Vedanta, through its subsidiaries BALCO and MALCO, is the second largest primaryproducer of aluminium in India with a 31.0% primary market share by volume in India in
fiscal 2008, according to AAI. BALCO was the fastest growing primary producer of
aluminium in India in fiscal 2007 based on quantity of aluminium produced as a result of
the ramp-up in production at its 245,000 tpa Korba aluminium smelter. BALCOs 245,000tpa Korba smelter was in the lowest cost quartile in terms of all aluminium smelters
operations worldwide in 2007, according to Brook Hunt; and
Sesa Goa was Indias largest producer-exporter of iron ore in the private sector by volumein fiscal 2007, according to the Federation of Indian Mineral Industries. Sesa Goa accounted
for approximately 10.5% of Indias total iron ore exports and 1.4% of the world trade in
iron ore in fiscal 2007, according to the Goa Mineral Ore Exporters Association. It has
operations in the States of Goa, Karnataka and Orissa and, being strategically located in
India, is well positioned to benefit from the continued growth of the Asian economies,
including China. The acquisition of Sesa Goa has further diversified the business andallowed us to participate in the strong growth in the iron ore sector.
High quality assets and resources making us a low-cost producer
They believe that the business has assets of global size and scale. The costs of production in
the Indian copper, zinc and aluminium businesses are competitive with those of leading
metals and mining companies in the world, which they believe is enabled by the high quality
assets, operational skills and experience and the integrated nature of the operations.
Specifically:
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Sterlites Tuticorin smelter was one of the top ten custom copper smelters worldwide in2007, according to Brook Hunt, and the largest in India by production volume in fiscal
2008. In 2007, Sterlites Tuticorin smelter was also in the lowest cost quartile in terms of all
copper smelting operations worldwide and its Tuticorin and Silvassa refineries had the
seventh and eighth lowest costs of production, respectively, of all copper refiningoperations worldwide, according to Brook Hunt. Brook Hunt projects that they will be the
worlds eighth largest refined copper producer on a production volume basis in 2008.
HZLs operations are fully integrated with its own mining and captive power generationcapacities. HZL was the worlds fifth largest zinc mining company in 2007 based on mine
production and is also one of the top ten lead mining companies by production volume
worldwide, according to Brook Hunt. HZLs largest zinc mine, Rampura Agucha, was
ranked third in the world in 2007 in terms of contained zinc deposits on a production basis
and the fourth largest on a reserve basis, according to Brook Hunt. HZL was in the lowest
cost quartile in terms of all zinc mining operations worldwide in 2007 and the fourth largest
producer of zinc worldwide and HZLs Chanderiya smelter was the third largest smelter on
a production basis worldwide in 2007, according to Brook Hunt. Brook Hunt projects that
HZL will be the worlds largest integrated zinc mining and smelting company on a
production volume basis in 2008.
The aluminium business operations are fully integrated with respect to their powerrequirements through their captive power plants. BALCOs 245,000 tpa Korba smelter was
in the lowest quartile in terms of all aluminium smelter operations in 2007, according to
Brook Hunt. BALCO recently received a coal block allocation of 211.0 million tonnes for
use in its captive power plants. In March 2007, Vedanta Aluminium began the progressive
commissioning of a 1.4 mtpa greenfield Lanjigarh alumina refinery project and an
associated 90 MW captive power plant. The Lanjigarh alumina refinery has started
production from a single stream operation and produced 267,000 tonnes of alumina in fiscal
2008.
They are seeking to further lower the costs across all of the operations. Factors
contributing to the success in lowering the costs of production include:
the focus on continually reducing manufacturing costs and seeking operational efficiencyimprovements;
the building and managing captive power plants to supply a substantial majority of thepower requirements of the operations; and
they access to relatively large and inexpensive labour and talent pools in India and Zambia.They view strict cost management and increases in productivity as fundamental aspects of the
day-to-day operations and continually seek to improve efficiency.
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They believe that holding substantial cash and current assets and maintaining low leverage
are important for providing sufficient liquidity and meeting the cash outflow requirements of
the capacity expansion projects.
SustainabilityDuring 2008, they continued they efforts to ingrain and deliver on Vedantas sustainability
strategy, managing and addressing non financial considerations, material and integral to the
business and important to the key stakeholders.
The sustainable development strategy the Vedanta Way is all encompassing. It comprises
of the following elements:
Nurturing People
People are the key assets. They are committed to build a flexible, flat and learning
organization with an engaged and high performing work force. They believe in nurturing and
mentoring leaders from within and providing opportunities for growth based on meritocracy,
performance and integrity
Empowering Communities
Communities are integral to the business. They are committed to enhancing the quality of life
of the communities near the operations and creating self sustaining communities. They work
to gain and nurture the social license to operate in the host communities
Health and Safety
They are committed to providing a safe, secure and healthy workplace for all employees by
using the best technology and practices
Environmental Stewardship
Respect for nature, enhanced resource conservation and use of environmental friendly
technology are embodied in the working
Core competency
Vedanta's core competency is in developing low cost, Indian aluminium smelting capacity
with captive, low cost power.
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Strategy
The strategic goal is to create a world-class metals and mining company and to generate
strong financial returns. The strategy is based on the following four key pillars:
Continuing focus on asset optimisation and reducing the cost of production.
Increasing they capacities through greenfield and brownfield projects.
Consolidating they corporate structure and increasing they direct ownership of the
underlying businesses to derive additional synergies as an integrated group.
Seeking further growth and acquisition opportunities where they can leverage they
transactional, project execution and operational skills and experience.
They core values of growth, entrepreneurship, excellence, trust and sustainability not only
encompass the business philosophy, but also underline the relationships with all the
stakeholders, shape the culture of the company and guide us in the actions and decisions.
Integral to the business philosophy
Sustainability is integral to the business philosophy. They see the key drivers of the approach
as being: proactive engagement with the stakeholders; attracting and retaining the best talent;the provision of a safe and healthy working environment; the focus on using environmentally
friendly technologies in all of the businesses and the drive to conserve natural restheces.
Conservation of natural resources
This is a fundamental aspect of everything they do. they have set ambitious targets at each of
the businesses to use less resources. The water and energy conservation performance has
been promising and has exceeded the targets in some instances. This area will continue to be
an area of focus in the coming years.
The local communities
They believe they have a responsibility to engage with the communities in which they
operate and to foster their social and economic development. These principles are embedded
across the organisation and are a key element of the employee training, development and
performance at all levels.
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The people
The people are the key asset and drive the overall performance. The vision is to build a
flexible, agile and flat organisation with world-class capabilities and a high-performance
culture. Respect for the individual, valuing diversity, fostering entrepreneurship, ensuring an
enabling environment and developing a can do attitude is a way of life at Vedanta.
Health and safety
vedanta is committed to achieving best practice in health and safety at all of the sites. The
systems are well established and are regularly reviewed and monitored taking into account
the own experiences and industry best practice. Knowledge-sharing around Vedantas
companies plays an important part in this process.
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Future plans of Vedanta:
They possess a strong portfolio of greenfield and brownfield projects that we intend to
pursue:
Copper segment: KCM is expanding its smelting and mining capacities. KCM isconstructing a new 300,000 tpa smelter at Nchanga, which they expect to commission in
mid-2008. KCM is developing the KDMP, which is expected to increase KCMs Konkola
mine copper ore output to 7.5 mtpa and be completed in 2010.
Zinc segment: In April 2008, HZL announced $900 million of expansion projects toincrease its total lead-zinc capacity to 1,065,000 tpa with fully integrated mining and
captive power generation capacities. These projects include:
o establishing two brownfield smelters which are expected to increase the productioncapacities of zinc and lead by approximately 210,000 tonnes and 100,000 tonnes,respectively, at Rajpura Dariba in the State of Rajasthan, both of which are expected to be
completed by mid-2010;
o expanding ore production capacity at the Rampura Agucha mine from approximately 5mtpa to 6 mtpa and at the Sindesar Khurd mine from approximately 0.3 mtpa to 1.5 mtpa.
HZL is expected to start mining activity at the Kayar mine, which is expected to have a
production capacity of approximately 0.3 mtpa. These projects are expected to be
completed by early 2012;
o setting up a captive power plant with a capacity of 160 MW at Rajpura Dariba, which isexpected to be completed by mid-2010; and
o increasing silver production from the current levels of approximately 100 to 120 tpa toapproximately 500 tpa, primarily from the Sindesar Khurd mine where silver occurs at
approximately 200 parts per million (ppm).
Aluminium segment: Vedanta Aluminium is building a greenfield 500,000 tpa aluminiumsmelter, together with an associated 1,215 MW captive power plant, in Jharsuguda in the
State of Orissa, in two phases of 250,000 tpa each. Commissioning of the first phase
commenced in May 2008, a year ahead of schedule, and will be progressively
commissioned during fiscal 2009. Work has commenced on the second phase and they
expect it to begin commissioning in 2010.
Power segment: They are executing the plan to enter the commercial power generation business with Sterlite Energys construction of a 2,400 MW thermal coal-based power
facility (comprising four units of 600 MW each) in Jharsuguda in the State of Orissa. The
project is expected to be progressively commissioned from December 2009. They have
obtained coal block allocations of 112.2 million tonnes from the Ministry of Coal to support
this facility. In addition, BALCO entered into a memorandum of understanding in October
2006 with the Government of Chhattisgarh, India and the CSEB to build a thermal coal-
based 1,200 MW power facility, along with an integrated coal mine, in the State of
Chhattisgarh.
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Ideally positioned to capitalise on Indias growth and resource potential
They believe that the experience operating and expanding the business in India will allow us
to capitalise on attractive growth opportunities arising from factors including:
Indias large mineral reserves. According to the IBM 2005, the total copper ore, lead-zincore, bauxite and iron ore resources of India are estimated at 1.4 billion tonnes, 0.6 billion
tonnes, 3.3 billion tonnes and 25.2 billion tonnes, respectively. According to the Geological
Survey of India 2008, the total coal resources of India are 264.5 billion tonnes as of 1 April
2008. According to CRISIL Research, Indias bauxite reserves are the fifth largest in the
world with total recoverable reserves estimated at 2,600 million tonnes, and according to
the Energy Information Administration, a statistical agency of the United States
government, India has the fourth largest coal reserves in the world as of 2007. In addition,according to Indian Steel Alliance, India has the sixth largest iron ore reserves in the world.
Indias economic growth and proximity to other growing economies. India is one of thefastest growing large economies in the world with a 9.6% increase in real GDP from fiscal
2006 to 2007 and a 9.0% increase in real GDP from fiscal 2007 to 2008, according to the
Central Statistical Organisation Ministry of Statistics and Programme Implementation. This
growth has been driven primarily by significant increases in industrial production and
investments in infrastructure. They believe that the focus on the metals and power segments
will allow us to directly benefit from this growth. In addition, India is strategically located
close to other growing economies in China, Southeast Asia and the Middle East. Indias large and inexpensive labour and talent pools. India has, compared to other
industrialised nations, low labour costs and a large and skilled labour pool, including many
well-educated professionals.
According to Brook Hunt, the demand for copper, zinc and aluminium in India is expected to
grow from 458,000 tonnes, 428,000 tonnes and 1.1 million tonnes in 2006 to 982,000 tonnes,
824,000 tonnes and 2.5 million tonnes in 2015, representing CAGR of 8.8%, 7.5% and 9.6%,
respectively. According to CRU, demand for iron ore in India is expected to grow from 71.2
million tonnes in 2007 to 129.0 million tonnes in 2012, representing a CAGR of 11.4%.
Entrepreneurial management team with outstanding track record
The senior management has significant experience in all aspects of the business and has
transformed Vedanta into a leading metals and mining company that is listed on the LSE and
included in the FTSE 100 Index. Mr. Anil Agarwal, the founder, remains involved in
overseeing the business as the Executive Chairman. The experienced and focused
management and dedicated project execution teams have a proven track record of:
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lowering the costs of production by commissioning captive power plants and growing the
businesses through capacity expansions, specifically:
increasing HZLs production from 172,140 tonnes of zinc ingots and 214,447 tonnes of zincmined metal content when they acquired HZL in 2002 to 218,862 tonnes of zinc ingots and
551,295 tonnes of zinc mined metal content in fiscal 2008, representing an increase of
27.1% and 157.1%, respectively, by increasing the production of HZLs original two
hydrometallurgical zinc smelters, one lead-zinc smelter and three lead-zinc mines; and
increasing the production of BALCOs original aluminium smelter from 89,164 tpa whenthey acquired management control of BALCO in 2001 to 109,279 tpa in fiscal 2008,representing an increase of 22.6%.
Ability and capacity to finance world-class projects through strong cash flow and
prudent financial policies
They have generated strong cash flows in recent years due to the substantial volume growth,robust commodity prices and the cost reduction measures as illustrated by the improved cash
flow from operating activities of $2,232.9 million in fiscal 2008 compared with $632.2
million in fiscal 2006. Moreover, they have a strong balance sheet which will enable us to
finance future expansion projects.