The later part of the previous UPA regime was particularly bad for Vedanta as environmental clearances, or their denial, became a huge albatross for the global metals and mining giant. And then came the global economic slowdown that persists even now. Despite these setbacks, Vedanta, which is now headquartered in London, managed to sustain both growth and profitability. This is remarkable for a company that emerged almost out of nowhere in the late 1980s.
The company which has a presence across India, South Africa, Namibia, Australia and Ireland, generated a revenue of Rs 63,931 crore for the year ending FY2016. Revenues were at Rs 14,364 crore in Q1FY2017. Attributable net profit before exceptional items increased significantly from a loss of Rs 62 crore to a profit of Rs 615 crore sequentially mirroring an improved sentiment in commodities.
In Q2FY2017, revenue stood at Rs 15,666 crore, up 9 per cent sequentially. The company posted an attributable PAT of Rs 1,252 crore, up 104 per cent sequentially. With its strong operational performance, the firm reduced its net debt by Rs 2,259 crore over the quarter.
When asked about how government’s policies helped in their business growth, Tom Albanese, CEO, Vedanta Limited said, “The Coal Bill benefitted greatly the sectors of power, cement and metals by transparent auctions and allocation of resources. The HELP (Hydrocarbon Exploration Licensing Policy) initiative by the government is aimed at reducing oil imports and boost investment in the hydrocarbons sector. We have actively propagated for further policies aimed at opening up the sector. Advanced technology, processes and best in class governance will be some of the benefits that India’s oil sector will witness if the reforms continue.”
The company started this financial year with ramping up of aluminum, power and iron ore business. Vedanta has recently won a gold mine in Chhattisgarh; the Gamsberg mine in South Africa is getting ready to begin production. “First ore from Gamsberg is expected in mid-calendar year of 2018 and will ramp-up to full capacity of 250,000 tonnes in 9-12 months after that. We have put in some of the major orders already and we expect Gamsberg will come on stream in a deficit zinc concentrate and physical zinc market, and generate strong returns for shareholders,” added Albanese.
Vedanta is also reviewing opportunities to continue to grow its oil business, especially at Barmer. The outlook for oil and gas, includes in FY 2018 net capex is estimated at $100 million with optionality of additional $150 million for key projects. In iron ore, the company has achieved sales of over 40 per cent of allocated mining capacities in Q1 FY 2017. With current mining rate, it is engaging with respective state governments for allocation of higher volumes.
Also, the merger process of Vedanta-Cairn India progressed as expected, with shareholders of both the companies approving the merger. The company expects the remaining approvals to be in place by end of the financial year.
While talking about the new business initiative in India, Albanese stated, “India forms around 60 per cent of the company’s global operations — this is indicative of the absolutely critical position that India holds for us. Not just for the natural resources, but for businesses across sectors, India is one of the bright spots in the global economy. We are ready to invest in ramping up our smelter capacity in Odisha. In Jharsuguda, we are planning to build an aluminium park that will create an ecosystem for companies in the aluminium or allied sectors.”
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