The year 2014 marked the emergence of new leadership at the helm, both at Vedanta and in India. While India elected its government with a strong majority mandate, Vedanta appointed Tom Albanese to take charge as its CEO. The company’s zinc operations in Rajasthan gained further gusto with the development of India’s first non-coal underground mine in Rampura Agucha. More importantly, the company successfully achieved its water and energy saving targets over the year.
Says Anil Agarwal, Chairman, Vedanta Group, “As India consolidates its lead as the fastest growing major economy in the world, its drive towards providing better roads, improved public services, and a better life to all Indians will gain further motivation. Vedanta is privileged to be a part of this exciting phase in India’s journey and is committed to contributing to this trend. Our single-minded focus on growth through optimising operations at Tier-1, low cost assets, is now well positioned to leverage the positive outlook post the trend reversal. As an enterprise, we are dedicated towards our efforts on social good, and I have committed 75 per cent of wealth for community development.”
In 2015, the company changed its name to Vedanta from Sesa Sterlite and gained a reinvigorated brand identity. The new logo evoked the company’s priority towards environmental sustainability.
The next year was a test of resilience. As the volatile commodities environment posed a steep challenge to the natural resources sector, Vedanta continued to march on with the resumption of iron ore operations in Goa. The entire 9,000 MW portfolio of Vedanta’s power business became operational in 2016. The company then took a step further by proposing a merger with Cairn India, to create a truly diversified natural resources company. The proposed merger has been approved by the shareholders of both the companies.
In the third quarter of FY16-17, Vedanta generated healthy free cash flow of Rs 1,800 crore; the company has access to diversified sources of funding. De-levering its balance sheet is one of its strategic priorities. Reduction of gross debt, capex and opex optimisation, and continued discipline around working capital are some of the measures the company employs to maintain a sound financial health.
Over several quarters, the company has made progress in logistics, techno commercial, supply chain and supplier optimisation verticals. According to Agarwal, “Several measures have been put in place to upscale our commercial talent and strengthen the program framework to make savings generation a continuous process.”
Meanwhile, the company has also diversified into new businesses that would enrich its existing portfolio. The 2.3 MTPA ramp up of its aluminium smelters in Odisha is on track. It is already the largest aluminium producer in India, with 44 per cent of the total installed capacity. It was the first company to restart iron ore mining in Goa (August 2015) after a three-year long state-wide mining ban.
Recently, the company announced construction of a 1 MTPA steel plant in the resource-rich state of Jharkhand. It now also has a gold mine in Chhattisgarh that it won during the latter half of 2016.
Despite all challenges, involving environmental or social issues, the company is determined to diversify and invest in its assets. The inherent resilient quality of Vedanta — emerging from its unique business model, free cash flows, continuous focus on de-levering and group simplification — would hold it in good stead in times of crisis.
BW Reporters
The author is associate editor at BW Businessworld
