Vedanta Limited: Gung-ho On India
Vedanta Limited has received the necessary approvals for ramping up the capacity of its Lanjigarh alumina refinery in Odisha from one million tonne to six million tonnes at an investment of Rs 6,490 crore. The company, with interests in oil and gas, zinc, lead, silver, copper, iron ore, aluminium and commercial power, is an associate company of the UK-based diversified natural resources company, Vedanta Resources Plc.
The London-based multinational, of which Vedanta Limited is an Indian arm, has enterpriser Anil Agarwal at the helm as Chairman Emeritus. “Our focus on all-round improvement was complemented by improving markets; the strengthening of commodity prices evident in 2017 gained further momentum in 2018,” Agarwal said.
A Motilal Oswal analysis points out that “Vedanta has a portfolio of high-quality base metals and oil & gas assets”, of which zinc and oil prices had lost momentum during the year. Zinc and oil incidentally, make up a bulk of Vedanta’s business. “Zinc businesses should deliver strong volume growth on start of the Gamsberg mine in Africa and completion of expansion projects in India,” the report says, adding that the power business “remains stable, while aluminium, copper and iron ore segments are struggling”. Anil Agarwal sees the glass as half full. “These increased volumes and prices underpinned a 33 per cent increase in revenues to reach $15.4 billion, as well as a 27 per cent growth in EBITDA to $4.1 billion. We also delivered strong free cash flow of the company at $0.9 billion. These robust results are testament to the capability, commitment and expertise of all our employees,” he said. Agarwal sees the appointment of Srinivasan Venkatakrishnan as the new CEO, replacing Tom Albanese, “who stepped down after over three years with Vedanta” as the “biggest internal change in the group”. Srinivasan took charge in August 2018.
At the end of the 2017-18 financial year, Vedanta Limited’s revenues jumped 22 per cent to Rs 92,923 crore and its profit after tax was 10 per cent higher over the previous year at Rs 8,025 crore. The company’s EBITDA was 19 per cent higher over that of the previous year at Rs 25,470 crore. “India has an abundance of opportunities,” Agarwal said. “It is one of the fastest-growing G20 economies and by 2030 forecasts suggest, it will be worth $6 trillion with a population of over 1.5 billion.” The Vedanta Group chief pointed out that more than 80 per cent of India’s demand for oil and minerals is currently met from imports. The per capita consumption of metal in the country at around 70 per cent, is also way below the global average. “As the country’s sole diversified natural resource group, Vedanta is uniquely placed to help power India’s growth, and we are committed to investing in its future,” he said.
Vedanta Limited has a 64.9 per cent stake in Hindustan Zinc Limited (HZL) which was set up as a public sector enterprise and in which the Indian government now has a shareholding of 29.5 per cent. Hindustan Zinc has had a “record annual production” of refined zinc-lead at 960kt in the fiscal gone by. Vedanta Limited also had a “record annual production” of 17.9 million ounces of refined silver.
Vedanta had a setback when iron ore mining was banned in Goa, leading to a shutdown of its facilities. The cap on iron ore mining in Karnataka, however, increased from 2.3 million tonne to 4.5 million tonne. Vedanta’s copper production in India went up and it achieved a record annual aluminium production of 1.7million tonne. The company’s 1,980 MW Talwandi Sabo power plant achieved 93 per cent availability in Q4 FY 2018. The availability for the whole of FY 2018 was 74 per cent.
