INVESTMENT CASE

Built to deliver sustainable value

Natural resources represent an important growth engine for the Indian economy, which is poised to grow attractively in the foreseeable future. As India’s only diversified natural resources company, we are well placed to make a significant contribution to the nation’s growth. Our investment strategy is focused on delivering sustainable, long-term returns to our shareholders and creating value for our wider stakeholder fraternity.

Large, low-cost, long-life and diversified asset base with an attractive commodity mix

While commodity markets suffered during the first half of 2020 due to COVID-19, with the base metals sector experiencing reduced demand from manufacturing, and oil price suffering from severe demand weakness owing to travel restrictions and prolonged factory shutdowns, the second half of the year saw recovery, particularly in Vedanta’s core commodities (zinc, aluminium and oil & gas). In 2021, various efforts to stimulate economic growth by governments, central banks and international institutions, together with faster vaccine rollout are likely to strengthen the recovery in these commodity markets.

DEMAND 2020-2030 CAGR (%)

  • India Demand
  • Global Demand
  • Vedanta Limited Comodity Presence

Source: Wood Mackenzie

Note: Oil demand CAGR show for 2018-2030 period

Ideally positioned to capitalise on India’s growth and natural resources potential

  • India’s (US$2.7 trillion economy) per capita metal consumption is significantly lower than the global average, indicating significant headroom for growth.
  • The government’s continued focus on infrastructure, urbanisation, and affordable housing (supported by low interest rates regime driven by the RBI’s accommodative monetary policy) will help the economy recover faster from the COVID-induced shock and generate strong demand for natural resources.

VEDANTA’S COMPETITIVE ADVANTAGE IN INDIA

  • A diversified portfolio of established operations in India.
  • A strong market position as India’s largest base metals producer and largest private sector oil producer.
  • An operating team with an extensive track record of successful project execution

Source : Wood Mackenzie, IMF, IHS Markit, BMI, BP Energy outlook 2020

Note : All commodities demand correspond to primary demand; figures are for 2021

Source : Wood Mackenzie, IMF, IHS Markit, BMI, BP Energy outlook 2020

Note : All commodities demand correspond to primary demand; figures are for 2021

India’s mineral reserves ranking globally

8th
Zinc

Reserves: 10.0 mn tonnes

Crude oil

Reserves: 4.4bn bbl

7th
Iron ore

Reserves: 5.5 bn tonnes

8th
Bauxite

Reserves: 660 mn tonnes

Source: USGS Mineral Commodity Summaries 2021, OPEC Annual Statistical Bulletin 2020.

Well-invested assets driving free cash flow growth

  • Completed a significant proportion of our medium-term capital expenditure programme; and we are now ramping up production to take advantage of our expanded capacity
  • Seeing positive outcomes of our investments, with Zinc India and aluminium delivering robust production in the past year; and we expect Zinc International, particularly the Gamsberg project, to provide further impetus to our Zinc business, going forward
  • In the Oil & Gas business, we have begun to implement our growth projects with a gross capex of US$3.2+ billion, enabling us to grow our volumes in the near term. These increases in production are leading to a strong cashflow generation

GROWTH CAPEX (`cr.)

FY20212,578
FY20206,385
FY20197,764

Operational excellence and technology driving efficiency and sustainability

  • Eliminating inefficiencies across every aspect of operations
  • Leveraging advanced technologies to roll out a wide range of innovation
  • Rationalising the cost structure to build a leaner operating model
  • Ensuring sustainable operations and delivering a positive result for all our stakeholders and society

FCF POST CAPEX (`cr.)

FY202113,821
FY20207,130
FY201911,553

Strong financial profile

Our operating performance, coupled with optimisation of capital allocation, has helped strengthen our financials.
  • Revenues of ₹86,863 crore and EBITDA of ₹27,341 crore
  • Deleveraging and extending our debt maturities through proactive liability management exercises
  • Strong and robust FCF of ₹13,821 crore
  • Cash and liquid investments of ₹32,614 crore
  • A strong balance sheet, with respect to Net Debt/ EBITDA (0.9x) and gearing, compared to our global diversified peers
  • Interim dividend of ~₹3,500 crore paid in FY2021

RETURN ON CAPITAL EMPLOYED (%)

FY202119
FY202011
FY201913

Committed to the highest standards of ESG

  • Committed to be the lowest cost producer in a sustainable manner
  • Strong ROCE of ~19 %
  • Aligned to our Group objective of ‘Zero Harm, Zero Waste and Zero Discharge’, we worked dedicatedly to set up a framework, aligned to global best practices
  • Focusing on key material areas of occupational health, safety, environment, carbon, social performance and governance
  • Key future programmes comprise the following: achieve highest safety level, manage zero net environmental damage, support global carbon neutrality targets and work with all stakeholders in harmony
We have made significant improvements in our investigation quality to avoid repeat accidents and promote higher reporting for all incidents. We are also duly progressing towards achieving our water and waste targets set for the year.

LTIFR

FY20210.55
FY20200.66
FY20190.46

WATER CONSUMED & RECYCLED (mil m3)