Dear Stakeholders,

It’s refreshing to write to you at a time of rebound and cautious optimism, post the peak of the pandemic that plagued us for the past two years. At Vedanta, we are proud to have weathered the COVID-19 situation with prudence and empathy and are even more confident of taking on challenges and exceeding expectations.

I’m delighted to share that in FY2022, we achieved yet another best-ever year, with strong performance across all our businesses and strategic priorities. It’s noteworthy that we achieved this feat during the recovery period from COVID-19, and amid significant volatilities in the commodity space. We also continued to undertake value-accretive projects and improved our operational excellence and overall efficiency.

A new ESG purpose

This was the year in which we unveiled our renewed Environmental, Social and Governance (ESG) Purpose, ‘Transforming for Good’, built on the three pillars of ‘Transforming Communities’, ‘Transforming the Planet’ and ‘Transforming the Workplace’. These pillars are further indicative of Vedanta’s steadfast commitment to become best-in-its-class, while ensuring that the communities and the larger society also benefit from our existence. These pillars are supported by nine aims that will serve as guideposts and milestones in our journey, including our Net Zero Carbon Vision 2050. Going forward, this purpose will be the bedrock of our ESG strategy.

Safety, our fundamental priority

Across the organisation, we continue to instill safe work behaviours. However, it’s with extreme regret that I report 12 fatalities during the year. Such incidents indicate that our efforts towards safety requires continuous monitoring and upgradation. We are cognisant of this and have taken several novel steps to minimise incidents and improve overall safety performance, starting from the senior management. For example, at our respective businesses, CEOs are driving critical risks. We have also initiated the implementation of fatality learnings across businesses, led by CEOs, together with increased leadership time on field through Visible Felt Leadership (VFL) and personal safety programmes. Further, we have onboarded DuPont Sustainability Solutions for the implementation of Critical Risk Management.

Record growth and margins

Overall, in FY2022, we continued to improve our performance each quarter and closed the year with record performance in most of our businesses. Strong volumes, supported by a buoyant pricing scenario, primarily determined our performance during the year. Even as input costs increased due to commodity inflation, our focus on operational excellence, digitalisation and innovation held us in good stead, improving overall agility and efficiency.

At the close of the year, we recorded all time high revenue of  `131,192 crore, 51% higher than the previous fiscal. We also registered our highest-ever EBITDA, which stood at  `45,319 crore, with continued industry leading EBITDA margin of 39%. Concomitant with our performance, we were also able to distribute record dividends to our shareholders, to the tune of  `16,728 crore, delivered in three tranches through the fiscal.

Strong financial profile

Strong uptick in business performance and progress on deleveraging have allowed us to deliver an RoCE of ~30%, 1.6x y-o-y. Our underlying liquidity position remained robust, with a total cash and cash equivalents of  `32,130 crore in our books. We could also reduce our net debt by  `3,435 crore to  `20,979 crore by the end of the year. This has helped bring down our leverage ratio to 0.5x, one of the lowest in our peer group.

Digital first. Future ready

We continue to foster a digital-first approach across businesses, establishing it as a culture that cuts through levels and functions. We have established a digital Centre of Excellence (CoE), automated 100% of enabling functions, and achieved 100% digital literacy across the organisation.

We have also launched a Group-wide programme ‘Vedanta Spark’ with the objective of scaling up the partnership with innovative start-ups, to leverage their technological capabilities and speed of execution. This will enable us in achieving strategic goals under operational excellence, new product development and 360-degree sustainability. Through this programme, we aim to reimagine the role of entrepreneurship in catalysing innovation by enabling technology, talent, and entrepreneurial ambitions of India’s youth by seeding world-class technology ventures. The ventures will benefit from co-creation opportunities with the Vedanta Group companies; access to massive capacities and resources of the Group; availability of global and expert mentorship; and opportunity to solicit funding and investments

Aluminium

During the year, we yet again demonstrated record performance with the highest ever annual aluminium production of 2,268 million tonnes and alumina production of 1,968 million tonnes. This has been achieved through continued focus on operational excellence and ramp up at the Jharsuguda Smelter. Our initiatives, with a key focus on volume growth and value-chain integration, prepares our Aluminium business to be among the top 3 players globally (ex-China), delivering superior value for all its stakeholders.

Zinc

At Zinc India, we recorded the highest ever mined metal production, crossed the 1.0 million mark to reach 1,017 kt production, and improved our metal production to 967 kt. Our cost of production witnessed an uptick, driven by input commodity inflation. However, this was partially offset by higher volume and operational efficiencies. During the year, we also received Environmental Authorisations (EA) for expansion of Zawar mines from 4.8 mtpa to 6.5 mtpa. Equipped with best-in-class technology, our mines are future-ready with a possibility of upgrading our total R&R to 550 million tonnes.

At Zinc International, Gamsberg’s long-term potential holds us in good stead with highest ever production of 170 kt in FY2022, and 220 kt annualised production run rate in the month of March. Gamsberg also demonstrated notable hike in crushing throughput from 767 tph in FY2021 to 827 tph in FY2022.

Oil & Gas

In the Oil & Gas segment, our efforts were focused on sustaining production levels and increasing resources through exploration across the portfolio. We have initiated infill projects across fields to add to reserves and mitigate natural field decline. Our exploration efforts resulted in two hydrocarbon discoveries (Durga-1 in Rajasthan and Jaya-1 in Cambay).

In addition, we have announced strategic partnerships with leading Oil & Gas service companies to add R&R across our portfolio of PSC and OALP blocks.

We are investing in exploration and appraisal to add resources, establish shale potential through pilot wells, and add reserves through development projects such as ASP and infill wells across the fields.

Iron ore

Our iron ore business has completed the successful integration of the recently acquired coke plant with environmental clearance of 0.9 mtpa at Gujarat (Gujarat NRE Coke Limited). This positions the Vedanta Iron Ore business as one of the largest merchant coke players in the country. We are also pursuing expansion at Bokaro and planning a greenfield project in Bellary. Further, we are starting our mines in Liberia, and achieving R&R augmentation through exploration. The VAP portfolio will continue to expand as part of our future strategy.

From an output standpoint, the Karnataka iron ore mine production increased by 8% y-o-y and pig iron production also increased to 790 kt, up 33% y-o-y.

Steel

At ESL, our performance was powered by increased value-added mix in our portfolio, mitigating the pressure of increasing input commodity prices. FY2022 also saw our highest ever saleable production post acquisition of ESL. We improved our furnace performance post a planned shutdown during the period. From a strategic perspective, we won two iron ore mines in Odisha (Nadidih BICO and Nadidi FEEGRADE) which increase our raw material security and price stability.

FACOR

We achieved our highest Fe Chrome production and highest EBITDA margin in FY2022 since acquisition. The turnaround ore production performance from the Ostapal and Kalarangiatta mines is outstanding, with 70% growth in ore production on a y-o-y basis.

Delivering value for everyone

Vedanta remains steadfast in its commitment towards sustained value creation for all our stakeholders. The year saw us focus on eight key areas for value delivery during the year:

• ESG, with a resolute focus on sustainable ways of working
• Setting up centres of excellence for R&D, Asset health, Innovation and Quality
• Digital transformation with industry 4.0 technology, to increase overall efficiency, safety, predictability and serviceability
• Business potential mapping to chart out opportunity areas for growth
• Government partnerships
• Brownfield expansion at sites to increase overall output and service demand
• People focus, inculcating a performance culture rewarding merit and initiative
• Augmenting R&R through advanced technology

I am pleased to say that we have progressed actively on the above priorities and have delivered tangible results on them. Our stakeholders have played a key role in enabling this through their relentless support and faith in us. As we rebound and leap forward with a larger, diversified portfolio, a stronger financial profile, and a renewed ESG purpose, I solicit your continued cooperation.

Best regards,

Sunil Duggal

Chief Executive Officer