Integrated Thinking at Vedanta
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Dear Stakeholders,
The Indian economy thrived during FY 2023, driven by healthy macroeconomic fundamentals and domestic consumption even as interest rates went up. Commodity prices, however, moderated, weighed down by global macroeconomic challenges. Amid this backdrop, Vedanta once again demonstrated resilience and commitment to excellence, emerging stronger through difficult times. Our team executed strategies to ensure steady operational performance and strong cost control, resulting in a commendable financial performance.
Throughout the year, our sustainability-focussed and integrated business model propelled value-creation, delighting our stakeholders. Vedanta declared the highest-ever dividend of ₹101.5 per share to its shareholders and contributed ~₹ 73,486 crore to the exchequer. We made significant advancements on crucial Environmental, Social and Governance (ESG) commitments besides expanding capacities and our portfolio of value-added products in line with global trends and India’s journey of reliance. This positions us ideally to capitalise on emerging opportunities, and power the next phase of growth, which will be more sustainable and predictable through economic cycles.
The big leap in ESG
At Vedanta, FY 2023 was a year of remarkable progress on the ESG front led by our ‘Transforming for Good’ purpose. We positively touched more than 44 million lives, improved diversity, inclusion and governance practices and took major strides in the areas of carbon neutrality, water positivity and a greener business model. These actions propelled our ambitious ESG goals and earned us prestigious recognition. Vedanta Limited became the only company from India this year to get listed in The Dow Jones Sustainability™ World Index and The Dow Jones Sustainability™ Emerging Markets Index. Further, we ranked 6th globally and 2nd in Asia Pacific in the metal and mining sector of the S&P Global Corporate Sustainability Assessment 2022.
Across the Group, agreements for 788 MW of renewable energy (RE) round-the-clock (RTC) have been signed, which will take us closer to our 2.5 GW RE target and help reduce our carbon footprint significantly. Cairn India’s iron ore business and Zinc International’s Black Mountain Mines joined HZL to be certified water positive. High volume low toxicity (HVLT) wastes which can potentially harm human health and degrade the environment, have been better managed with unique efforts, resulting in their utilisation increasing to 162%.
Vedanta raised its first Sustainability Linked Loan (SLL) from leading international banks in FY 2023. The loans were granted basis our decarbonisation and safety performance parameters. The proceeds of US$250 million will be utilised for financing capex initiatives focussed on business growth and achieving a higher degree of backward integration.
The intent now is to scale up ESG actions with greater emphasis on inclusive, sustainable and responsible growth. This is the essence of our new ‘Transforming Together’ theme that will help us achieve ESG leadership and reinforce a value-accretive journey.
Stepping up zero harm culture
We place the utmost importance on the health and safety of our employees. Despite our continued efforts, I am deeply saddened by 13 tragic fatalities this year and the irreparable loss to their families, friends and colleagues. We have disseminated the findings of the investigation reports across Group companies, and I can assure you that we are fully focussed on ensuring workplace safety across our entire business.
The respective business CEOs have already stepped-up risk management efforts by implementing fatality learnings and are spending greater time on the field through Visible Felt Leadership (VFL) and personal safety programmes. Across the plants, safety infrastructure is being upgraded and training frequency has been increased. We have also fast-tracked the roll-out of the Critical Risk Management (CRM) module to mitigate three major risk areas of vehicle-pedestrian interaction, working at heights, and uncontrolled energy release.
Delivering resilient performance
We delivered an impressive performance across our businesses, reflecting our continual focus on establishing a high-performance, low-cost, long-life asset base. Our continued focus on high quality, asset optimisation and digital transformation, enabled us to maximise asset utilisation. We achieved robust production volumes and the highest-ever revenues.
I am delighted to report that we closed FY 2023 with an 11% growth in revenue to ₹1,45,404 crore, EBITDA for the year was ₹35,241 crore, with an industry-leading margin of 28% 1 . The dual challenges of high input costs and lower realisations led to a contraction in margins, which was partially offset by improved operational performance and strategic hedging gains. We are actively pursuing cost optimisation initiatives around improving linkage coal materialisation and operational efficiencies to make our profitability more predictable through commodity cycles.
As of 31 March 2023, our net debt stood at ₹45,260 crore. The balance sheet position remains strong with healthy cash and cash equivalents of ₹20,922 crore and a robust net debt to EBITDA ratio of 1.3x. The average term debt maturity is maintained at ~3.4 years.
Our continued focus on high quality, asset optimisation and digital transformation, enabled us to maximise asset utilisation. We achieved robust production volumes and the highest ever revenues.
Employee safety an utmost priority
Note 1: Excludes copper smelting at Copper Business
In FY 2023, we delivered significant progress across all our businesses with record volumes in Aluminium, Zinc India and Zinc International businesses. Key cost reduction, capex and operational improvement projects enabled us to stay on course with our growth plans.
Investing in future
Vedanta’s long-term focus is to grow in India, in sync with the country’s robust economic and demand growth. We see new-age India to be more mineral-intensive. The emphasis on electric mobility, infrastructure creation, renewable energy and efforts to establish India as an electronics hub are all set to enhance demand for key metals and minerals.
Capitalising on these opportunities aligned to the nation’s needs, Vedanta is expanding capacities across various businesses, which are in various stages of implementation. Further, projects aimed at achieving raw material security are also being pursued. A disciplined capital allocation approach is being followed across all projects to ensure higher returns while maintaining strong balance sheet.
Employees at Cairn, Oil and Gas
Operational and strategic review
In FY 2023, we significantly progressed across all our businesses with record volumes in aluminium, Zinc India and Zinc International and steel business. Key cost reduction, capex and operational improvement projects enabled us to stay on course with our growth plans.
Aluminium
The business achieved the highest-ever aluminium production at 2.29 million tonnes in FY 2023, which included 59 kt of green aluminium (branded Restora and Restora Ultra). During the year, we pursued structural initiatives like optimising the coal and bauxite mix, improving capacity utilisation and implementing growth and vertical integration projects. We completed the Jharsuguda capacity ramp-up to 1.8 MTPA and going forward, Lanjigarh refinery expansion from 2 MTPA to 5 MTPA remains our key focus area. We also strengthened long-term coal supply at competitive prices by emerging as the successful bidder for the Ghogharpalli coal block. Jamkhani coal block has been operationalised. Commencement of Kuraloi (A) North and Radhikapur West mines is expected in the next 12-18 months. On the bauxite front, LOI has also been issued for the Sijimali bauxite block, with an estimated reserve of 311 million tonnes of bauxite. In an endorsement of sustainable operations, the business was ranked 2nd among DJSI’s ranked aluminium peers.
Zinc
Zinc India registered its best-ever mined metal production of 1,062 kt and refined metal production of 1,032 kt. Silver production grew by 10% to 714 kt. Despite rising input costs, it continues to be in the first quartile of the global cost curve. Key projects are under execution at RD Mines complex to expand MIC capacity to 1.25 MTPA. In line with our vision of increasing metal volumes to 1.2 MTPA, the installation of a new 160 KTPA Roaster in Debari, HZAPL alloy project, and 1.6 LTPA Fumer plant are major projects under execution. One of the most notable achievement has been the successful commissioning of a 3,200 KLD Zero Liquid discharge (RO-ZLD) plant at the Dariba smelter. Apart from that, Zawar mine (ZM) and Rampura Agucha mine ZLD projects of 4,000 KLD capacity each have been initiated to improve recycling and strengthen the zero discharge.
Zinc International recorded its highest-ever mined metal production of 273 kt, including 208 kt at the Gamsberg mine and 65 kt at BMM. Gamsberg achieved 12% reduction in the cost of production excluding Treatment Charge and Refining Charge (TcRc) during the year. For increasing MIC production from 300 KTPA to 600 KTPA, the Zn Concentrator Plant with 200 KTPA capacity and the 210 KTPA Smelter project are under execution.
Oil & Gas
In the Oil & Gas segment, our efforts were focussed on adding reserves and resources. The infill wells across producing fields have enabled us to mitigate a part of the production decline. We are working on development projects to unlock potential of our contingent resource base. Exploration activities across the portfolio have enabled us to generate prospects and add resources.
Iron Ore
The business seized opportunities with robust execution and agility to overcome market sluggishness on account of duty imposition and export ban. Post the withdrawal of export duty in December 2023, we became the first to complete an export shipment of Karnataka-origin ore. We also commenced ore production in our Liberia mine and completed its first-ever export shipment. The production of saleable iron ore at Karnataka was flat at 5.3 million tonnes and that of value-added pig iron was down by 12% to 696 kt.
Steel
ESL performed resiliently amidst challenges that were used as an opportunity to be future-ready by undertaking yield improvement, debottlenecking and plant maintenance initiatives. ESL registered an increase in saleable production to 1,285 kt with the highest ever net sales realisation, resulting in favourable EBITDA margins. It continued to prioritise its value-added portfolio, resulting in a 5% increase in its sales. ESL successfully operationalised two iron ore mines with 100% captive sourcing of iron ore.
FACOR
We successfully commenced production at new 60 KTPA furnace in February 2023, taking the total Fe-Cr alloy capacity to 140 KTPA. We also completed the merger of FACOR and FACOR Power Plant Limited. FACOR recorded the highest-ever chrome ore production at 290 kt in FY 2023, a 16% increase over the previous year. Ferrochrome production decreased by 11% to 67 kt.
Nicomet
In FY 2023, we successfully operationalised the Nicomet plant and were able to stabilise plant operations for producing premium quality products. Additionally, the nickel plant for producing Ni metal was commissioned later in the year. The first despatch of NiSo4 & Ni metal was executed in March 2023. Going forward, the focus is on developing our customer base in domestic and export markets.
Employees at Operational sites
Vedanta has grown substantially in the past year. With our employee-centric approach, Vedanta has been recognised with the ‘Kincentric Best Employer of the Year’ award.
Positioned to deliver long-term value
Vedanta has grown substantially in the past year. With our employee-centric approach, Vedanta has been recognised with the ‘Kincentric Best Employer of the Year’ award. We continue to upskill young leaders, and empower women and business partners through various flagship programmes. Our fundamentals are stronger, assets are more competitive and expansion projects are all set to enhance the life of assets and volume growth. We have reinforced our market-leading position in the natural resources sector, which has promising upside potential in the long run.
Drawing inspiration from these achievements, we are determined more than ever to aim higher. We will maintain an unrelenting focus on priorities to deliver on our ambition of transforming together to create shared value.
The safety of our people and other stakeholders will remain a top priority. It will require us to make incremental investments and bring revolutionary change to achieve and sustainably maintain the ambition of zero harm. At the same time, we are inspired to secure long-term growth and embedding ESG across every facet of business will be key to this. We will need to move with greater agility toward our goals of climate change, inclusive development and an equitable workplace. Lastly, we must maintain top-notch asset quality with operational stability and drive focussed volume growth to capitalise on potential growth opportunities. Our success will be dependent on our ability to balance these priorities and commitments so that we can contribute towards a better world together.
Best regards,
Sunil DuggalChief Executive Officer
