ECONOMIC RESPONSIBLITY
WE LEVERAGE INNOVATION AND TECHNOLOGY TO HARNESS THE ELEMENTS OF NATURAL RESOURCES AND TRANSFORM THEM
TO FUEL PROGRESS AND DEVELOPMENT, WITH A COMMITTED GOAL OF ZERO HARM, ZERO DISCHARGE AND ZERO WASTE.
ANIL AGARWAL
CHAIRMAN, VEDANTA RESOURCES
Natural resources form a significant portion of the world's economy. As a globally diversified company operating in the energy and metals sector, with operations spread across four continents, we have a long history of creating consistent value for our shareholders, while taking care of all stakeholders.
At Vedanta, we believe that wealth generation is not an end in itself, but the means to distribute better
shareholder returns and employee benefits plus contribute to the exchequer, invest in social prosperity and fund environmental protection.
ECONOMIC PERFORMANCE
ECONOMIC VALUE GENERATED & DISTRIBUTED In million USD
During the reporting period, Vedanta saw its direct economic value generated (a function of its revenue generation) increase by 30% from the last fiscal year. In line with our strategy to ramp up across our asset base, we had record production of Zinc, Copper and Aluminium, whilst growth projects in our Oil & Gas business are on track.
Favourable market conditions, higher production volumes and firmer commodity prices, combined with enhanced productivity and material efficiency, resulted in a strong annual performance.
MOODY'S UPGRADED THE CORPORATE FAMILY RATING (CFR) OF THE COMPANY FROM B1 TO
BA3 IN NOVEMBER 2017 AND THE RATING ON ITS SENIOR UNSECURED BONDS TO B3 FROM B2.
ECONOMIC PERFORMANCE ACROSS THE STAKEHOLDER SPECTRUM
SHAREHOLDERS & LENDERS
Our focus continues to be on generating shareholder earnings through prudent capital allocation, with a focus on low-risk, phased projects with high returns. Our cost saving programme coupled with plant productivity and material efficiency continue to result in low
cost operations, contributing to investor returns. During FY 2017-18, Vedanta Limited took successful steps towards acquiring Electrosteel Steels Limited (ESL). The final closure of the transaction will happen after applicable regulatory requirements.
ESL has steelmaking design capacity of 2.5 MTPA in Bokaro, Jharkhand with blast furnace/ basic-oxygen-furnace technology. It manufactures pig iron, billets, thermo-mechanically treated bars, wire rods and ductile iron pipes. The acquisition would provide the Group, an opportunity for an integrated iron ore and steel play, at the same time benefitting from the fast-growing steel sector in the country, leading to the creation of long-term sustainable value.
REVENUE & EBITDA
In FY 2017-18, our revenue stood at US$ 15.4 billion compared with US$ 11.5 billion in FY 2016-17 - a growth of 34%. EBITDA for FY 2017-18 improved by 28% to US$ 4.1 billion from US$ 3.2 billion. This was primarily driven by higher commodity prices, the ramp-up at our Zinc and Aluminium businesses and cost efficiencies across the business.
WE DELIVERED A ROBUST YEAR WITH EBITDA SIGNIFICANTLY HIGHER AND
WITH OUR EBITDA MARGIN REMAINING STRONG.
KULDIP KAURA
Chief Executive Officer, Vedanta Ltd.
|
REVENUE
34%
 |
EBITDA
28%
|
SEGMENT CONTRIBUTION TO REVENUEIn million US$
*Others include port business and eliminations of inter-segment sales, which were lower in the current period
DIVIDEND
We have always believed in sharing the economic value generated. A consistent dividend is a healthy sign of a growing company. With a robust operational performance and a complementary market environment, we returned impressive numbers for FY 2017-18.
THE FINAL DIVIDEND OF US CENTS 41 PER SHARE (TOTAL DIVIDEND OF US CENTS 65 PER SHARE) WAS DECLARED, WITH A YIELD OF 6%.
RETURN TO
SHAREHOLDERSIn US Cents per share
SHAREHOLDERSIn US Cents per share
GOVERNMENT
We collaborate with governments across every country we operate in, contributing to the exchequer by paying direct as well as indirect taxes, creating direct as well as indirect jobs and by purchasing goods and services. We also contribute to reduce the country's import dependency, by enhancing production of natural resources.
IN FY 2017-18, WE CONTRIBUTED US$ 5.4 BILLION TO THE EXCHEQUER THROUGH DIRECT AND INDIRECT TAXES, LEVIES, ROYALTIES AND DIVIDEND.
We have not received any direct financial assistance from governments during the reporting year, although as part of various direct tax holidays and similar exemptions, Vedanta did benefit by US$ 157.5 million during FY 2017-18.
We also work closely with host governments, on initiatives to protect the environment
and become active partners in community programmes that touch the lives of innumerable people.
TAX TRANSPARENCY
At Vedanta, we believe that transparency breeds trust and accountability builds responsibility. Governance principles, Code of Business Conduct & Ethics, and systems of checks and balances are in place, and bribery and corruption are non-negotiable.
In whichever nation we operate, all disclosures based on local laws are made.
Starting 2015-16, we publish a Tax Transparency Report (TTR) every year and it is made available on our website. It contains all the details of the contributions we made to public finances in the countries of our operations. The latest TTR of 2017-18 is also
available on: www.vedantaresources.com.
POLITICAL PARTIES
In accordance with the UK Bribery Act, it is a Vedanta Board policy that neither the Group nor its subsidiaries will make donations or contributions to political parties within the United Kingdom or European Union. In India, political donations or contributions made within the context of legitimate business operations are made only with the approval of the Board. Last year, no political donation was made by any of our businesses.
EMPLOYEES
Human resources are instrumental in making Vedanta one of the global leaders in natural resources.
We continually invest in the well-being and development of our 78,000 strong workforces and in
providing them a safe and conducive work environment.
Industry-best remuneration and benefits coupled with merit-based growth opportunities are offered to all employees. Employee-friendly policies and inventive programmes nurture talent and keep them motivated to deliver their best.
Benefits to our employees include: life insurance, mediclaim, disability coverage, parental
leave, pension and retirement benefits, stock ownership, and educational assistance.
IN THE LAST FINANCIAL YEAR, WE SPENT US$ 630.70 MILLION FOR EMPLOYEE WAGES AND BENEFITS.
To read more about our employee-centric initiatives, please refer to the Employees section on page 60
SOCIETY
Through our operations, we generate profits, employment, and economic growth and through partnerships with government and civil society, we ensure that benefits of mining extend beyond the boundary of the mine itself. It is our constant endeavour to see that the mining industry has a long-lasting positive impact on the natural environment and social capital.
Many of our operations are located in remote, often economically backward regions. We invest in developing infrastructure, taking care of people's health, providing education and training, creating opportunities for employment and entrepreneurship, and speeding up the development curve of the regions where we operate.
Many spearhead programmes have been initiated, like Nandghar for children's well-being and education, Subhalaxmi and Sakhi projects for women empowerment, Vedanta hospitals and mobile hospitals for health, skill schools for skill enhancement through vocational courses, and various projects for farming and animal husbandry.
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SOCIAL INVESTMENT
38.75
US$ MILLION
|
BENEFICIARIES
3.36
MILLION
|
To read more about our community initiatives, please refer to the Community section on page 46
SUPPLY CHAIN
Holistic sustainability is not a localised phenomenon and cannot be achieved by a few companies. It requires global adoption and everyone's support including people, business and nations. We help propagate sustainability further and faster, by cascading it through our supply chain.
At Vedanta, we believe that by managing and improving environmental, social and economic performance throughout supply chains, we can:
.
CONSERVE RESOURCES | OPTIMISE PROCESSES | UNCOVER PRODUCT INNOVATIONS | SAVE COSTS | INCREASE PRODUCTIVITY | PROMOTE CORPORATE VALUES.
It is a material issue for us as it affects both, upstream and downstream, and hence given prime importance.
We have an established Supplier Code of Conduct, Supplier and Contractor Management Policies and Supplier Screening Checklists that encourage business partners and suppliers to adopt principles and practices comparable to our own.
These include key aspects on legal compliance, HSE management, labour management, human rights and child labour.
The nature of our industry stipulates our presence in far-flung areas, where we support local suppliers to boost local economy and mitigate carbon footprint. We engage with them to make them understand their responsibilities towards the environment, safety, human rights and also support them to come up to international standards.
MODERN SLAVERY ACT 2015 (MSA)
In accordance with the UK's Modern Slavery Act 2015, we have updated our Supplier Code of Conduct & Contract Conditions, and our Code of Business Conduct & Ethics to ensure the prevention of modern slavery and human trafficking in our operations and supply chain.
WE HAVE ALSO INTRODUCED THE MSA FRAMEWORK AT ALL OUR BUSINESS UNITS. UNDER THIS FRAMEWORK, WE HAVE A SYSTEM IN PLACE FOR TRAINING OF VENDORS/SUPPLIERS, DUE-DILIGENCE AND SELF-DECLARATION. WE PERIODICALLY UNDERTAKE INTERNAL AS WELL AS EXTERNAL AUDITS, TO ENSURE RIGOROUS ADHERENCE TO THE FRAMEWORK BY ALL BUSINESS UNITS.
Implementation of the compliance framework for MSA rests with the Commercial teams at each BU. They have been given the responsibility to ensure that all our vendors meet the stringent requirements of the Act.
Our businesses continued to cascade adherence to the act across the supply chain and
highlights during the reporting period include:
BALCO has received MSA declaration from around 90% of its vendors
VAL - Jharsuguda, stopped dealing with 6 suppliers on the basis of noncompliance with the MSA
requirements
Cairn Oil & Gas introduced external due diligence for MSA as part of the vendor registration process and has
raised awareness towards MSA in Vendor Conferences. Annual declarations have been obtained from 70% of the vendors and external audits are in progress at
vendor sites
IOB stopped dealing with 2 vendors based on the audit report. Of the remaining 15 vendors, most have formulated internal policies in line with the requirements of the MSA. The company has also received Annual MSA declaration from about 60% of our Medium-Risk Vendors
Konkola Copper Mines completed an audit of high-risk vendors. They stopped dealing with one vendor as a result of the audit. They also introduced supplier declaration electronically during the registration process and have conducted MSA training programmes for internal teams and contract employees
CUSTOMERS
Vedanta is now the sixth largest diversified natural resources company in the world, with operations in four continents and customers across the globe. With products in energy and metals sector, we invest time, money and talent to understand
evolving customer requirements and fulfil them safely, speedily while matching their desired quality and quantity.
Engagement with the customers is our priority, and pre-defined modes and platforms, which include third party surveys, are in place to understand and meet their expectations. Innovation and technology are leveraged to increase operational efficiency, value addition and logistics. Our advanced supplier portal is equipped to handle supplier as well as customer's needs, and handle auctions.
OUR METAL PRODUCTS MEET THE REQUIRED LONDON METAL EXCHANGE (LME) STANDARDS.
No cases of non-compliance with relevant regulations, anti-competitive behaviour, anti-trust, monopoly and voluntary codes concerning the health and safety impacts of our products and services were observed or reported. Similarly, no significant fines for non-compliance with laws and regulations concerning the provision and use of products and services were reported.