Improving quality of life for communities
Our resilient performance against the odds of a downturn in the commodity cycles in FY16, has enabled us in emerging as an organisation, which is:
STRONGER, SMARTER, SUSTAINABLE
Our astute understanding of natural resource operations and years of experience in the commodities markets have helped us secure market leadership in several of our business segments, both in terms of production growth and cost savings. The resurgence of commodities market downturn and our business restructuring have further reinstated the trust of our Shareholders — transforming us into a “Stronger” entity.
We have always been foresighted and stayed ahead in the technology curve in our businesses. Leveraging our Innovation and Technology capabilities, we are exploring all possibilities of fast pacing our processes and increasing our efficiencies. We are also exploiting every opportunity to use technology for our Sustainability agenda. We believe the company is ”Smarter”.
We believe our social and environmental performance are integral to our core business activities. As a leader in the Natural resources sector, we are pro-active in incorporating all possible environmental conservation and enhancement measures. We believe in building long-term relationships with the communities we operate in. We are committed to be a truly “Sustainable “ entity.
Total Shareholder Returns(%)
LTIFR (per million man-hours worked)
Note: ICMM 2014 methodology adopted form FY2016 onwards
Water consumption and recycling rate(%)
Note: Increase in consumption is due to ramp up in the businesses
Employee at BALCO cast house
The foundation of our Strong financial position is laid upon a sharp focus on production growth and capacity maximisation, disciplined capital allocation and focus on FCF, deleveraging, cost-savings, a strategic outlook for ‘long term shareholder value creation’ while continuing to strengthen the balance sheet and simplification of organisational structure.
We emerged from the cycle, a stronger entity, well positioned to reap the benefits.
We had record productions in most of our segments and we continue to focus on the safe ramp-up of our assets. We are focussed on ramping up our existing capacities and a disciplined ramp-up of production across our zinc, aluminium, iron ore and power businesses is delivering significant growth. We are generating increasing free cash flow, and with relentless focus on costs and managing working capital, we are deleveraging our balance sheet. We have announced our Dividend policy which demonstrates our commitment to providing strong returns to shareholders.
All our manufacturing operations constantly try to achieve optimum operational efficiencies. This helps us attain significant cost- savings and increased efficiencies. We have achieved cumulative savings of US$712m as a part of our cost savings program and are progressing ahead of original plan to achieve cost savings of 1.3bn by H1 of FY2019. In all our businesses, we are at the 1st or 2nd quartiles of the cost curves. Our net debt and net gearing remain low. Reflecting the strong performance and pro-active balance sheet management, long term rating of the company was recently upgraded in April 2017 from AA-/Positive to AA / Stable, second rating action in the last 3 months.
CAIRN MERGER - BENEFITS OF RESTRUCTURING
One of the key strategic priorities of Vedanta Limited has been simplification of the group structure.
The merger has significantly transformed the company and its capital structure. We achieved a market capitalisation of c. USD 14bn, with inclusion in India’s premier index – the Nifty 50 from May 26th. There has been increase of almost 70% in our free float to USD 7 Billion. The new diversified portfolio will help de-risk the earnings volatility and will drive stable cash flows though business and commodity price cycles. This will also offer greater financial flexibility to allocate capital to highest return projects, consequently it will lead to superior shareholder returns
We are generating increasing free cash flow, and with relentless focus on costs and managing working capital, we are deleveraging our balance sheet.
Employee at BALCO cast house
EUREKA – A REPOSITORY OF
IDEAS IN A YEAR
Digitalisation of the mining industry is gaining traction and Vedanta is capitalising on India’s leading position and expertise in information technology.
Building on two of our core values of entrepreneurship and innovation, during the year we have stepped up our efforts to discover and implement new, innovative and disruptive technologies through the introduction of new systems and incentive programmes.
From assessing mineral deposits, cost management, ensuring worker safety to addressing environmental imperatives, advanced technologies and innovative practices hold the key to value creation for our business. With a foresighted and pro-active approach to technology upgradation and organisational change, we have flourished even in difficult economic situations.
We are evaluating some of the most forward-looking projects in the field of mining, exploration and production.
We believe, to nurture innovation, a cross functional and multi-disciplinary approach to technology design is needed. And crowd-sourcing of ideas has always proven to be very effective in bringing several ideas together. This also encourages entrepreneurial skills and creativity among the employees.
CREATING WEALTH OUT OF WASTE
Finding 50,600 tonnes of Galena out of waste; resulting in production of 1323 tonnes of metal and 1246 kgs of Silver generating a net revenue of ₹ 10.94 Crore.
As, Rampura Agucha Open Pit mine is at a development stage, the ore supply has not been sufficient to meet the production target . This challenge was overcome with an innovative solution from our team of experienced Geologists. The solution lied in “Finding value out of waste”.
Typically, in a mining operation huge amounts of mining waste is generated which contains minerals. Our team went through the samples of the geological data for finding Galena, in the waste. The team prepared sections of Galena based on the explored data, calculated volumes and undertook feasibility study. An estimated 50,600 tonnes of Galena with Lead content of 3.05% was finally found. Galena excavation blocks were prepared, marked with fluorescent paints and a separate area was demarcated for stacking of enriched Galena ore.
The team ensured that during all these activities there is no hampering of mining operations.
The team’s continuous efforts paid results. The enriched Galena of 46,289 tonnes was fed to beneficiation plants and treated as per schedule. 1,323 tonnes of metal and 1,246 kgs of Silver was recovered during Q1 & Q2 and early part of Q3 thus generating a net revenue of ₹ 10.94 Crore out of waste.
“EUREKA” - TRANSFORMING THE CULTURE FOR INNOVATION
“Eureka” – our pioneering effort to encourage the culture of Innovation, is an open platform to enable all our employees to submit and rate ideas and suggestions. The programme has been launched with a corpus of ₹ 200 Crore in 2016. The focus areas of this programme are:
Within a year of its implementation, Eureka has already turned out to be a repository of 1200+ ideas, which are continuously being evaluated and are getting shortlisted for implementation across all our operations. To keep the creativity and passion for innovation alive, we have planned incentives for our employees every quarter.
Since its inception several contests for idea generation were conducted - ‘Waste to Value’, a drive to minimise waste and finding possibilities of reusing, recovering and recycling the waste, ‘Ease of Doing Business and Reduce Cycle Time’, a contest focused towards finding new ways to optimize processes, improve production methodology and core technology and ‘Finance 2.0’, a campaign targeting improvement of analytics, processes and capabilities of the Finance functions.
We believe, to nurture innovation, a cross functional and multi-disciplinary approach to technology design is needed.
IN FY 2017
In our diversified natural resources company, sustainable development is at the heart of our growth strategy. We are committed to build a Sustainable business which not only caters to stakeholder needs but also builds relationships with all its stakeholders, creating long-term Value.
Our corporate Sustainability Framework is aligned to international standards of UNGC, IFC, ICMM and OECD guidelines. And the Vedanta Sustainability Assurance Program (VSAP) is used to monitor the effectiveness of sustainability framework implementation at a group level. Based on Stakeholder Engagement and materiality assessment process we identify material sustainability issues for the business and our stakeholders. Initiatives to manage these issues are integral to our business processes. Health & Safety, Water management, Energy and Carbon management, Biodiversity management are identified as material EHS issue to the business.
DEVELOPMENT PRESERVING BIODIVERSITY
Gamsberg Mine: Biodiversity Conservation
A critical feature of Gamsberg’s development is its approach to biodiversity. The project is being developed in a designated biodiversity “hotspot” – one of the four in South Africa.
The mine is located in the Succulent Karoo Biodiversity hotspot which is home to more than 6,000 species of plants, (40% of which are only found here) and also hosts 250 birds, 80 mammals and 32 reptile and amphibian species.
At a project like the Gamsberg mines, which ensures rich economic returns, we have taken a whole host of initiatives to preserve and conserve the biodiversity value of the location. An EMP (Environmental Management Programme) and a BMP (Biodiversity Programme) and a BMP (Biodiversity Management Plan) are used to monitor and to guide the construction phase, so that we adhere to the Environmental footprint. During the mine rehabilitation, we plan to use the endemic plant species which belong to the Succulent Karoo biome.
The biodiversity management plan entails a step wise approach of: Avoid by looking for alternative infrastructure to minimise impact, such as adjusting siting of processing plants ad roads.
Minimising Impacts through the use of lining for mine tailings ore fencing.
Remedy by translocating sensitive species (almost 77000 plant species).
Offset with the objective of ‘No Net Loss’ – through the identification of locations with similar biodiversity features.
Creating and maintaining a Zero Harm culture is our aim as well as our call to action.
SOCIAL LICENSE TO OPERATE
In FY 2017, we invested ₹ 110 Crore in social development benefiting c.2.2mn people. Our social development initiatives address some of the key issues of education, healthcare and women empowerment. We made 71 Model ‘Nand Ghar’ (signature project of Vedanta) operational in terms of Health, Education and Women Entrepreneurship. Our CSR outreach spans 576 core villages and 1,142 peripheral villages, located around our operations.
For the environmental priorities arising from the materiality process, we have developed specific objectives and targets, and review performance against these issues on a periodic basis.
Energy In FY 2017, we saved 0.35 million GJ of energy. In spite of our capacity enhancements and increased energy demand. We have set for ourselves an ambitious target of 0.87 million GJ energy savings in FY 2018. We focus on energy efficiency as well increasing dependency on Renewable Energy. 16 out of our 42 operations received the ISO 50001 certification.
Climate Change Headed by CEO Power, our ’Carbon Forum’ directs Vedanta’s climate mitigation strategy aligning it with the respective governments’ Nationally Determined Contributions, which outline the national commitment towards climate mitigation and lay out the roadmap for actions.
Water Water is a key natural resource on which our operations are dependent and as per our Water Policy and management standard, we focus on optimising water use, by recycling and reusing it. In FY 2017, we recycled about 27% of our total water consumption.
Safety Creating and maintaining a Zero Harm Culture is our aim as well as our call to action. We have a comprehensive Group level HSE policy in place. In 2016-17, our Lost Time Injury Frequency Rate (LTIFR) was at 0.4. We have conducted 968,625 man-hours of safety training with 100% coverage of periodical medical examination
Biodiversity Managing Biodiversity of the location where we operate is a precursor to all our operations. Our Biodiversity Policy and management program is developed to avoid, minimize or compensate the loss of biodiversity
Since its closure in 2015, at our Lisheen mine site, we have a vision to establish a ‘Bio-economy Campus’. The Tailings Management Facility has been turned back into productive agricultural land and successful animal trials have been approved by the Irish Department of Agriculture.