Strategic framework and focus areas for short and long-term

Framing our strategy while addressing the material concerns of our stakeholders

Strategic priorities

Operational excellence

Description: We are focused on all-round operational excellence to achieve benchmark performance across our business by debottlenecking our assets, adopting technology and digitalisation, strengthening people practices, enhancing the vendor and customer bases, optimising the spend base and improving realisations.

FY2018 update

  • Oil & Gas
  • Debottlenecked facility at Mangala Processing Terminal (MPT) to handle and increase liquid-handling capacity by ~10%
  • Additional 21 wells brought online through a drilling campaign at Mangala and other satellite fields
  • Infill drilling campaign commenced in the Cambay block, leading to substantial increase in production
  • Raageshwari Deep Gas (RDG) Phase 2A commissioned and gas production ramped up to 45 mmscfd (increased capacity by ~33%)
  • Zinc India
  • Commenced construction of the Fumer project to improve zinc and by-products recovery
  • Zawar mill debottlenecking completed to 2.7 mt
  • Reduced cost of coal basket by using lignite and off-spec coal as well as sourcing domestic coal
  • Zinc International
  • Skorpion Pit 112 redesigned to reduce waste extracted and increase contained metal by 15%
  • Aluminium
  • Lanjigarh refinery debottlenecked to 2 mt nameplate capacity
  • Value-added sales improved y-o-y (from 41% to 46%)
  • Iron ore
  • Goa mining operations shut due to state-wide ban

Objectives for FY2019

  • Oil & Gas
  • Execute growth projects to deliver 220-250 kboepd
  • Zinc India
  • Commission Fumer
  • Progressive ramp-up of underground mines to achieve target run-rate of 1.2 mtpa
  • Ramp up silver production to 650-700 tonnes
  • Aluminium
  • Controllable costs in the aluminium business
  • Establish long-term bauxite sourcing in the State of Odisha
  • Copper and Iron Ore
  • Engage with government and relevant authorities to enable the restart of operations

KPIs

  • EBITDA
  • Adjusted EBITDA Margin
  • ROCE
  • FCF post capex

Risks

R2

R4

R5

R10

Strategic priorities

Preserve our licence to operate

Description: We operate as a responsible business, focusing on achieving zero harm, minimising our environmental impact and promoting social inclusion across our operations. We put management systems and processes in place to ensure our operations create sustainable value for our stakeholders.

FY2018 update

  • Seven fatalities occurred in the fiscal year. Increased oversight from Group ExCo to prevent future occurrences
  • LTIFR improved from 0.40 to 0.35
  • Achieved water savings of 1.3 million cubic metres
  • Achieved c. 14% reduction in GHG intensity over baseline of 2012
  • ~90% of generated fly ash is being utilised
  • 154 Nand Ghars constructed with commitment to construct 4,000 (under Vedanta Foundation)
  • Increased diversity across our businesses: Women represent 10.6% of our total workforce
  • Vedanta Medical Research Foundation launched central India’s first world-class cancer facility in Raipur, Chhattisgarh

Objectives for FY2019

  • Zero fatal accidents and an LTIFR of 0.30
  • Achieve fly ash utilisation of 75%
  • Achieve water saving of 1.5 million cubic metres through conservation and efficiency improvement projects
  • Achieve energy saving of 2 million GJ
  • 250 Nand Ghars to be constructed in FY2019, and planning for additional 1,000 to be completed

KPIs

  • LTIFR
  • CSR footprint
  • Gender diversity

Risks

R4

R5

R6

R12

Strategic priorities

Optimise capital allocation and maintain a strong balance sheet

Description: Our focus is on generating strong business cash flows, capital discipline and proactive liability management and maintaining a strong balance sheet. We will also review all investments (organic and in acquisitions) based on our strict capital allocation framework, with a view to maximising returns to shareholders.

FY2018 update

  • Total gross debt reduction of ` 8,512 crore during FY2018
  • Dividend policy announced at Vedanta Limited
  • Net debt increased to ` 21,958 crore from ` 18,269 crore, mainly due to ASI acquisition of ` 1,622 crore and dividends at Vedanta Limited and HZL totalling ` 9,653 crore, and the corresponding tax outflow
  • ` 7,880 crore of FCF post capex generated during the year
  • CRISIL and India Ratings improved their outlook to ‘AA/Positive’ from ‘AA/Stable’

Objectives for FY2019

  • Generate healthy-free cash flow from our operations
  • Disciplined capex across projects to generate strong ROCE
  • Improve credit ratings
  • Proactive liability management
  • Reduce working capital

KPIs

  • FCF post capex
  • Net debt/EBITDA (consolidated)
  • EPS (before exceptional items)
  • Interest cover
  • Dividend

Risks

R1

R2

R12

R13

Strategic priorities

Deliver on growth opportunities

Description: We are focused on growing our operations organically by developing brownfield opportunities in our existing portfolio and by acquiring attractive, complementary assets in the natural resources segment that add value to our portfolio.

FY2018 update

  • Achieved record annual production at Zinc India of 960 kt and Aluminium of 1.7 mt (exit rate c. 2 mt)
  • Significant progress at Gamsberg, on track to start production by mid-CY2018
  • Oil & Gas
  • Ended March 2018 with run-rate of 200 kboepd and announced growth plans
  • Commenced Copper India expansion plan to double smelter capacity to 800 kt
  • Initiated process to acquire Electrosteel Steel Limited to value add to our iron ore business

Objectives for FY2019

  • Oil & Gas
  • Progress on execution on growth projects to deliver 275-320 kboepd in FY2020
  • Commence exploration in blocks awarded through first-round auctions under OALP
  • Zinc India
  • Commence work towards expansion to 1.35 mtpa
  • Zinc International
  • Successful commencement of Gamsberg in FY2019, progress towards ramp up to Phase I production of 250 kt in FY2020
  • Aluminium
  • Achieve steady state production of 2 mt in FY2019
  • Copper India
  • Progress towards expansion to 800 kt production capacity by FY2020
  • Complete the Electrosteel Steel acquisition subject to regulatory approval and integrate with the Iron Ore business

KPIs

  • Revenue
  • ROCE
  • FCF post capex
  • Growth capex

Risks

R3

R11

R12

Strategic priorities

Augment our R&R base

Description: We are looking at ways to expand our R&R base through targeted and disciplined exploration programmes. Our exploration teams aim to discover mineral and oil deposits in a safe and responsible way, to replenish the resources that support our future growth.

FY2018 update

  • Completed more than 240 km of brownfield drilling across businesses to add R&R
  • Secured greenfield licences for base metals
  • 19.5 mt gross additions to Zinc India reserves and resources aggregating prior to depletion of 12.6 mt, aggregating to 411 mt with 25+ years of mine life
  • Engaged global specialists, including Schlumberger, Xodus and Petrotel, to supplement the efforts of in-house teams to augment exploration portfolio in Rajasthan, Ravva and Krishna-Godavari (KG) offshore blocks. This led to mapping a portfolio of prospects with 1.7 billion boe of prospective resources: 1.2 billion boe in Rajasthan, 400 million boe in KG and 100 million boe in Ravva

Objectives for FY2019

  • Metals
  • Continue to build R&R base and generate new greenfield targets for our commodities/ metals
  • Oil & Gas
  • High-ranked prospects are being taken up for well-drilling across our assets

KPIs

  • Total 2P + 2C reserves and resources in Oil & Gas
  • Total R&R in Zinc India, Zinc International

Risks

R4

R8

R12