DEAR STAKEHOLDERS,
It's with immense pride that I reflect on another remarkable year
in Vedanta's evolution as a world-class Indian multinational. As we embark on the
next stage of our multi-year growth trajectory, aimed at unleashing value for all
stakeholders, I extend my deepest gratitude to each of you. You are the pillars of our
success, propelling us towards building a futuristic organisation rooted in India's
progress.
In today's ever-evolving world, where transformation is key, we
understand the imperative to continuously transform for good and invest in tomorrow to
outperform. Join me as I unveil our vision for the next phase of growth, building a
Stronger Vedanta a value-focussed, future-ready, and purpose-driven institution that will
stand the test of time.
Vedanta for a progressive India
India, under the leadership of a visionary government, is on an
expressway of progress. The optimism surrounding the Indian economy is unparalleled,
fuelled by robust manufacturing activity, thriving private consumption and commendable
strides in infrastructure development. The buoyancy observed in the stock markets and the
influx of foreign direct investments solidify India's rise as a global power and a
critical long-term market. The estimated GDP growth of ~8.2% in FY 2023-24 supports the
narrative of India's flourishing growth trajectory.
Going by the prevailing macro indicators, India's growth momentum
is poised to further accelerate in the years ahead. The government's manufacturing
and infrastructure push and aggressive investments in the green economy are catalysing a
new era of progress and development for the country. International Monetary Fund forecasts
the Indian economy to grow the fastest and ascend to the world's third-largest
economy position by 2027, with GDP expanding at a projected CAGR of ~7% during 2023-2030.
The dream of witnessing India enter a golden era once again is within reach.
As the economic growth engine gathers steam, the demand for commodities
is set to surge. Equipped with a unique portfolio, ranging from oil and gas to essential
metals, Vedanta is strategically positioned to seize the momentum, while aiding the
nation's goal of reaching a US$ 30 trillion developed economy by 2047 and achieving
self-reliance. Our recent foray into Electronics and display business exemplifies our
commitment to India's vision of self-sufficiency in chip-making. This exciting
venture opens doors to the thriving Indian electronics market, predicted to grow at a
staggering 43% CAGR between 2023 and 2026, reaching a monumental US$ 300 billion.
Looking ahead, our unwavering commitment to substantial capex projects
worth US$ 6 billion for expanding our capacities across the businesses and achieving
vertical integration in Aluminium business will be a cornerstone of our future growth. The
commissioning of Train 1 at Lanjigarh refinery, adding 1.5 MTPA of capacity, marks a
significant milestone. Other projects Aluminium, Zinc India, Iron and Steel and
Ferrochrome businesses are steadily progressing. We are on track to produce 90%
value-added aluminium products and alloys and securing 100% captive alumina, bauxite and
coal supplies along with 3 MTPA aluminium.
Furthermore, we are actively pursuing various strategic initiatives to
unlock the immense value within our diversified conglomerate, positioning ourselves for
continued success in evolving market landscapes.
Unleashing value through demerger
As a visionary organisation, Vedanta has always changed for the better.
Having built a US$ 50 billion diversified conglomerate over four decades, we now aim to
propel our journey with the proposed demerger of business into six independent, pure-play
companies. This strategic move will simplify the corporate structure, unlock greater value
and attract targeted investment for the expansion and growth of each business.
The demerger will be a simple vertical split, with shareholders
receiving one share in each demerged listed company for every share of Vedanta Limited
they hold. Each entity will have greater freedom to grow to its potential, led by
independent management, capital allocation and niche strategies as per their customers,
investment, and end markets. Our goal is to see each entity replicate the success of
today's
Vedanta Limited.
Strategic finance management
We are committed to financial prudence and fortifying our capital
management framework to proactively meet the expectations of our investor community. I
would like to bring your attention to the significant progress our holding company Vedanta
Resources has made in reducing debt, having deleveraged by US$ 3.7 billion in last two
years against our commitment of US$ 4 billion in three years. Thanks to your overwhelming
support, Vedanta Resources also successfully restructured its outstanding bonds totalling
US$ 3.2 billion, extending their maturity up to FY 2028-29 and easing off the liquidity
pressure. This newfound liquidity flexibility allows us to channel cash flows to important
capex projects. Furthermore, we expect the monetisation of our steel and raw materials
business, to be completed in the first half of FY 2024-25.
These decisive moves demonstrate our commitment to a debt-free and
value-accretive future for our stakeholders.
Performance
In FY 2023-24, India stood out globally as a market characterised by
both growth and stability. Our team, backed by strong leadership, did a commendable job in
capturing the opportunity, despite commodity prices exhibiting mixed performance,
influenced by global market dynamics and sector-specific demand trends. Through a sharp
focus on operational performance, strategic investments and commitment to innovation and
sustainability, we achieved significant success. Our financial report reflects this, with
revenues reaching Rs. 1,41,793 crore and EBITDA at Rs. 36,455 crore. Notably, we also
generated a healthy free cash flow (post capex) of Rs. 11,427 crore, indicating the
strength of operations.
Investing in ESG for a sustainable future
As a responsible corporate committed to sustainable development, ESG
remains central to Vedanta's growth plans and investments. Our efforts continued to
yield tangible outcomes during the year under review. I am thrilled to announce some big
wins in the S&P Global Corporate Sustainability
Assessment 2023. Vedanta and
Hindustan Zinc Limited (HZL) secured the third and first positions
respectively in the metal and mining sector, becoming the only two Indian companies in the
top 10. Additionally, Vedanta Aluminium took the top spot in its aluminium peer group. The
accomplishment reflects Vedanta's unwavering commitment to sustainable business
practices and responsible corporate citizenship, led by our Transforming for Good ESG
strategy.
Vedanta's exceptional progress on various ESG goals during the
year was witnessed in other milestone achievements. Advancing towards net zero, we have
begun construction for 838 MW of renewable energy round-the-clock (RE RTC). We have rolled
out industry-leading policies, such as an EV purchase policy for all our employees, and
all our business units have plans in place to ensure 100% light mobility vehicle
electrification by 2030. Jharsuguda unit and HZL have also begun trials for the
electrification of heavy mobility and other vehicles from the mining fleet.
Our water positivity ratio improved to 0.7 during the fiscal, with 2.7%
reduction in freshwater consumption.
In our commitment to diversity, equity and inclusion, women's
representation improved to 20% in FY 2023-24, enabled by programmes to place them in STEM
and leadership roles. We are proud to have expanded our definition of diversity beyond
gender, with more than 36 members from the transgender community now part of the Vedanta
team. A revolutionary parenthood policy was introduced for women and LGBTQIA+ employees to
emphasise that parenthood is not a challenge for professional life but a transformative
phase. The policy allows options for maternity leave, work from home, flexible working
hours and even a 12-month sabbatical with job security.
As you are aware, we follow extremely focussed CSR policies as part of
our community support programme. During the year, our efforts benefited nearly 17.4
million women and children across India. The second edition of the Vedanta Delhi Half
Marathon set yet another milestone, as a record 35,000+ participants ran in support of the
#RunForZeroHunger cause, raising 5 million meals for children in the process. This is a
true example of the immense power of participative sport to bring together people from all
walks of life for fun, fitness and, most importantly, a cause.
Ethics, good governance and transparency are core to Vedanta's
business values and integral to its ESG philosophy. During the year, we continued our
track record of paying one of the highest dividends (Rs. 50 in FY 2023-24) and being among
the top taxpayers in India (Rs. 54,402 crore in FY 2023-24). We also made considerable
efforts towards enhancing transparency a testament to our commitment to responsible
practices. This is evident in Vedanta's alignment with multiple global frameworks and
publication of disclosures beyond statutory requirements.
On a steady path to progress
As we move ahead, we will endeavour to continue pursuing the path of
steady and progressive performance, which we have stayed consistently on through the
years. While we can look back with pride on our accomplishments and initiatives, it is the
future that we are more excited about.
FY 2024-25 will be a transformative year for Vedanta on many fronts.
The expected completion of most expansion projects and the focus on
disciplined growth, operational excellence and exploring opportunities along the value
chain, position us for greater success on all fronts including volumes, revenue, cost
efficiency and bottom line. Beyond that, we have set targets that reflect our pursuit of
sustainable growth and further improving our balance sheet integrity. We seek to further
deleverage Vedanta Resources by US$ 3 billion over the next three years. Our team is
energised and the fundamentals supporting the sectors in which we operate remain robust,
providing an optimistic outlook. We believe that the key growth projects that are on the
horizon, along with the expected acceleration in commodity prices, will drive future
profitability.
On behalf of the entire Board, I extend my heartfelt gratitude to all
the stakeholders for their continuous support, the driving force behind our success.
Vedanta remains committed to executing strategic priorities to create long-term value for
all.
Best regards
Anil Agarwal
Chairman