The year FY 2011-12 has been a transformational year for Sterlite. Your
company has made considerable progress in the execution of its strategy
this year, delivering production growth and increasing reserves and
resources, completing Zinc International acquisition. Over the years,
Sterlite has become a world-class, diversifed resources company,
contributing around Rs. 5,500 Crore to the Indian exchequer in terms of
taxes, duties and royalties.
ROBUST FINANCIAL RESULTS
Despite volatile economy conditions, Sterlite increased volumes across
most of its commodities and successfully integrated recent Zinc
International acquisition, which contributed to our strong revenue
growth, which were up 35% at Rs. 40,967 Crore. In line with the
revenue growth, FY 2011-12 EBITDA grew 26% to Rs. 10,169 Crore. We
continue to maintain a strong and liquid balance sheet with Cash and
liquid investments of Rs. 23,403 Crore.
STRONG OPERATIONAL PERFORMANCE
Record production of Refined Zinc, Lead including Silver and Power and
increased contributions from the Zinc International assets were the key
drivers of our strong operational performance as our growth projects
started to yield results.
The ramp up of the silver-rich Sindesar Khurd mine and the new Silver
refnery delivered an impressive 35% increase in Silver production for
the year, with production reaching a new high of 242 tonnes and
contributing Rs. 1,014 Crore to EBITDA in FY 2011-12.
The commissioning of two 600 MW power plant at the 2,400 MW SEL power
plant and the Lead smelter at Dariba signifcantly boosted our power
generation and lead production.
This performance is the result of the hard work and commitment of our
13,525 employees across the organization and on behalf of the Board; I
would like to thank them for their contribution to this excellent
Despite volatile global market conditions, demand for commodities
remained strong throughout the year, driven by economic growth and
urbanization in emerging economies, which account for approximately 94%
of our revenues. Commodity prices were strong in the frst half of FY
2011-12, but corrected in the second half of the year, with the end
result that prices for silver moved up substantially, zinc prices fell
and copper TC/RCs, aluminium and lead were ahead of the previous year.
Growth rates in India, our home market, moderated to 6.9% due to higher
infation. Demand for natural resources however continued its upward
trend particularly for aluminium with India projected to become the
second largest consumer of aluminium in Asia during CY 2012.
Over the long-term, we believe that the increasing size of the domestic
market in India and favourable demographics will continue to drive
robust economic growth. We meet 82% of India''s Zinc consumption and
approximately 46.5% of its Copper and Lead requirements.
KEY STRATEGIC DEVELOPMENTS
We continued to focus on extending our existing resources and growing
our assets organically, investing in projects that expand our high
quality asset base, zinc assets life and increase our production
volumes. During the year, we invested Rs. 7,439 Crore in our organic
growth programme, increasing production of Zinc-Lead, Silver, Copper,
Aluminium, and Power. We have successfully completed the integration of
the assets acquired from Anglo American last year, now our Zinc
International business. The assets we acquired also included the
Gamsberg deposit in South Africa, which is one of the largest
undeveloped zinc deposits in the world. With a resource base of 186 mt
, Gamsberg has the potential to deliver over 400 ktpa over a mine life
of more than 20 years and a feasibility study is underway to scope the
Long term Value
We have maintained our position as a low cost producer through our
culture of continuous improvement. As well as major investment
projects, a myriad of small projects have been implemented across all
our businesses to reduce energy consumption, improve productivity,
debottleneck processes and increase effciency.
To ensure the long-term future of the Group, we aim to grow our
Reserves and Resources (R&R) at a faster rate than we deplete them,
through exploration and acquisitions. Exploration focus yielded good
results during the year for Zinc Business.
In line with our strategy to simplify our corporate structure, towards
the end of the year, we announced a merger of Sterlite Industries
(India) Ltd with Sesa Goa Ltd to create Sesa Sterlite Ltd. As part of
the group structure simplifcation, Vedanta''s stake in Cairn India and
Vedanta Aluminium will move under Sesa Sterlite. Sesa Sterlite Ltd is
expected to be the world''s Seventh largest global diversifed natural
resources major, ranked by EBITDA.
The simplifcation and consolidation of the Group structure is expected
to yield signifcant benefits through a more effcient capital structure,
increased fexibility to allocate capital, broader access to capital
markets and enhanced visibility of earnings and cash fow. The merger
will also generate signifcant synergies for the shareholders of
We have continued to focus on aligning our policies and management
systems to the sustainability standards recognized internationally by
the IFC performance standards, ICMM and UNGC principles. This year we
have completed the development of a comprehensive Sustainability
Framework that is now being rolled out across our operations.
We want to go even further and embed sustainable development into every
aspect of what we do which is one of the priorities that I have set.
The others are to:
Improve our health and safety performance for a safer, more secure and
healthier environment for every employee and contractor.
- We work in an inherently risky industry. We will continue to strive
to achieve our goal of ''zero harm''. We have structured programme in
place and our efforts to eliminate unsafe conditions and unsafe
behavior are starting to yield results. Our quarterly fgures show good
progress and our lost time injury rate continues to fall, reducing by
13% as compared to last year.
Contribute further and in a more targeted way to local communities
We are passionately committed to making a difference to our local
communities, contributing Rs. 57.58 Crore this year to community
development projects, benefiting over 1.6 million people.
Continue to manage and minimize our impact on air, water and land
Our environmental focus on reducing specifc consumption of energy and
water is making sound progress with most of our operations yielding
signifcant positive results.
Maintain a dialogue with Stakeholders to help us understand and respond
to their material issues
- We understand that stakeholder engagement is a two way process and
have structured programmes through which we identify and engage with
our different stakeholder group like our communities, our employee''s,
our industry, our lenders, our government and our civil society in
order to understand their material issues.
Achieving our goals will take a great deal of hard work, but we are
committed to our journey of continuous improvement.
The Board has recommended a fnal dividend of Rs. 1/- per share, taking
the total dividend for FY 2011-12 to Rs. 2 per share, which is the
highest ever dividend proposed by the company. The total dividend outgo
will nearly double to Rs. 686 Crore in FY 2011-12 as against Rs. 430
Crore during the previous year.
We start the new financial year with a world-class asset portfolio, a
low cost structure and a strong near term growth profle. The outlook
for natural resources remains robust: industrialization and
urbanization in China, India and other emerging economies continues to
drive demand and Sterlite is well-positioned to serve these markets.
Our signifcant capital investment programme, which has largely been
invested, will deliver near-term production growth across our
portfolio, in turn driving strong cash fow growth.