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Vedanta Ltd.

BSE: 500295 | NSE: VEDL |

Represents Equity.Intra - day transactions are permissible and normal trading is done in this category
Series: EQ | ISIN: INE205A01025 | SECTOR: Mining & Minerals

BSE Live

Jun 24, 16:00
250.90 -0.25 (-0.10%)
Volume
AVERAGE VOLUME
5-Day
531,156
10-Day
528,322
30-Day
718,053
221,652
  • Prev. Close

    251.15

  • Open Price

    252.35

  • Bid Price (Qty.)

    250.90 (1512)

  • Offer Price (Qty.)

    253.00 (100)

NSE Live

Jun 24, 15:59
250.95 -0.30 (-0.12%)
Volume
AVERAGE VOLUME
5-Day
11,201,069
10-Day
9,908,843
30-Day
13,106,502
6,777,996
  • Prev. Close

    251.25

  • Open Price

    252.25

  • Bid Price (Qty.)

    250.95 (9549)

  • Offer Price (Qty.)

    0.00 (0)

Annual Report

For Year :
2019 2018 2017 2016 2015 2014 2013 2012 2011

Chairman's Speech

Dear Shareholders, 2012-13 was a year of unprecedented challenges for your Company. As I had said earlier, in 2011-12, the Indian iron ore mining industry was adversely affected by regulatory and environmental concerns. Debate on illegal mining practices occupied centre stage with heightened activism driving government action and judicial intervention leading to a complete halt in mining. The business environment for the industry deteriorated during 2012-13. Sesa''s Karnataka mining operations were suspended due to ban on mining since 2011. In September / October 2012, the Goa mining operations came to a complete halt by an abrupt imposition of ban on mineral extraction and transportation by the State Government and subsequently by the Supreme Court. With both Karnataka and Goa operations suspended, Sesa''s entire iron ore mining business was at a standstill. Sesa and its teams are working tirelessly to mitigate impact, to ensure an early resolution of the impasse while continuing to respond proactively to all agencies. Sesa enhanced its engagement with stakeholders during the year to dispel myths and to reinforce and reiterate its responsible mining practices. Notwithstanding these challenges, Sesa made significant progress in its journey towards becoming a diversified global resource champion. Sesa increased its equity in WCL to 100%, acquiring the remaining 49% in December 2012. This consolidates our presence in Liberia and reaffirms our faith in the significant potential for the Western Cluster Project. With a large resource potential and its proximity to the port, it is one of the most exciting upcoming iron ore projects. Both the people of Liberia and our team are looking forward to the start of Phase I in the next financial year, which will be the first step in building a global iron ore mining giant. The merger of Sterlite Industries (India) Limited (and other associated companies), announced last year through two schemes, has received approval of the companies'' shareholders, Stock Exchanges in India, Competition Commission of India, Foreign Investment Promotion Board and Supreme Court of Mauritius. While the Goa Bench of the High Court of Bombay has accorded its approval, the scheme awaits approval of the High Court of Madras, where hearings are over and the order is awaited. The Value Addition Business achieved a new landmark in August 2012 when the new 450m3 blast furnace was commissioned, enhancing pig iron production from 0.25 to 0.625 mtpa, making us the largest low phosphorous pig iron facility in India. A 0.28 mtpa metallurgical coke plant, a 0.8 mtpa sinter plant and a 30 MW power plant were also commissioned as part of the project. Despite adverse events, Sesa looks ahead to a hopeful early resolution of challenges. We continue to further our systemic robustness and strengthen our processes to handle future challenges. In 2012, Sesa became the 1st Indian mining company to implement automation using RFID technology, wherein RFID tags on trucks register movement across operations in Goa and Karnataka and link truck information with forest passes and Dept. of Mining & Geology permits (in Karnataka), providing assurance and control. Sesa received the Supply Chain Technology Advancement award at the 2nd Asia Manufacturing Supply Chain Summit for this implementation. Business Environment Global GDP growth rate is estimated to be 3.2% in 2012 (3.9% in 2011). China and India exhibited slower growth in 2012, than previous years, of about 7.9% and 4.5% respectively. World crude steel production reached a record 1,548 mt in 2012, up by 1.2%, driven by growth in Asia and North America. World trade in iron ore increased in 2012 by 3.7% to 1.12 billion tonnes, despite decrease from India. As indicated last year, albeit temporary glitches, the emerging market super cycle theme remains unchanged. Despite emerging markets exhibiting slower growth, and a decade of trying to catch up with developed economies, with both China and India continuing in their commodity-intensive urbanisation, the gap is expected to continue for at least two more decades. Temporary slowdowns in growth and dips in infrastructure investment will only extend the investment horizon. The scale of urbanisation in China, urbanisation potential of India, and potential of other developing countries, with significant populations, makes the manifold increase in metal demand and absolute metal consumption inevitable. Given this long-term robustness of demand, in the iron ore demand-supply equation, the risk emanates on the supply side. Supply forecasts continue to remain complex owing to disruptions due to regulatory concerns as in India, weather as in Australian ports, cost inflations, grade depletion and large uncertainty of project timelines. Due to recent dip in iron ore prices and project cost blowouts, many new projects either failed to meet original forecasts or continue to remain on the drawing board. However, the big four iron ore players, have enhanced, or are in the process of expanding, their production levels in the light of favourable market conditions and, as per forecasts, are expected to lead to a surplus market in the long term. Performance Faced with extraordinary challenges, volumes have significantly declined during the year. Iron ore production and sales were 3.7 and 3.1 mt in 2012-13 compared to 13.8 and 16.0 mt in the previous year. Gross sales revenue from iron ore decreased by 77%, from Rs. 7,516 crore in 2011-12 to Rs. 1,697 crore in 2012-13 Pig iron and met coke production increased by 24% and 29% to 307,775 and 331,000 tonnes respectively due to new capacities commissioned in Q2 of FY2013. The pig iron business'' sales volume increased by 10% from 250,571 tonnes in 2011-12 to 275,119 tonnes in 2012-13, while sales revenue grew by 7% to Rs. 784 crore in 2012-13 from 730 crore in 2011-12. Sales volume of met coke increased by 20% to 301,889 tonnes in 2012-13 from 251,264 tonnes in 2011-12. Gross sales revenue remained even at Rs. 558 crore in 2012-13 as against Rs. 551 crore in 2011-12. Sesa''s net income from operations fell by 69% from Rs. 8,310 crore in 2011-12 to Rs. 2,554 crore in 2012-13. Operating cash profit (PBDT) declined by 99% to Rs. 23 crore from Rs. 3,235 crore in 2011-12. PAT (including associate income) decreased 15% from Rs. 2,696 crore in 2011-12 to Rs. 2,280 crore in 2012-13, and diluted earnings per share were Rs. 26.24 in 2012-13. Growth Despite the tough climate, we begin 2013-14 with renewed hope and a fresh outlook. The expansion projects in the value added business are commissioned and we have acquired the balance equity in wcL. More importantly, our drive for growth continues to be underscored by our strong performance on resource addition. True sustainable development in the mining industry is in the continued discovery of new resources through scientific exploration and Sesa continues to be at the forefront of investment into mineral exploration. though mining operations were restricted for a significant part of the year, consequent to which exploratory drilling too was halted, the Exploration team added 59 mt of additional resources in India during the year. The Liberia Project progressed well during the year culminating in a JORc-compliant resource estimate of over 966 mt. exploration is expected to continue aggressively for years to come and the indications, so far, point to a significant resource potential. The Liberia project is a very exciting growth opportunity for Sesa and we hope to commence mining at Liberia during FY2014 with the first shipment by end of FY2014. The project will be expanded in a phased manner in due course. Sustainability Sesa remains committed to sustainable development, which focuses on maintaining a pre-eminent position in health, safety and environment practices, and contributing to the development of communities where it operates. Health and safety are always a priority for Sesa, and we continue to play a proactive role in providing employees a safe working environment through responsibility, training, monitoring and implementing the best safety practices across all locations. In 2012-13, Sesa''s overall Lost Time Injury Frequency Rate (LTIFR) reduced from 0.81 in 2011-12 to 0.54 per million manhours worked. I am also happy to report that, during the year, the shipbuilding, met coke, pig iron and energy divisions achieved a zero-accident record. During the year, two unfortunate incidents of soot emissions, due to misfiring by two high capacity burners, occurred during the commissioning of the second battery of met coke expansion project. The root cause of the soot emissions was immediately addressed and corrective actions were taken in earnest. the unit''s activities were suspended for about 2 months as a result of this incident. Sesa has an integrated approach to the management of health, safety and environment systems in all its units, which are certified for ISO 9001:2008, ISO 14001: 2004 and OHSAS 18001:2007. Sesa has been certified for SA 8000 for all its units on a standalone basis. Our community development work, through the Sesa community Development Foundation, Mineral Foundation of Goa and other specific need-based initiatives, continues to focus on social projects in line with our overall sustainability objectives. Further details, on health, safety and environment and corporate social responsibility, are outlined in the ensuing relevant chapters. Outlook The longer-term business environment of the iron ore market remains stable with a gradual move towards equilibrium. Notwithstanding multiple cost and regulatory pressures, Sesa''s strategic positioning as a low-cost producer, coupled with accessibility to ports and strong customer relations, remains key to mitigating downside risks and exploiting opportunities. On the cost front, royalty rates, railway and road freight and export duties are expected to continue to put pressure on the company, while volumes would continue to be challenged by regulatory actions and hurdles in logistics. We remain confident that the industry will emerge stronger out of the current turmoil with a strict, robust and stable regulatory environment and we continue to remain optimistic of overcoming the current and any future obstacles. The following will continue to be our strategic thrust areas for the year 2012-13. - To be alert and ensure a state of readiness to restart efficient operations in Karnataka and Goa, whenever we are permitted to resume operations - To identify opportunities to leverage and introduce technology to improve our performance, be it in operations, people management, knowledge management or CSR - To better our safety record and performance and achieve / maintain standards of zero-accidents in all operations - To strengthen proactive stakeholder relations Corporate Governance In 2009-10, Sesa was subjected to an investigation by the Serious Fraud Investigation Office (SFIO) of the Ministry of Corporate Affairs. In 2011, Sesa received a copy of the SFIO report, wherein certain allegations were made relating to violations under the Indian Companies Act, during 2001 to 2008. The report had recommended, inter alia, that action be taken against the directors of Sesa Goa Limited during the aforementioned period. Sesa filed representations to all concerned explaining in detail its position on the allegations and denying the allegations made in the SFIO report. Subsequently, the Union of India through the Ministry of Corporate Affairs filed three cases against Sesa Goa Limited, its erstwhile subsidiary, Sesa Industries Limited, and some of their officials. The Company is defending itself and its directors / officials against these cases. However, the Ministry has dropped all allegations of under / over invoicing of iron ore / coal and excess payment of commission. Acknowledgement I would like to take this opportunity to thank all our employees, my colleagues on the executive team of Sesa, the Group Management and the Board of Directors for their unwavering support. I thank our shareholders for reposing faith in our business in increasingly adverse times. Let me reassure our shareholders that we will not get bogged down by the tough environment that surrounds us today, that we are geared up to face challenges as they arise and, through our tireless collective efforts, we will continue to propel our Company forward on its path of growth. P K Mukherjee Managing Director