CONTENTS
Integrated
Report
Statutory
Reports
Financial
Statements
see pages 02-125
see pages 126-141
see pages 142-290
02 About the Report
03
04 Highlights FY2021
Integrated Thinking at Vedanta
INTRODUCTION
08 Vedanta at a Glance
10 Asset Overview
12
Investment Case
16 Chairman’s Statement
20 Key Performance Indicators
24
Case Studies
VALUE CREATION
AND STRATEGY
34 Value Creation Model
36 Strategic Priorities
42 Opportunity Landscape
46 Risk Management
WELL-POSITIONED TO DELIVER
SUSTAINABLE SOLUTIONS
58 Sustainability and ESG
62 Environment
68
Social
74 Safety
76 People and Culture
MANAGEMENT DISCUSSION
AND ANALYSIS
82 Finance Review
90 Operational Review
142 Independent auditor’s report
151 Financials
278 Five Year Summary
279 Production and Reserves
Summary
286 Glossary and Definitionsa
126 Governance
131 Accountability: Audit
Committee
133 Directors’ Report
139 Remuneration Report
139 Directors’ Remuneration
Policy Report
140 Annual Report on
Remuneration
Read more online
at vedantaresources.com
Marching ahead
and contributing to
aatmanirbhar bharat
see pages 24
Resourcing India’s rise
Responsibly
India is a land of abundant
resources. Resources that help
the economy grow, and create
sustainable livelihoods for mns of
people. At Vedanta, we continue to
foster long life, structurally low cost
and diverse assets with excellent
potential, which drive our growth
ambitions.
Our investments in smarter
processes, industry-leading
efficiencies, empowerment of our
people, and strong corporate
governance help us address the
nation’s growing needs for metals
and minerals.
Our strategic decisions are
supported by robust cash flows,
disciplined capital allocation and
emphasis on sustainability in
everything we do. With a resilient
and responsible business model,
we are ideally positioned to partner
India’s journey towards greater
self-reliance.
Powering the wheels
of the automotive
industry
Taking digital
transformation to
the next level
Cairn pushes the
digital envelope
farther
see pages 26
see pages 28
see pages 30
ABOUT THE REPORT
Inspired by our values, we remain committed to disclosing relevant information
pertaining to our material issues with highest standards of transparency and
integrity. These reports are prepared to assist our stakeholders, primarily the
providers of financial capital, to make an informed assessment of our ability to
create value over the short, medium and long term. They strive to demonstrate
our confidence, capacity to grow and our ability to deliver on set strategies that
can drive significant financial and non-financial value for everyone.
02
Integrated Report
Integrated Report
Statutory reports
Financial statements
INTEGRATED THINKING AT VEDANTA
At Vedanta, we are led by an integrated thought process that powers our
decision-making and enables our consistent market success.
We are
led by
Mission
To create a leading global natural
resource Company
Values
Trust | Entrepreneurship | Innovation |
Excellence | Integrity | Care | Respect
Capitals
Building
on
Financial
capital
Natural
capital
Intellectual
capital
Manufactured
capital
Social and
relationship
capital
Human
capital
34
Material issues
Focusing
on
Enabled
by
With a
constant
eye on
Creating
consistent
value
M1
M2
M3
M4
M5
M6
M7
M8
M9 M10 M11 M12 M13
61
M
Material issue
Strategic focus
Continue
to focus on
world-class ESG
performance
36
Augment our
reserves and
resource base
Operational
excellence
Optimise capital
allocation and
maintain strong
balance sheet
Delivering
on growth
opportunities
Top risks
Megatrends and opportunities
R1
R2
R3
R4
R5
R6
R7
T1
T2
T3
T4
T5
R8
R9
R10
R11
R12
R13
T6
T7
T8
T9
T10
49
Risk
R
42
Trend
T
For shareholders,
investors and lenders
For local
communities
For employees
For industry
For governments
For civil societies
VEDANTA RESOURCES LIMITED | INTEGRATED REPORT AND ANNUAL ACCOUNTS 2020-21 |
03
VEDANTA RESOURCES LIMITED | INTEGRATED REPORT AND ANNUAL ACCOUNTS 2020-21 | HIGHLIGHTS FY2021
Financial highlights
US$11.7 bn
Revenue
1%
(FY2020: US$11.8 bn). This
was primarily driven by rupee
depreciation, lower power sales
at TSPL, lower volume at Oil &
Gas, Skorpion mine put under
maintenance and care, and
lower cost recovery at Oil & Gas
business, partially offset by higher
commodity prices, higher volumes
at Zinc India, Copper, Iron Ore and
Aluminium business, inclusion of
FACOR in FY2021.
US$1.3 bn
Free cash flow (FCF)
post-capex
Driven by strong cash flow from
operations and lower sustaining and
project capital expenditure.
(FY2020: US$0.8 bn)
US$3.8 bn
EBITDA
27% y-o-y
37%Robust adjusted
EBITDA Margin1
(FY2020: US$3.0 bn)
(FY2020: 29%)
C. 19.4%
ROCE
US$303 mn
Profit Attributable to equity
holders (before exceptional items)
(FY2020: 10.3%)
(FY2020: US$(202) mn)
US$5.6 bn
Strong financial position with
cash and cash equivalents
(FY2020: US$5.1 bn)
US$10.7 bn
Net debt
Primarily driven by dividend
payment during the year,
increase in working capital,
stake increase in VEDL,
capital expenditure partially
offset by strong cash flow
from operations.
(FY2020: US$ 10.0 bn)
C. US$4.7 bn
Contribution to the exchequer
(FY2020: US$4.6 bn)
Gross debt at
US$16.4 bn
(FY2020: US$15.1 bn), higher by
$1.3 bn mainly due to the increase
in borrowings at Vedanta Resources
Limited standalone level.
Moody’s downgraded corporate Family ratings of Vedanta Resources from
B1 to B2 (and the ratings of senior unsecured notes from B3 to Caa1) and
placed the ratings “under review for downgrade’ in December 2020 upon
failure of take private transaction and expectation of high refinancing
needs and weak liquidity at VRL. On 17 February 2021, Moody’s confirmed
Vedanta Resources Limited’s B2 Corporate Family Rating and Caa1 rating
on the senior unsecured notes of the company and changed the outlook
on the rating to “Negative” from ratings “under review for downgrade”.
The rating confirmation reflects the reduced immediate refinancing risk at
VRL. Further to downgrade of VRL in March 2020 by S&P to B- with a stable
outlook, S&P placed the ratings on ‘Negative’ outlook in October 2020 upon
failure of Take private transaction. On 25th January 2021, S&P revised the
outlook to ‘Stable’ from ‘Negative’ on account of reduced refinancing risk
and improving liquidity position at the holding company level while affirming
the ratings at ‘B-‘.
1. Excludes custom smelting at Copper India and Zinc India Operations.
04
Integrated Report
Integrated Report
Statutory reports
Financial statements
Business highlights
ZINC
INDIA
ZINC
INTERNATIONAL
OIL &
GAS
Highest ever ore
production of 15.5 mn
tonnes despite disruptions
on account of the
pandemic
Highest ever mined metal
production of 972 kt, up 6%
y-o-y
Refined zinc-lead
production of 930 kt, up
7% y-o-y
Cost of production at
US$1,307 per tonne, down
22% y-o-y
Average gross operated production of 162 kboepd, down 6%
y-o-y due to the impact of the pandemic on growth projects
completion and natural field decline
Increase in Gamsberg
Key growth projects update:
production volume from
108 kt in FY2020 to 145 kt
in FY2021
BMM started a new
product line of recovering
magnetite through its
tailings with potential
capacity of 0.7 mn tonnes
of production per annum
− New gas processing terminal construction completed;
commissioning underway expected to add c.100mmscfd
by Q1 FY22
− Liquid handing capacity upgraded by 30%, major facility
systems commissioned
− Enhanced Oil Recovery project implemented in Bhagyam
and Aishwariya Fields
− Aishwariya Barmer Hill surface facility commissioned;
wells being hooked up progressively
Drilling activities across the portfolio in Rajasthan, North East
and Cambay regions. First well KW-2-Udip drilled in Rajasthan.
Capex growth projects update:
− 74 wells hooked up during FY2021
− Ravva drilling programme completed; c.11 kboepd of
incremental volumes
ALUMINIUM
POWER
IRON ORE
STEEL
Lowest ever APC of 7.19%
at the 1,980 MW TSPL plant
in FY2021
Sustained operations
with zero import coal
in FY2021 through coal
substitution scheme of GoI
(Government of India)
Highest ever aluminium
production at 1,969 kt,
retaining our position as
the largest aluminium
producer in the country
Highest ever alumina
production from Lanjigarh
refinery at 1,841 kt, up 2%
y-o-y
Lowest ever hot metal cost
of production at US$1,347
per tonne, 20% lower y-o-y
Goa operations remains
suspended during the
year due to state-wide
directive from the
Hon’ble Supreme Court,
continuous engagement
with the stakeholders for
a resumption of mining
operations
Production of saleable
ore at Karnataka at 5 mn
tonnes, up 15% y-o-y
Iron Ore Sales at Goa at 2.1
mn tonnes
Value-added Business
achieved highest ever
EBITDA Margin of
US$104/T supported by
strengthening steel prices
Annual steel production at
1.19 mn tonnes for FY2021
Robust margin of US$ 131
per tonne during the last
quarter (c.22% EBITDA
Margin)
COPPER
INDIA
Due legal process being
followed to achieve a
sustainable restart of the
operations
VEDANTA RESOURCES LIMITED | INTEGRATED REPORT AND ANNUAL ACCOUNTS 2020-21 |
05
VEDANTA
AT A GLANCE
Vedanta Resources Limited is one of the world’s foremost natural
resources conglomerates, with primary interests in zinc-lead-silver, iron
ore, steel, copper, aluminium, power, oil and gas. With world-class, low-
cost, long-life strategic assets based in India and Africa, we are rightly
positioned to create long-term value with superior cash flows.
70,000+
Direct and indirect
employment
Largest
Natural resources
company in India
06
Integrated Report
Statutory reports
Financial statements
2,300+
Nand Ghars created
for social welfare
c.13.6 mn
tCO2e in avoided emissions
from 2012 baseline
07
VEDANTA RESOURCES LIMITED | INTEGRATED REPORT AND ANNUAL ACCOUNTS 2020-21 | VEDANTA AT A GLANCE
Enabling resource
sufficiency at scale
We cater diverse consumer markets for their primary material needs and are leaders in the
segments we operate. Through our activities that generate economic, human, and social
value, we responsibly support economies in their journey towards self-sufficiency.
OUR VALUE CHAIN
Exploration
We have consistently added more
to our Reserves and Resources
(‘R&R’) through brownfield and
greenfield activities. This helps us
to extend the lives of our existing
mines and oilfields.
08
Asset development
We have a strong track record of
executing projects on time and
within budget. We take special care
to develop the resource base to
optimise production and increase
the life of the resource. We also
strategically develop processing
facilities.
Extraction
Our operations are focused on
exploring and producing metals,
extracting oil & gas and generating
power. We extract zinc-lead-
silver, iron ore, steel, copper and
aluminium. We have three operating
blocks in India producing oil & gas.
Integrated Report
Statutory reports
Financial statements
OUR CORE VALUES
Our core values underpin everything we do at Vedanta. These are universal values, which guide our behaviour,
as we expand into new markets and countries.
Trust
Entrepreneurship
Innovation
Excellence
Integrity
Care
Respect
A STRUCTURE THAT SUPPORTS RESPONSIBLE, VALUE-ACCRETIVE GROWTH
VEDANTA
RESOURCES LTD
Vedanta Ltd
65.2%
Divisions of Vedanta Limited
Sesa Iron Ore
Sterlite Copper
Power (600 MW Jharsuguda)
Aluminium (Odisha aluminium
and power assets)
Cairn Oil & Gas*
Konkola Copper
Mines (KCM)
79.4%
Subsidiaries of
Vedanta Ltd
Zinc India
(HZL)
Bharat Aluminium
(BALCO)
Zinc International
(Skorpion -
100%, BMM &
Gamsberg - 74%)
Talwadi
Sabo Power
(1,980 MW)
ESL Steel
Limited
64.9%
51%
100%
100%
95.5%
Listed entities
Unlisted entities
Note: Shareholding as on May 10, 2021
* 50% of the share in the RJ Block is held by a subsidiary of Vedanta Ltd
Processing
We produce refined metals by
processing and smelting extracted
minerals at our zinc, lead, silver,
copper, and aluminium smelters, and
other processing facilities in India and
Africa. For this purpose, we generate
captive power as a best practice
measure and sell any surplus power.
Value addition
We meet market requirements
by converting the primary metals
produced into value-added products
such as sheets, rods, bars, rolled
products, etc., at our zinc, aluminium
and copper businesses.
09
VEDANTA RESOURCES LIMITED | INTEGRATED REPORT AND ANNUAL ACCOUNTS 2020-21 | VEDANTA AT A GLANCE CONTINUED...
ASSET OVERVIEW
Vedanta is India’s largest natural resources conglomerate with leading positions in seven
key business segments.
ZINC-LEAD-SILVER
OIL & GAS
ALUMINIUM
c.80%
Market share in India’s primary
zinc market
Business:
Zinc India (Hindustan
Zinc Limited- HZL)
Zinc International
Production Volume:
Zinc India (HZL) Production Volume
715 kt
Zinc
706 t
Silver
214 kt
Lead
Zinc International
203 kt
EBITDA (In US$ mn)
Operates
c.25%
of India’s crude oil production
Business:
Cairn India
Production Volume:
162 kboepd
Average Daily Gross
Operated Production
EBITDA (In US$ mn)
1,568
Zinc India (HZL)
120Zinc International
438
Asset highlights:
World’s largest fully integrated zinc-
lead producer
World’s largest underground zinc-
lead mine at Rampura Agucha, India
6th largest silver producer in the
world
Zinc India has R&R of 448 mn tonnes
with mine life of 25+ years
Zinc International has R&R of more
than 566.4 mn tonnes supporting
mine life in excess of 30 years
HZL- Low-cost zinc producer, which
lies in the first decile of the global
zinc cost curve (2020)
Application areas:
Galvanising for infrastructure and
construction sectors
Die-casting alloys, brass, oxides and
chemicals
Asset highlights:
World’s longest continuously heated pipeline
from Barmer to Gujarat Coast (c.670 km)
Till FY2021, to deliver the capex project 256
wells have been drilled and 149 wells hooked up
New gas processing terminal construction
completed; commissioning underway expected
to add c. 100 mmscfd
Early drilling opportunities being evaluated in
OALP - Rajasthan, Assam & Cambay regions.
First well KW-2-Udip drilled in Rajasthan.
Largest private sector oil & gas producer in India
Executed one of the largest polymers EOR
projects in the world
Footprint over a total acreage of c. 65,000 sq km
Gross proved and probable reserves and
resources of 1,229 mmboe
Largest primary aluminium
producer in India
Business:
Aluminium smelters at
Jharsuguda & Korba (BALCO)
Alumina refinery at Lanjigarh
Volume:
1,969 kt
Aluminium
1,841 kt
Alumina
EBITDA (In US$ mn)
1,046
Asset highlights:
Largest aluminium installed
capacity in India at 2.3 MTPA
Integrated 5.7GW Power & 2
MTPA Alumina refinery
c.47% market share in India
among primary aluminium
producers
Diverse product portfolio
– ingots, wire rods, primary
foundry alloy, rolled products,
billet and slab
Application areas:
Crude oil is used by
hydrocarbon refineries.
Natural gas is mainly used by
the fertiliser sector
Application areas:
Power systems, automotive
sector, aerospace, building and
construction, packaging
10
Integrated Report
Statutory reports
Financial statements
POWER
IRON ORE
STEEL
COPPER
c.9 GW
Power portfolio
Business:
Power assets at
Talwandi Sabo,
Jharsuguda, Korba &
Lanjigarh
Volume:
11,261
mn units
Power Sales
One of the largest merchant iron
ore miners in India and one of the
largest producers and exporters of
merchant pig iron in India
One of the largest copper
producers in India
Business:
Iron Ore India
Business:
Electrosteel India
Business:
Copper India
Volume:
5 mn dmt
Iron ore
596 kt
Pig Iron
Production Volume:
Production Volume:
1,187 kt
Steel
101 kt
EBITDA (In US$ mn)
EBITDA (In US$ mn)
EBITDA (In US$ mn)
EBITDA (In US$ mn)
190
245
117Steel
(21)
Asset highlights:
One of the largest
power producers in
the country in the
private sector*
Energy efficient,
super critical 1,980
MW power plant at
Talwandi Sabo
Asset highlights:
Karnataka iron ore mine with
reserves of 76 mn tonnes, and
life of 11 years
Value-added business: 3 blast
furnaces (0.8 mtpa), 2 coke
oven batteries (0.5 mtpa) and
2 power plants (60MW) and
one merchant coke plant of
capacity 0.1 mtpa
Asset highlights:
Design capacity of
2.5 mtpa
Largely long steel
product
Asset highlights:
Tuticorin smelter and
refinery currently not
operational
Application areas:
2.9 GW (c.37%)
commercial power
backed by Power
Purchase Agreements
4.8 GW (c.63%)
captive use
Application areas:
Essential for steel making
Used in construction,
infrastructure and
automotive sectors
*including captive power generation
Application areas:
Construction,
infrastructure, transport,
energy, packaging,
appliances and industry
Product portfolio includes
pig iron, billets, TMT bars,
wire rods and ductile iron
pipes
Application areas:
Used for making cables,
transformers, castings,
motors and castings, and
alloy-based products
11
VEDANTA RESOURCES LIMITED | INTEGRATED REPORT AND ANNUAL ACCOUNTS 2020-21 | INVESTMENT CASE
At Vedanta, our investment strategy is focused on delivering sustainable, long-term
returns to our shareholders and creating value for our wider stakeholder fraternity. Natural
resources form an important growth engine in the economies we operate in. Through
scientific and sustainable mining, we are poised to grow attractively in the foreseeable
future in these regions and contribute to regional and national growth.
Large, low-cost, long-life and diversified asset
base with an attractive commodity mix
Large-scale, diversified asset
portfolio, with an attractive cost
position in many core businesses,
positions us to deliver strong
margins and free cash flows
through the commodity cycle
An attractive commodity mix,
with strong fundamentals and
promising demand growth, key
focus on base metals and oil.
While commodity markets suffered
during the first half of 2020, due to
COVID, with the base metals sector
experiencing reduced demand
from manufacturing, and the oil
price suffering from severe demand
weakness owing to travel restrictions
and prolonged factory shutdowns,
the second half of the year saw
recovery, particularly in Vedanta’s
DEMAND 2020-2030 CAGR
1
.
2
1
core commodities (zinc, aluminium
and oil & gas). In 2021 various
efforts to stimulate economic
growth by governments, central
banks and international institutions,
together with faster vaccines roll
out are likely to strengthen the
recovery in these commodity
markets
(%)
5
.
5
9
.
5
9
.
5
9
.
6
2
.
2
8
.
1
4
.
2
8
.
1
9
.
3
7
.
4
2
.
4
4
.
2
1
.
0
7
.
2
)
2
.
0
(
)
1
.
0
(
Copper
Lead
Met Coal
Aluminium
Zinc
Iron Ore
Nickel
Oil
India Demand
Global Demand
Vedanta Resources Limited Commodity Presence
Source: Wood Mackenzie
Note: Oil demand CAGR shown for 2018-2030 period
)
7
.
0
(
Thermal
Coal
12
Jharsuguda Facility, Odisha
Integrated Report
Statutory reports
Financial statements
Ideally positioned to capitalise on India’s growth
and natural resources potential
India’s (US$2.7 trillion economy) per capita metal consumption is significantly lower than the global
average, indicating significant headroom for growth
The government’s continued focus on infrastructure, urbanisation, and affordable housing (supported
by low interest rates regime driven by RBI’s accommodative monetary policy) will help the economy
recover faster from the COVID-induced shock and generate strong demand for natural resources
VEDANTA’S COMPETITIVE ADVANTAGE IN INDIA
A diversified portfolio of established operations in India
A strong market position as India’s largest base metals producer and largest private sector oil producer
An operating team with an extensive track record of successful project execution
ALUMINIUM CONSUMPTION
(KG/CAPITA)
COPPER CONSUMPTION
(KG/CAPITA)
ZINC CONSUMPTION
(KG/CAPITA)
OIL CONSUMPTION
(BOE/CAPITA)
7
.
6
2
7
.
8
9
.
4
5
.
4
6
.
3
3
.
1
5
.
1
4
.
8
4
.
0
1
.
3
4
.
0
7
.
1
India
Global
China
India
Global
China
India
Global
China
India
Global
China
Source : Wood Mackenzie, IMF, IHS Markit, BMI, BP Energy outlook 2020
Note : All commodities demand correspond to primary demand; figures are for 2021
INDIA GROWTH POTENTIAL
GDP
(Nominal at $PPP)
Pre capita income
(Nominal at $PPP)
Population
Urbanisation
Source: IHS Market
$10.2tr
2020
$7,409
2020
1.4 bn
2020
35%
2020
India
CAGR 8 . 8%
CAGR 7.9%
CAGR 0.9%
CAGR 1.4%
$23.7tr
2030
$15,782
2030
1.5 bn
2030
40%
2030
India’s mineral reserves
ranking globally
8th
Zinc
Reserves: 10.0 mn tonnes
Crude oil
Reserves: 4.4bn bbl
7th
Iron ore
Reserves: 5.5 bn tonnes
8th
Bauxite
Reserves: 660 mn tonnes
Source: USGS Mineral
Commodity Summaries
2021, OPEC Annual Statistical
Bulletin 2020.
13
VEDANTA RESOURCES LIMITED | INTEGRATED REPORT AND ANNUAL ACCOUNTS 2020-21 | World-class natural resources powerhouse with proven track record
Our Management team has a diverse and
PRODUCTION VOLUMES
INVESTMENT CASE CONTINUED...
extensive range of sectoral and global experience.
They ensure that operations run efficiently and
responsibly, drawing from key insights
Disciplined approach to development, growing
our production steadily across our operations with
focus on operational efficiency and cost savings
Since our listing in 2003, our assets have delivered a
phenomenal production growth
0
0
4
1
8
8
3
1
3
4
3
1
6
3
9
2
7
7 9
1
9
(kt)
1
7
5
1
6
5
9
6
5
9
8
1
4
7
1
2
6
1
Oil & Gas
Underground
mine zinc
production
Aluminium
production
Jharsuguda
Aluminium
production
BALCO
FY2019
FY2020
FY2021
Well-invested assets driving free cash flow growth
Completed a significant proportion of our medium-
term capital expenditure programme; and we are
now ramping up production to take advantage of our
expanded capacity
GROWTH CAPEX
FY2021
0.3
FY2020
FY2019
Seeing positive outcomes of our investments, with
Zinc India and aluminium delivering robust production
in the past year; and we expect our Zinc International,
particularly the Gamsberg project, to provide further
impetus to our Zinc business, going forward
In the Oil & Gas business, we have begun to implement
our growth projects with a gross capex of US$3.4+
bn, enabling us to grow our volumes in the near term.
These increases in production are leading to a strong
cash flow generation
Operational excellence and technology driving
efficiency and sustainability
Eliminating inefficiencies across every aspect of
FCF POST CAPEX
operations
Leveraging advanced technologies to roll out a
wide range of innovation
Rationalising the cost structure to build a leaner
operating model
Ensuring sustainable operations and delivering a
positive result for all our stakeholders and society
14
FY2021
FY2020
FY2019
0.8
(US$ bn)
0.8
1.1
(US$ bn)
1.3
1.3
Integrated Report
Statutory reports
Financial statements
Strong financial profile
Our operating performance, coupled with optimisation
of capital allocation, has helped strengthen our
financials.
Revenues of US$11.7 bn and EBITDA of US$3.8 bn
Strong ROCE of c.19.4 %
Deleveraging and extension of our debt maturities
through proactive liability management exercises
Strong and robust FCF of US$1.3 bn
Cash and liquid investments of US$5.6 bn
A strong balance sheet, with respect to Net Debt/
EBITDA (2.8x) and gearing, compared to our global
diversified peers
RETURN ON CAPITAL EMPLOYED
FY2021
FY2020
FY2019
10.3
9.6
(%)
19.4
Committed to the highest standards of ESG
Committed to be the lowest cost producer in a
LTIFR
sustainable manner
Aligned to our Group objective of ‘Zero Harm, Zero
Waste and Zero Discharge’ we worked dedicatedly to
setup a framework, aligned to global best practices
Focusing on key material areas of occupational health,
safety, environment, carbon, social performance
and governance
FY2021
FY2020
FY2019
0.55
0.66
0.46
Key future programmes comprise the following:
achieve highest safety level, manage zero net
environmental damage, support global carbon
neutrality targets and work with all stakeholders
in harmony
We have made significant improvements in our
investigation quality to avoid repeat accidents and
promote higher reporting for all incidents. We are also
duly progressing towards achieving our water and
waste targets set for the year.
WATER CONSUMED AND RECYCLED
(mil m3)
3
4
2
0
5
2
0
7
2
7
6
1
7
3
8
FY2019
FY2020
FY2021
Consumed
Recycled
Cairn facility
15
VEDANTA RESOURCES LIMITED | INTEGRATED REPORT AND ANNUAL ACCOUNTS 2020-21 |
CHAIRMAN’S STATEMENT
Strength meets
responsibility
DEAR STAKEHOLDERS,
The year 2020 was an unusual
year for all of us. A year that was
challenging on multiple fronts,
but what stood out was the
extraordinary resilience and
adaptability of individuals and
enterprises. There was a tectonic
shift in the way we live or conduct
our businesses, and Vedanta was
no different. As a large natural
resources company, we have had our
fair share of challenges. However, we
were quick to adapt to the emerging
realties, backed by the relentless
support of our dynamic workforce.
In India, where our key subsidiary
Vedanta Limited has maximum
footprint, we extended our support
to the nation’s fight against
COVID-19 during its first wave
through contributions to the PM
CARES Fund and undertaking
initiatives that positively impacted
the lives of over 15 lakh people. We
have now pledged c.US$20 mn to
help the country in its fight against
the second wave of COVID-19 along
with setting up of 1,000 specialty
beds in 10 locations across India.
Sterlite Copper, which has a capacity
to produce 1,000 tonnes of oxygen
at Tuticorin, is catering to the needs
of COVID patients in the region.
A YEAR OF CONTINUED
EXCELLENCE AND LEARNING
Vedanta Resources Limited is one
of the world’s largest suppliers of
natural resources, with primary
operations in zinc-lead-silver,
iron ore, steel, copper, aluminium,
power, oil & gas. Our portfolio of
world-class, low-cost, scalable
assets consistently generate strong
profitability and deliver robust cash
flows. We are actively deleveraging
our balance sheet and are raising the
bar in operational excellence, across
our wide canvas of operations.
During FY2021, Vedanta continued
to live up to its promises to its
stakeholders and operated a
resilient and responsible business
that contributed to a self-reliant
India. Even as temporary disruptions
materialised, we were able to bounce
back strongly with industry-leading
EBITDA margins and exceptional
quarters for key businesses. We
continued to deliver on all strategic
levers, building on our strengths
and commitment to operational
excellence. We remained cash flow
positive; liquidity was maintained at
comfortable levels.
16
Anil Agarwal,
Chairman
Integrated Report
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our Board, who brings a host of
experience with his background in
management consulting, operational
audit, and information technology
in manufacturing and service
businesses. A Chartered Accountant
by profession, he has been an
advisor to the Vedanta Foundation
in recent years and is a lead member
of the Vedanta CSR Management
Committee. We hope to be guided
by his extensive financial, strategic
and boardroom experience, in
setting new benchmarks for
Vedanta. We are thankful to
Mr. Deepak Parekh, Mr. Ravi
Rajagopal, and Mr. Edward T Story
for their contributions during their
tenure with the Vedanta Board as
Non-Executive Directors.
OPERATING IN A THRIVING
ECONOMY
After an outlier year, India is now
back on the growth trajectory, and is
poised to grow by 11.5% in FY2022,
according to the International
Monetary Fund. The rebound is
clearly evidenced by the uptick in
consumption, manufacturing activity
and bank credit. India is experiencing
a V-shaped recovery. Global
agencies such as the World Bank
have acknowledged the fact that this
recovery is phenomenal, given how
the country has now opened up, and
is organising large-scale vaccination
drives on priority.
The government is also playing a key
role in facilitating the economy’s
Offshore facility of Cairn Oil & Gas
17
c.US$20 mn
Pledged by Vedanta to support
India during the second wave of
COVID-19
It also gives me great pleasure
in informing you that we
performed exceedingly well
on key Environmental, Social,
Governance (ESG) aspects during
the year. This is validated by our
improved ranking in the Dow
Jones Sustainability Index. It’s a
true reflection of our belief that
business and sustainability are
synergistic in nature.
While we have reasons to celebrate,
we mourn the passing of eight of
our colleagues. We are aggrieved
by their irreplaceable loss and are
supporting the bereaved families.
At Vedanta, we accord paramount
importance to occupational
safety and employee wellbeing
and continue to nurture a safety
culture that results in zero harm.
However, there is always room for
improvement, and collective action
and behavioural change alone
can help bring transformational
outcomes. Aligned to this, we
are conducting a Group-wide
review of permit to work and
isolation procedure and are
instating a safety alert dashboard
to improve implementation of
fatality learnings. Cross business
safety audits and piloting of
critical risk management are
other supplementary initiatives
supporting this.
Another key development of
the year, is the appointment
of Mr. A R Narayanaswamy a
Non-Executive Director on
VEDANTA RESOURCES LIMITED | INTEGRATED REPORT AND ANNUAL ACCOUNTS 2020-21 | CHAIRMAN'S STATEMENT CONTINUED...
return to the growth path. This
is clearly reflected in the Union
Budget 2021, which lays extended
focus on economic enablers such as
infrastructure and socially important
sectors such as health. Among
others, the proposals to create a
Development Financial Institution
(DFI), monetise assets, set up new
economic corridors and increase the
ambit of the National Infrastructure
Pipeline (NIP) are promising. These
measures, in conjunction with a
conducive policy environment, are
expected to increase the demand
for basic materials in which we
specialise. The relevance of metals
and mining are more pronounced
today than ever, and at Vedanta, we
are rightly positioned to cater to
the growing needs. The clarion call
for ‘Aatmanirbharta’(self-reliance)
is very well founded, and we
are perfectly aligned to the
government’s vision of a self-reliant
nation. In line with this, we have
augmented our positioning to ‘Desh
Ki Zarooraton Ke Liye, Aatmanirbhar
Bharat Ke Liye (For the needs of the
nation, For India’s self-reliance).’
GROWING IN A VITAL INDUSTRY
There is a definite focus on India’s
natural resources sector as a key
enabler in supporting the nation’s
development. Apart from being a
contributor to GDP, it underpins
the supply of raw materials to the
nation’s burgeoning manufacturing
sector. Development of this sector
thus holds key to the nation’s
ambition of becoming fully
self-reliant.
In recognition of this, India is turning
a new leaf with the introduction
of the Mines and Minerals
(Development and Regulation)
Amendment (MMRDA) Bill, 2021.
A welcome move, its passage will
significantly boost India’s metals and
mining industry, by inviting private
participation in the exploration of
18
key resources such as coal and gold.
It is set to redefine the norms of
exploration of mineral blocks and
adequately utilise India’s unused
mineral reserves. Currently, natural
resources contribute 1.75% to India’s
GDP, whereas in countries with
similar reserves, the contribution
is 7-7.5%. The MMRDA Bill is a
gamechanger in this context and is
expected to significantly improve the
share of the sector in the national
economy. It will contribute to the
creation of over five mn jobs and will
considerably reduce India’s import
dependence for basic materials.
BEING THE DEVELOPER OF
CHOICE
Over the years, Vedanta has built
one of the most recognised and
impactful CSR programmes in
India. As a natural resources player,
we are inextricably linked to the
communities near our operations,
and have become an inalienable part
of their livelihood.
From here stems our deep sense
of responsibility and extended
obligation beyond what is
mandatory.
During FY2021, we spent over US$45
mn on social development activities,
spread across our core impact areas
of education, health, sustainable
livelihoods, women empowerment,
sports and culture, environment
and community development.
Each Group company played its
part by executing the respective
CSR agenda, in line with the Group
guidelines.
This year, supporting communities
during the COVID-19 crisis also
assumed precedence, with the
distribution of nearly 25 lakh meal
and ration kits, and over 7 lakh health
and hygiene kits.
As we stand today, our flagship CSR
initiative for women and children
has touched a new milestone, with
the setting up of 2,300+ Nand Ghars
(women-child welfare centres) in
11 states. It continues to pave way
Building the future of India
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c.9.23 mn m3
Water savings achieved
over the past four years
c.52,000
Women benefited through
Nand Ghar initiative
c.65,000
Children benefited through
the Nand Ghar initiative
for the model Anganwadi (rural
childcare centre) movement across
India and to date, we have positively
touched the lives of c.52,000 women
and c.65,000 children through
the initiative.
have signed the declaration towards
carbon neutrality, in late 2020. Today,
we have achieved c.13.6 mn tCO2e in
avoided emissions compared to our
2012 baseline.
BEING NATURALLY RESPONSIBLE
Vedanta is one of the world’s largest
natural resources companies and we
are well aware of the responsibility
that rests on our shoulders. It’s
in this context that we have a
target-oriented environmental
programme. We believe that good
ecology is good business and we
strive our best to give back more
than we take. Consequently, over the
past four years, we have achieved
water savings of c.9.23 mn m3 and
have implemented an active plastic
protocol in three of our business
units. We have also seen 100%+ fly
ash utilisation.
With regards to GHG emissions, we
have a vision to substantially de-
carbonise our operations by 2050,
and towards this extent, we have
built a Group-wide carbon forum
with CEO-level engagement. I’m
also proud of the fact that we are
among the 24 Indian companies who
BEING THE EMPLOYER OF CHOICE
Vedanta is home to thousands of
skilled professionals, who seek to
develop their careers aligned to
our culture and facilitated by an
employee-friendly, diverse, and
meritocratic environment. Their
efforts have been instrumental in
taking Vedanta to its current stature,
and their contribution to ensuring
business continuity has been
phenomenal during the height of the
pandemic.
The safety, wellbeing and happiness
of our employees is of utmost
importance to us, and we are taking
every measure to ensure the same.
Towards this, we rolled out health
programmes for our employees and
business partners during the year.
We also focused on telemedicine,
promotion of mental health and
health monitoring so that our people
remained safe and secure during
these trying times.
Employees at Cairn, Oil & Gas
We constantly engage with
best-in-class service and technology
providers to ensure the highest level
of safety for our employees and have
managed to achieve a zero-fatality
year at our largest business –
Hindustan Zinc.
AHEAD WITH INDIA
As I look forward, I see an
opportunity of a lifetime ahead of us.
The Indian economy has regained
its growth momentum and we
are operating in an industry that
complements this growth curve.
With India’s young energy, consistent
governance, strong consumption,
and a thriving private sector, I’m
positive that the best for the
nation is yet to come. At Vedanta,
we are cognisant of the immense
growth potential and will invest in
opportunities that create value for
all stakeholders. As we power ahead,
we stand in solidarity with India, its
ambition of being Aatmanirbhar
(self-reliance) and creating a 5
trillion-dollar economy.
Best regards,
Anil Agarwal
19
VEDANTA RESOURCES LIMITED | INTEGRATED REPORT AND ANNUAL ACCOUNTS 2020-21 | KEY PERFORMANCE INDICATORS
Delivering on all fronts
GROWTH
Revenue
FY2021
FY2020
FY2019
EBITDA
FY2021
FY2020
FY2019
(US$ bn)
11.7
11.8
13.0
Description: Revenue represents the
value of goods sold and services provided
to third parties during the year.
Commentary: In FY2021, consolidated
revenue was at US$11.7 bn compared
with US$11.8 bn in FY2020. This was
primarily driven by rupee depreciation,
lower power sales at TSPL, lower volume
at Oil & Gas, Skorpion mine put under
maintenance and care, and lower cost
recovery at Oil & Gas business, partially
offset by higher commodity prices,
higher volumes at Zinc India, Copper, Iron
Ore and Aluminium business, inclusion of
FACOR in FY2021.
(US$ bn)
3.8
3.0
3.5
Description: Earnings Before Interest,
Tax, Depreciation and Amortisation
(EBITDA) is a factor of volume, prices
and cost of production. This measure is
calculated by adjusting operating profit
for special items and adding depreciation
and amortisation.
Commentary: EBITDA for FY2021 was
at US$3.8 bn, 27% higher y-o-y. This
was mainly driven by higher commodity
prices, higher sales realisation from
Iron ore and Steel business, increased
volumes at Zinc India and Aluminium
business, lower cost of production at
Zinc, Aluminium and Oil & Gas business
partially offset by lower brent realisation,
lower cost recovery at Oil & Gas business.
Description: This represents net cash
flow from operations after investing in
growth projects. This measure ensures
that profit generated by our assets
is reflected by cash flow, in order to
de-lever or maintain future growth or
shareholder returns.
Commentary: We generated FCF
of US$1.3 bn in FY2021, driven by
strong cash flow from operations and
lower sustaining and project capital
expenditure.
Description: This is calculated on the
basis of operating profit, before special
items and net of tax outflow, as a ratio of
average capital employed. The objective
is to earn a post-tax return consistently
above the weighted average cost of
capital.
Commentary: Strong ROCE of c.19.4%
in FY2021 (FY2020: 10.3%), primarily
due to strong operating and financial
performance coupled with lower
depreciation due to impairment in Oil &
Gas business in FY2020.
FCF post-capex
(US$ bn)
FY2021
FY2020
FY2019
0.8
Return On Capital
Employed (ROCE)
FY2021
FY2020
FY2019
10.3
9.6
1.3
1.3
(%)
19.4
20
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Adjusted EBITDA margin
FY2021
FY2020
FY2019
29
30
(%)
37
Description: Calculated as EBITDA
margin excluding EBITDA and turnover
from custom smelting of Copper India
and Zinc India businesses.
Commentary: Adjusted EBITDA margin
for FY2021 was 37% (FY2020: 29%).
Net Debt /EBITDA
(Consolidated)
FY2021
FY2020
FY2019
2.8
3.3
3.0
Description: This ratio represents the
level of leverage of the Company. It
represents the strength of the balance
sheet of Vedanta Resources Limited.
Commentary: Net debt/EBITDA ratio as
at 31 March 2021 was at 2.8x, compared
to 3.3x as at 31 March 2020.
Interest Cover
FY2021
FY2020
FY2019
Description: The ratio is a
representation of the ability of the
Company to service its debt. It is
computed as a ratio of EBITDA divided
by gross finance costs (including
capitalised interest) less investment
revenue.
3.2
3.7
3.8
Commentary: The interest cover for
the Company was at c. 3.7 times, higher
y-o-y on account of higher EBITDA.
21
VEDANTA RESOURCES LIMITED | INTEGRATED REPORT AND ANNUAL ACCOUNTS 2020-21 | KEY PERFORMANCE INDICATORS CONTINUED...
LONG-TERM VALUE
Growth capex
FY2021
0.3
FY2020
FY2019
(US$ bn)
Description: This represents the
amount invested in our organic growth
programme during the year.
0.8
1.1
Commentary: Our stated strategy
is of disciplined capital allocation on
high-return, low-risk projects. Expansion
capital expenditure during the year stood
at US$0.3 bn.
Dividend
(US CENTS)
FY2021
FY2020
FY2019
88
123
65
Description: Dividend per share
is the total of the final dividend
recommended by the Board in relation
to the year, and the interim dividend
paid out during the year.
Commentary: The Board has
recommended a total interim
dividend of 88 US cents per share this
year compared with 123 US cents per
share in the previous year.
Reserves and Resources (R&R)
Zinc India
(mn mt)
Zinc International
(mn mt)
Oil & Gas
(mmboe)
FY2021
FY2020
FY2019
448
FY2021
566
FY2021
403
403
FY2020
FY2019
509
434
FY2020
FY2019
1,229
1,194
1,195
Description: Reserves and resources are
based on specified guidelines for each
commodity and region.
Commentary:
Zinc India: During the year, gross
additions of 45 mn tonnes were made
to reserves and resources prior to
depletion of 15 mn tonnes. Overall mine
life continues to be more than 25 years.
Zinc International: During the year,
mineral reserves and resources at Zinc
International increased by 8% to 566.4
Mt containing 30.3 Mt of metal. Gross
additions to reserves and resources, after
depletion, amounted to 41.3 Mt of ore
and 1.8 Mt of metal. Despite depletion,
reserve levels were successfully
maintained at the same level as 2020, and
amount to 139.7 Mt containing 8.3 Mt of
metal. The most significant contributor
to the addition of metal in resources was
the declaration of a maiden resource at
Gamsberg South (23.2 Mt @ 7.1% Zn and
0.6% Pb). Overall mine life is more than
30 years.
Oil & Gas: During FY2021, the gross
proven and probable reserves and
resources increased by 35 mmboe during
the year.
22
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SUSTAINABLE DEVELOPMENT
LTIFR
FY2021
FY2020
FY2019
Description: The Lost Time Injury
Frequency Rate (LTIFR) is the number
of lost-time injuries per mn man-hours
worked. This includes our employees and
contractors working in our operations
and projects.
0.55
0.67
0.46
Commentary: This year, the LTIFR was
0.55. Safety remains the key focus across
businesses.
Gender diversity
(%)
FY2021
FY2020
FY2019
11.23
10.9
10.5
Description: The percentage of women
in the total permanent employee
workforce.
Commentary: We provide equal
opportunities to men and women. During
the year, the ratio of female employees
was 11% of total employees.
CSR footprint
(million beneficiaries)
FY2021
FY2020
3.26
FY2019
3
42
Description: The total number of
beneficiaries through our community
development programmes across all our
operations.
Commentary: We benefited around
42 mn people this year through our
community development projects
comprising community health,
nutrition, education, water and
sanitation, sustainable livelihood,
women empowerment and bio-
investment. This year our large-scale
COVID-19 outreach programme has
further augmented the metric.
VEDANTA RESOURCES LIMITED | INTEGRATED REPORT AND ANNUAL ACCOUNTS 2020-21 |
23
Marching ahead and
contributing to
AATMANIRBHAR
BHARAT
Hindustan Zinc Limited (HZL) is aggressively pursuing the Government of India’s
mega drive for Atmanirbhar Bharat, and developing value-added zinc products for
India’s steel, auto and alloy industries. Many success stories have been meticulously
crafted through the collective grit and relentless innovation focus by Team HZL.
Another value-added product
is Hindustan Zinc Die-cast Alloy
(HZDA), which is now being used
by domestic auto components
manufacturing industry. HZL
offers two variants (HZDA-3 and
HZDA-5) of the product to cater to
the needs of alloy makers. Earlier,
Die-cast alloys were imported, and
this make-in-India initiative will
lead to foreign exchange savings
for the country. Wide availability
is another big advantage for auto
components manufacturing
companies.
Yet another success story for HZL
is Electro Plating Grade (EPG)
products. The Company has set up
a digital shop to quickly address the
requirements of various customers
seamlessly. Indian Micro Small and
Medium Industries (MSMEs) can
easily have access to the products
One such project is Continuous
Galvanising Grade (CGG) a zinc-
aluminium alloy, which was co-
developed with leading domestic
steel manufacturers. The benefits
of this value-added product
comprise significantly low energy
costs and better coating finish
owing to the use of aluminium.
Electro Plating
Grade (EPG)
products
A successful HZL story
24
from the Company’s warehouses
with real-time prices benchmarked
to the London Metal Exchange (LME).
The Company’s future plan is to
develop zinc dust, which will cater
to the requirements of the paints,
pharma and fertiliser industries.
Special Hi-Grade
Silver Ingots
Integrated Report
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Financial statements
HZL offers two variants
HZDA-3 and
HZDA-5
Possibilities on the horizon
HZL is also partnering with IIT
Bombay for Continuous Galvanised
Rebar (CGR) benefits. IIT
Bombay published a paper, which
demonstrates the benefits of CGR
vs epoxy-coated vs non-galvanised
rebars, along with cost implications.
The life of all coastal infrastructure
can increase manifold at an almost
equal cost compared to other
options for EPC contractors.
Given the gradual migration from
fossil fuel to renewables throughout
the world, major investments in
battery technology, involving zinc,
are expected to come to India, the
horizon of opportunities for HZL
is growing. The Company is fully
equipped to take advantage of these
tailwinds to grow its business and
partner a self-reliant India.
Aligned with the mission for a self-
reliant India, we at HZL envisages
several opportunities in the near
and long terms and are already
capitalising on many of them. HZL is
now partnering with leading Indian
corporates for Aatmanirbhar Bharat.
The partnership with Tata Steel is
a remarkable step in this direction.
Tata Steel made an exception to
their Two-Supplier policy by giving
100% of their annual requirement
to HZL last year. HZL is providing
vendor managed inventory services
to Tata Steel’s plants to help them
rationalise their costs.
VEDANTA RESOURCES LIMITED | INTEGRATED REPORT AND ANNUAL ACCOUNTS 2020-21 |
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VEDANTA RESOURCES LIMITED | INTEGRATED REPORT AND ANNUAL ACCOUNTS 2020-21 | Powering the wheels of
AUTOMOTIVE
INDUSTRY
Aluminium’s versatility makes it the metal of choice for a wide range of
industries. These are aviation, aerospace, automobiles and electric vehicles,
transportation, building & construction, defence, electrical distribution, and
many more. As India’s largest aluminium producer, our quest for product
excellence stems from a mission to serve our customers better. This is centred
around developing value-additions that tap into the metal’s superior inherent
properties to cater to the evolving market requirements.
AN ARRAY OF INDIGENOUS
CAPABILITIES FOR AN
IMPORT-DEPENDENT INDUSTRY
India’s auto sector consumes about
4% aluminium, vis-à-vis 11% in USA
and 14% in Europe, indicating a huge
growth headroom. The country’s
foundry market for automotive
components is small (only 10% of total
foundry market) compared to that
of the US. With increasing focus on
higher performance with better safety
and lower emission, this gap is going to
shrink progressively.
We, at Vedanta, have tapped into the
opportunity and developed indigenous
capabilities to meet aluminium’s
growing demand. Our aluminium
business was the first in India to
supply Primary Foundry Alloys (PFA)
to the import-dependent domestic
auto sector for the manufacture of
alloy wheels.
PFA’s domestic market was c.250 kt
in FY2020, of which 65 kt was being
imported as wheels from China and
other duty-free nations and c.20 kt
was being supplied from BALCO. In
FY2020, 160 kt PFA was imported into
India, which later reduced to 98 kt in
FY2021 following the capacity ramp-
up from BALCO’s foundry alloy line.
Our aluminium smelters across
Odisha and Chhattisgarh have
advanced technology-enabled cast
houses. Best-in-class engineering
technologies, intelligent automation,
smart solutions, environmental
safeguards and sustainability-focused
operating procedures are integrated
to create lasting value.
Equipped with in-line metal treatment
facilities consisting of degassing and
metal filtration unit and continuous
casting technology, this ensures
that our customers get the best in
quality PFA.
A HAWK-EYED FOCUS ON QUALITY
Our foundry alloy ingots exceed the
most stringent quality requirements
such as the standards set by The
International Automotive Task
Force (IATF). We have received the
IATF-16949 certification, one of
the most widely used international
standards trusted by leading global
automakers. We are now India’s only
TS-16949 and IATF-16949 accredited
primary smelter. Our Centre of
Quality Excellence, stringent quality
assessment of raw materials and
finished products have made us one of
the most preferred aluminium suppliers
to developed markets.
Our Customer Technical Services (CTS)
team has become more advanced and
intuitive to ensure complete customer
fulfilment. With state-of-the-art
infrastructure, engineering prowess,
global technology partnerships and
R&D capability to develop solutions,
Vedanta is poised to bring fundamental
change in India’s automotive and
auto-ancillary markets. To help build
the future of mobility.
26
Integrated Report
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Financial statements
At Vedanta, we are relentlessly
exploring the capabilities of
aluminium as the
‘Green Metal
of the Future’
A NATURAL GROWTH PARTNER FOR
INDIA’S AUTOMOTIVE SECTOR
Expanding our foundry alloy product
line, we have recently launched the
Aluminium Cylinder Head Alloy. This
alloy was entirely being imported into
India (25 kt in FY2021). The Cylinder
Head Alloy leverages material design
to help automakers increase efficiency
of internal combustion engines for
improved performance on emission
control, in line with BS-VI and CAFE
(Corporate Average Fuel Efficiency/
Economy) norms.
The first Indian emission regulations
were idle emission limits, which have
become more stringent over time
following the implementation of
Bharat Standards, the latest of which
is BS-VI, implemented on 1 April 2020.
With tighter norms and compliance
to control emission of sulphur
oxide, nitrogen oxide and carbon
dioxide, automakers are looking
for fundamental solutions such as
improving the efficiency of internal
combustion engines. This is where
Vedanta’s aluminium cylinder head
alloy is helping automakers adhere to
emission norms.
India’s auto component sector is
among the fastest growing but lags
in contribution to manufacturing
turnover. The country’s auto
component industry’s aspirations of
having a significant share of the global
trade calls for a renewed focus on
localisation on every business front,
particularly with respect to sourcing
raw materials. As India’s leading
producer of a vast array of globally
acclaimed metals and value-added
products, Vedanta is a natural partner
for the automotive and auto ancillary
industry, across their entire value
chain, from large players to Micro Small
and Medium Enterprises (MSMEs), for
the nation’s growth.
Aluminium Billets
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VEDANTA RESOURCES LIMITED | INTEGRATED REPORT AND ANNUAL ACCOUNTS 2020-21 | Taking digital
transformation to
THE NEXT LEVEL
“Vedanta is focused on applying smart manufacturing technologies aimed at
significantly improving HSE, driving up production volumes, reducing operating cost,
improving stakeholder experiences, and enhancing ease of doing business. We are
transforming into an organisation that is embracing new agile ways of working and is
making digital a way of life”
Anand Laxshmivarahan R,
Interim Group Chief Digital Officer, Vedanta
Traditional businesses, which were largely looked upon as brick-and-mortar companies were slow to transform.
However, they are recognising the need for faster digitalisation to expedite integration across divisions and
verticals, stepping up efficiency, and reaching out to more customers and stakeholders. Besides, digitalisation has
not only improved business gains, but has also enhanced safety standards. At Vedanta, we are relentlessly building
on our digital backbone across all our businesses as an investment for the future.
3D VISUALISATION TO REDUCE
RAMP JAM
With the extensive use of 3D visualisation module of
OptiMine to track machines in the Rampura Agucha
underground mine, we have achieved significant
improvement (9-10%) in the reduction of ramp jams
from November 2020 to March 2021. The control room
has played a major role in tracking daily operations
and critical processes to reduce ramp jams, increase
efficiency and improve average response time to clear
the jams.
HAULING CYCLE TIME REDUCTION IN RA MINE
The digitalisation of the underground mine through our
WiFi network has been completed at Rampura Agucha
Mine and the control room setup is fully operational.
Traffic awareness is being utilised now for the main decline
section spanning 12 km. Traffic congestion and real-time
equipment tracking are being utilised to drive operational
efficiency. Mobilaris and Eurovac are our key partners in
our ongoing digitalisation programme at RAUG.
LPDT Cycle time has reduced by 9-10% with improved
visibility and real-time decision-making from the control
room to equipment.
28
Integrated Report
Statutory reports
Financial statements
3D
Visualisation
module
of OptiMine to track machines
in the Rampura Agucha
underground mine
SOFT SENSOR FOR ANALYSIS AND PREDICTION
FOR REAL TIME P80
A soft sensor for P80 was built by modelling the grinding
process in Rampura Stream, using the historical
process parameter data from Pi. The model has 97%
accuracy which assists to optimise the consumable
usage of grinding media and process water addition.
The model ensures a consistent P80 to the downstream
floatation circuit, which will help the operations team
to reduce concentrate grade fluctuation. As the model
acts as a soft sensor for PSI, the procurement and
the operating costs of PSI are reduced. The model
helps prevent over- or under-grinding by effective
P80 tracking.
Leveraging digital technology
at Hindustan Zinc facility
VEDANTA RESOURCES LIMITED | INTEGRATED REPORT AND ANNUAL ACCOUNTS 2020-21 |
29
VEDANTA RESOURCES LIMITED | INTEGRATED REPORT AND ANNUAL ACCOUNTS 2020-21 | Cairn pushes the
DIGITAL ENVELOPE
FARTHER
Cairn Oil & Gas commenced project ‘Nirman’ in 2018-19, which laid out
the Company’s digital roadmap and strengthened its foundation. The
year 2020-21 saw ‘Project Pratham’ embrace the ‘digital first’ approach by
accelerating the existing digital projects and unveiling innovative initiatives
to add more barrels to the topline, optimise cost per barrel and improve
Health, Safety and Environment (HSE) practices.
Through this initiative Cairn is re-designing itself for quicker digital adoption and building
competencies through reskilling and ‘Act-Up’ programmes. The oil and gas business has further
refined its digital strategy to accomplish the vision of ‘smart oilfield’ that cuts across the
exploration and production value chain.
EXPLORATION AND NEW FIELD
DEVELOPMENT
Leading to the reduction in time-to-
first oil by moving to cloud-based data
management and high-performance
computing such as seismic data and
processing on cloud, log splicing tool,
and so on.
DECLINE AND RESERVOIR
MANAGEMENT
To manage production-related
challenges to the ageing fields
using traditional first principle-
based approaches augmented by
new-age data driven techniques in
artificial intelligence and machine
learning (AI/ML) such as water flood
optimisation in Aishwarya Upper
Fatehgarh and Polymer optimisation
in Mangala fields, well reservoir
management job planning and
tracking, and so on.
SURFACE AND SUB-SURFACE
OPERATIONS
We are focused on reducing
unwanted production losses and
driving digital-led efficient work
processes through programmes
such as digital oilfield, Disha –
smart interactive reporting and
dashboards, model predictive
control-based artificial lift system
optimisation, satellite fields IoT-
based connectivity, production
reporting, and so on.
30
Integrated Report
Statutory reports
Financial statements
Improved systems and
processes and faster
adoption of digital strategy
have enabled Cairn Oil & Gas
to win several national and
international awards in the
last few years.
ASSET INTEGRITY AND
RELIABILITY
Improvement programmes are
driven to have best-in-class
equipment availability. The culture
is shifting from reactive to proactive
maintenance through the adoption
of predictive analytics-based apps,
asset performance management,
drone-based transmission line
inspections, control room, field
logbooks, among others.
HEALTH, SAFETY AND
ENVIRONMENT
HSE practices are supported by
digitalisation leading to Vedanta’s
vision of zero harm, zero discharge
and zero waste. For example, HSE
dashboards, contact tracing mobile
app, visible felt leadership app,
incident learning app, and so on.
BUSINESS PROCESS
IMPROVEMENTS
Digitally enabled supporting
functions in the organisation
are expected to become more
efficient and productive such as
HR, procurement, supply chain &
logistics, finance, and so on. These
functions use technologies such as
upgraded ERP platform, BOTS, RPA
(Robotic Process Automation), Video
analytics, and so on.
Digitally optimised artificial lift system
Artificial lift systems are important and complex pumping systems that drive oil from sub-surface to surface. Digital
systems such as advanced process control or model predictive control maximises production without violating any
of the surface, sub-surface, well or pump constraints. Additionally, customised Artificial Lift Surveillance digital
system helps avoid avoidable trips and shutdowns, thus having higher runtime resulting in enhanced production.
Moreover, it helps engineers take prudent decisions that improves the run-life of these critical equipment.
VEDANTA RESOURCES LIMITED | INTEGRATED REPORT AND ANNUAL ACCOUNTS 2020-21 |
31
VEDANTA RESOURCES LIMITED | INTEGRATED REPORT AND ANNUAL ACCOUNTS 2020-21 | VALUE-CREATION
AND STRATEGY
At Vedanta, our sustainability focused and integrated business
model continues to propel our value-creation process, helping
deliver better for all stakeholders.
CREATING VALUE FOR STAKEHOLDERS
Shareholders,
investors and lenders
A return on investment
Employees
Governments
A safe and inclusive working
environment
Generating economic value for
society and delivering sustainable
growth
32
Integrated Report
Statutory reports
Financial statements
Local community
and civil society
Investment in health, education
and local businesses
Industry (suppliers,
customers, peers, media)
Building long-term partnerships
VEDANTA RESOURCES LIMITED | INTEGRATED REPORT AND ANNUAL ACCOUNTS 2020-21 |
33
VEDANTA RESOURCES LIMITED | INTEGRATED REPORT AND ANNUAL ACCOUNTS 2020-21 | VALUE CREATION MODEL
Operating a responsible,
future-proof model
CAPITALS
FINANCIAL CAPITAL
We are focused on optimising capital allocation and
maintaining a strong balance sheet while generating
strong free cash flows. We also review all investments,
taking into account the Group’s financial resources with a
view to maximising returns to shareholders.
MANUFACTURED CAPITAL
We invest in best-in-class equipment and machinery to
ensure we operate as efficiently and safely as possible,
both at our current operations and in our expansion
projects. This also supports our strong and sustainable
cash flow generation.
INTELLECTUAL CAPITAL
As a relatively young Company, we are keen to embrace
technological developments and encourage innovation.
We encourage our people to nurture and implement
innovative ideas, which will lead to operational
improvements across our operations.
HUMAN CAPITAL
We have employees drawn from across the world, and
their diverse skills and experience contribute to our
operations. The mining and plant operations require
specialised skills for which we employ qualified technical,
engineering and geology experts. In addition, we create
a culture which nurtures safety, innovation, creativity
and diversity, which helps us meet our business goals
while also enabling our employees to grow personally and
professionally.
SOCIAL & RELATIONSHIP CAPITAL
We aim to forge strong partnerships by engaging
with our key stakeholders, including shareholders
and lenders, suppliers and contractors, employees,
governments, communities and civil societies. These
relationships help maintain and strengthen our licence
to operate.
NATURAL CAPITAL
India and Africa have favourable geology and mineral
potential. These regions provide us with world-class
mining assets and extensive R&R. Additionally, operating
our mines requires a range of resources including
water and energy which we aim to use prudently and
sustainably.
34
INPUTS
FINANCIAL CAPITAL
US$16.4 bn
Gross debt
US$2.3 bn
Net worth
US$5.6 bn
Cash and cash
equivalents
US$0.3 bn
Capex
MANUFACTURED CAPITAL
US$13.3 bn
Plant Property and
Equipment (in value terms)
HUMAN AND INTELLECTUAL CAPITAL INDICATORS
70,089
No. of employees
incl contractors
7,14,757
No. of hours of
training
1,481
HSE employees
incl contractors
186
No. of geologists
including
contractors
8,33,941
No. of hours of
safety training
3,259
Employees
covered under
mentoring and
support
programmes
SOCIAL AND RELATIONSHIP CAPITAL
US$45 mn
Community
investment
S&P and Moody
Rated by two international
rating agencies
25
Strong network of
global and domestic
relationship banks
4
Independent
Directors
NATURAL CAPITAL
525 mn GJ
Energy
consumption
270 mn m3
Water
consumed
474 mn
tonnes
Coal used
13.9 mn tonnes
Fly Ash generated
15.3 mn tonnes
Fly Ash used
17.97 mn tonnes
HVLT waste
generated
16.8 mn tonnes
HVLT waste
recycled
R&R Zinc India
448 mn tonnes
containing 32.9 mn
tonnes of zinc-lead
metal and 914.2
mn ounces of
silver.
R&R Zinc
International
566.4 mn
tonnes
containing
30.3 mn tonnes
of metal
R&R Oil & Gas
1,229 mmboe
Gross proved and
probable reserves
and resources
Integrated Report
Statutory reports
Financial statements
ACTIVITIES
OUTPUTS AND OUTCOMES
We operate across the mining
value chain focusing on long-term
and low-cost assets in India
and Africa
EXPLORE
We invest selectively in exploration
and appraisal to extend mine and
reservoir life.
DEVELOP
We develop world-class assets,
using the latest technology to
optimise productivity.
EXTRACT
We operate low-cost mines and oil
fields, with a clear focus on safety
and efficiency.
PROCESS
We focus on operational excellence
and high asset utilisation to deliver
top quartile cost performance and
strong cash flow.
MARKET
We supply our commodities to
customers in a wide range of
industry sectors, from automotive
to construction, from energy to
consumer goods.
RESTORE
We manage our long-life assets as
effectively as possible and return
them to a natural state at the end
of their useful life.
US$11.7 bn
Turnover
US$3.8 bn
EBIDTA
US$4.7 bn
Total exchequer
contribution
US$1.3 bn
FCF post-capex
c.19.4%
ROCE
88 US cents/
share
Dividend paid
2.8x
Net Debt to EBITDA
Production across various businesses
Zinc India:
1.0 mtpa
Mined metal
Zinc International:
58 kt
BMM
Oil & Gas:
162 kboepd
706 tonnes
Silver
145 kt
Gamsberg
Power:
11.3 bn kWh
Steel:
1.2 MnT
Pig Iron:
596 kt
Copper:
101 kt
0.55
Lost Time Injury
Frequency Rate (LTIFR)
Aluminium:
1.8 mtpa
Alumina
2 mtpa
Aluminium
6.49%
Attrition rate
11.23%
Diversity ratio
42 mn
CSR programme
beneficiaries
1,000
Nand Ghars built
1,800
Operational Nand
Ghars (women-child
welfare centres)
88 US cents/
share
Interim
dividends paid
2,193
Youth benefited
from employment
based skills training
US$4.7 bn
Dividends, royalty
and taxes paid to
the government
30.7%
Water recycled
110%
Fly Ash utilisation rate
c.60 mn tCO2e
GHG emitted
2.03 mn m3
Water savings
83 mn m3
Water recycled
58.93 mn tCO2e
GHG emissions:
Scope 1
1.31 mn tCO2e
GHG emissions:
Scope 2
94%
High Volume Low
Toxicity (HVLT)
effect waste
recycled
*before exceptional items
35
VEDANTA RESOURCES LIMITED | INTEGRATED REPORT AND ANNUAL ACCOUNTS 2020-21 | STRATEGIC PRIORITIES
Focus areas integral to our
decision-making
As part of our long-term roadmap, we have five strategic focus areas along which we
determine our progress and deliver consistent stakeholder value. They are intricately
linked to our material issues, opportunity landscape and risk management protocol,
hence forming a key part of our integrated decision-making process. Progress and
outlook across each of these focus areas have been summarised below.
Continue focus on
world-class ESG performance
We operate as a responsible business, focusing
on achieving ‘zero harm, zero discharge and zero
wastage’, and so minimising our impact on the
environment and society.
We promote social inclusion across our
operations to promote inclusive growth.
FY2021 update
8 fatalities occurred in the fiscal year;
there are programmes in place to
ensure better investigation quality and
leadership oversight to avoid repeats
Focus this year is on critical risks
existing in our business
Our business partner management is
a key priority where new standards for
BP management have been introduced
along with uniform monitoring system
LTIFR reported at 0.55
We launched a social performance pilot
project at our critical sites
2,300+ Nand Ghars established
We conducted self -assessment across
all BUs to establish the current capacity
Vision
Our safety vision: Everyone goes
home safe
Our environment vision: Zero net
environmental impact
Our health vision: No impact on
employees, BPs and communities
due to our operations
Our social performance vision: To
become a developer of choice in
our areas of operation
Carbon vision: To substantially
decarbonise by 2050
Objectives for FY2025
Zero fatality, with 2 fatality-free
years
Stack emissions to be 25% of 2018
levels. All tailing facilities to be
audited and actions closed with
real-time monitoring
All performance standards to be
developed, implemented and part
of VSAP. Employee and community
exposure monitoring. Mental
health programme to be initiated.
Achieve zero social non-
compliances. Become signatories
to and participants in VPSHR. Set
up an external SP advisory body
Achieve 20% reduction in
GHG emission intensity from a
2012 baseline
Ensure that 40% of all new projects
to have a carbon rating of 4-star
and above
29,000 Nand Ghars to be
constructed by 2025
Skilling and employment creation
for 60,000 youths
36
Employees at BALCO facility
KPIs
Fatalities
TRIFR
No. of Cat 5 social incident
GHG emission intensity
Number of Carbon star
rated projects
Compliance tracking
Source emissions tracking
Personal exposure
monitoring
CSR footprint
Gender diversity
Risks
R1
R2
Safety and health of
our employees, BPs and
communities
Managing positive
community relationships
Integrated Report
Statutory reports
Financial statements
Augment our Reserves &
Resources (R&R) base
We look at ways to expand our R&R base
through targeted and disciplined exploration
programmes. Our exploration teams aim to
discover mineral and oil deposits safely and
responsibly, to replenish the resources that
support our future growth ambitions.
spread across Rajasthan, Cambay &
North East shall enable to unlock the
resource potential
Gross proved and probable reserves
and resources of 1,229 mmboe
Objectives for FY2022
O&G: Drilling commenced in Rajasthan,
Cambay & North East for OALP blocks.
O&G: Evaluating opportunities to
commence drilling campaign of
exploration and appraisal wells to build
on the resource portfolio in Rajasthan.
On metals: Continue to build R&R base
and generate new greenfield targets
for our commodities/metals
FY2021 update
Zinc India
During the year, gross additions of 45
mn tonnes were made to reserve &
resource, prior to depletion of 15 mn
tonnes
Combined R&R were estimated to be
448 mn tonnes, containing 32.9 mn
tonnes of zinc-lead metal and 914.2 mn
ounces of silver
Overall mine life continues to be more
than 25 years
Zinc International
Combined mineral resources and
ore reserves estimated at 566.4 mn
tonnes, containing 30.3 mn tonnes of
metal
Oil & Gas
Commencement of seismic acquisition
and exploration drilling in OALP blocks
An employee at Cairn, Oil & Gas
KPIs
Total 2P+2C Reserves &
Resources in O&G
Total R&R in Zinc India & ZI
Risks
R1
R5
R9
Health, Safety and
Environment (HSE)
Discovery risk
Regulatory and legal risk
37
VEDANTA RESOURCES LIMITED | INTEGRATED REPORT AND ANNUAL ACCOUNTS 2020-21 | STRATEGIC PRIORITIES CONTINUED...
Delivering on growth
opportunities
We are focused on growing our operations
organically by developing brownfield
opportunities in our existing portfolio. Our
large, well-diversified, low-cost and long-life
asset portfolio offers us attractive expansion
opportunities, which are evaluated based
on our return criteria for long-term value
creation for all stakeholders.
FY2021 update
Zinc India
Total mine development increased by 3% to 95 km in
FY2021
Environment clearance received for CLZS hydro smelter
expansion by 84 kt and Zawar mines expansion by 8 lakhs
mtpa of ore
Back fill plants were commissioned at Zawarmala and
Mochia mines
Zinc International
Significant ramp up in Gamsberg production with 145 kt zinc
MIC in FY2021
Oil & Gas
New gas processing terminal construction completed;
commissioning underway expected to add c.100 mmscfd
by Q1 FY22
Capex growth projects update:
− 74 wells hooked up during FY2021
− Ravva drilling programme completed; c.11
kboepd of incremental volumes
Implementation of enhanced recovery project in Bhagyam
and Aishwariya fields
Monetisation of tight oil fields through execution of
Aishwariya Barmer Hill project
ESL
Annual steel production at 1.19 mn tonnes, down 4% y-o-y
on account of reduced availability of hot metal due to lower
production amidst the disruption caused by the pandemic
Objectives for FY2022
Zinc India
Further ramp-up of underground mines towards their
design capacity of 1.2 mn mtpa
Combined paste-fill and dry tailing plant at Rajpura Dariba,
which will help increase ore production from 1.2 mtpa to
2 mtpa
Setting up 300 ktpa greenfield Zinc smelter at
Doswada, Gujarat
38
Gamsberg facility
Zinc International
Skorpion Refinery Conversion – detailed BOQ generated,
feasibility report being updated with latest information,
target to get board approval for execution by Q1 FY22
Magnetite Project – Feasibility was completed in Q4 FY21.
0.7 mtpa modular plant has been finalised. Project will be put
up for approval for start of execution in Q1 FY22.
The feasibility study for Gamsberg Phase 2 was updated. The
mine design and the new reserve statement was completed
with the Resource to Reserve conversion as scheduled
Oil & Gas
Unlock the potential of the exploration portfolio comprising
of OALP and PSC blocks
Infill projects across producing fields to add volume in the
near term
ESL
Embark on the expansion journey from 1.5 to 3.0 mtpa
To be a steelmaker amongst the top quadrant EBIDTA
percentile group
KPIs
Revenue
ROCE
FCF post-capex
Growth capex
Risks
R8 Cairn related challenges
R9 Regulatory and legal risk
R12 Major project delivery
Integrated Report
Statutory reports
Financial statements
Optimise capital
allocation and maintain
a strong balance sheet
Our focus is on generating strong
business cash flows and maintaining
stringent capital discipline in investing
in profitable high IRR projects. Our aim
is to maintain a strong balance sheet
through proactive liability management.
We also review all investments (organic
and acquisitions) based on our stringent
capital allocation framework to
maximising shareholder returns.
FY2021 update
Free cashflow (FCF) improvement from US$0.8 bn to
US$1.3 bn, up 57% y-o-y
Net Debt (ND) increased from US$10.0 bn to US$10.7 bn.
Net Debt/EBITDA at 2.8x on a consolidated basis
Objectives for FY2022
Generate healthy free cash flow from our operations
Disciplined capex across projects to generate healthy
ROCE
Improve credit ratings
Reduce working capital
Employees at Lanjigarh Plant
Employees at Black Mountain Mining lab
KPIs
FCF post-capex
Net Debt/EBITDA
(Consolidated basis)
EPS (before exceptional items)
Interest cover ratio
Dividend
Risks
R9 Regulatory and legal risk
R10 Tax related matters
Fluctuation in commodity prices (including
oil) and currency exchange rates
R11
Access to capital
R13
39
VEDANTA RESOURCES LIMITED | INTEGRATED REPORT AND ANNUAL ACCOUNTS 2020-21 | STRATEGIC PRIORITIES CONTINUED...
Operational excellence
We strive for all-round operational excellence
to achieve benchmark performance across our
business, by debottlenecking our assets to
enhance production, supported by improved
digital and technology solutions. Our efforts are
focused on enhancing profitability by optimising
our cost and improving realisations through
prudent marketing strategies.
FY2021 update
Zinc India
Record ore production of 15.5 mn tonnes, despite
disruptions on account of COVID-19
Mined metal production of 972 kt and refined zinc-lead
production of 930 kt
Zinc International
BMM achieved consistent production in FY2021 (58 kt)
Gamsberg ramped up significantly with 145 kt production
in FY2021 and several best demonstrated performances
in ore milled tonnes, mill throughput and plant availability.
Production was partly impacted by slope failure in Nov
2020, but the plant continued to operate, backed up by
healthy ore stockpile
Skorpion remained under Care and Maintenance following
geotechnical instabilities in the open pit
Oil & Gas
Average gross operated production of 162 kboepd for
FY2021, impacted by COVID-19
Liquid handing capacity upgraded by 30%, major facility
systems were commissioned
Aishwariya Barmer Hill surface facility commissioned;
wells being hooked up progressively
Aluminium and Power
Record aluminium production at the smelters at 1,969 kt, up
3% y-o-y
Highest ever PFA sales, 28% increase y-o-y
New products development in FY2021 such as aluminium
cylinder head alloy, high speed billets, 22 kg and 10 kg ingots
Record alumina production from Lanjigarh refinery at
1,841 kt, up 2% y-o-y due to debottlenecking of the refinery
Locally sourced bauxite of c.3 MnT during the year (56%);
alumina COP reduction by c.15% y-o-y at US$235/ T
despite COVID-19 related challenges impacting businesses
at large
In FY2021, there were no fresh coal imports for our
smelters, thereby reducing import dependency by c.3 mn
tonnes
Won Radhikhapur coal block in first tranche of commercial
coal block auction
FY2021 CoP for aluminium c.US$ 1,347 per tonne down by
20% y-o-y
Steel
Increased the EBITDA margin to US$ 95 per tonne for the
year (against US$ 78 per tonne in FY2020) even at dip in NSR
by US$ 7 per tonne, through better control over costs
Decrease in cost by 6 % y-o-y from US$ 418 per tonne to
US$ 393 per tonne in FY2021
Copper and Iron Ore
At Karnataka, production of saleable ore was 5 mn tonnes,
15% higher y-o-y
In FY2021, revenue increased to US$611 mn, 25% higher
y-o-y mainly due twofold increase in sales volume at Goa
and improved margin at Goa, Karnataka and VAB during the
year
EBITDA increased to US$245 mn compared with US$117 mn
in FY2020 was mainly due to improved margin and higher
volume at Goa
Continued engagement with the government and local
communities to restart operations at Goa and Tuticorin
40
Integrated Report
Statutory reports
Financial statements
Objectives for FY2022
Zinc India
Sustain cost of production at below US$1,000 per tonne
through efficient ore hauling, higher volume and grades and
higher productivity through ongoing efforts in automation
and digitalisation
Zinc International
Ramp up Gamsberg to design capacity in H1 FY2022
Restart Skorpion post completion of geotechnical studies
and feasibility completion of imported zinc oxides
O&G
Increase in near-term volumes by commissioning the gas
processing terminal and completion of surface facilities for
Aishwariya Barmer Hill project
Continue to operate at a low cost-base and generate free
cash flow post-capex
Aluminium
Production at Lanjigarh refinery of around 1.8-2.0 million
tonnes, with aluminium production at smelters around 2.1
-2.2 million tonnes
Hot Metal COP, between US$1,475-US$1,575 per tonne
Improve raw material security locally (bauxite and coal)
Increased focus on Asset Integrity and Optimisation,
Quality and Innovation and Digitalisation
Copper and Iron ore
Continue engagement with government and
relevant authorities to enable restart of operations
in Goa and Tuticorin
Increase our footprint in iron ore by continuing to
participate in auctions across the country, including
Jharkhand
Overview of the Mangala Processing Terminal
Securing EC for expansion of production capacity of
Pig Iron plant by 1.7 LTPA
Advocacy for removal of E-auction/trade barrier in
Karnataka
Steel
Ensuring business continuity with greater focus on
Reliability Centered Maintenance
Obtain clean Consent to Operate and environmental
clearance
Raw material securitisation through long-term contracts;
approaching FTA countries for coking coal
KPIs
EBITDA
Adj. EBITDA margin
FCF post-capex
ROCE
Risks
R1 Health, Safety and Environment (HSE)
R3
R7
Tailings dam stability
Loss of assets or profit due to
natural calamities
R11
Fluctuation in commodity prices (including
oil) and currency exchange rates
41
VEDANTA RESOURCES LIMITED | INTEGRATED REPORT AND ANNUAL ACCOUNTS 2020-21 | OPPORTUNITY LANDSCAPE
Responsive to megatrends
Vedanta operates in a dynamic, regulated, and commoditised environment, and is
influenced by megatrends that shape the industry. Key trends (Source: Deloitte) that
resonate with us and we respond to in the current environment are provided below
T1 BUILDING RESILIENCE
AMID VOLATILITY
The COVID-19 pandemic has altered
business dimensions with uncertainty
becoming the order of the day. In
this light, businesses have started
adapting together and separately,
serving the interest of their
stakeholders and ensuring business
continuity. Scenario planning
straddling four hypothetical scenarios
that strategic leaders such as Vedanta
can plan for. These include:
a. A ‘passing storm’ response
where the overall healthcare
ecosystem is bolstered post the
pandemic
b.
c.
d.
‘Good company’ scenario where
public-private partnerships will
emerge with new ecosystems
that would encourage innovation
‘Sunrise in the east’ indicating
the shift of power to eastern side
of the world such as China
‘Lone wolves’ where the
pandemic situation drags on to
engage stricter protocols and
government surveillance
Vedanta’s response: The COVID-19
pandemic is an unprecedented
humanitarian and economic crisis.
Our metal and mining industry
has sought to respond quickly to
protect the health of its employees
and its communities. These steps
are in response to (and often
ahead of) emergency measures
and lockdowns implemented by
governments across the world to
control the spread of the pandemic.
During these testing times, our
priority is to ensure the health
and safety of our employees,
contractors, and stakeholders,
while ensuring business continuity
to the extent possible. At the
Group level, we have formulated
various controls to prevent the
spread of infection and thereby
maintaining business continuity.
We formed a business COVID
taskforce, formalised from diverse
departments, whose tasks is
to implement strong controls
and SOPs/protocols, audit the
respective units so as to ensure
complete compliance to COVID
protocols to prevent the spread
of the infection and to monitor
and report the proceedings to the
business CEO and Group task force.
Working towards employee health and well-being
Based on ‘Deloitte Insights: Tracking the trends 2021’
T2 WINNING BACK INVESTOR
CONFIDENCE
The mining industry lost out on
investor confidence owing to
the far-reaching downcycle that
eroded value post M&A action in
the past year. The companies in
the sector would now need to find
new ways to deliver consistent
shareholder returns; enhance
their Environmental, Social and
Governance (ESG) performance; and
improve their capital and operational
discipline. The scenario is also
becoming increasingly conducive
with historical lows now history.
Captive Power Plant at the Dariba Complex
42
Integrated Report
Statutory reports
Financial statements
Vedanta’s response: Our focus
during these times have been to
ensure that we operate optimally
with lowest possible cost of
production.
In FY2021, we were able to sustain
our low-cost advantage in aluminium
by engaging structural measures.
While we have optimised our coal
and bauxite source mix, we also
continued our journey towards
improving on operational efficiencies
and debottlenecking our assets
for improved capacity utilisation.
For Zinc India operations, we
completed 1.2 MnT mined metal
project activities and sustained
production post-transition to a fully
underground mining company.
As we look forward to the year ahead,
we are operationally well positioned
to deliver. In Oil & Gas, we are the
largest private sector producer of
crude oil in India and rank among the
world’s lowest cost producer with
a pipeline of assets in production,
development, and exploration. In
Zinc, we are the world’s largest
fully integrated zinc-lead producer.
In terms of Aluminium, we are
India’s largest primary aluminium
producer supported by our own
captive power generation. We
performed exceedingly well on
key Environmental, Social and
Governance (ESG) aspects during
the year. This is validated by
improved ranking in the Dow Jones
Sustainability Index.
T3 ESG–GETTING SERIOUS
ABOUT DECARBONISATION
Climate change has become
an accepted reality in business
circles and the risks arising from
the phenomenon is increasingly
becoming a part of their strategic
dialogue. The cost of taking action
with respect to decarbonisation
and renewables is also reaching
parity. In this light, the focus from
investment houses is now on
how companies are moving from
strategy to onground execution,
that can show tangible results.
Vedanta’s response: Vedanta
has an unwavering focus on
sustainability, with ESG becoming
a core focus. We have a vision to
sustainably decarbonise by 2050.
To realise specific outcomes, we
have institutionalised a separate
vertical for ESG. We continuously
participate in ESG forums and have
a Group-wide carbon forum.
Moving towards a greener future
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T4 ESG–OVERCOMING THE
SOCIAL TRUST DEFICIT
There is a clear opportunity for
miners to create social value that
goes beyond compliance. Globally,
high-profile disasters have muddled
the reputation for mining and there
is a tangible trust deficit that many
miners experience. In this context,
miners should explore creating
long-term socioeconomic benefits
for the communities in and around
their impact zones. Measurement of
the impact of CSR programmes, for
example, also gains prominence in
this backdrop.
Vedanta’s response: Vedanta aims
to be the developer of choice for
communities, and an enabler for
better livelihoods. Our Nand Ghar
(women-child welfare centres)
initiative, a novel programme aimed
at women and child empowerment,
has helped create significant impact
in communities around our impact
zones.
Bringing smiles in the
community
T5 ESG–CORPORATE
GOVERNANCE ADDING TO
COMPETITIVE ADVANTAGE
The third pillar of ESG – Governance,
is often underrated, but can have
heavy repercussions if ignored as a
downside risk. However, if managed
prudently, good governance can
change its role to a competitive
advantage. Approach to issues such
as human rights, ethical conduct,
diversity, cybersecurity, and evolving
social norms will need to gain
significance in strategy making and
board discussions.
Vedanta’s response: Vedanta has
an illustrious Board, that guides us
in our present and future roadmap.
Our corporate behaviour is led by our
core values and policies that align to
good governance.
Working towards a culture
of best practices
44
Wire Rods Dispatch area,
ESL Plant
Technology
deployment at plant
T6 ESG–CREATING AN AGILE
SUPPLY CHAIN
T7 THE PATH TOWARDS
INTEGRATED OPERATIONS
The pandemic has exposed supply
chain risks of mining companies,
which were not actively recognised
before. This validates a relook at how
direct and extended supply chains
work, how inventory is managed
and how cost structures need to be
evaluated. On the mitigation front,
companies need to explore alternate
supply lines, and reduce risk by
creating predictable operations.
Vedanta’s response: Vedanta has an
integrated value-chain which helps
inherently mitigate supply chain risks
to a large extent.
The proliferation of technology
in mining has unlocked several
opportunities in decision making
and achieving cost advantages.
Digitalisation-led business
integration is a key enabler, and
a factor of achieving distinct
competitive advantage. It results in
predictable outcomes, consequently
achieving better stakeholder trust.
Vedanta’s response: Vedanta
has been at the forefront of
digitalisation in its industry and
has invested in technologies
that not only results in better
efficiencies and integration, but also
enhanced safety in operations.
Integrated Report
Statutory reports
Financial statements
T8 ADVANCING THE FUTURE
OF WORK
While there has been an
undercurrent of shifting workplace
practices, the pandemic has
brought a sea change in the way
organisations manage their team,
through remote operations and
work-from-anywhere models. With
the use of Industry 4.0 technologies,
activity-heavy operations such as
mining can also move to remote
models, with minimal human
interactions and larger system
integration. Conventional ways of
working now need to be re-examined
and contemporary working practices
should be adapted as the new
normal.
Vedanta’s response: Vedanta has
been at the forefront of digitalisation
and technology. We have various
initiatives throughout the Group
where remote working is used to
analyse real-time data.
For example, at Cairn Oil&Gas,
a pilot is being conducted to use
video analytics to reduce manual
monitoring efforts and leverage
technology to automate the alert
monitoring through business rules.
Similarly, long range ultrasonic
testing-based solution is used for
the real-time pipeline monitoring.
COVID Marshal is an AI and ML
based video analytics application
implemented in Vedanta Resources
Limited which analyses the
video captured through CCTVs
and provides the compliance
reports. The data is ingested for
the compliance dashboard which
can be accessed real-time by the
Management.
In Oil & Gas, a pilot is also being
run where drones are used for
automating the survey of pipeline
and rights- of-usage to ascertain
erosion, exposed pipe, vegetation
overgrowth, encroachments and
missing/damaged signs and markers.
At Hindustan Zinc Limited, drones-
based technology is leveraged
to provide solutions for asset
maintenance and sustainability.
These solutions provide automated
diagnostics from safe and frequent
aerial inspections (for transmission
lines, pipelines etc.) and real-time,
centralised view of remote assets.
Building a digital environment
T9 ON THE ROAD TO
ZERO HARM
The safety focus of mining
companies has evolved towards
zero harm, and there is a significant
improvement in mining safety
records. However, there is still
room to improve, and companies
will likely need to integrate different
data pools and systems to effect
better results.
Vedanta’s response: Safety
is a core priority area for
Vedanta, and we have instated
processes and practices to
enable highest standards of
safety for all our people.
T10 MEETING DEMAND FOR
GREEN AND CRITICAL
MINERALS
With the world moving towards
a greener future, the demand for
materials that enable cleaner energy
is on the rise. This poses a clear
opportunity for mining companies,
as their portfolios will be shaped in
response in the near future.
Vedanta’s response: Vedanta is a
core player in unearthing minerals
such as zinc and steel, which are
not only core inputs in realising
renewable infrastructure, but also in
contributing to circular economy.
Operating in a safe
environment
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VEDANTA RESOURCES LIMITED | INTEGRATED REPORT AND ANNUAL ACCOUNTS 2020-21 | RISK MANAGEMENT
Managing and mitigating risks
in a volatile business scenario
RISK GOVERNANCE FRAMEWORK
Board of
Directors
Audit
Committee
GRMC
EXCO
Business Unit Management Teams
GROUP RISK MANAGEMENT FRAMEWORK
EXTERNAL
STRATEGIC
E
V
A
L
U
A
T
E
M ITIG A T E
ID E N TIF Y
M
O
N
I
T
O
R
FINANCIAL
OPERATIONAL
46
As a global natural resources
Company operating in multiple
geographies, our businesses
are exposed to a wide range of
risks. Therefore, it is essential
to have the necessary systems
and a robust governance
framework in place to manage
risk, while balancing the risk-
reward equation expected
by stakeholders.
ENTERPRISE RISK MANAGEMENT
The Group has a multi-layered risk-
management framework, which aims
to effectively manage risks, which
our businesses are exposed to in the
course of their operations, as well as
in their strategic actions. We identify
risks at the individual business
level for existing operations as well
as for ongoing projects through a
well-crafted methodology. Formal
discussion on risk management
takes place at business level
review meetings at least once in a
quarter. The Group’s every business
division has evolved its own risk
matrix, which gets reviewed by the
Business Management Committee.
In addition, business divisions have
developed their own risk registers.
Respective businesses review the
risks, changes in the nature and
extent of major risks since the last
assessment, control measures and
further action plans. The control
measures stated in the risk matrix
are also periodically reviewed by
the business management teams
to verify their effectiveness. These
meetings are chaired by business
CEOs and attended by CXOs,
senior management and concerned
functional heads. The role of risk
officers at each business and at the
Group level is to create awareness
on risks at the senior management
level, and to develop and nurture a
risk-management culture within the
businesses. The Company’s risk-
mitigation plans are integral to the
KRAs/KPIs of process owners. The
governance of risk management
framework in the businesses is
anchored with the leadership teams.
The Audit & Risk Management
Committee aids the Board in the
risk management process by
identification and assessment
of any changes in risk exposure,
review of risk-control measures
and by approval of remedial
actions, wherever appropriate. The
Committee is, in turn, supported
by the Group Risk Management
Committee, which helps the Audit
& Risk Management Committee in
evaluating the design and operating
effectiveness of the risk-mitigation
programme and the control systems.
The Risk Management Committee
meets at least four times annually
to discuss risks and mitigation
measures. The Committee reviews
the robustness of our framework at
individual businesses and progress
against actions planned for key risks.
Our risk-management framework
is simple and consistent and
provides clarity on managing
and reporting risks to our Board.
Together, our management
systems, organisational structures,
processes, standards and code
of conduct, and ethics represent
the system of internal control that
governs how the Group conducts
its business and manages the
associated risks.
The Board shoulders the ultimate
responsibility for the management
of risks and for ensuring the
effectiveness of internal control
systems. It includes the Audit
Committee’s report on the risk
matrix, significant risks, and
mitigating actions that we have put
in place. Any systemic weaknesses
Integrated Report
Statutory reports
Financial statements
identified by the review are
addressed by enhanced procedures
to strengthen the relevant controls,
and these are reviewed regularly.
The Audit Committee is in turn
assisted by the Group-level
Risk Management Committee
in evaluating the design and
effectiveness of the risk-mitigation
programme and control systems.
The Group Risk Management
Committee (GRMC) meets every
quarter and comprises the Group
Chief Executive Officer, Group
Chief Financial Officer and Director-
Management Assurance. The Group
Head-Health, Safety, Environment
& Sustainability is invited to attend
these meetings. GRMC discusses
key events impacting the risk profile,
relevant risks and uncertainties,
emerging risks and progress against
planned actions.
Since it is critical to the delivery of
the Group’s strategic objectives,
risk management is embedded
in business-critical activities,
functions and processes. The
risk-management framework helps
the Company by aligning operating
controls with the Group’s objectives.
It is designed to manage rather
than eliminate the risk of failure
to achieve business objectives
and provides reasonable and not
absolute assurance against material
misstatement or loss. Materiality and
risk tolerance are key considerations
in our decision-making. The
responsibility for identifying and
managing risks lies with every
manager and business leader.
Additionally, other key risk
governance and oversight
committees in the Group comprise
the following:
Committee of Directors (COD)
comprising Vice Chairman &
Group CFO supports the Board
by considering, reviewing and
approving all borrowing and
investment related proposals
within the overall limits approved
by the Board. The invitees to
these committee meetings are
the CEO, business CFOs, Group
Head Treasury and BU Treasury
Heads depending upon the
agenda matters
Sustainability Committee reviews
sustainability-related risks
Jharsuguda facility
47
VEDANTA RESOURCES LIMITED | INTEGRATED REPORT AND ANNUAL ACCOUNTS 2020-21 | RISK MANAGEMENT CONTINUED...
Additionally, there are various
Group-level ManComs such
as Procurement ManCom,
Sustainability - HSE ManCom, CSR
ManCom, and so on, who work on
identifying risks in those specific
areas and mitigating them.
Each business has developed its
own risk matrix, which is reviewed
by its respective management
committee/executive committee,
chaired by its CEO. In addition, each
business has developed its own
risk register depending on the size
of its operations and number of
SBUs/locations. Risks across these
risk registers are aggregated and
evaluated and the Group’s principal
risks are identified, and a response
mechanism is formulated.
This element is an important
component of the overall internal
control process from which the
Board obtains assurance. The scope
of work, authority and resources
of the Management Assurance
Services (MAS) are regularly
reviewed by the Audit Committee.
The responsibilities of MAS include
recommending improvements
in the control environment and
reviewing compliance with our
philosophy, policies and procedures.
The planning of internal audits is
approached from a risk perspective.
In preparing the internal audit plan,
reference is made to the risk matrix,
and inputs are sought from senior
management, business teams and
members of the Audit Committee.
In addition, we refer to past audit
experience, financial analysis and the
prevailing economic and business
environment.
48
Despite COVID-induced disruptions
Vedanta’s BUs dealt with its impact
extremely well, resulting in an
effective response. This happens
owing to the following:
Our safety-first culture that
prioritised people’s health and
well-being
Our collaboration with
communities, governments, and
health experts ensure that leading
practices are followed
Focusing on what is critical to
operations and communities,
while continuing to build
longer-term resilience
Consistent response to the
pandemic across the Group
Establishment of
COVID-19 taskforces under
seasoned leaders
Investments in new processes,
procedures, protocols, health-
testing equipment and support
for workforce
R&D facility at Gamsberg, Zinc International
As a result, our facilities remained
largely operational during the
pandemic, despite challenges. Rather,
the disruption created an opportunity
for us to identify and work on certain
transformational aspects for the
future. We continue to remain
committed to achieve our objectives
of zero harm, zero wastage and
discharge, thus creating sustainable
stakeholder value.
The order in which the risks appear
in the section below does not
necessarily reflect the likelihood
of their occurrence or the relative
magnitude of their impact on
Vedanta’s businesses. The risk
direction of each risk has been
reviewed based on events, economic
conditions, changes in business
environment and regulatory changes
during the year.
While Vedanta’s risk-management
framework is designed to help the
organisation meet its objectives,
there is no guarantee that the Group’s
risk-management activities will
mitigate or prevent these or other
risks from occurring.
Integrated Report
Statutory reports
Financial statements
The Board, with the assistance of the management conducts periodic and robust assessments of principal risks and
uncertainties of the Group and tests the financial plans for each risk and uncertainty mentioned below.
SUSTAINABILITY RISKS
Health, Safety and Environment (HSE)
R1
Impact
Mitigation
Direction
The resources sector is subject
to extensive health, safety and
environmental laws, regulations
and standards. Evolving
requirements and stakeholder
expectations could result in
increased cost or litigation or
threaten the viability of operations
in extreme cases.
Emissions and climate change:
Our global presence exposes us
to a number of jurisdictions in
which regulations or laws have
been, or are being, considered
to limit or reduce emissions. The
likely effect of these changes
could be to increase the cost
for fossil fuels, impose levies for
emissions in excess of certain
permitted levels, and increase
administrative costs for monitoring
and reporting. Increasing
regulation of greenhouse gas
(GHG) emissions, including the
progressive introduction of carbon
emissions trading mechanisms and
tighter emission reduction targets,
is likely to raise costs and reduce
demand growth.
HSE is a high-priority area for Vedanta. Compliance with international and local
regulations and standards, protecting our people, communities and the environment
from harm and our operations from business interruptions are key focus areas
Policies and standards are in place to mitigate and minimise any HSE-related
occurrences. Safety standards issued/continue to be issued to reduce risk level
in high-risk areas. Structured monitoring and a review mechanism and system of
positive compliance reporting are in place
BU Leadership continues to emphasise on three focus areas: visible felt leadership,
safety critical tasks and managing business partners
The process to improve learning from incidents is currently being improved with the
aim of reducing re-occurrence of similar incidents
A Vedanta Critical Risk Management programme will be launched to identify critical
risk controls and to measure, monitor and report the control effectiveness
The Company has implemented a set of standards to align its sustainability
framework with international practice. A structured sustainability assurance
programme continues to operate in the business divisions covering environment,
health, safety, community relations and human rights aspects, and is designed to
embed our commitment at operational level
All businesses have appropriate policies in place for occupational health-related
matters, supported by structured processes, controls and technology
To provide incentives for safe behaviour and effective risk management, safety KPIs
have been built into performance management of all employees
Carbon forum has been re-constituted with updated Terms of Reference and
representation from all businesses. It has a mandate to develop and recommend to
the ExCo and Board the carbon agenda for the Group
Enhanced focus on renewable power obligations
The Group Companies are actively working on reducing the GHG emissions intensity
of our operations
A task force team is formulated to assess end-to-end operational requirement for
FGD plant. We continue to engage with various stakeholders on the matter
Giving paramount importance to safety
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RISK MANAGEMENT CONTINUED...
Managing relationship with stakeholders
R2
Impact
Mitigation
Direction
The continued success of our
existing operations and future
projects are in part dependent
on broad support and a healthy
relationship with our respective
local communities. Failure to
identify and manage local concerns
and expectations can have a
negative impact on relations and
therefore affect the organisation’s
reputation and social licence to
operate and grow.
CSR approach to community programmes is governed by the following key
considerations: the needs of the local people and the development plan in line with
the new Companies Act in India; CSR guidelines; CSR National Voluntary Guidelines
of the Ministry of Corporate Affairs, Government of India; and the UN’s sustainable
development goals.
Our BU teams are proactively engaging with communities and stakeholders through
a proper and structured engagement plan, with the objective of working with them as
partners.
Business Excos factor in these inputs, and then decide upon focus areas of CSR and
budgets while also aligning with strategic business priorities.
All BUs follow well-laid processes for recording and resolving all community
grievances.
Every business has a dedicated Community Development Manager, who is a part of
the BU Exco. They are supported with dedicated teams of community professionals.
Our business leadership teams have periodic engagements with the local
communities to build relations based on trust and mutual benefit. Our businesses
seek to identify and minimise any potentially negative operational impacts and risks
through responsible behaviour - acting transparently and ethically, promoting dialogue
and complying with commitments to stakeholders.
Stakeholder engagement is driven basis stakeholder engagement plan at each BUs
by CSR and cross-functional teams. Regular social and environment risk assessment
discussions are happening at BU level.
Strategic CSR communication is being worked upon for visibility. Efforts continue to
meet with key stakeholders, showcase our state-of the art technology, increase the
organic followers and enhance engagement through social media.
CSR communication and engagement with all stakeholders – within and outside
communities.
Tailings dam stability
R3
Impact
Mitigation
Direction
A release of waste material
leading to loss of life, injuries,
environmental damage,
reputational damage, financial
costs and production impacts. A
tailings dam failure is considered
to be a catastrophic risk – i.e. a
very high severity but very low
frequency event that must be
given the highest priority.
50
The Risk Management Committee included tailings dams on the Group Risk Register
with a requirement for annual internal review and three-yearly external review.
Operation of tailings dams is executed by suitably experienced personnel within the
businesses.
Third party has been engaged to review tailings dam operations, including
improvement opportunities/remedial works required and the application of
Operational Maintenance and Surveillance (OMS) manuals in all operations. This is
an oversight role in addition to technical design and guidance arranged by respective
business units. Technical guidelines are also being developed.
Vedanta Tailings Management Standard has been reviewed, augmented and reissued
including an annual, independent review of every dam and half-yearly CEO sign-off
that dams continue to be managed within design parameters and in accordance with
the last surveillance audit. Move towards dry tailings facilities has commenced.
Those responsible for dam management received training from third party and will
receive on-going support and coaching from international consultants.
Management standard implemented with business involvement.
BUs are expected to ensure ongoing management of all tailings facilities with ExCo
oversight with independent third-party assessment on Golder recommendations
implementation status y-o-y
Digitalisation of tailings monitoring facilities is being carried out at the BU’s.
Tailing management standard is updated to include latest best practices in tailing
management. UNEP/ICMM Global Tailings Standard incorporated into Vedanta
Standard during FY2021.
Integrated Report
Statutory reports
Financial statements
OPERATIONAL RISKS
R4
Challenges in Aluminium and Power business
Impact
Mitigation
Direction
Our projects have been
completed and may be subject
to a number of challenges during
operationalisation phase. These
may also include challenges
around sourcing raw materials and
infrastructure-related aspects and
concerns around Ash utilisation/
evacuation.
Improved LME and improved aluminium demand has led to recovery from the fall
which happened last year
Alumina refinery expansion from 2 mtpa to 5 mtpa being pursued
Continue to pursue new coal linkages to ensure coal security.
Inbound and outbound supply chain across rail, road and ocean including manpower
are functioning well, with no major risks foreseen.
Local sourcing of Bauxite & Alumina from Odisha.
Jharsuguda facilities have ramped up satisfactorily.
Project teams in place for Ash pond, Red mud, railway infrastructure and FGD.
Dedicated teams working towards addressing the issue of new emission norms for
power plants.
Global technical experts have been inducted to strengthen operational excellence.
Continuous focus on plant operating efficiency improvement programme to achieve
design parameters, manpower rationalisation, logistics and cost reduction initiatives.
Continuous augmentation of power security and infrastructure.
Strong management team continues to work towards sustainable low-cost of
production, operational excellence and securing key raw material linkages.
Talwandi Saboo (TSPL) power plant matters are being addressed structurally by a
competent team.
Discovery risk
R5
Impact
Mitigation
Direction
Dedicated exploration cell with continuous focus on enhancing exploration
capabilities.
Appropriate organisation and adequate financial allocation in place for exploration.
Strategic priority is to add to our reserves and resources by extending resources
at a faster rate than we deplete them, through continuous focus on drilling and
exploration programme. Exploration Executive Committee (Exco) has been
established to develop and implement strategy and review projects Group wide.
Continue to make applications for new exploration tenements in countries in which
we operate under their respective legislative regimes.
Exploration-related systems being strengthened, and standardised Group wide and
new technologies being utilised wherever appropriate.
International technical experts and agencies are working closely with our exploration
teams to enhance our capabilities.
Increased production rates from
our growth-oriented operations
place demand on exploration
and prospecting initiatives to
replace reserves and resources
at a pace faster than depletion.
A failure in our ability to discover
new reserves, enhance existing
reserves or develop new
operations in sufficient quantities
to maintain or grow the current
level of our reserves could
negatively affect our prospects.
There are numerous uncertainties
inherent in estimating ore and oil
and gas reserves, and geological,
technical, and economic
assumptions that are valid at the
time of estimation. These may
change significantly when new
information becomes available.
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Breaches in IT/Cybersecurity
R6
Impact
Mitigation
Direction
Like many global organisations,
our reliance on computers and
network technology is increasing.
These systems could be subject
to security breaches resulting in
theft, disclosure, or corruption
of key/strategic information.
Security breaches could also
result in misappropriation of funds
or disruptions to our business
operations. A cybersecurity breach
could have an impact on business
operations.
Group-level focus on formulating necessary frameworks, policies, and procedures in
line with best practices and international standards.
Implementation and adoption of various best-in-class tools and technologies for
information security to create a robust security posture.
Special focus to strengthen the security landscape of Plant Technical Systems (PTS)
through various initiatives.
Adoption of various international standards relating to Information Security, Disaster
Recovery & Business Continuity Management, IT Risk Management and setting up
internal IT processes and practices in line with these standards.
Work towards ensuring strict adherence to the IT-related SOPs so as to improve
operating effectiveness and continuous focus for employees to go through
mandatory cybersecurity awareness training.
Periodic assessment of entire IT systems landscapes and governance framework
from vulnerability and penetration perspective through reputed expert agencies and
addressing the identified observations in a time-bound manner.
Loss of assets or profit due to natural calamities
R7
Impact
Mitigation
Direction
Our operations may be subject
to a number of circumstances
not wholly within the Group’s
control. These include damage
to or breakdown of equipment
or infrastructure, unexpected
geological variations or technical
issues, extreme weather
conditions and natural disasters –
any of which could adversely affect
production and/or costs.
Vedanta has taken an appropriate Group insurance cover to mitigate this risk and
Insurance Council is in place that monitors adequacy of coverage and status of claims.
An external agency reviews the risk portfolio and adequacy of this cover and assists
us in our insurance portfolio.
Our underwriters are reputed institutions and have the capacity to underwrite our
risk.
Established mechanism of periodic insurance review in place at all entities. However,
any occurrence not fully covered by insurance could have an adverse effect on the
Group’s business.
Continuous monitoring and periodic review of the security function.
Continue to focus on capability building within the Group.
R8
Cairn related challenges
Impact
Mitigation
Direction
Cairn India has 70% participating
interest in the Rajasthan Block. The
Production Sharing Contract (PSC)
of the Rajasthan Block runs till
2020. The Government of India has
granted its approval for a ten-year
extension at less favourable terms,
pursuant to its policy for extension
of Pre-NELP Exploration Blocks,
subject to certain conditions. Ramp
up of production vs envisaged may
have impact on profitability.
RJ PSC 2020 extension was issued by DGH subject to certain conditions. Ongoing
dialogue and communication with the Government and relevant stakeholders to
address the conditions.
The applicability of the Pre-NELP Extension Policy to the RJ Block is currently sub
judice.
Discussions within teams as well as with partners have been initiated with an
objective to optimise cost across all spheres of operations.
Constant engagement with vendors/partners to ensure minimal project delay based
on the current situation and plan to ramp-up.
The growth projects are being implemented through an integrated contracting
approach. Contracts have built in mechanism for risk and reward. Rigorous project
reviews with execution partners/contractors to deliver volumes and returns.
Project management committee and project operating committee have been setup
to provide support to the outsourcing partner and address issues on time to enable
better quality control as well as timely execution for growth projects.
52
Integrated Report
Statutory reports
Financial statements
COMPLIANCE RISKS
R9
Regulatory and legal risk
Impact
Mitigation
Direction
We have operations in many
countries around the globe. These
may be impacted because of legal
and regulatory changes in the
countries in which we operate
resulting in higher operating
costs, and restrictions such as the
imposition or increase in royalties
or taxation rates, export duty,
impacts on mining rights/bans, and
change in legislation.
The Group and its business divisions monitor regulatory developments on an
ongoing basis.
Business-level teams identify and meet regulatory obligations and respond to
emerging requirements.
Focus has been to communicate our responsible mining credentials through
representations to government and industry associations.
Continue to demonstrate the Group’s commitment to sustainability by proactive
environmental, safety and CSR practices. Ongoing engagement with local
community/media/NGOs.
SOX-compliant subsidiaries.
Common compliance monitoring system being implemented in Group companies.
Legal requirements and a responsible person for compliance have been mapped in
the system.
Legal counsels within the Group continues to work on strengthening the compliance
and governance framework and the resolution of legal disputes.
Competent in-house legal organisation is in place at all the businesses and the legal
teams have been strengthened with induction of senior legal professionals across all
Group companies.
Standard Operating Procedures (SOPs) have been implemented across our
businesses for compliance monitoring.
Greater focus for timely closure of key non-compliances.
Contract management framework has been strengthened with the issue of boiler
plate clauses across the Group which will form a part of all contracts. All key contract
types have also been standardised.
Framework for monitoring performance against anti-bribery and corruption
guidelines is also in place.
R10
Tax related matters
Impact
Mitigation
Direction
Our businesses are in a tax regime
and changes in any tax structure
or any tax-related litigation may
impact our profitability.
Tax Council reviews all key tax litigations and provides advice to the Group.
Continue to engage with concerned authorities on tax matters.
Robust organisation is in place at business and Group-level to handle tax-related
matters.
Continue to consult and obtain opinion from reputable tax consulting firms on major
tax matters to mitigate the tax risks on the Group and its subsidiaries
53
VEDANTA RESOURCES LIMITED | INTEGRATED REPORT AND ANNUAL ACCOUNTS 2020-21 |
RISK MANAGEMENT CONTINUED...
FINANCIAL RISKS
R11
Fluctuation in commodity prices (including oil)
and currency exchange rates
Impact
Mitigation
Direction
Prices and demand for the Group’s
products may remain volatile/
uncertain and could be influenced
by global economic conditions,
natural disasters, weather,
pandemics, such as the COVID-19
outbreak, political instability, and
so on. Volatility in commodity
prices and demand may adversely
affect our earnings, cash flows
and reserves.
Our assets, earnings and
cash flow are influenced by a
variety of currencies due to our
multi-geographic operations.
Fluctuations in exchange rates
of those currencies may have an
impact on our financials.
R12
The Group’s well-diversified portfolio acts as a hedge against fluctuations in
commodities and delivers cash flows through the cycle.
Pursue low-cost production, allowing profitable supply throughout the commodity
price cycle.
Vedanta considers exposure to commodity price fluctuations to be integral to the
Group’s business and its usual policy is to sell its products at prevailing market
prices; and not to enter into price hedging arrangements other than for businesses
of custom smelting and purchased alumina, where back-to-back hedging is used to
mitigate pricing risks. Strategic hedge, if any, is taken after appropriate deliberations
and due approval from ExCo.
Our Forex policy prohibits forex speculation.
Robust controls in forex management to hedge currency risk liabilities on a back-to-
back basis.
Finance Standing Committee reviews all forex and commodity-related risks and
suggests necessary courses of action as needed by business divisions.
Seek to mitigate the impact of short-term currency movements on the businesses by
hedging short-term exposures progressively, based on their maturity. However, large,
or prolonged movements in exchange rates may have a material adverse effect on the
Group’s businesses, operating results, financial condition and/or prospects.
Notes to the financial statements in the Annual Report provide details of the
accounting policy followed in calculating the impact of currency translation.
Major project delivery
Impact
Mitigation
Direction
Shortfall in achievement of
expansion projects stated
objectives leading to challenges
in achieving stated business
milestones – existing and new
growth projects.
Empowered organisation structure has been put in place to drive growth projects.
Project Management systems streamlined to ensure full accountability and value
stream mapping.
Strong focus on safety aspects in the project.
Geo-technical audits are being conducted by independent agencies.
Engaged global engineering partner to do complete Life of Mine Planning and Capital
Efficiency analysis to ensure that the project objectives are in sync with the BP and
growth targets.
Standard specifications and SOPs have been developed for all operations to avoid
variability. Reputed contractors are engaged to ensure the completion of the project
on indicated timelines.
Mines are being developed using best-in-class technology and equipment and
ensuring the highest level of productivity and safety. Digitalisation and analytics help
improve productivity and recovery.
Stage gate process to review risks and remedy at multiple stages on the way.
Robust quality control procedures have also been implemented to check safety and
quality of services/design/actual physical work.
Use of reputed international agency for Geotech modelling and technical support,
wherever required.
54
Integrated Report
Statutory reports
Financial statements
R13
Access to capital
Impact
Mitigation
Direction
The Group may not be able to
meet its payment obligations
when due, or may be unable to
borrow funds in the market at an
acceptable price to fund actual
or proposed commitments. A
sustained adverse economic
downturn and/or suspension of
its operation in any business,
affecting revenue and free cash
flow generation, may cause stress
on the Company’s ability to raise
financing at competitive terms.
A focused team continues to work on proactive refinancing initiatives with an
objective to contain cost and extend tenor.
The team is actively building the pipeline for long-term funds for near- to medium-
term requirements both for refinancing and growth capex.
Track record of good relations with banks, and of raising borrowings in the last few
years.
Regular discussions with rating agencies to build confidence in operating
performance.
Business teams ensure continued compliance with the Group’s treasury policies that
govern our financial risk management practices.
CRISIL and India Ratings have revised outlook to ‘Stable’ from ‘Negative’ while
affirming the respective ratings
Building talent through teamwork
55
VEDANTA RESOURCES LIMITED | INTEGRATED REPORT AND ANNUAL ACCOUNTS 2020-21 |
WELL-POSITIONED TO
DELIVER SUSTAINABLE
SOLUTIONS
At Vedanta, our sustainability approach is driven by the overarching desire to
address the expectations of our stakeholders, while delivering a strong business
performance. As one of the world’s leading diversified natural resource companies
with business operations in multiple geographies spanning continents, we are
mindful of our commitments to society, our people and the environment.
KEY STATISTICS:
42 mn
Community beneficiaries
through our social investments
(FY2020: 3.26 mn)
60 mn mt
Carbon footprint
(FY2020: 59 mn mt)
8 fatalities
in FY2021 (FY2020: 7)
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Financial statements
1.89 mn GJ
Energy conserved
(FY2020: 1.75 mn GJ)
c.US$45 mn
Community investment
(FY2020: US$42 mn)
30.7%
Water recycling rate
(FY2020: 29%)
VEDANTA RESOURCES LIMITED | INTEGRATED REPORT AND ANNUAL ACCOUNTS 2020-21 |
57
VEDANTA RESOURCES LIMITED | INTEGRATED REPORT AND ANNUAL ACCOUNTS 2020-21 | SUSTAINABILITY AND ESG
A firm sustainability
roadmap
Our vision is to become a developer of choice in the areas of our operations and
create long-term value for all our stakeholders. To deliver on this promise, we have
developed the Vedanta Sustainability Framework that enables our business units to
embed sustainable business principles into their systems and procedures.
VEDANTA SUSTAINABILITY FRAMEWORK
Developed in line with global standards from
international bodies such as ICMM, IFC, OECD,
UNGC and SDGs, the Framework comprises several
policies, standards and guidance notes, which
facilitate its execution.
8 Policies
Biodiversity, Energy & Carbon, HIV-AIDS,
Human Rights, Social, Supplier & Contractor
Sustainability Management, Water
87
Standards & Guidance Notes
Covering all the policy subject areas
In line with ICMM, IFC Performance Standards,
Global Reporting Initiative (GRI)
Robust monitoring
Annual audit (VSAP) conducted at all Vedanta
locations to check compliance with VSF
Monitored by Group ExCo
Please refer to the Sustainable Development
Report 2021 for more information
VEDANTA SUSTAINABILITY ASSURANCE
PROCESS (VSAP)
VSAP is our sustainability risk assurance tool,
which is used to assess the compliance of all
our businesses with the Vedanta Sustainability
Framework. This meticulously developed
assurance process helps embed sustainable
development into every activity that we
undertake.
VSAP is an annual process with clear tracking of
results by the Sustainability Committee, and the
Executive Committee, which in turn reports to the
Board.
EFFECTIVE ENGAGEMENT. ENHANCED
STEWARDSHIP.
Our key stakeholders
At Vedanta, we engage with several stakeholder
groups, while operating our business and creating
measurable social impact. The infographic
summarises the key stakeholder groups, who
have a bearing on our operations.
VEDANTA
Local community
Employees
Shareholders, investors and lenders
Civil society
Industry (suppliers, customers, peers,
media)
Governments
58
Integrated Report
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Financial statements
We engage continuously and effectively with our varied
stakeholder groups with a view to understand their
key concerns and priorities, and respond sufficiently.
It further helps us maintain a pulse on our external
environment and the sentiment of the overall ecosystem,
thereby helping us proactively sense opportunities and
risks, and enabling quick action.
The table below represents an overview of the ongoing
engagement with our stakeholders and the manner in
which Vedanta responds to their expectations.
Stakeholder groups
Types of engagement
Key expectations
Initiatives in FY2021
Local community Community group meetings
Employees
Village council meetings,
Community needs/social impact
assessments
Public hearings
Grievance mechanisms
Cultural events
Engaging with communities via
various community initiatives of
the Vedanta Foundation
Chairman’s workshops
Chairman’s/CEO’s town hall
meetings
Feedback sessions
Performance management
systems
Various meetings at plant level
V-Connect mentor programme,
Event management committee
and welfare committee
Women’s club
Developing and undertaking
need-based community projects
Increasing community outreach
175 number of initiatives
undertaken through our 7
thematic areas
through our programmes
Improving grievance mechanism
for community
Tirelessly worked with the
communities during COVID
Initiated a Group-wide social
performance programme
to redefine community
engagement. Covered self-
assessment across all business
units
Improving training on HSES and
other pertinent material issues
for the organisation
Providing increased
A Group-wide CHESS module
launched to engage with
employees on sustainability
practices
opportunities for career
growth through internal talent
recognition
10 numbers of Vice Chairman’s
workshops conducted to identify
internal talent
Increasing the gender diversity
Launched a Group-wide
of the workforce
programme to promote women
in leadership. 60 women leaders
engaged
59
VEDANTA RESOURCES LIMITED | INTEGRATED REPORT AND ANNUAL ACCOUNTS 2020-21 | SUSTAINABILITY AND ESG CONTINUED...
Stakeholder groups
Types of engagement
Key expectations
Initiatives in FY2021
Shareholders,
investors and
lenders
Regular updates
Investor meetings
Site visits (put on hold in the last
Consistent disclosure
on economic, social, and
environmental performance
Actively engaged with risk rating
agencies to improve disclosures
Participated in international
webinars to improve Vedanta’s
presence on international
forums
Civil societies
year due to COVID),
AGM and conference
Quarterly result calls
Dedicated contact channel –
Vedantaltd.ir@vedanta.co.in and
sustainability@vedanta.co.in
Partnerships with, and
membership of international
organisations
Working relationships with
organisations on specific
projects
Engagement with international,
national, and local NGOs
Conferences and workshops
Dedicated contact channel –
sustainability@vedanta.co.in
Expectation of being aligned with
the global sustainability agenda
Commitment to ensuring human
rights for all
Engaged with RMI
Initiated engagement with
intended membership to VPSHR
Partnered with 91 NGOs for our
various programmes
Engaged with global
business partners for various
sustainability improvement
programmes
Industry
(suppliers,
customers,
peers,media)
Customer satisfaction surveys
Vendor scorecards
In-person visits to customers,
suppliers, and vendor meetings
(put on hold during COVID)
Consistent implementation of
the Code of Business Conduct
and Ethics
Ensuring contractual integrity
100% coverage through CoC
training
Governments
Participation in government
consultation programmes,
Compliance with laws
Contributing towards the
Engagement with national, state,
and regional government bodies
at business and operational level
economic development of the
nation
60
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OUR ESG MATERIAL ISSUES
We conducted a detailed materiality analysis in FY2020 to identify the most pertinent ESG issues that define our
present and future. They are divided into three intervention categories.
High
Medium
Low
M1
Energy & Climate Change
M14 Noise & Vibration
M25
Land Acquisition &
Rehabilitation
M2 Water Management
M15 Tailings Dam Management
M3 Solid Waste Management
M16 Human Rights
M4 Air Emissions
M17 Resource Efficiency
M5 Biodiversity
M18 Transparent Disclosure
M6 Health & Safety
M19 Materials Management
M7 Community Development
M20 Learning and Development
M8 Supply Chain Sustainability
M21 Use of Recycled Material
M9 Grivance Management
M22 Brand Salience
M10 Compliance to Government Regulations
M23
Innovation
M11 Upholding Rights of Indigenous People
M24 Governance for Sustainability
M12 Ethical Business Practices
M13 Diversity & Equal Opportunity
Act
Manage
Observe
Read our detailed stakeholder engagement process and progress across ESG material issues update in our
Sustainable Development Report 2021
61
VEDANTA RESOURCES LIMITED | INTEGRATED REPORT AND ANNUAL ACCOUNTS 2020-21 | ENVIRONMENT
A multi-pronged approach to
conserve the environment
Our environmental approach is based on improving our existing processes and
systems and proactively adopting more efficient processes for new operations.
We have developed specific objectives and targets as a part of our environmental
commitment and review our performance annually against these priorities.
62
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Energy management
& climate change
As a large consumer of fossil-fuel based power, we
recognise the climate-related risks associated with our
business activities. We understand the implications of
our energy consumption, both in terms of its cost to the
natural environment as well as cost to the operations;
and are committed to meet our energy demands, while
limiting our carbon emissions. We remain fully supportive
of the outcomes of the Paris Agreement and have taken
on carbon reduction targets in alignment with the
Nationally Determined Contributions (NDC).
Targets & strategies
We had aligned ourselves with the Nationally Determined
Contributions (NDCs) of the Government of India and
had committed to reduce our GHG emissions intensity by
20% by 2025 from a 2012 baseline.
Till FY2021 we have achieved c.13.6 mn tons of avoided
GHG emissions since 2012. Our long-term target is to
substantially de-carbonise by 2050 and are currently on
the path to develop a plan.
Performance
GHG EMISSIONS
FY2021
FY2020
FY2019
FY2018
FY2017
1.31
2
3.5
1.2
1.4
(mn tCO2e)
58.93
60.24
61
63
55
51
51.7
58.5
52.2
53.1
Harnessing wind energy at HZL
Scope 1 (direct)
Scope 2 (indirect)
We calculate and report Greenhouse Gas (GHG) inventory
i.e., Scope 1 (process emissions and other direct emissions)
and Scope 2 (purchased electricity) as defined under the
World Business Council for Sustainable Development
(WBCSD) and World Resource Institute (WRI) GHG Protocol.
UN SDGs and targets linkage
ENERGY CONSUMPTION
(mn GJ)
Goal: SDG 12 –
Responsible production and consumption
Target: 12.2 – Achieve sustainable management and
efficient use of natural resources
8.7
8.5
FY2021
FY2020
FY2019
62.59
FY2018
14.34
FY2017
9.07
Direct
Indirect
515
517
483.9
424.94
411.95
523.7
525.5
546.49
439.28
421.02
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VEDANTA RESOURCES LIMITED | INTEGRATED REPORT AND ANNUAL ACCOUNTS 2020-21 | ENVIRONMENT CONTINUED...
Waste and tailings
management
Waste management in a safe and responsible manner is a
crucial priority for our businesses. The hazardous wastes
comprise used/spent oil, waste refractories, spent pot
lining and residual sludge from smelters. On the other
hand, high-volume and low-toxicity wastes constitute the
non-hazardous wastes. These are fly ash (from captive
and merchant power plants), red mud (aluminium refinery
waste), jarofix (from zinc smelting), slag, lime grit (process
residues from smelters and aluminium refineries) and
phosphogypsum (phosphoric acid plant).
In FY2021, we recycled 94% of the high-volume-low-effect
wastes such as fly ash, slag, and jarosite. For the 2nd year
in a row, we could reutilise more than 100% of the fly ash
generated in the year by recycling legacy waste.
Tailings dam management
Integral to mining operations, tailings dams (if breached)
can cause significant damage to the environment and to
the neighbouring communities. The Company oversees
18 active and five inactive and one closed Tailings
Management Facilities (TMFs). Our principal concern is to
ensure the safety of the people who live downstream from
our dams. All but one1 tailings facilities have undergone an
independent audit and assessment in the last 12 months by
Golder Associates.
We have also introduced a tailings dam management
standard to ensure that our Group companies adhere to
standard practices while managing their dam structures.
HIGH-VOLUME-LOW-EFFECT WASTE
(mn mt)
UN SDGs and target linkage
6%
25%
114%
Red Mud
Jarosite
0.13
2.27
0.15
0.6
1.15
1.01
Slag
Fly Ash
Recycled
Generated
Goal: SDG 12 – Responsible production
and consumption
Target 12.2 – Achieve sustainable
management and efficient use of natural
resources
15.32
13.9
110%
1 Our facility at Skorpion Zinc underwent an audit in 2016.
64
Reducing our impact on the environment
Integrated Report
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Financial statements
Water
management
While access to a steady water supply is critical for
mining and smelting operations, host communities and
the natural ecosystem and biodiversity of the area also
rely on water. Hence, the responsible use of this shared
resource is a critical imperative for us and for all our
stakeholders.
Our Group water policy administered through our water
management standard is in place and our approach is
to keep it as a core factor while making decisions, either
for a new project or an existing one. Water-screening
assessment to identify sensitive water resources,
aquatic habitats and any known or suspected water
resource constraints in proximity to each operation, is
a must and has been conducted by all our businesses.
We have steadily increased our water recycling rate in
the last three years.
Performance
WATER CONSUMPTION & RECYCLING
(mn m3)
FY2021
83.05
FY2020
72.36
FY2019
66.99
FY2018
71.70
FY2017
64.65
270.4
30.71%
251.68
28.75%
243.44
27.52%
241.66
29.67%
241.56
26.76%
UN SDGs and target linkage
Total water consumption
Water recycled/reused (% Water recycled)
Goal: SDG 6 – Clean water
and sanitation for all
Target: 6.4 – Increase
water use efficiency
and ensure sustainable
withdrawals
Goal: SDG 15 – Life on land
Target: 15.9 - Introduce
biodiversity management
and planning into
development processes
Raw water reservoir at Lanjigarh facility
65
VEDANTA RESOURCES LIMITED | INTEGRATED REPORT AND ANNUAL ACCOUNTS 2020-21 | ENVIRONMENT CONTINUED...
Air
emissions
The impact of emissions on employees, communities
and the natural surroundings is closely observed,
evaluated and documented for corrective actions and
future reference. We use best-in-class technologies to
reduce to the minimum any particulate release.
The release of Suspended Particulate Matter (SPM),
SOx and NOx are monitored as a part of our consistent
efforts to keep the ambient air quality safe. Lead
emissions in our zinc operations, fluoride emissions in
our copper and aluminium operations, and Polycyclic
Aromatic Hydrocarbons (PAHs) in our aluminium
operations are also checked regularly to adhere to our
Environmental Management Standard.
Performance
STACK EMISSIONS
FY2021
FY2020
FY2019
66,305
66,602
67,278
FY2018
56,749
FY2017
44,935
SOx
NOx
(in mt)
219,745
255,657
242,234
189,823
174,340
Reducing carbon footprint with tree plantation
66
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Financial statements
CASE STUDY
Responsible tailings
utilisation: all round
benefits
One of the key aspects of mine
sustainability is its post-mining
restoration. Typically, to maintain
structural stability of the mines,
miners undertake the process
of back filling material into
underground voids created by
their activity. The backfilling
is usually conducted using
cementitious material such as
concrete. However, this can be a
costly affair, with larger negative
environmental footprint.
At Hindustan Zinc, Vedanta’s zinc
division, we took up an innovative
and contemporary approach
to back filling. In exploring
economically viable mixtures to
execute back filling, we found an
opportunity to use mine tailings
(leftover material after ore
separation). This played out to
be beneficial in more ways than
one, where we could utilise waste
material to fill the void, offsetting
the need for new disposal land for
tailings. It resulted in economic
benefits, reduction of cycle time,
generating employment and
above all, environmental utility
as industrial waste could find
alternate and sustainable use.
Infrastructure, technology
and process
We executed this by following
the paste back fill system,
setting up two paste fill plants
each in Sindesar Khurd (SK) and
Rampura Agucha (RA) mines
and one in the Zawar mine. In
fact, HZL is credited with the
installation of the first paste fill
plant in India. These plants help
Paste Fill Plant at Rajpura Dariba Complex
in thickening the mill tailings, mixing
with the binder to prepare the paste
for the underground distribution
system. This process avoids any air
emissions, and we use recycled water
for the activity. The plants in SK have
a combined capacity of 6 mtpa, RA at
5 mtpa and Zawar at 1 mtpa.
Employing the latest technology with
emergency preparedness plans and
digitisation, this initiative dovetails
into Vedanta’s policy of ‘Zero Harm,
Zero Waste, Zero Discharge’.
Key outcomes
Since deployment, we have achieved
up to 39% of tailings utilisation,
continual reduction of cement
utilisation in the mix and 14% and
37% reduction in specific water
consumption in the RA and SK mines,
respectively. The capital cost of the
plant deployment has been paid back
within three months across locations
and has resulted in continuous
profit contribution.
Way forward
Going forward, we intend to
utilise 55% of tailings and
maximise fly ash utilisation
within the next one year. Focus
will be on increased backfilling
and safety.
Since 2018, we
utilised 7.4 mt
of tailings in
backfilling to
avoid land disposal
67
VEDANTA RESOURCES LIMITED | INTEGRATED REPORT AND ANNUAL ACCOUNTS 2020-21 | SOCIAL
Together we help
uplift communities
We are the primary economic driver for the communities where we operate. We
shoulder this responsibility seriously and endeavour to fulfil our role in a manner
that upholds the dignity of all our stakeholders and allows us to live up to our
deeply cherished values.
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The Vedanta Sustainability
Framework and its associated
standards and policies guide
our work on social performance.
In areas with indigenous
populations, we are committed
to following the principles of
Free, Prior, Informed Consent
(FPIC). With its genesis in the
UN Declaration of Rights of
Indigenous Peoples, it has been
adopted as a best practice by the
IFC and ICMM.
Our CSR Council, led by a senior
business leader, and including
CSR Heads and CSR Executives
from all business units, meets
every month and reviews the
performance, spend and outcome
of CSR programmes across
units. Governed by our in-house
CSR Policy and Sustainability
Framework, the Council is
responsible for governance,
synergy and cross-learning
across the Group’s CSR efforts.
The Board CSR Committee
comprises senior Independent
Directors, who, apart from
providing strategic direction for
CSR activities, also approve and
budgets, and review progress of
the initiatives.
Through such
proactive and
targeted initiatives,
we are progressing
towards our objective
of becoming a
developer of
choice in our
areas of operation.
Following the success of the
initiative, we are engaging
third-party consultants again to
reinstate the project through the
means of pilot to be conducted
at two BUs – Lanjigarh and HZL.
With initial formalities complete
along with senior management
approvals, FY2022 will see these
two BUs undertake pilot projects
including social risk assessment
and grievance mechanism tracking,
among others.
SOCIAL PERFORMANCE & SOCIAL
LICENCE TO OPERATE
Securing and retaining one’s social
licence to operate is an outcome
resulting from a company’s ability to
garner the trust of the communities
where it operates. Social
performance frameworks are a good
mechanism to measure, manage, and
monitor this aspect of the business.
With a view to evaluate Vedanta’s
social performance and impact, our
senior leadership commissioned a
study conducted by independent,
globally renowned experts. This
study spanned four sites, post
which the reports were submitted
to the Vedanta ExCo for their
consideration. The reports made a
clear case for a reboot of our social
performance practices.
Based on the findings of the report,
a Group-wide self-assessment
drive with all units was conducted
in FY2021. These led to the
formation of Social Performance
Steering Committees, with cross
functional participation. The
primary intent was to explain to
our internal stakeholders that
social performance and licence to
operate go beyond the ambit of an
organisation’s CSR activities and are
closely related to its operations, HR
practices and other activities.
This awareness initiative resulted in
the formation of Social Performance
Management Committees (SPMC)
at each unit, development of
standard and guidance note and its
implementation through VSAP.
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VEDANTA RESOURCES LIMITED | INTEGRATED REPORT AND ANNUAL ACCOUNTS 2020-21 | SOCIAL CONTINUED...
COMMUNITY EMPOWERMENT INITIATIVES
Community provides us the critical support to grow sustainably with all stakeholders. We have evolved one of the
most elaborate community empowerment initiatives in our industry, and we regularly garner inputs and insights from
stakeholders to improve our programmes.
In FY2021, c.US$45 mn were spent to help communities elevate their quality of life through various interventions. An
overview of these programmes is provided below.
Children’s well-being and education
Key features
90+Initiatives across our
Group companies
c.39 mn
Children benefit from
these programmes
Types of interventions:
Anganwadis (rural
childcare centre)
and child-care
centres; public school
infrastructure support
(including sanitation);
scholarships teacher
training; digital
classrooms and
computer aided learning
centres; libraries;
Vedanta-run schools;
exam preparation
counselling; career
counselling science fairs
60+Initiatives across our
Group companies
c.2.4 million
People benefit from
these programmes
Types of interventions:
Support to primary
health centres; HIV/AIDS
awareness programmes;
health camps; mobile
health vans; specialist
doctor support; nutrition
programmes; Vedanta-
run hospitals; health
awareness drives
Healthcare
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Women’s empowerment
Key features
Drinking water & sanitation
Upskilling youth
15+Initiatives across our
Group companies
Types of interventions:
Self-help groups;
Women’s co-operatives;
Micro-enterprises
3,300+
SHGs formed
300+
Micro-enterprises formed
32,000+
Women benefit from
these programmes
35+Initiatives across our
Group companies
250,000+
People benefit from these
programmes
Types of interventions:
Provision of drinking
water; construction
of toilets; RO plant
set up; digging of
borewells; handpump
repair/installation;
sanitation drives
20Initiatives across our
Group companies
2,000+
Youth trained
Types of interventions:
Sewing centres;
Vocational training
centres; Technical
and computer
literacy programmes;
Traditional craft and
painting training
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VEDANTA RESOURCES LIMITED | INTEGRATED REPORT AND ANNUAL ACCOUNTS 2020-21 | SOCIAL CONTINUED...
Community infrastructure
Key features
40+Initiatives across our
Group companies
360,000+
People and
3,000+
Families benefit from
these programmes
Types of interventions:
Tube-wells/open-wells/
borewells; check-dams;
roads; parks; public
education infrastructure;
community centres;
health centres; village
walls and gates;
renovation of sports
complexes; temple
irrigation channels;
drains; bus stands;
streetlights; ponds;
public CCTV installations
50+Initiatives across our
Group companies
62,000+
Farmers benefited
Types of interventions:
Climate change
adaptation; Wadi-based
agriculture; water-
shed rejuvenation;
agriculture-based
natural resource
management; dairy and
livestock development;
farmer training;
SHGs; co-operatives;
veterinary care;
irrigation channel
maintenance
30+Initiatives across our
Group companies
43,000+
Sportspersons and culture
enthusiasts benefited
Types of interventions:
Rural sports;
Sponsorship for: para-
athletes; Marathons;
Sports tournaments;
Music festivals; Football
and archery training
academies
Agriculture & animal husbandry
Sports & culture
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Environmental restoration & protection
Key features
96,000+
Saplings planted and are
under maintenance
Types of interventions:
Sapling plantation and
greenbelt management;
Water conservation
structures; Pond
desilting
UN SDGs and target linkage
Goal: SDG 2 – Zero Hunger
Target: 2.1 - End hunger
and ensure access to safe,
nutritious, and sufficient
food, all year round
Target: 2.2 - End all forms
of malnutrition
Goal: SDG 6 – Clean water &
sanitation
Target: 6.6 - Protect and
restore water-related
eco-systems
Goal: SDG 8 – Economic
growth & decent work
for all
Target: 8.6 - Reduce youth
unemployment, illiteracy,
unproductivity
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VEDANTA RESOURCES LIMITED | INTEGRATED REPORT AND ANNUAL ACCOUNTS 2020-21 | SAFETY
Ensuring the safety of
our workforce
During FY2021, we lost eight colleagues to work-related accidents. It is a stark reminder for us to strengthen and
improve our safety management systems, as one life lost is one too many.
This was a matter of grave concern, because within the same period, we had invested heavily in several systems
and standards, which were introduced to ensure a safe, injury-free workplace. To understand the rationale behind
this anomaly, the Group ExCo along with our Group HSE teams went on to analyse the situation and developed a
way forward.
As a part of our continuing safety initiatives, the following three areas deserve mention:
Proactive leadership
Continuous interaction between
leaders and support personnel on
safety issues, leading to hands-on
safety interventions.
Delegation of safety-
critical tasks
Safety-critical responsibilities are
identified and delegated with proper
monitoring mechanism in place.
Safety engagement
with partners
Long-standing business partners
are properly informed about safety
initiatives undertaken by Vedanta,
and project-specific business
partners are managed through
efficient supervisors.
74
Integrated Report
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Financial statements
Setting high safety standards
An overview of our safety performance:
LTIFR
FY2021
FY2020
FY2019
FY2018
FY2017
(per mn person-hours)
FATALITIES
0.55
FY 2021
0.66
FY 2020
0.46
0.35
0.40
FY 2019
FY 2018
FY 2017
5
8
9
7
7
UN SDGs and target linkage
Goal: SDG 8 – Economic growth &
decent work for all
Target: 8.8 - Protect labour rights and
provide safe work conditions for all
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VEDANTA RESOURCES LIMITED | INTEGRATED REPORT AND ANNUAL ACCOUNTS 2020-21 | PEOPLE AND CULTURE
An enriching culture
of caring and sharing
Giving back to the community, society and country in various ways is part of Vedanta’s
larger purpose. We are committed to work for greater good towards national prosperity and
sustainable growth. Vedanta was among the very few companies which rose to the occasion
and supported the nation through various initiatives such as distributing food packets for daily
wage earners, manufacturing of masks and PPEs, food for animals, and so on.
Ensuring health, safety, environment
and sustainability continue to be
our core focus areas. To combat
the pandemic-induced health and
security concerns of our people,
we created a central COVID Task
Force with a mix of passionate young
leaders and experienced senior
leaders. The taskforce is focused
on implementing strong control
measures across the Group, which
includes the launching of Apollo 24x7
healthcare helpline, digital portal
for tracking the cases across the
Group, wellness webinars and regular
communication on precautions and
preventive measures with all our
people through the Vedanta Cares
initiative.
We also introduced the Vedanta
Term Life Insurance Policy
(providing financial protection
equivalent to five times of annual
salary) with world-wide coverage of
all our executives across the Group.
Amid the pandemic, this was the
most important initiative launched
for our employees. This benefit is
over and above the Mediclaim and
Group Personal Accident Insurance
Policies currently being provided
by the Company to support the
employees in emergencies.
Our employees also receive
consistent recognition from
our Management and Board for
their extra-mile. These include
the Chairman Individual Awards,
Chairman Awards for COVID-19
efforts, Chairman Award for
Business Partner and Best
performing ManCom and Chairman
Discretionary Award.
76
STREAMLINED MANAGEMENT
Management Committee:
Vedanta introduced the concept
of Management Committee
(ManCom) for the organisation’s
apex leadership. Our businesses
are now being run by a Group of
6-8 people of the Management
Committee comprising the CEO,
CFO, CHRO, CCO, CMO and other
key leaders. Our ManComs work
as a cohesive team and are the
top decision-making body for the
respective businesses, functions,
and the Group, while ExCos
(Executive Committee) serve as
a review body. Currently, we have
one Group ManCom, which is the
central decision-making body
with eight members and seven
Business ManComs. The SBUs are
still managed by their respective
EXCOs. The same concept has been
extended to functions as well and
each function is divided into verticals
with a vertical head identified to
ensure accountability and delivery.
Integrated Commercial and
Marketing Organisation:
At Vedanta, we continuously assess
our organisational structure to
ensure right Management in Place
(MIP). We redesigned the way
we look at our commercial and
marketing functions and created
an Integrated Commercial and
Marketing Organisation under
the leadership of the Group Chief
Commercial Officer and anchored by
the Managing Director Commercial &
CEO Aluminium & Power.
We embarked on a series of
Commercial and Marketing
Workshops to identify 100+
leaders in the largest ever talent
identification exercise through a
series of structured Vice Chairman’s
Internal Growth Workshops. The new
team will work with a clear objective
of enhanced margin protection, build
category expertise, benchmarking
and data-driven decision-making,
backed by technology and
digitisation. The focus will be on
buying and selling within the Indian
Employees at operational site
Integrated Report
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Financial statements
subcontinent to foster national
growth.
Project organisation design:
We have a large number of
high-impact brownfield projects that
are being implemented across the
Group to significantly drive volume,
unlock value and accelerate growth.
This is also part of our endeavour to
help our nation revive the economy
and infrastructure development,
capex spending and foreign direct
investment (FDI). To drive this
transformational agenda, we have
embarked on a series of Project
Leadership Workshops to identify
the next set of project leaders.
These workshops have helped us
identify 16 heads of various key
projects across the Group, who
have taken up enhanced roles to
drive our growth vision.
DIVERSITY & INCLUSION GO HAND
IN HAND
Diversity is a business imperative,
as much as it is about fairness and
the right thing to do. The Group
benefits significantly from the skills,
experience, and perspectives of
the wide range of people who work
with us. Our objective is to achieve
gender parity across all levels
starting from our Board to ManComs
/ ExCos and all decision-making
bodies. We constantly review our
organisation design and talent mix
to ensure a healthy representation
of women at all levels in the
organisation.
CASE STUDY
Empowering women for an empowered tomorrow
in future, spanning operational
and enabling roles at Vedanta’s
business units in India and overseas.
The entire programme is likely to
be completed between six and 18
months, as the broader objective is
to elevate and retain talent.
Our journey commenced with 55
women leaders, out of 1,000 women
employees in various business units
and functions across 10 businesses
and operations. This includes an
interesting mix of women leaders
from enabling functions such as
Commercial, Marketing, Finance,
HR, IT, PR/CSR, Legal & Strategy
and operations, such as HSE, AO,
Security, and Core Operations.
The eligibility criteria comprised the
following:
a)
b)
c)
d)
Performance and potential
Educational background
Projects handled
Passion for technology
Following their selection, the Vice
Chairman had a detailed interaction
with these aspiring leaders. These
women are being trained to take on
higher CXO roles as part of Top 200
leaders in the Group. The idea is to
ensure that they represent a part of
the decision-making bodies of the
Vedanta Group, namely ManCom
and ExCo.
A minimum of five women
will be given higher roles and
responsibilities on a quarterly basis.
This will ensure higher visibility,
exposure and fast-track career
progression through their enhanced
and elevated roles. Anchoring the
programme are senior leaders of
the Group and each anchor has been
assigned five to six women leaders
as mentees.
We will continue to implement
more such programmes to
encourage women to demonstrate
their grit and talent and take on
larger responsibilities.
77
At Vedanta, we have put in place
a comprehensive, time-bound
process to develop a robust
pipeline of women leaders across
the Group. The benchmark HR
programme (V-lead) underlines
the Group’s strong commitment
to diversity and inclusion.
As part of the initiative, a Group
of promising young women will
be identified, nurtured, and
promoted to adopt greater
responsibilities in CXO positions
VEDANTA RESOURCES LIMITED | INTEGRATED REPORT AND ANNUAL ACCOUNTS 2020-21 | PEOPLE AND CULTURE CONTINUED...
Leaders in the making
TRANSFORMATIONAL INITIATIVES
Vice-Chairman’s SBU engagement
workshops:
The key idea behind this
transformational initiative was to
connect with SBU Heads / ExCos
to engage, energise and generate
ideas / suggestions around key
themes such as Management in
Place and Business Vision, Volume
& Cost, HSE, CSR and Community
Relations, People Development,
Technology & Digitalisation,
Innovation & Benchmarking, Quality,
Security & Housekeeping etc.
Through this structured initiative,
we have covered 16 SBUs and have
engaged with 1,200+ executives. The
businesses have acknowledged that
the Vice Chairman’s engagement
helped them in: a) moving in the
right direction; (b) each SBU has
already started working on the
key action points which emerged
from the engagement; (c) since the
workshops happened during the
current COVID times, it helped build
employees’ morale and performance
focus; (d) engagement with
business partners helped in quality
assessment.
Leadership succession planning:
We concluded the largest ever
exercise of Leadership Succession
Planning. The initiative aims to
create a three-level succession slate
for the COOs for key businesses
in the Group. The objective was to
identify 10 COOs and 30 three level
successors for each COO through
IJP and handpicking high-quality
leaders. This is a continuous process,
as we continue to identify successors
for other CXO positions such as
deputy for CHRO and CFO positions
for each business.
360-degree feedback mechanism:
This initiative was launched to get
a comprehensive assessment of
the organisation’s key leaders.
It will help the leaders in identifying
strengths and improvement areas
for effective leadership and address
the improvement areas through a
comprehensive developmental plan.
The key leaders from Group ManCom
to ManCom and ExCo members of
each business will undergo the same
leadership development journey.
ONBOARDING TALENT
As part of our overarching initiative
to onboard talent through campus
hiring from esteemed institutions,
we inducted 1,000+ young
professionals in India with a focus
on diversity. We have put special
focus to induct talent from North-
East, J&K region and minority
communities. As a proactive
measure, we have introduced
premium salary for rank holders
in few categories, and they will
be offered front-line decision-
making roles. We are also inducting
specialised talent from new-age
programmes such as digital, data
science and analytics, quality, R&D,
sustainability, forensics, and so on.
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Financial statements
Campus hiring with
focus on gender
diversity, upliftment of
minority communities
and adequate
representation
of all regions and
demographics in India.
Vedanta Leadership Development
Programme:
Continuing our practice of hiring
young talent and developing
them to take up higher roles and
responsibilities in the organisation,
we started the Vedanta Leadership
Development Programme (VLDP)
for hiring from top IITs and IIMs. Over
the preceding four years, we have
hired 100+ management trainees
from the top three IIMs and XLRI and
graduate engineer trainees from the
top six IITs.
Our high-potential talent is provided
with high-impact frontline roles.
At the end of these workshops,
we rotated them into elevated
cross-functional roles to provide
them with maximum exposure and
train them to take up CXO roles at
our businesses within the next six to
eight years.
LEADERSHIP DEVELOPMENT
As part of Vedanta’s DNA, we focus
on continuous identification and
talent development. Over 1,000
leaders were identified through
workshops, V-Reach, IJP and Act-Up
programmes.
FACOR Leadership ACT UP
FACOR (Ferro Alloys Corporation
Limited) which was recently acquired,
comprises chrome mines along with
a fully integrated processing and
captive power plant. FACOR is one of
the largest producers of Ferro alloys,
an essential ingredient to produce
stainless steel and specialty steel.
FACOR has tremendous potential
to generate significant value in the
growing market. A 2-day ACT UP
(Accelerated Competency Tracking
and Upgradation Programme)
workshop was organised with the
objective to identify and elevate
the internal talent at FACOR to
leadership role in order to strengthen
the FACOR leadership backbone
and impart Vedanta’s culture and
values for alignment. A structured
process was designed to shortlist
participants from a pool of 600+
employees for the 2-day workshop
which comprised Group activities,
presentations, and case studies.
50+ new leaders were identified and
elevated to significantly higher roles
across the three verticals of Captive
Power Plant (CPP), FACOR Power
Limited (FPL) and Mines. Cross-
functional teams were formed to
foster learning across verticals and
solve complex problems. A new CSR
vertical was established to stand
firm on our values of giving back to
society.
V-Reach
Graduate Development Programme:
We have a strong and unwavering
focus on identifying and developing
talent from within. We have a 5,000+
strong talent pool who joined us
as graduates and who represent
the backbone of our businesses.
V-Reach was launched in three
phases to identify top 500 talent
from the graduate talent pool and
provide them elevated roles and
opportunities for fast-track career
growth within the Group. This
identified talent will progressively
take up enhanced roles for adding
fresh perspective and value to
various businesses. We are also
developing a digital solution to
continuously track the progress
of this talent through technology
implementation as we continue to
identify additional set of talent under
this category.
Digital Organisation
Vedanta has embarked on an
aspirational digital transformation
journey and our vision is to become
a technology-driven company.
With this vision, Digital ACT UP was
conducted to identify young high
potential leaders across various
units and functions through the
structured ACTUP workshop model
and give them significantly elevated
roles and responsibilities and thereby
induct the required skillset to provide
digital direction to our organisation.
V-Tech 1.0
To identify talented engineers and
elevate them to significantly higher
roles, V Tech 1.0 was launched. Over
550 employees spanning the group
with focus on ensuring diversity
with a undergo online psychometric
assessment to result in shortlisting
of top 300 basis following a thorough
assessment. These leaders will
drive high-impact projects and
innovations, take up leadership roles
across the organisation, leverage
their potential and become brand
ambassadors of Vedanta.
Young Leaders’ Taskforce
At Vedanta, young leaders are
given a wide plethora of growth
opportunities. We have created a
team of livewire professionals hailing
from diverse backgrounds with a
focus on innovation. Their innovative
ideas help us steadily grow volumes,
optimise costs and identify other
key drivers to make the organisation
more agile to protect our margins,
despite market variations.
UN SDGs and target linkage
Goal: SDG 5
Target: 5.5 - Ensure full and equal
participation of women in all
decision-making in the political,
economic, and public life
Target 5.9- Adopt and enforce
policies and legislation on gender
equality
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VEDANTA RESOURCES LIMITED | INTEGRATED REPORT AND ANNUAL ACCOUNTS 2020-21 | MANAGEMENT
DISCUSSION
AND ANALYSIS
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Integrated Report
Statutory reports
Financial statements
VEDANTA RESOURCES LIMITED | INTEGRATED REPORT AND ANNUAL ACCOUNTS 2020-21 |
81
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VEDANTA RESOURCES LIMITED | INTEGRATED REPORT AND ANNUAL ACCOUNTS 2020-21 | MANAGEMENT DISCUSSION AND ANALYSIS CONTINUED...
Finance review
Executive summary:
We had a strong operational and financial performance in
FY2021 amidst the challenges faced due to the pandemic.
The company continues to focus on controllable factors
such as resetting cost base through diverse cost
optimisation initiatives, disciplined capital investments,
working capital initiatives, marketing initiatives & volume
with strong control measures to ensure safe operations
across businesses within framed government and
corporate guidelines amidst the pandemic.
In FY2021, we recorded an EBITDA of $3,800 mn, 27%
higher y-o-y and robust adjusted EBITDA margin1 of 37%.
(FY2020: $3,003 mn, margin 29%).
Higher sales volumes resulted in increase in EBITDA by
$128 mn, driven by higher volumes at Zinc India, Iron ore,
Aluminium and steel business. However, this was partially
offset by lower sales volume at Oil & Gas business and
lower power sales at TSPL.
Market and regulatory factors resulted in increase in
EBITDA by $524mn compared to FY2020. This was
primarily driven by increase in the commodity prices,
softening of input commodity prices, rupee depreciation,
partially offset by lower brent realization at Oil & Gas
business and lower capex recovery at Oil & Gas business.
Gross debt as on 31 March 2021 was $16.4 bn, an increase
of $1.3 bn since March 31, 2020. This was mainly due to
the increase in borrowings at Vedanta Resources Limited
standalone level.
Net debt as on 31 March 2021 was $10.7 bn, increased by
$0.7 bn since 31 March 2020 (FY2020: $10.0 bn), primarily
driven by dividend payment during the year, increase
in working capital, stake increase in VEDL, capital
expenditure, partially offset by strong cash flow from
operations.
The balance sheet of Vedanta Resources Limited
continues to remain strong with cash & cash equivalents,
of $5.6 bn and Net Debt to EBITDA ratio at 2.8x (FY2020:
3.3x)
Consolidated operating profit before special items
Operating profit before special items increased by 70%
in FY 2021 to $2,701 mn. This was mainly driven by lower
depreciation, higher commodity prices, higher sales
realisation from Iron ore and Steel business, increased
volumes at Zinc India and Aluminium business, lower cost
of production at Zinc, Aluminium and Oil & Gas business,
partially offset by lower brent realisation and lower cost
recovery at Oil & Gas business.
(US$ mn , unless stated)
Consolidated operating profit summary before special items
Zinc
-India
-International
Oil & Gas
Aluminium
Power
Iron Ore
Steel
Copper India/Australia
Others
Total EBITDA
Consolidated operating profit bridge before special items
Market and regulatory: US$ 524 mn
a) Prices, premium / discount
b) Direct raw material inflation
c) Foreign exchange movement
d) Profit petroleum to GOI at Oil & Gas
e) Regulatory changes
Operational: US$ 273 mn
f) Volume
g) Cost and marketing
h) Others
Depreciation and amortization
Operating profit before special items for FY2021
FY2021
1,313
1,236
77
151
816
111
215
80
(42)
57
2,701
FY2020
875
911
(36)
466
48
151
83
49
(61)
(20)
1,591
% change
50
36
-
(68)
-
(26)
-
65
(31)
-
70
(US$ mn)
1,591
151
232
126
(90)
105
128
188
(43)
313
2,701
1.Excludes Copper Zambia as its operations have been discontinued & deconsolidated in books w.e.f. 21 May 2019.
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Financial statements
a) Prices, premium/discount
Commodity price fluctuations have a significant impact on the Group’s business. During FY2021, we saw a net
positive impact of $151 mn on operating profit due to commodity price fluctuations.
Zinc, lead and silver: Average zinc LME prices during FY2021 marginally increased to US$2,422 per tonne, up 1%
y-o-y; lead LME prices decreased to US$1,868 per tonne, down 4% y-o-y; and silver prices increased to US$22.9
per ounce, up 38% y-o-y. The cumulative impact of these price fluctuations increased operating profit by $170 mn.
Aluminium: Average aluminium LME prices increased to US$1,805 per tonne in FY2021, up 3% y o y, this had a
positive impact of $95 mn on operating profit.
Oil & Gas: The average Brent price for the year was US$44.3 per barrel, lower by 27% compared with US$60.9 per
barrel during FY2020. This had negative impact on operating profit by $230 mn.
b) Direct raw material inflation
Prices of key raw materials such as imported alumina, thermal coal, carbon and caustic have reduced significantly
in FY2021, improving operating profit by $232 mn, mainly at Aluminium and Zinc business.
c) Foreign exchange fluctuation
INR and SA Rand depreciated against the US dollar during FY2021. Stronger dollar is favourable to the Group’s
operating profit, given the local cost base and predominantly US dollar-linked pricing. The favourable currency
movements positively impacted operating profit by $126 mn.
Key exchange rates against the US dollar:
Indian rupee
South African rand
Average year ended
31 March 2021
74.11
16.37
Average year ended
31 March 2020
70.86
14.78
% change
4.6
10.7
As at
31 March 2021
73.30
14.83
As at
31 March 2020
74.81
17.89
d) Profit petroleum to GOI at Oil & Gas
The profit petroleum outflow to the Government of
India (GOI), as per the production sharing contract
(PSC), increased by $90 mn. The increase in outflow
was primarily due to the lower recovery of capital
expenditure in FY2021.
e) Regulatory
During FY2021, changes in regulatory levies such as
Renewable Power Obligation etc. had a cumulative
positive impact on the Group operating profit of
$105 mn.
f) Volumes
Higher volume led to increase in operating profit by
$128 mn, majorly by following businesses:
Zinc India (positive $165 mn)
Higher zinc & lead sales (higher by 6% and 20%
respectively) & higher sliver sales (c.25%), had a
cumulative positive impact on operating profit of
$165 mn.
Oil & Gas (negative $70 mn)
Oil & Gas business achieved WI sales of 40.27
mmboe, down by 8% y-o-y. This had negative
impact on operating profit of $70 mn.
Iron Ore (positive $35 mn)
Sales volumes at iron ore business increased
significantly having a positive impact on operating
profit of $35 mn.
Aluminium (positive $15 mn)
In FY2021, the Aluminium business achieved metal
sales of 1.96 mn tonnes, up 2% y-o-y. This volume
increase had a positive impact on operating profit of
$15 mn.
g) Cost and marketing
Improved costs resulted in an increase in operating
profit by $188 mn over FY2021, primarily due to
improved cost at Aluminium business driven by better
coal rate and mix and lower alumina imports. This
was partially offset by lower premia realizations at
Aluminium and Zinc business.
h) Others
This primarily includes the impact of past
exploration cost recovery at Oil & Gas business
during the FY2020 and change in Profit Petroleum
(PP) tranche partially offset by higher power EBITDA,
inventory and foreign exchange adjustments,
impacting operating profit negatively by $43 mn.
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MANAGEMENT DISCUSSION AND ANALYSIS CONTINUED...
Depreciation and amortisation
Depreciation and amortisation decreased by $313 mn against the previous year. This was primarily on account of lower
charge at Oil & Gas business due to impairment of asset in Q4 FY2020, and Skorpion mine put under maintenance and
care at the start of the financial year 2021.
Income statement
Particulars
Revenue
EBITDA
EBITDA margin (%)
EBITDA margin without custom smelting (%)
Special items
Depreciation and amortisation
Operating profit
Operating profit without special items
Net interest expense
Interest cost-related special items
Other gains /(losses)
Profit before taxation
Profit before taxation without special items
Income tax expense
Income tax (expense)/credit (special items)
Effective tax rate without special items (%)
Profit for the year from continuing operations
Profit for the period/year from continuing operations before special
items
Profit for the year from discontinuing operations (special items)
Profit for the period /year
Profit for the period /year without special items
Non-controlling interest
Non-controlling interest without special items
Attributable profit / (loss)
Attributable profit/loss without special items
Underlying attributable profit/(loss)
FY 2021
11,722
3,800
32%
37%
(49)
(1,099)
2,652
2,701
(917)
(58)
6
1,683
1,795
(316)
18
17.7%
1,385
1,479
91
1,476
1,479
1,153
1,176
323
303
334
(` crore, unless stated)
FY 2020
11,790
3,003
25%
29%
(2,065)
(1,412)
(474)
1,591
(797)
12
(87)
(1,346)
707
(411)
781
27.5%
(976)
296
(771)
(1,747)
296
(179)
498
(1,568)
(202)
(171)
% Change
(1)
27
-
-
-
(22)
-
70
15
-
-
-
-
(23)
(98)
-
-
-
-
-
-
-
-
-
-
-
1. Previous period figures have been regrouped or re-arranged wherever necessary to conform to current period’s presentation.
CONSOLIDATED REVENUE
Revenue, for FY2021, decreased by 1% to US$ 11,722 mn (FY2020: US$ 11,790 mn). This was primarily driven by rupee
depreciation, lower power sales at TSPL, lower volume at Oil & Gas, Skorpion mine put under maintenance and care,
and lower cost recovery at Oil & Gas business, partially offset by higher commodity prices, higher volumes at Zinc India,
Copper, Iron Ore and Aluminium business, inclusion of FACOR in FY2021.
Consolidated revenue1
Zinc
-India
-International
Oil & Gas
Aluminium
Power
Iron Ore
Steel
Copper India/Australia
Others2
(US$ mn, unless stated)
FY2021
FY2020
% change
3,328
2,960
368
1,016
3,865
725
611
630
1,469
76
3,004
2,563
441
1,787
3,751
827
489
604
1,278
51
11
15
(17)
(43)
3
(12)
25
4
15
50
(1)
Total
1. Excludes Copper Zambia as its operations have been discontinued & deconsolidated in books w.e.f. 21 May 2019
2. Includes port business and eliminations of inter-segment sales.
11,722
11,790
84
Integrated Report
Statutory reports
Financial statements
Consolidated EBITDA1
The consolidated EBITDA by segment is set out below:
(US$ mn, unless stated)
Consolidated EBITDA
Zinc
-India
-International
Oil & Gas
Aluminium
Power
Iron Ore
Steel
Copper India/Australia
Others2
FY2021
1,688
1,568
120
438
1,046
190
245
117
(21)
97
FY2020
1,283
1,230
54
1,032
281
233
117
83
(40)
14
Total
1. Excludes Copper Zambia as its operations have been discontinued & deconsolidated in books w.e.f. 21 May 2019
2. Includes port business and eliminations of inter-segment sales.
3,800
3,003
% change
32
28
-
(58)
-
(18)
-
42
-
-
27
Key drivers
Higher volumes and Higher LME
Higher LME offset by lower volumes
Lower Oil Price & Volume
Higher volume & Improved Cost of Production
Lower volume & lower realisation
Higher Iron Ore Karnataka volumes
Higher sales & lower cost of sales
EBITDA margin1
Adjusted EBITDA margin1
EBITDA margin %
FY2021
51%
EBITDA margin %
FY2020
43%
53%
33%
43%
27%
26%
40%
19%
(1)%
-
32%
37%
48%
12%
58%
8%
28%
24%
14%
(3)%
28%
25%
29%
1. Excludes Copper Zambia as its operations have been discontinued & deconsolidated in books w.e.f. 21 May 2019
2. Includes port business, FACOR and elimination of inter-segment transactions.
EBITDA AND EBITDA MARGIN
EBITDA1 for the year was at US$ 3,800 mn, 27% higher
y-o-y. This was mainly driven by higher commodity prices,
higher sales realisation from Iron ore and Steel business,
increased volumes at Zinc India and Aluminium business,
lower cost of production at Zinc, Aluminium and Oil & Gas
business, partially offset by lower brent realisation, lower
cost recovery at Oil & Gas business. (See ‘Operating profit
variance’ for more details).
We maintained a robust adjusted EBITDA margin1 of 37%
for the year (FY2020: 29%)
SPECIAL ITEMS - CONTINUED OPERATIONS (INCLUDED
INTEREST INCOME RELATED AND OTHERS)
In FY2021 special items stood at negative $ 94 mn. For
more information, refer note [6] on special items is set out
in financial statement.
85
VEDANTA RESOURCES LIMITED | INTEGRATED REPORT AND ANNUAL ACCOUNTS 2020-21 | MANAGEMENT DISCUSSION AND ANALYSIS CONTINUED...
NET INTEREST
The blended cost of borrowings was 7.52% for FY2021
compared to with 7.43% in FY2020.
Finance cost excluding special items for FY2021 was at
US$1,209 mn, 3% higher y-o-y compared to US$ 1,179
mn in FY2020 mainly on account of increase in average
borrowing primarily at VRL standalone level, increase in
average borrowing cost, lower capitalisation of interest
cost, partially offset by lower bill discounting charges &
bank charges, decrease in export advance and BC/SC cost.
Investment income excluding special items for FY2021
stood at US$292 mn, 26% lower y-o-y compared to US$382
mn in FY2020. This was mainly due to lower average
investments, primarily due to lower investment at Oil & Gas
business, and lower pre-tax return on investments.
The average post-tax return on the Group’s investments
during FY2021 was 4.76% (FY2020: 5.62%), and the
average pre-tax return was 5.86% (FY2020: 7.17%).
The increased finance cost and decreased investment
revenue led to a net increase of US$ 120 mn in net interest
expense (excluding special items) during the period.
OTHER GAINS/(LOSSES) EXCLUDING SPECIAL ITEMS
Other gains/(losses) excluding special items for FY2021
amounted to US$11 mn, compared to US$(87) mn in
FY2020.
TAXATION
Tax expense for FY2020 stood at US$ 298 mn. The
normalized ETR is 38% (excluding tax on dividend from HZL
US$ 117mn and tax on exceptional items of US$ 18 mn, new
tax regime impact of (US $34 mn) and Deferred Tax Asset
of US$ 420mn recognized on losses in ESL) compared to
52% (excluding tax on distributable reserve/dividend from
HZL US$ 276mn, new regime impact (US $233 mn) and tax
on exceptional items of US$ 781 mn) which is primarily on
account of increase in profit from the entities which are
taxable at lower rate and adoption of new tax regime in one
of the major subsidiary.
ATTRIBUTABLE PROFIT/(LOSS)
Attributable profit before special items was US$ 303 mn
in FY2021 compared to an attributable loss of US$ 202
mn in FY2020, primarily driven by higher EBITDA, lower
depreciation charge partially offset by higher net interest.
FUND FLOW POST-CAPEX
The Group generated free cash flow (FCF) post-capex of
$1,253 mn (FY2020: $823 mn), driven by strong cash flow
from operations and lower sustaining and project capital
expenditure.
FUND FLOW MOVEMENT IN NET DEBT1
Fund flow and movement in net debt1 in FY2021 are set out below.
(US$ mn, unless stated)
Key drivers
EBITDA 2
Working capital movements
Changes in non-cash items
Sustaining capital expenditure
Movements in capital creditors
Sale of property, plant and equipment
Net interest (including interest cost-related special items)
Tax paid
Expansion capital expenditure
Free cash flow (FCF) post capex1
Dividend paid to equity shareholders
Dividend paid to non-controlling interests
Dividend Received
Tax on dividend from Group companies
Acquisition of subsidiary
Discontinued operations of Copper Zambia2
Payment for acquiring non-controlling interest
Others
Movement in net debt
1. Includes foreign exchange movements
2. Copper Zambia operations have been discontinued & deconsolidated in books w.e.f. 21 May 2019.
86
FY2021
3,800
(576)
(2)
(467)
(164)
23
(938)
(242)
(325)
1,109
(162)
(992)
-
-
(8)
-
(403)
(253)
(709)
FY2020
3,003
(74)
18
(558)
84
21
(687)
(165)
(819)
723
(536)
(101)
2
-
(5)
(118)
-
222
287
Integrated Report
Statutory reports
Financial statements
DEBT, MATURITY PROFILE AND REFINANCING
The Gross debt increased from US$15.1 bn in FY2020 to US$16.4 bn, mainly on account of increase in borrowings at Vedanta
Resources Limited standalone level.
During FY2021, Net Debt increased from US$10.0 bn to US$ 10.7 bn, primarily driven by dividend payment during the year, increase in
working capital, stake increase in VEDL, partially offset by strong cash flow from operations.
Our total gross debt of US$16.4 bn comprises:
US$15.9 bn as term debt (March 2020: US$12.9 bn);
US$0.3 bn of short-term borrowings (March 2020: US$1.2 bn); and
US$0.2 bn of working capital loans (March 2020: US$1.0 bn).
The maturity profile of term debt of the Group (totalling US$ 15.9 bn) is summarised below:
Particulars
Debt at Vedanta Resources
Debt at subsidiaries
Total term debt¹
As at
31 March 2020
6.7
6.2
12.9
As at
31 March 2021
8.6
7.3
15.9
1.Term debt excluding preference shares.
FY2022
FY2023
FY2024
1.1
2.0
3.1
2.0
1.3
3.3
2.4
1.0
3.4
FY2025
& beyond
3.1
2.9
6.0
Term debt at our subsidiaries was US$ 7.3 bn, with the
balance at Vedanta Resources Limited. The total undrawn
fund-based credit limit was c.US$ 1.1 bn as at 31 March
2021.
Cash and liquid investments stood at US$ 5.6 bn at 31
March 2021 (31 March 2020: US$5.1 bn). The portfolio
continues to be invested in debt mutual funds, and in cash
and fixed deposits with banks.
GOING CONCERN
The Group has prepared the consolidated financial
statements on a going concern basis. The Directors have
considered a number of factors in concluding on their
going concern assessment.
The Group monitors and manages its funding position
and liquidity requirements throughout the year and
routinely forecasts its future cash flows and financial
position. The key assumptions for these forecasts include
production profiles, commodity prices and financing
activities.
The last Going concern assessment carried out for the
period ended September 30, 2020 was approved by the
Board of Directors in December, 2020. The Directors
were confident that the Group will be able to ensure
production is not materially impacted by the COVID-19
virus, that the Group will be able to roll-over or obtain
external financing as required and that prices will remain
within their expected range.
Since then, while the other mitigating actions as
highlighted in the period ended September 30, 2020
financial statements remain available to the Group,
several recent significant developments have had a
positive bearing on the liquidity and company’s ability
to continue as going concern. [For more information,
please refer to, Note 1(d) of the Consolidated Financial
Statements]
Notwithstanding the uncertaintie, the Directors have
confidence in Group’s ability to execute sufficient
mitigating actions. Based on these considerations, the
Directors have a reasonable expectation that the Group
and the Company will meet its commitments as they
fall due over the going concern period. Accordingly, the
Directors continue to adopt the going concern basis in
preparing the Group’s consolidated financial statements
and Company’s standalone financial statements.
COVENANT COMPLIANCE
The Group’s financing facilities, including bank loans and
bonds, contain covenants requiring the Group to maintain
specified financial ratios. The Group has complied with all
the covenant requirements till 31st March 2021.
87
VEDANTA RESOURCES LIMITED | INTEGRATED REPORT AND ANNUAL ACCOUNTS 2020-21 | MANAGEMENT DISCUSSION AND ANALYSIS CONTINUED...
Management notes that the Group has previously
obtained covenant waivers, including in response to
the appointment of a provisional liquidator at KCM.
Additionally, the Group has recently successfully
amended the covenants for its listed bonds. The
Directors of the Group are confident that they will be able
to execute mitigating actions (see below) to ensure that
the Group avoids, or secures waivers or relaxations for
future period breaches, if any, of its covenants during the
going concern period. [For more information, please refer
to, Note 1(d) of the Consolidated Financial Statements]
CREDIT RATING
During FY2021, Moodys downgraded corporate Family
ratings of Vedanta Resources from B1 to B2 (and the
ratings of senior unsecured notes from B3 to Caa1)
and placed the ratings “under review for downgrade’ in
December 2020 upon failure of take private transaction
and expectation of high refinancing needs and weak
liquidity at VRL. On 17th February 2021, Moody’s
confirmed Vedanta Resources Limited’s B2 Corporate
Family Rating and Caa1 rating on the senior unsecured
notes of the company and changed the outlook on the
rating to “Negative” from ratings “under review for
downgrade”.
The rating confirmation reflects the reduced immediate
refinancing risk at VRL. Further to downgrade of VRL
in March 2020 by S&P to B- with a stable outlook, S&P
placed the ratings on ‘Negative’ outlook in October 2020
upon failure of Take private transaction. On 25th January
2021, S&P revised the outlook to ‘Stable’ from ‘Negative’
on account of reduced refinancing risk and improving
liquidity position at the holding company level while
affirming the ratings at ‘B-‘.
BALANCE SHEET
Key drivers
Goodwill
Intangible assets
Property, plant and equipment
Exploration and Evaluation Assets
Other non-current assets
Cash, liquid investments and Financial asset investment net of related liabilities
Other current assets
Total assets
Gross debt
Other current and non-current liabilities
Net assets
Shareholders’ equity
Non-controlling interests
Total equity
(US$ mn, unless stated)
31 March 2021
12
99
12,968
334
3,115
5,957
2,834
25,319
(16,377)
(6,611)
2,331
(3,147)
5,478
2,331
31 March 2020
12
100
13,005
240
3,028
5,090
2,711
24,186
(15,095)
(6,818)
2,273
(3,263)
5,536
2,273
Shareholders’ (deficit)/equity was US$(3,147) mn at 31 March 2021 compared with US$(3,263) mn at 31 March 2020. Non-controlling
interests decreased to US$ 5,478 mn at 31 March 2021 (from US$5,536 mn at 31 March 2020).
Property, plant and equipment (including exploration and Evaluation Assets)
As at March 31, 2021, PPE was at US$13,302 mn (FY2020: US$ 13,245 mn). The increase of US$ 57 mn was primarily driven by additions
$920 mn (Zinc India $315mn, Aluminium division $270mn, Oil & Gas 200mn Zinc International $50mn, FACOR $50mn and BALCO
$35mn), FCTR c.US $330 mn partly offset by depreciation charge US $1099 mn CWIP impairment charge recognition of US$ 33 mn
and net disposals US $60 mn.
88
Integrated Report
Statutory reports
Financial statements
CONTRIBUTION TO THE EXCHEQUER
The Group contributed c.US$ 4.7 bn to the exchequer in FY2021 compared to US$4.6 bn in FY2020 through direct and indirect taxes,
levies, royalties and dividend, which was made by Vedanta Resources Limited.
Total capex
approved3
2,522
Cumulative spend
up to March 20204
1,144
Spent in
FY20214
181
Unspent
as at 31 March 20215
1,197
(US$ mn)
2,990
2,925
36
29
PROJECT CAPEX
Capex in progress
Status
1
Cairn India
Mangala Infill, Liquid handling,
Bhagyam & Aishwariya EOR, Tight
Oil & Gas,OALP, etc
On - going
Aluminium Sector
Jharsuguda 1.25mtpa smelter
Zinc India
Mine expansion
Others
Zinc International
Gamsberg mining Project2
Copper India
Tuticorin smelter 400ktpa
Avanstrate Inc
Furnace Expansion and Cold
repair
Capex flexibility
Metals and Mining
Lanjigarh Refinery (Phase II) –
5mtpa
Skorpion refinery conversion
Line 3: Fully
capitalised
Line 4: Fully
Capitalised
Line 5: Six
Section
capitalised
Line 6:
Phase-wise
capitalisation
Ongoing
Completed
Capitalisation
Project is under
force majeure
Currently
deferred till pit
112 extension
2,076
261
400
717
74
2,088
156
1,726
159
387
198
48
909
14
44
7
3
-
7
18
-
1.
2.
3.
4.
5.
Capex approved for Cairn represents Net capex, however Gross capex is $3.4 bn
Capital approved US$400 mn excludes interest during construction (IDC).
Based on exchange rate prevailing at time of approval.
Based on exchange rate prevailing at the time of incurrence.
Unspent capex represents the difference between total projected capex and cumulative spend as at March 31, 2021
306
95
10
519
20
1,161
142
89
VEDANTA RESOURCES LIMITED | INTEGRATED REPORT AND ANNUAL ACCOUNTS 2020-21 |
MANAGEMENT DISCUSSION AND ANALYSIS CONTINUED...
Operational review
Zinc India
THE YEAR IN BRIEF
Our mine production gradually improved during the year with ore production for the full year, up by 7% y-o-y,
to deliver a record production of 15.5 mn MT. This was supported by robust production growth at Zawar mines
and Rampura Agucha mine, up by 21% and 9%, respectively. Our operations were halted on account of the
pandemic-induced lockdown from March 22, 2020 onwards, impacting 3-4 weeks of equivalent production.
Mined metal production was up by 6% y-o-y to 972 kt, primarily on account of higher ore production, with
overall grades remaining at the same levels.
90
< BACK TO CONTENTS
Integrated Report
Statutory reports
Financial statements
ENVIRONMENT
Zinc India was certified as 2.41x water
positive company, defined as a ratio
of Water Credit and Water Debit. The
assessment was carried by DNV GL, a
globally renowned risk management
and quality assurance company.
Initiatives like rainwater harvesting,
recharge to ground water and use of
treated sewage water have enabled
us to achieve this distinction.
Zinc India management has finalised
Sustainability Goals 2025 by
undertaking the following targets:
Zero work-related fatalities and
50% reduction in TRIFR
Achieve 0.5 mn tonnes of
CO2e GHG emission savings in
our operations from the base
year 2017
Become a 5 times water
positive company and achieve
25% reduction in fresh-water
consumption
Achieve 3 times increase in gainful
utilisation of smelting process
waste
Protecting and enhancing
biodiversity throughout the
Life Cycle
Positively impacting 1 mn lives
through social, economic and
environmental outcomes
Inclusive & diverse workplace with
30% diversity
100% responsible sourcing in
supply chain
HZL Facility
91
OCCUPATIONAL HEALTH & SAFETY
Lost time injury frequency rate
(LTIFR) for the last quarter was
0.92 vis-à-vis 1.23 in Q4 FY2020,
driven by several safety awareness,
investigation and prevention
initiatives. Compared to a year ago,
the number of LTIs declined from
18 to 13 in the fourth quarter. LTIFR
for the year was 0.98 (total 51 LTIs).
There has been greater management
focus to bring a cultural shift via felt
leadership programmes, safety town
halls, enabling tools such as safety
whistle-blower as well as reward and
recognition for near-miss reporting.
In view of the COVID-19 health
emergency, an advisory was issued
for the precautionary measures,
along with awareness campaigns
and drive for disinfecting facilities
across the Company. The Company’s
operations were halted during the
lockdown and employees were asked
to work from home barring some
employees, who attended call for
duty to keep production assets safe.
To ensure business continuity, a
committee of COVID-19 Response
‘War Room’ was organised to identify
and implement urgent business
decisions. We also engaged the
Self-Help Group (SHG) women in our
communities to stitch and distribute
cloth masks among the villagers,
police and administration officials.
Our teams also worked with the
civil administration to ensure food
reached the vulnerable population.
During the year we commissioned
an underground Occupational
Health Centre at Rampura Agucha
Mine which significantly improves
the response time in emergency
cases. Senior management visits
to shop floors and Gemba walks at
contractor operated sites reiterated
the focus on felt leadership in the
organisation. ‘Sameeksha’ was
conducted with six business partners
to discuss the details of their serious
LTI with CEO, HZL chairing the
session.
VEDANTA RESOURCES LIMITED | INTEGRATED REPORT AND ANNUAL ACCOUNTS 2020-21 | MANAGEMENT DISCUSSION AND ANALYSIS CONTINUED...
Operational review
Zinc India
Zinc India’s 22 MW solar power
project at RAM was registered
under the Gold Standard during
the year. DSC Zinc successfully
commissioned a 4500 MTPA FPT
(Freeze Precipitation Technology)
plant to recover sodium sulphate
from the final multi-stage RO rejects
which will cater to 1/3rd of DSC Hydro
smelter’s input salt requirements
to support our circular economy
goal. The CPP Team conducted an
innovative in-house recycling of
the bottom ash to convert it into fly
ash (saleable product) improving
value realisation and lowering the
environment footprint. Zinc India’s
Udaipur Sewage Treatment Plants
expanded to 55 MLD translating into
over 90% treatment of city’s sewage
Zinc India led an endorsement for
‘UNGC (United Nations Global
Compact) CEO Water Mandate’
giving our commitment towards
water stewardship and initiating our
journey to follow the six principles
laid out by UNGC. As part of our
commitment towards biodiversity
conservation, the Company is
now a member of IUCN ‘Leader for
Nature India’ initiative. HZL actively
participated in the 3rd meeting of
‘Business Leaders Group COP26’
and actively engaged for shaping
the agenda for COP26, to be held at
Glasgow (UK) in Nov’21.
Our sustainability initiatives received
several endorsements during the
year including the selection in
‘Sustainability Yearbook 2021’ as
Member for fourth consecutive
year, Supplier Engagement Rating
‘A’ received from CDP, first position
in the Asia Pacific region in metal
and mining sector in Dow Jones
Sustainability Indices and 7th Globally
and CII-ITC Corporate Excellence
Sustainability Award 2020. Zinc India
(HZL) was featured among the first
Indian companies to be featured in
CDP India Annual Report and was
rated ‘A’ in Climate change CDP 2020.
Hindustan Zinc is the first company
in India to respond to CDP’s Forests
questionnaire.
92
PRODUCTION PERFORMANCE
FY2021 FY2020
917
972
%
change
6
930
715
214
706
870
688
182
610
7
4
18
16
Production (kt)
Total mined
metal
Refinery metal
production
Refined zinc –
integrated
Refined lead –
integrated1
Production
– silver (in
tonnes)2
1. Excluding captive consumption of
6,424 tonnes in FY2021 vs. 7,088 tonnes
in FY2020.
2. Excluding captive consumption of
34.6 tonnes in FY2021 vs. 36.7 tonnes
in FY2020.
OPERATIONS
For the full-year, ore production was
up 7% y-o-y to 15.5 mn tonnes on
account of strong production growth
at Rampura Agucha and Zawar
mines, which were up by 9% and
21% respectively. Zinc India’s mined
metal production for FY2021 was
971,976 tonnes compared to 917,101
tonnes in the previous year in line
with higher ore production.
For the full year, metal production
was up 7% to 930 kt in line with
higher MIC availability, while silver
production strengthened by 16% to
a record 706 MT in line with higher
lead production and better grades
at SK. These record numbers were
delivered despite losing 3-4 weeks
equivalent of production days in
the year due to COVID induced
disruptions.
Smelting Operations at Rajpura Dariba Complex
Integrated Report
Statutory reports
Financial statements
Last year, the largest supply changes
were attributed to Chinese mines,
primarily from Inner Mongolia, Hunan
and Sichuan. This reflects the poor
performance of the small mine
sector, where several mines in these
provinces failed to restart. Hunan
was most affected. The 2021 global
mine production estimate of Wood
Mackenzie is 13.2Mt, a 5.47% increase
vis-à-vis 2020. The Chinese spot TCs
declined from $85 in December to $70
in March in favour of miners.
After hitting a low of 27.4 in April
2020, the manufacturing Purchasing
Managers Index (PMI) hit 54.6 in
September and has averaged 57
in the four months through to
February 2021. This is pointing to
a robust pace of expansion for the
country’s manufacturing sector. The
strength of the rebound in activity
has driven a rapid recovery in the
Indian steel production with crude
steel production hitting 9.7 Mt in
December, its highest since the
HZL Captive Power Plant Control Room
record high of just over 10 Mt in March
2019. With India’s economic growth
entering positive territory, the strong
performance of India’s steel sector
seen in the latter part of 2020 should
be sustained into 2021.
UNIT COSTS
Particulars
Unit costs
(US$ per tonne)
Zinc(including
royalty)
Zinc (excluding
royalty)
FY2021 FY2020
%
change
1,286 1,371
954 1,047
(6)
(9)
For the full year, zinc COP excluding
royalty was $954, lower by 9%
y-o-y. The COP decrease reflects
lower spend on consumables,
lower coal and coke consumption,
digitisation led operational efficiency
which was partly offset by higher
R&M expense, other mining and
manufacturing expenses.
93
PRICES
Particulars
Average zinc
LME cash
settlement
prices US$ per
tonne
Average lead
LME cash
settlement
prices US$ per
tonne
Average silver
prices US$/
ounce
FY2021 FY2020
2,402
2,422
%
change
1
1,868
1,952
(4)
22.9
16.5
38
LME Zinc prices averaged $2,750
per MT in Q4 FY2021, up 29% y-o-y
and 5% q-o-q. Investor interests in
base metals is set to be sustained
with the roll out of vaccination
programmes globally. The recovery
in international trade has not been
uniform. In comparison to December
2020 the bulk of the growth can be
attributed to the growth of imports
and exports in China and developed
Asian nations. There was marginal
growth from the European Union and
the rest of Asia, and a modest decline
for the US and UK. Wood Mackenzie
estimates zinc LME prices to average
$2800 per MT in 2021.
The ongoing vaccination
programmes and relatively better
manufacturing activity are providing
positive cues to investors. As for
the premiums in South East Asia, a
combination of improving demand
and smelters directing shipments
to China have tightened the market,
helping premiums to shift to the
upper end of a $90-110/tonne range.
Global exchange stocks ended at
389 kt March, marginally higher than
in February, but remain at 10 days in
terms of days of global consumption.
ZINC DEMAND – SUPPLY
CY
2019
CY
CY
2020
2021 E
13,363 12,491 13,171
Zinc Global
Balance In kt
Mine
Production
Smelter
Production
Consumption 13.924 13,228 13,755
Source: Wood Mackenzie, March STO
13,601 13,731 13,938
VEDANTA RESOURCES LIMITED | INTEGRATED REPORT AND ANNUAL ACCOUNTS 2020-21 | MANAGEMENT DISCUSSION AND ANALYSIS CONTINUED...
Operational review
Zinc India
FINANCIAL PERFORMANCE
Particulars
Revenue
EBITDA
EBITDA margin
(%)
Depreciation
and
amortisation
Operating
Profit before
special items
Share in Group
EBITDA (%)
Capital
Expenditure
Sustaining
Growth
(US$ mn, unless stated)
FY2021 FY2020
2,563
2,960
1,230
1,568
48
53
%
change
15
28
-
332
319
4
1,236
911
36
41
281
225
56
41
-
532
(47)
341
191
(34)
(71)
Revenue from operations for the
year was $2,960 mn, up 15% y-o-y,
primarily on account of higher metal
production partly offset by lower
sulphuric acid and lower domestic
sales of zinc.
EBITDA in FY2021 increased to $1,568
mn, up 28% y-o-y. The increase was
primarily driven by higher revenue and
lower cost of production.
PROJECTS
We commissioned a 10 MLD STP
plant in Udaipur and another 5 MLD
STP (Sewage Treatment Plant) is in
its last leg of commissioning, which
will take the total STP capacity set
up by us to 60 MLD. This will treat
almost the entire sewage of Udaipur
city and the recycled water will be
used by our plants, significantly
reducing our freshwater intake.
During the year, our graphite
floatation system was commissioned
at Mill 3 of Sindesar Khurd Mines,
which will enhance the smelter
throughput and bolster recovery.
During the quarter, backfill plants
were commissioned at Zawarmala
and Mochia mines. These plants will
derisk operations and provide an
opportunity to mine left-out high-
grade ore in pillars. On similar lines,
we have also commenced activities
for a combined paste-fill and dry
tailing plant at Rajpura Dariba. This
will help increase ore production
from 1.2 MTPA to 2 MTPA; also
facilitating additional utilisation of
tails by c.20% for back-filling and will
reduce stope turnaround time.
The development of North Decline
(ND1) was completed at Rampura
Agucha (RA) mine. This improves
the accessibility of shaft section,
alternate emergency evacuation,
ease in mine equipment deployment
at lower mine levels, face charging
with emulsion explosives, face
drilling with long feed jumbo, and so
on.
We have commenced operations in
RKD circuit (component of overall
Fumer project) to treat Raw Zinc
Oxide (RZO). Covid-19 restrictions
including stringent visa guidelines
for Chinese nationals continued
during the year, which resulted in
Maintenance work by our diverse workforce at Rajpura Dariba Mine
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delay in commissioning of Fumer
plant at Chanderiya. We are following
up with government authorities to
find a solution. Two back-fill plants
in Zawar were also commissioned
during the year.
EXPLORATION
The Company has put in place an
aggressive exploration programme
focusing on delineating and
upgrading Reserves and Resources
(R&R) within its license areas.
Technology adoption and innovation
play a key role in enhancing
exploration success.
The Company’s deposits remain
‘open’ and exploration identified a
number of new targets on mining
leases having potential to increase
R&R over the next 12 months. Across
all the sites, the Company increased
its surface drilling to assist in
upgrading resources to reserves.
In line with previous years, the
mineral resource is reported on an
exclusive basis to the Ore Reserve
and all statements have been
independently audited by SRK (UK).
Total Ore Reserves increased
significantly from 114.7 mn tonnes
at the end of FY 2020 to 150.3 mn
tonnes at the end of FY 2021 due
to heightened focus on resource
to reserve conversion during the
year. Exclusive Mineral Resource
totalled 297.6 mn tonnes. Total R&R
increased to 448 mn tonnes as we
added more resource than that was
consumed during the year.
Total contained metal in Ore
Reserves is 9.16 mn tonnes of zinc,
2.55 mn tonnes of lead and 295.5
mn ounces of silver and the Mineral
Resource contains 14.9 mn tonnes
of zinc, 6.3 mn tonnes of lead and
618.7 mn ounces of silver. At current
mining rates, the R&R underpins
metal production for more than 25
years.
STRATEGIC PRIORITIES &
OUTLOOK
Our primary objective remains to
concentrate on enhancing overall
output, cost efficiency of our
operations and disciplined capital
expenditure. While the current
economic environment remains
Cell House at Dariba Smelting Complex
uncertain our goals over the medium
term are unchanged.
Our key strategic priorities include:
Further ramp-up of underground
mines towards their design
capacity, deliver increased silver
output in line with communicated
strategy.
Sustain cost of production to
below US$1000 per tonnes
through efficient ore hauling,
higher volume and grades and
incremental productivity through
ongoing efforts in automation and
digitisation
Disciplined capital investments in
minor metal recovery to enhance
profitability
Increase R&R through higher
exploration activity and new
mining tenements, as well as
upgradation of resource to
reserve
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VEDANTA RESOURCES LIMITED | INTEGRATED REPORT AND ANNUAL ACCOUNTS 2020-21 | MANAGEMENT DISCUSSION AND ANALYSIS CONTINUED...
Operational review
Zinc International
THE YEAR IN BRIEF
During FY2021, Zinc International continued to ramp up production from its flagship project Gamsberg mine
and achieved production of 145kt. Several best demonstrated performances on throughput, milled tonnes and
improved recoveries were achieved in Q4 FY21.
Black Mountain continued to have a stable production of 58kt, slightly lower than FY2020 due to lower head
grades and mining challenges due to unplanned equipment breakdowns. A new product line of recovering
magnetite from tailings was established in FY2021.
In spite of COVID-19, robust mitigation measures were put in place to ensure minimal impact on production.
Skorpion Zinc has been under Care and Maintenance since the start of May 2020, following cessation of mining
activities due to geotechnical instabilities in the open pit. Activities to restart the mine are progressing well.
Significant reduction in cost was achieved in FY2021 through increased volumes, cost containment measures,
consumption efficiencies and exchange rate depreciation.
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OCCUPATIONAL HEALTH
At Vedanta Zinc International, we
take the health and safety of our
employees and stakeholders very
seriously and we remain committed
to communicating timely and
transparently to all stakeholders.
Since Covid 19 pandemic, we have
recorded 227 positive cases, 222
recoveries, 3 active cases and 2
deceased. We have put stringent
protocols to mitigate the spread
and we have rolled out awareness
initiatives to assist communities in
which we operate.
Airborne particulate management
remains a key focus in reducing
lead and silica dust exposures
of employees. Black Mountain
Mine has reduced blood lead
withdrawals from 12 in FY2020
to 6 in FY2021. As a part of our
Employee Wellness Programme,
we are focussing on increased
participation of employees and
communities in VCT for Aids / HIV,
blood donation and wellness; 2172
employees were screened for
tuberculosis during the year.
SAFETY
Gamsberg mine recorded a slope
failure in the South Pit on 17
November 2020. One fatality was
recorded and efforts to locate
the one missing employee of
our business partner, remains a
priority. A dedicated team has
been constituted to undertake
the recovery efforts. Gamsberg
LTIFR improved from 1.10 in
FY2020 to 1.08 in FY2021
Black Mountain Mine had a fatality
free year and saw a reduction
in high potential risk incidents.
Employee engagement is an
integral to our safety strategy
and both Visible Felt Leadership
Interactions and Planned Task
Observations are conducted
regularly by leaders and front-
line supervisors to coach and
address behavioural issues.
Both Black Mountain and
Gamsberg Mines are embarking
on a Critical Control Management
programme to ensure that
all the fatal risks protocols
are in place and understood
by all the employees.
Leadership remains key to
the success of our safety
improvement programme.
Our leaders have recently
undergone legal compliance
training and plans are in place
to provide risk-management
training and improve risk
management interventions
and decision-making.
0.65 m3/tonne
Water consumption at
Gamsberg, Zinc International
Gamsberg facility, Zinc International
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VEDANTA RESOURCES LIMITED | INTEGRATED REPORT AND ANNUAL ACCOUNTS 2020-21 | MANAGEMENT DISCUSSION AND ANALYSIS CONTINUED...
Operational review
Zinc International
Gamsberg Nursery
OPERATIONS
During FY2021, our total production
stood at 203,000 tonnes, 16%
lower y-o-y. This was primarily due
to Skorpion Zinc going into care
and maintenance, BMM mining
challenges which was partly offset by
higher production at Gamsberg.
At BMM, production was 58,000
tonnes, 12% lower y-o-y. This was
mainly due to lower grade of lead
(2.3% vs 2.9%) and hence lead lower
recoveries (84.1% vs 85.6%) and 6%
lower throughput resulting from
lower mining performance.
Gamsberg’s production was at
145,000 tonnes as the operation
continues to ramp up with improved
performance every quarter – Q1
FY2021 at 25,000 tonnes, Q2 at
35,000 tonnes, Q3 at 43,000 tonnes
and Q4 at 41,000 tonnes (Q4 FY2021
performance slightly impacted
by lower mine grades). Our plant
operations were partially impacted
in November due to the slope failure
incident. While mining only started
in phases in December and January
2021, plant continued to run on
healthy ROM stockpile.
Stockpile at Gamsberg, VZI
ENVIRONMENTAL
Gamsberg successfully reduced
water consumption in the plant to
0.65m3/t and reduced the levels
of the Tailings Storage Facility
return water dam to prevent
future overflows from the dam.
During a recent ISO 14001; 2015
recertification audit Black Mountain
Mining successfully retained the
certification with no major non-
conformances.
The draft Gamsberg Nature Reserve
Strategic Management Plan has been
prepared and submitted for public
comments. The final Management
Plan will be submitted to MEC for
approval. BMM is in negotiations
to secure additional farms to be
include in the Gamsberg Nature
Reserve to ensure compliance to the
Biodiversity Offset Agreement.
PRODUCTION PERFORMANCE
Particulars
Total
production (kt)
Production –
mined metal
(kt)
BMM
Gamsberg
Refined metal
Skorpion
FY2021 FY2020
240
203
%
change
(16)
58
145
-*
66
108
67
(12)
34
-
* Skorpion produced 0.6 kt in April 2020
before moving into Care and Maintenance
for the rest of the year
98
At Skorpion Zinc, engagement
with technical experts to explore
opportunities of safely extracting
the remaining ore is ongoing. The
pit optimisation work is complete.
The business is currently evaluating
options to restart mining. Further
there is significant progress made
to make the Skorpion Refinery
Conversion Project economically
feasible. Previously completed
feasibility study is being updated.
We target to start the on-ground
execution by H1 FY22.
At both BMM and Gamsberg,
production was also slightly
impacted by the COVD-19 lockdown
during Q1 FY2021.
UNIT COSTS
Particulars
Zinc (US$ per
tonne) unit cost
FY2021 FY2020
1,307 1,665
%
change
(22)
The unit cost of production
decreased by 22% to US$1,307 per
tonne, from US$1,665 per tonne in
the previous year. This was mainly
driven by the Company’s strong
focus to reduce the cost, along
with reduction through higher
production at Gamsberg, local
currency depreciation, optimising
consumables usage, higher copper
credits offset by higher TCRCs and
annual inflation.
FINANCIAL PERFORMANCE
(US$ mn, unless stated)
Particulars
Revenue
EBITDA
EBITDA margin
Depreciation
and
amortisation
Operating Profit
before special
items
Share in Group
EBITDA (%)
Capital
Expenditure
Sustaining
Growth
FY2021
368
120
33%
43
FY2020
441
54
12%
89
%
change
(17)
-
-
(51)
77
3%
44
44
-
(36)
2%
-
-
101
(57)
80
21
(45)
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During the year, revenue decreased
by 17% to $368 mn, driven by lower
volumes compared to FY2020 due
to Skorpion Zinc going under Care
and Maintenance, partially offset by
higher price realisations. EBITDA
increased significantly to $120 mn,
from $54 mn in FY2020 mainly on
account of higher price realization
and improved cost.
PROJECTS
Refinery conversion – A substantial
progress has been made on Skorpion
Zinc Refinery conversion Project
with the FEED completion, feasibility
study, tendering activities and
techno-commercial adjudication.
All regulatory approval is in place to
start project execution. Previously
completed feasibility study is being
updated. With power tariffs being
very critical for the viability of the
project, discussions are ongoing
with the state power utility and the
option of renewable power is also
being explored. We can start the on-
ground execution by H1 2022 subject
to the confirmation of power tariff
and approval from the Board.
Swartberg Phase 2 – Based on
the completed feasibility study,
the finalised mine design and
environmental authorisation
has been received in Q3 FY2021.
Based on the proposed integration
schedule with BMM the underground
operations project is planned to be
executed in FY2023.
Gamsberg Phase 2 - 54MT reserves
have been added post completion of
Feasibility study for expansion which
can result in additional 200ktpa MIC
production over and above current
production.. The mine design and
the new reserve statement was
completed with the Resource to
Reserve conversion as scheduled.
The project is currently split into two
distinctive sections, one focused
on increasing the mining to 9 MTPA
and second focused on construction
of a duplicate concentrator plant,
effectively doubling the capacity.
Gamsberg Smelter – We have
received the environmental approval
Monitoring site using state of the art technology
for bulk water pipeline construction
and outcome of ESIA for Gamsberg
Smelter is also expected in April’21.
The SEZ application process has
progressed well. We are engaging
with the Governmnet of South Africa
on critical success factors like SEZ,
power price, sulphuric acid offtake,
logistics infrastructure and other
regulatory approvals.
Black Mountain Magnetite project –
This is a project to recover iron ore/
magnetite from the BMM tailings.
The feasibility was completed and
pilot plant of 60ktpa capacity was
started in Q4 FY2021. To fast track
the project and take advantage
of the current favourable market
conditions a quick start modular
0.7MTPA plant was decided, based on
treating current fresh tailings. This
project will be put up for approval
to start the execution in H1 FY2022
with target of completion by end of
FY2022.
EXPLORATION
Certified Mineral Reserves and
Resources at Zinc International
increased by 8% to 566.4 Mt
containing 30.3 Mt of metal. Gross
additions to reserves and resources,
after depletion, amounted to 41.3 Mt
of ore and 1.8 Mt of metal. Despite
depletion, reserve levels were
successfully maintained at the same
level as 2020, and amount to 139.7
Mt containing 8.3 Mt of metal. The
most significant contributor to the
addition of metal in resources was
the declaration of a maiden resource
at Gamsberg South (23.2 Mt @ 7.1%
Zn and 0.6% Pb).
STRATEGIC PRIORITIES & OUTLOOK
Zinc International continues to remain
focused to improve its production by
sweating its current assets beyond its
design capacity, debottlenecking the
existing capacity, and adding capacity
through growth projects.
Our priority is to ramp up the
performance of our Gamsberg Plant at
designed capacity and simultaneously
develop the debottlenecking plan
to increase plant capacity by 10% to
4.4Mt Ore throughput. Likewise, BMM
continues to deliver stable production
performance and the focus is to
debottleneck its ore volumes from 1.6
Mt to 1.8 Mt.
Skorpion is expected to remain in ‘Care
and Maintenance’ for H1 FY2022, while
management is assessing feasible
and safe mining methods to extract
ore from pit 112. Zinc International
continues to drive the cost reduction
programme to place Gamsberg
operations on the 1st quartile of global
cost curve with the production cost
less than US$1000 per tonne.
Additionally, core growth strategic
priorities include:
Additionally, core growth strategic
priorities include:
Complete approval process and
commence project activities of
Skorpion Refinery Conversion
Project and Magnetite Project in
FY2022
Continue to improvise business
case of Gamsberg Phase II and
Gamsberg Smelter Project through
government intervention, capex
and opex reduction.
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Operational review
Oil & Gas
THE YEAR IN BRIEF
During FY2021, Oil & Gas business delivered gross operated production of 162 kboepd, lower by 6% y-o-y. This was
mainly due to delay in execution of growth projects owing to the implementation of nationwide lockdown imposed
by the Government of India to curb the spread of COVID-19 and natural reservoir decline at the MBA fields.
The decline was partially offset by the addition of wells brought online as a part of Mangala Infill, MPT Upgrade,
Aishwarya and Bhagyam Polymer and ABH. Business continues to drive all efforts towards volume growth through
capacity additions, new wells and surface facilities. During FY2021, 74 wells were hooked up across all assets.
In OALP blocks, the initial phase of seismic acquisition programme has been completed in Assam, Cambay,
Rajasthan and Offshore GS-GK region. Second phase is ongoing in Rajasthan and Cambay.
Early drilling opportunities have been identified based on reprocessing and interpretation of vintage data in
Rajasthan, Assam and Cambay regions. First well KW-2-Udip has been drilled in Rajasthan. Drilling and related
preparation activities are ongoing in Cambay and North East.
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OCCUPATIONAL HEALTH
&SAFETY
There are six lost time injuries
(LTIs) in FY2021. The frequency
rate stood at 0.16 per mn-man
hours (FY2020: 0.3 per mn-
man hours) amidst increased
development activities.
Unfortunately, there was also
a fatality in one of the projects
during the FY2021.
Our focus remains on
strengthening our safety
philosophy and management
systems. We were recognised
with awards conferred by
external bodies:
Leaders Award in
Sustainability 4.0 award
2020 jointly instituted by
Frost & Sullivan and TERI
under Mega Large Business,
Process Sector
‘Sword of Honour’ and ‘5Star’
by British Safety Council for
excellence in HSE Management
for Pipeline Operation
CII National Award for Excellence
in Water Management 2020’
‘within fence’ category and
noteworthy contribution under
‘CII National Award for excellence
in Water Management 2020’
‘beyond fence category
Cairn Oil & Gas has taken various
initiatives to prevent exposure of
COVID-19:
Awareness on COVID-19
based on MOHFW (Ministry
of Health and Family Welfare),
ICMR (Indian Council of Medical
Research) and National Disaster
Management Guidelines.
Tied up with Apollo and Mahatma
Gandhi Hospital, Jaipur for
handling of COVID patients
Established Apollo Telemedicine
Centre in Barmer and ‘Isolation /
Quarantine Accommodation’ at
Camp sites
Weekly Health Awareness
Sessions by Specialists from
various prestigious Hospitals.
SOPs for travel, office duty,
construction & operations and
COVID test requirement.
Daily Health Monitoring of
Personnel on Parameters -
Temperature, Cold & Cough.
Launched ‘Your Dost’, an Online
Emotional Wellness Platform
providing 24x7 guidance from
900+ experts.
Night view of the Mangala Processing Terminal, Barmer
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VEDANTA RESOURCES LIMITED | INTEGRATED REPORT AND ANNUAL ACCOUNTS 2020-21 | MANAGEMENT DISCUSSION AND ANALYSIS CONTINUED...
Operational review
Oil & Gas
ENVIRONMENT
Our Oil & Gas business is committed
to protect the environment, minimise
resource consumption and drive
towards our goal of ‘zero discharge’.
We have secured first runner-up
position in Jury Special Mention Award
on ‘Recycling of Produced Water for
Injection Purpose’ under sustainability
4.0 award 2020 jointly instituted by
Frost & Sullivan and TERI. Highlights
for FY2021 are:
Highlights for FY2021 are:
Recycling and reusing of produced
water resulting in reduced water
abstraction: 99.55% at Mangala,
Bhagyam and Aishwariya.
Natural gas was adopted at
Raageshwari Gas Terminal for power
generation, eliminating the flaring of
gas and reduction in GHG emissions.
Waste oil disposal to registered
recyclers: 6,390bbls in FY2021
Energy conservation by the
replacement of conventional lights
with energy-efficient lightings
(LED): c.150,000 units in FY2021.
Commissioning of GEG’s at
Rajasthan North field for power
generation, reduction in GHG
emissions of c.9200 tons of CO2e/
annum
Biodiversity Conservation:
− Conservation and proliferation
of indigenous species: c.1,500
seed balls and 10,000 saplings of
indigenous species developed
at Mangala Processing Terminal
− Carbon sequestration -
plantation in Ravva field:
c.17,959 tons of CO2e
− Conservation of Fishing Cat
at Coringa Wildlife Sanctuary
at Godavari delta. MoU signed
with Andhra Pradesh Forest
Department and Wildlife
Institute of India.
− Published “Know your Flora-A
Glimpse of Thar Ecosystem”,
capturing information about 57
local floral species (26 trees, 17
shrubs and 14 herbs) growing in
the vicinity of Rajasthan.
102
PRODUCTION PERFORMANCE
Gross operated production
Rajasthan
Ravva
Cambay
Oil
Gas
Net production – working interest
Oil*
Gas
Gross operated production
Net production – working interest
Unit
Boepd
Boepd
Boepd
Boepd
Bopd
Mmscfd
Boepd
Bopd
Mmscfd
Mmboe
Mmboe
FY2021
162,104 172,971
132,599 144,260
14,232
19,177
14,479
10,329
140,353 154,677
109.8
101,706 110,459
99,709
88,923
64.5
76.7
63.3
59.2
40.4
37.1
FY2020 % change
(6)
(8)
35
(29)
(9)
19
(8)
(11)
19
(7)
(8)
130.5
* Includes net production of 441 boepd in FY2021 and 483 boepd in FY2020 from KG-ONN
block, which is operated by ONGC. Cairn holds a 49% stake.
OPERATIONS
Average gross operated production
across our assets was 6% lower
y-o-y at 162,104 boepd. The
company’s production from the
Rajasthan block was 132,599 boepd,
8% lower y-o-y. The decrease
was primarily due to the delay in
execution of growth projects due to
COVID-19 restrictions and natural
reservoir decline at the MBA fields.
The decline was partially offset by
the addition of wells brought online
as a part of Mangala Infill, MPT
Upgrade, Aishwarya and Bhagyam
Polymer and ABH. Production from
the offshore assets, was at 29,505
boepd, 3% higher y-o-y, supported
by production from new wells drilled
through Ravva drilling campaign and
production optimization activities.
The production details by block are
summarised below.
Rajasthan block
Gross production from the
Rajasthan block averaged 132,599
boepd, 8% lower y-o-y. This
decrease was primarily due to
the delay in execution of growth
projects due to implementation of
the nationwide lockdown imposed
by the Government of India to curb
the spread of COVID-19 and natural
reservoir decline at the MBA fields.
The decline was partially offset by
Ravva Offshore facility, Cairn Oil & Gas
Integrated Report
Statutory reports
Financial statements
the addition of wells brought online
as a part of Mangala Infill, MPT
Upgrade, Aishwarya and Bhagyam
Polymer and ABH and production
optimisation activities.
As part of the growth projects
in Rajasthan 248 wells have been
drilled. Of these 143 wells have been
hooked up till date.
Gas production from Raageshwari
Deep Gas (RDG) averaged 124 mn
standard cubic feet per day (mmscfd)
in FY2021, with gas sales, post
captive consumption, at 96 mmscfd.
On 26th October 2018, the
Government of India, acting
through the Directorate General
of Hydrocarbons (DGH), Ministry
of Petroleum and Natural Gas,
has granted its approval for a
10-year extension of the PSC for
the Rajasthan block, RJ-ON-90/1,
subject to certain conditions, with
effect from 15 May 2020. In May 2018
the single judge had passed the order
in our favour allowing extension of
Rajasthan PSC on same terms. The
GoI had appealed against the said
order before the division bench of
the Delhi High Court. Vide order
dated 26 March 2021, the High Court
has allowed the appeal of GoI against
the single judge order.
We have served notice of arbitration
on the Government of India (GoI) in
respect of the audit demand raised
by DGH based on PSC provisions.
The Government has accepted it
and the arbitration tribunal stands
constituted. It is our position that
there is no liability arising under
the PSC owing to these purported
audited exceptions. The audit
exceptions do not constitute
demand and hence shall be resolved
as per the PSC provisions.
The tribunal had a first procedural
hearing on 24th October on which
Vedanta also filed its application
for interim relief. The interim relief
application was heard by the tribunal
on 15th December 2020 wherein
it was directed that the GoI should
not take any coercive action to
recover the disputed amount of audit
exceptions which is in arbitration and
that during the arbitration period,
the GoI should continue to extend
the tenure of the PSC on terms
of current extension. The GoI has
challenged the said order before the
Delhi High court which is now listed
on 20th May 2021.
Further, on 23rd September 2020,
the GoI filed an application for
interim relief before Delhi High Court
seeking payment of all disputed
dues. The bench has not been
inclined to pass any ex-parte orders
and the matter is now listed for
hearing on 20th May 2021.
Further to above stated letter from
GoI on 26th October 2018, in view
of pending non-finalization of the
Addendum to PSC, the GoI granted,
permission to the Oil & Gas business
to continue petroleum operations in
Rajasthan block, till the execution of
the Addendum to PSC or 30th April
2021, whichever is earlier.
Ravva block
The Ravva block produced at an
average rate of 19,177 boepd,
higher by 35% y-o-y. This was
primarily due to new wells bought
online through Ravva drilling
campaign which was successfully
completed during the year.
Cambay block
The Cambay block produced at an
average rate of 10,329 boepd, lower
by 29% y-o-y. This was primarily
due to natural field decline partially
offset by production optimization
measures.
Cairn Facility
PRICES
Particulars
Average
Brent prices –
US$/barrel
FY2021 FY2020
60.9
44.3
%
change
(27)
Crude oil price averaged US$44.3
per barrel, compared to US$60.9 per
barrel in the previous year driven by
multiple reasons shifting the world
from the era of supply disruption to
plenty. Global economic indicators
continued to be adversely impacted
due to the COVID-19 pandemic.
Early in the year, oil prices declined
drastically as the markets struggled
with a rapidly filling storage capacity
and massive crude oil glut amid a
demand collapse caused by the virus
outbreak.
Prices continued extending gains
from the second quarter, climbing to
a six-month high as physical market
fundamentals continued to recover,
rollout of COVID-19 vaccines and
the surplus in the market eased,
which was reflected from the decline
in crude oil stocks, and recovery in
refinery operations and utilization
rates in the major economies.
Continued efforts by OPEC to
accelerated production cuts
including voluntary adjustments
and weather-related energy crisis
in the US later in the year caused a
sharp decline in oil production. This
temporarily disrupted at least a fifth
of the U.S. refining output, and a mn
barrels of crude production led to a
steady rally in crude prices
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Operational review
Oil & Gas
FINANCIAL PERFORMANCE
(US$ mn, unless stated)
Particulars
Revenue
EBITDA
EBITDA margin
Depreciation
and
amortisation
Operating Profit
before special
items
Share in Group
EBITDA (%)
Capital
Expenditure
Sustaining
Growth
FY2021
1,016
438
43%
287
FY2020
1,787
1,032
58%
566
%
change
(43)
(58)
-
(50)
151
12%
233
9
224
466
(67)
34%
-
495
(53)
19
476
(51)
(53)
Revenue for FY2021 was 43% lower
y-o-y at $1,016 mn (after profit
petroleum and royalty sharing with
the Government of India), owing to
fall in oil price realization and lower
volumes. EBITDA of FY2021 was at
$437 mn, lower by 58% y-o-y in line
with the lower revenue.
The Rajasthan operating cost
was US$7.7 per barrel in FY2021
compared to US$8.7 per barrel in
the previous year, primarily driven
by cost optimisation initiatives and
lower maintenance activities due to
COVID-19 early in the year.
A.
Growth projects development
The Oil & Gas business has
a robust portfolio of infill
development & enhanced
oil recovery projects to add
volumes in the near term and
manage natural field decline.
Some of key projects are:
Mangala infill, Bhagyam &
Aishwariya Enhanced oil
recovery (EOR) and FM3/5 Infill
Mangala is currently under
full field polymer injection.
In addition, to increase the
ultimate oil recovery and
support production volumes,
we are executing a 45-well infill
drilling campaign in Mangala
field. Drilling and hook up of the
45 well campaign have been
completed during FY2021.
104
The polymer’s success
enhanced oil recovery at
Mangala and is being replicated
at Bhagyam and Aishwariya
fields to increase recovery
rates. Drilling and hook-up
of 42 well campaign have
been completed during fiscal
year 2021. Surface facility
development for polymer
implementation has been
completed and polymer
injection has been ramped up to
its design capacity.
Based on the success of the FM3
infill drilling campaign, Cairn
has identified opportunities to
further accelerate production
by drilling four horizontal wells
in FM3 and FM5 sands. The
project also entails drilling of
few deviated wells for FM2/3
sands and conversion of three
wells to polymer injector. The
approved field development
plan is being executed and
the drilling is expected to
commence during the first half
of the fiscal year 2022.
Tight oil and gas projects
Tight oil: Aishwariya Barmer
Hill (ABH)
Aishwariya Barmer Hill (ABH)
is the first tight oil project
to monetise the Barmer hill
potential. All 39 wells have
been drilled, of which 27 wells
are hooked up. They are being
progressively hooked up to
ramp up volumes. Surface
facility construction is
completed and commissioned.
Aishwariya Barmer hill stage
II drilling program enabled to
establish the confidence in
reservoir understanding of
ABH. Based on the success of it,
drilling of 5 additional wells were
conceptualized and drilling is
expected to commence during
third quarter of fiscal year 2022.
Tight gas: Raageshwari deep
gas (RDG) development
Gas development in the
Raageshwari Deep Gas field
continues to be a strategic
priority. Early production facility
has been commissioned and
ramped up to its designed
capacity of 90 mmscfd.
Further construction of gas
terminal through integrated
contract is completed and
under commissioning. This shall
lead to incremental sales of
c.100 mmscfd.
In order to realize the full
potential of the gas reservoir,
drilling of 42 wells is nearing
completion. 41 wells have been
drilled, of which 23 wells are
online as of March 31, 2021.
They are being progressively
hooked up to ramp up volumes.
Offshore rig, Cairn Oil & Gas
Integrated Report
Statutory reports
Financial statements
B.
Other projects
The Mangala processing
terminal facility upgradation
is nearing completion and
all the major sub-systems
of liquid handling are under
operation. Intra-field pipeline
augmentation project has
been completed. The project
will lead to increasing liquid
handling capacity by 30% at the
Mangala processing terminal.
Ravva development
An integrated development
campaign which was
commenced in Q3 FY2020 got
completed in FY2021. Seven
well drilling programmes
resulted in c.11 kboepd of
incremental volumes from
Ravva Block.
Exploration and appraisal
Rajasthan - (BLOCK RJ-
ON-90/1)
Rajasthan exploration
The Rajasthan portfolio provide
access to multiple play types
with oil in high permeability
reservoirs, tight oil and
tight gas. We are evaluation
opportunities to drill low to
medium risk and medium to
high reward exploration wells to
build on the resource portfolio.
Tight oil appraisal
The appraisal programme of
four fields (Vijaya and Vandana,
Mangala Barmer Hill, DP and
Shakti) entails the drilling and
extended testing of 10 new
wells with multi-stage hydraulic
fracturing. Till March 31, 2021, 8
wells have been drilled.
Open Acreage Licensing Policy
(OALP)
Under the Open Acreage
Licensing Policy (OALP),
revenue-sharing contracts
have been signed for 51 blocks
located primarily in established
basins, including some optimally
close to existing infrastructure.
Full Tensor Gravity Gradiometry™
(FTG) airborne survey implemented
to prioritise area of hydrocarbon
prospectivity has been completed in
Assam, Cambay, Rajasthan and Kutch
region. The exploration prospect
maturation process is digitalised to
fastrack the decision to drill.
The initial phase of seismic
acquisition programme has been
completed in Assam, Cambay and
Offshore GS-GK region. The second
phase is ongoing in Rajasthan and
Cambay.
Early drilling opportunities have been
identified, based on reprocessing
and interpretation of vintage data
in Rajasthan, Assam and Cambay
region. It is planned to utilise modular
production facilities Extended Well
Test (EWT), Quick Production Facility
(QPF) to fastrack production.
The first well KW-2 Udip has been
drilled in Rajasthan. Drilling and
related preparation activities are
ongoing in Cambay and North East.
Employees at Cairn, Oil & Gas
STRATEGIC PRIORITIES AND
OUTLOOK
Vedanta’s Oil & Gas business has
a robust portfolio mix comprising
exploration prospects spread across
basins in India, development projects
in the prolific producing blocks and
stable operations which generate
robust cash flows.
The key priority for us is to deliver
on our commitments from our
world-class resources with
‘zero harm, zero waste and zero
discharge’:
Increase in near-term volumes by
commissioning the gas processing
terminal and surface facilities for
Aishwariya Barmer Hill
Infill projects across producing
fields to add volume in near term
Unlock the potential of the
exploration portfolio comprising
OALP and PSC blocks
Continue to operate at a low cost-
base and generate free cash flow
post-capex
105
VEDANTA RESOURCES LIMITED | INTEGRATED REPORT AND ANNUAL ACCOUNTS 2020-21 |
MANAGEMENT DISCUSSION AND ANALYSIS CONTINUED...
Operational review
Aluminium
THE YEAR IN BRIEF
In FY2021, the aluminium smelters achieved India’s highest production of 1.97 mn tonnes (including trial run). It has
been a remarkable year in our cost reduction journey on all operational fronts. Structural reforms and continued
focus on operational excellence, coupled with lower input commodity prices, provided us a long-term cost
advantage. Our efforts towards optimising our bauxite and coal mix and improved asset capacity utilisation across
refinery, smelters and power plants supported the cost reduction journey. We started and continued a structural
cost reduction program called Vijaypath with focus on optimising our controllable costs and improving our price
realisation to improve profitability in a sustainable manners. The hot metal cost of production for FY2021 stood
at US$ 1,347 per tonne. We also achieved record production of 1.84 mn tonnes at the alumina refinery through
continued debottlenecking.
106
Integrated Report
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mobile health units were used for
creating awareness with a clear
emphasis on the importance of
social-distancing and maintaining
personal hygiene. Our business units
provided support to the district and
state health services in terms of
medical equipment, including hand
sanitisers, medicines, reagents
and PPEs such as surgical masks,
gloves, gowns and personnel
(housekeeping staff, security
personnel, medical personnel and
so on, in addition to the contribution
to the Government’s relief fund for
COVID-19).
The SHGs associated with our
facilities were involved in preparing
masks, thereby creating livelihood
while helping reduce the COVID-19
impact. Fire brigades at the facilities
have been deployed to sanitise the
premise and in the core villages near
our facilities. The facilities provide
food to migrant workers, identified
community groups, police personnel
and so on, as part of our social
responsibility initiatives.
ENVIRONMENT
Jharsuguda has recycled 14.67%
of the water used in FY 2021,
while BALCO has recycled
12.49%. One of our smelters at
Jharsuguda has achieved Specific
Water Consumption of 0.28 m3/
MT of aluminium, a benchmark in
India. There has been a significant
improvement in our water
consumption of 0.59 m3/MT
(FY 2020: 0.69 m3/MT) at BALCO.
We are consistently focusing on
improving the recycled water
percentage in future.
The management of hazardous
waste such as spent Pot line,
aluminium dross, fly ash,
and so on are material waste
management issues for the
aluminium business. Our BALCO
and Jharsuguda units disposed
of 25,949 MT spent pot lining and
14,736 MT of aluminium dross
this year, to recyclers authorised
by respective state pollution
control boards. Our operations
were able to dispose 100% of fly
ash generated at the units. At our
Lanjigarh operations, 92% of lime
grit has been utilised in FY 2021
vis-à-vis 98.4% in FY2020.
Jharsuguda facility
107
OCCUPATIONAL HEALTH
& SAFETY
We report with deep regret, two
fatalities during the year, one
at our operations in Lanjigarh
during unloading of bauxite
and another at power Plant in
BALCO. We investigated both
incidents thoroughly and shared
the lessons learned across all our
businesses.
This year, we experienced total
19 Lost Time Injuries (LTIs) at our
operations with a LTIFR of 0.27.
To enhance competencies of
our executives, engineers,
and supervisors of business
partners, we have launched the
Safety Booster programme at
our sites. We conducted safety
stand-downs across the sites to
communicate the learnings from
safety incidents and prevent
repeated future incidents. Also,
our safety leadership regularly
engages with the business
partner site in-charges and their
safety officers for their capability
development and strengthening
the culture of safety at our sites.
Our operations commenced a
monthly theme initiative where
cross-functional audits and
awareness programmes were
carried out based on one high
hazard work area each month
such as confined space, vehicle
driving and working at height.
Moreover, to sensitize our
employees towards our core
values of ‘Care’, we regularly
carry out programmes such as
‘Suraksha ki Goth’ and ’Suraksha
Charcha’.
The worldwide outbreak of
COVID-19 has not impacted
our operations in FY 2021.
As part of our Corporate
Social Responsibility, our
business units worked with the
government and stakeholders,
including local community to
provide relief measures. Our
VEDANTA RESOURCES LIMITED | INTEGRATED REPORT AND ANNUAL ACCOUNTS 2020-21 | MANAGEMENT DISCUSSION AND ANALYSIS CONTINUED...
Operational review
Aluminium
PRODUCTION PERFORMANCE
Particulars
Production (kt)
Alumina –
Lanjigarh
Total
aluminium
production
Jharsuguda I
Jharsuguda II1
BALCO I
BALCO II
FY2021 FY2020
%
change
1,841
1,811
1,969
1,904
533
867
265
304
543
800
256
305
2
3
(2)
8
4
-
(1) Including trial run production of 27 kt in
FY2021 vs. nil in FY2020
ALUMINA REFINERY: LANJIGARH
At Lanjigarh, production was 2%
higher y-o-y at 1.84 mn tonnes,
primarily through continued plant
debottlenecking and improved
capacity utilisation.
ALUMINIUM SMELTERS
We ended the year with production
of 1.97 mn tonnes (including
trial run). Our smelter at BALCO
continued to show consistent
performance. Jharsuguda smelter
ramped-up its production from
1.3 mtpa in FY2020 to 1.4 mtpa in
FY2021, 4% up y-o-y.
COAL SECURITY
We continue to focus on the long-
term security of our coal supply
at competitive prices. We added
Jamkhani and Radhikapur (West)
coal mines through competitive
bidding process by GOI. The
Radhikapur Coal Block has a capacity
of 6 MTPA, as per current approved
mine plan and Jamkhani coal block
is currently rated at 2.6 MTPA.
These acquisitions will substantially
improve our coal security. We also
look forward to continuing our
participation in linkage coal auctions
and secure coal at competitive rates.
Casting process at Jharsuguda facility
108
FY2021 FY2020
1,749
1,805
%
change
3
PRICES
Particulars
Average
LME cash
settlement
prices (US$ per
tonne)
Average LME prices for aluminium
in FY2021 stood at US$ 1,805
per tonne, 3% higher y-o-y. LME
prices were bearish for the first two
quarters due to pandemic-induced
disruption in the global economic
activity and seemed bullish in the last
two quarters, driven by increase in
demand in the second half of FY2021.
The prices showed a sharp increase
in the concluding months of FY2021.
UNIT COSTS
Particulars
Alumina cost
(ex-Lanjigarh)
Aluminium
hot metal
production
cost
Jharsuguda
CoP
BALCO CoP
(US$ per tonne)
FY2021 FY2020
275
235
%
change
(15)
1,347
1,690
(20)
1,304
1,686
(23)
1,450
1,700
(15)
During FY2021, the cost of
production (CoP) of alumina
improved to US$ 235 per tonne,
due to benefits from increase in
locally sourced bauxite, continued
debottlenecking, improved capacity
utilization and plant operating
parameters. This was further backed
by reduced input commodity prices
(mainly caustic soda and HFO).
In FY2021, the total bauxite
requirement of about 5.3 mn tonnes
was met by Odisha (56%) and
imports (44%). In the previous year,
the bauxite supply mix was captive
mines (9%), Odisha (49%) and
imports (42%).
In FY2021, the CoP of hot metal
at Jharsuguda was US$ 1,304 per
Integrated Report
Statutory reports
Financial statements
tonne, down by 23% from US$ 1,686
in FY2020. The hot metal CoP at
BALCO fell to US$ 1,450 per tonne,
down by 15% from US$ 1,700 per
tonne in FY2020. This was primarily
driven by improved materialisation
of domestic coal from Coal India
Limited (CIL) with lower auction
premiums and structural reduction
in Renewable Purchase Obligation
rates. Improved production and
lower cost of Lanjigarh Alumina
along with subdued input commodity
prices in first nine months supported
our cost reduction journey.
FINANCIAL PERFORMANCE
(US$ mn, unless stated)
Particulars
Revenue
EBITDA
EBITDA margin
(%)
Depreciation
and
amortisation
Operating Profit
before special
items
Share in Group
EBITDA (%)
Capital
Expenditure
Sustaining
Growth
FY2021
3,865
1,046
27%
230
816
28%
221
162
59
FY2020
3,751
281
8%
%
change
3%
-
-
233
(1%)
48
9%
-
-
153
45%
96
57
69%
3%
During the year, revenue increased
by 3% to $3,865 mn, driven primarily
by rising LME Aluminium prices
and higher production volumes.
EBITDA was significantly up at
$1,046 mn (FY2020: $281 mn),
mainly due to improved hot metal
cost of production & increased sales
realisation.
STRATEGIC PRIORITIES &
OUTLOOK
With the increasing primary
aluminium demand, the outlook for
FY2022 is strong. Regional ingot
and value-added product premiums
are rapidly increasing, reflecting a
combination of low ordering for 2021
and stronger than expected demand.
The input commodity prices across
carbon are moving on a higher
side driven by continued demand
increases. We are looking at ways
to continuously optimise our costs,
while also increasing the price
realisation to improve profitability
sustainably.
India’s market is expected to have
robust growth, supported primarily
by growing industrial activity and
government focus on infrastructure
sector and domestic manufacturing
in the country. Several government
initiatives (Make in India,
Production-linked Incentive for
domestic manufacturing, National
Infrastructure Pipeline and National
Rail Plan) will enhance aluminium
demand, going forward.
Vedanta continues to expand its
value-added product portfolio in
line with evolving market demand,
making it poised to grow in the Indian
aluminium market.
At our power plants, we are also
working towards reducing gross
calorific value (GCV) losses in coal
as well as improving plant operating
Wire Rods produced by Vedanta Aluminium
parameters which should deliver
higher plant load factors (PLFs) and a
reduction in non-coal costs. Vedanta
is working out a plan to expediate
operationalization of Radhikapur and
Jamkhani coal mines.
Whilst the current market outlook
remains bullish, our core strategic
priorities include:
Focus on the health & safety of our
employees, business partners,
customers and community
Deliver alumina and aluminium
production through structured
asset optimisation framework
Enhance our raw material security
of bauxite and alumina
Improve coal linkage security,
better materialisation
Expedite operationalisation of
Radhikapur and Jamkhani coal
block
Zero slippage in raw material and
finished goods quality
Improve our plant operating
parameters across locations; and
Improve realisations by enhancing
our value-added product portfolio
109
VEDANTA RESOURCES LIMITED | INTEGRATED REPORT AND ANNUAL ACCOUNTS 2020-21 | MANAGEMENT DISCUSSION AND ANALYSIS CONTINUED...
Operational review
Power
THE YEAR IN BRIEF
In FY2021, TSPL’s (Talwandi Sabo Power Limited) plant availability was 81% and Plant Load Factor (PLF) was 40%,
primarily on account of Covid related demand disruption in H1 FY2021.
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Integrated Report
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Financial statements
OCCUPATIONAL HEALTH & SAFETY
We reported 1 fatality at TSPL in FY2021. The
accident was thoroughly investigated and learnings
have been propagated across our employees,
Business Partners and across the group.
We continue to strengthen the ’Visible Felt
Leadership‘ through the on-ground presence of
senior management, improvement in reporting across
all risk and verification of on-ground critical controls.
We also continue to build safety assisting infrastructure
development through the construction of pedestrian
pathways, dedicated route for bulkers, creation of
secondary containment for hazardous chemicals and
other infra development across sites
TSPL Plant
111
VEDANTA RESOURCES LIMITED | INTEGRATED REPORT AND ANNUAL ACCOUNTS 2020-21 | MANAGEMENT DISCUSSION AND ANALYSIS CONTINUED...
Operational review
Power
ENVIRONMENT
One of the main environmental
challenges for power plants is the
management and recycling of fly
ash. At all our operations, we have
a managed to utilize more than
100% of generated fly ash and
60% in TSPL. The reduction in ash
utilisation is due to COVID-19 related
demand disruption and national/
local lockdowns affecting traffic
movement, particularly in H1.
TSPL has implemented all the
recommendations given by M/s
Golder associates for ash dyke.
Additional review done by dyke
designer and assurance was also
taken from third party (M/s TSE)
regarding ash dyke stability.
TSPL has recycled 18.5% of the
water used. We are further working
to sustain the recycled water
percentage through measures
planned during FY2022.
PRODUCTION PERFORMANCE
Particulars
Total power
sales (MU)
Jharsuguda
600 MW
BALCO 300
MW*
MALCO#
HZL wind
power
TSPL
TSPL –
availability
FY2021
FY2020
11,261 11,162
%
change
1
2,835
1,596
-
351
6,479
81%
776
-
1,726
(7)
-
437
8,223
91%
-
(20)
(21)
-
# continues to be under care and
maintenance since 26 May 2017 due to low
demand in Southern India.
* we have received an order dated 01 Jan
2019 from CSERC for Conversion of
300MW IPP to CPP w.e.f. 01 April 2017.
During the Q4 FY2019, 184 units were sold
externally from this plant.
Employee at operational site, TSPL
112
OPERATIONS
During FY2020, power sales were
11,261 mn units, 1% higher y-o-y.
Power sales at TSPL were 6,479
mn units with 81% availability in
FY2021. At TSPL, the Power Purchase
Agreement with the Punjab State
Electricity Board compensates us
based on the availability of the plant.
The 600MW Jharsuguda power plant
operated at a lower plant load factor
(PLF) of 58% in FY2021.
The 300 MW BALCO IPP operated at a
PLF of 66% in FY2021.
The MALCO plant continues to
be under care and maintenance,
effective from 26 May 2017, due to low
demand in Southern India.
UNIT SALES AND COSTS
FY2021 FY2020
5.1
4.2
%
change
(18)
3.2
4.0
2.8
3.5
(10)
5.3
(24)
3.8
(25)
Particulars
Sales
realisation
(US cents/
kWh)1
Cost of
production (US
cents/kWh)1
TSPL sales
realisation (US
cents/kWh)2
TSPL cost of
production (US
cents/kWh)2
(1) Power generation excluding TSPL
(2) TSPL sales realisation and cost of
production is considered above, based
on availability declared during the
respective period
Average power sale prices, excluding
TSPL, decreased by 18% to US
cents 4.2 per kWh and the average
generation cost was lower at US
cents 3.2 per kWh (FY2020: US
cents 3.5 per kWh), driven mainly by
decrease in coal prices and improved
linkage materialisation.
In FY2021, TSPL’s average sales price
was lower at US cents 4.0 per kWh
(FY2020: US cents 5.3 per kWh), and
power generation cost was lower at
US cents 2.8 per kWh (FY2020: US
cents 3.8 per kWh).
Integrated Report
Statutory reports
Financial statements
100%+
Utilisation of generated
fly ash at all operations
6,479
mn units
Power sales at TSPL
in FY2021
FINANCIAL PERFORMANCE
(US$ mn, unless stated)
Particulars
Revenue
EBITDA
EBITDA margin
(%)
Depreciation
and
amortisation
Operating Profit
before special
items
Share in Group
EBITDA (%)
Capital
Expenditure
Sustaining
Growth
*Excluding one-offs
FY2021
725
190
26%
79
111
5%
3
3
-
FY2020
827
233
28%
%
change
(12)
(18)
-
81
(4)
151
(26)
8%
3
3
-
-
(1)
(1)
-
Channeling the solar power at TSPL facility
EBITDA for the year was 18% lower
y-o-y at $190 mn, mainly due to low
capacity charges as PPA at TSPL,
BALCO and Zinc India and lower
realisation at TSPL, partially offset by
increase in power sales at Aluminium
business.
STRATEGIC PRIORIES & OUTLOOK
During FY2022, we will remain
focused on maintaining the plant
availability of TSPL and achieving
higher plant load factors at the
BALCO and Jharsuguda IPPs.
Our focus and priorities will be to:
Resolve pending legal issues and
recover aged power debtors;
Achieve higher PLFs for the
Jharsuguda and BALCO IPP; and
Improve power plant operating
parameters to deliver higher
PLFs/availability and reduce the
non-coal cost.
Ensuring safe operations, energy
& carbon management
113
VEDANTA RESOURCES LIMITED | INTEGRATED REPORT AND ANNUAL ACCOUNTS 2020-21 | MANAGEMENT DISCUSSION AND ANALYSIS CONTINUED...
Operational review
Iron Ore
THE YEAR IN BRIEF
Production of Crude ore at Karnataka stood at 5.60 wet mn tons. With the order of Central Empowered Committee
(Supreme Court appointed body) on 21st March’20, our annual mining capacity has been increased up to 5.89
MTPA. In line with this the Govt. of Karnataka on Feb’2021 has allocated the production quantity of 5.60 wet mn
tons for FY2021 to maintain the SC allocated district cap.
Meanwhile, operations in Goa remained in suspension in FY2021 due to a state-wide directive from the Supreme
Court. However, we continue to engage with the Government to secure a resumption of mining operations.
114
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Statutory reports
Financial statements
OCCUPATIONAL HEALTH &
SAFETY
In-spite of our best efforts
towards the vision of Zero Harm
we are very sorry to inform that
we lost one of our business
partner colleague at our
Karnataka operations in a fatal
accident at the mobile screening
plant. This has appalled the
entire management and we
thus undertook to review all our
activities for the risk perception
and on ground implementation
of controls. Our Lost Time Injury
Frequency Rate (LTIFR) has
increased to 0.56 (FY 2020:0.45).
We engaged a third-party
consultant to identify the
hidden risk in our operations
and further strengthened our
Grid owner systems with focus on
implementation of Vedanta Safety
performance standard on ground.
We have a robust top-down
approach with more than 95% month
on month compliance for Visible
Felt Leadership rounds including
the EXCO. Collective efforts of our
enthusiastic Business Partners, grid
owners and Line managers has been
effective in ensuring critical controls
in place for all identified Critical
Activities.
IOB has implemented more focused
initiatives to improve vehicle and
driving safety. At Iron ore Karnataka
all our drivers working in mining are
trained by OEM’s, and at VAB, we
have developed internal trainers
Met Coke division at Amona facility
for vehicle and driving safety
with greater focus given on one
way-traffic, pedestrian walkways,
discipline parking of trucks and
HEMM, Pre-start inspection etc.
Our one of its kind Grid Owners
Scheme has proved to be the
essence for inculcating and
percolating the true values of
Safety leadership at site level.
With each grid owner working
as a responsible steward, our
BUs have seen commendable
positivity and enthusiasm
towards compliance with not
just safety standards but also
green belt development, waste
segregation, UA/UC reporting,
critical task management, etc.
With the wholehearted
involvement of our line managers,
we had run a theme-based
safety campaign on “Line of Fire
at Workplace” which included
site rounds, on-site trainings,
awareness sessions, online
sessions, online quiz, poster and
slogan competitions, daily mailers
and screensavers. The campaign
helped us to identify and control
situations and conditions of line
of fire across all BUs. Post this
successful and well-accepted
campaign, we will be organising
similar theme-based campaigns
every quarter to strengthen the
safety culture of our business.
With the persistent pandemic of
COVID-19 across the nation, top
Grid Owners Scheme
One-of-its-kind
programme
implemented
to encourage
Safety leadership
115
VEDANTA RESOURCES LIMITED | INTEGRATED REPORT AND ANNUAL ACCOUNTS 2020-21 | MANAGEMENT DISCUSSION AND ANALYSIS CONTINUED...
Operational review
Iron Ore
management team of IOB has been
driving continual efforts to restrict
spread of the Novel Corona Virus
among our employees and business
partners. After a small duration of
shutdown due to ‘Janata curfew’ and
nation-wide lockdown in the month
of April’20, we were able to restart
majority of our operations by the
last week of April. Till date we have
tested up to 1400 staff, workmen and
business partner employees under
travel and contact tracing guidelines.
We have had 318 persons who were
found positive.
Our IOB Covid-19 taskforce, under
the guidance of our CEO and unit
wise cross functional teams, for
implementation of all the preventive
and precautionary measures,
are engaged in prevention and
control of the virus. Controls
like cold fumigation for common
areas, mandatory screening, social
distancing, usage of masks, contact
tracing, work from home, etc. proved
effective and steered us to maintain
our business continuity. Also, our
State-of-the-art Video analytics
system called COVID Marshall which
was rolled out by our Security and
IT team, gave us an edge to ensure
compliance of social distancing,
mask compliance, etc. The solution
was extended to other group
companies as a best practice. One
of the major milestones achieved
during this phase was that we were
able complete the BF#3 re-lining
project at VAB with zero outbreaks
of the Novel Corona virus among
project workers and employees
which was an outcome of testing
at source and destination for the
project workmen and strict controls
on site.
Our focus for the upcoming year
would be on strengthening the
controls of critical activities,
business partner safety
management, centralization,
and standardization of HSE
trainings, up-grade of incident
investigation methods and digital
transformation in HSE functions for
effective management.
116
Metallurgical Coke Plant at Amona Value added Business
ENVIRONMENT
At our Value-Added Business we
recycle and reuse almost all the
wastewater. Only the non-contact
type condenser cooling water of the
power plant is cooled and treated
for pH adjustment and discharged
back into the Mandovi river, which
is a consented activity by the
authorities.
We have further strengthened our
dust control system by installing new
bag houses systems with advanced
design at our Blast furnace 2 and
Coke screening plant 1 & 2.
At Iron ore Karnataka, continuing
with its best practises, company
has constructed 38 check dams,
7 settling pond and 2 Harvesting
pits having a rainwater harvesting
potential of 275805 m3/annum.
Additionally, company has de-silted
10 nearby village ponds increasing
their rainwater harvesting potential
by 75629 m3/annum.
In FY2021, around 5 Ha of mining
dump slope was covered with
biodegradable geotextiles to prevent
soil erosion & 41,000 native species
sapling were planted. Various
latest technologies like use of fog
guns; environment friendly dust
suppressants mixed with water
were adopted on the mines to
reduce water consumption for dust
suppression without affecting the
effectiveness of the measures.
AWARDS AND ACCOLADES
Value Added Business achieved
2 Green Triangle Society Safety
Awards. PID 2 has won the 1st
prize, Gomant Sarvocha Suraksha
Puraskar and PP 1 won the 2nd
prize, Gomant Suraksha Puraskar
in the event organised by Green
Triangle Society under the aegis
of Goa Inspectorate of Factories
and Boilers.
Value Added Business received
the Indian Chamber of Commerce
- National OHS Gold award for
excellence in Occupation Safety
and Health Practices.
VAB Won CII National
Energy Efficiency Circle
Competition 2020’
IOK Won FIMI’s Subh Karan
Sarwangi Award.
IOK won Grow Care India
Environment Gold Award.
VGCB won 3-star award in
“EHS Excellence Award” at 13th
edition of CII-South Region
EHS Excellence Awards 2020.
The recognition made on the
Integrated Report
Statutory reports
Financial statements
outstanding performance in
various EHS categories.
cater to requirement of our pig iron
plant at Amona.
FINANCIAL PERFORMANCE
(US$ mn, unless stated)
Particulars
Revenue
EBITDA
EBITDA margin
(%)
Depreciation
and
amortisation
Operating Profit
before special
items
Share in Group
EBITDA (%)
Capital
Expenditure
Sustaining
Growth
FY2021
611
245
40%
30
215
6%
14
6
7
FY2020
489
117
24%
%
change
25
-
-
34
(13)
83
4%
-
-
10
47
9
1
(26)
-
In FY2021, revenue increased to
$611 mn, 25% higher y-o-y mainly
due twofold increase in sales volume
at Goa & improved margin at Goa,
VGCB Won Greentech Safety
and Environment Award
under Safety & Environment
Excellence category
VGCB Won Apex India Safety
Gold Award 2020 under Safe
Workplace Category
PRODUCTION PERFORMANCE
Particulars
Production
(dmt)
Saleable ore
Goa
Karnataka
Pig iron (kt)
Sales (dmt)
Iron ore
Goa
Karnataka
Pig iron (kt)
(`crore, unless stated)
FY2021 FY2020
%
change
5.0
-
5.0
596
6.5
2.1
4.4
609
4.4
-
4.4
681
6.6
0.9
5.8
666
15
-
15
(12)
(2)
-
(24)
(8)
OPERATIONS
At Karnataka, production was 5 mn
tonnes, 15% higher y-o-y. Sales
in FY2021 were 4.4 mn tonnes,
24% lower y-o-y due to Covid-19
Impact in the current financial year.
Production of pig iron was 596,197
tonnes in FY2021, down by 12%
y-o-y due to Covid-19 Impact and
shut down of Plant for two months
due to planned relining activity.
At Goa, mining was brought to a
halt pursuant to the Supreme Court
judgement dated 7 February 2018
directing all companies in Goa to
stop mining operations with effect
from 16 March 2018. We continue to
engage with the Government for a
resumption of mining operations.
We bought low grade iron ore in
auctions held by Goa Government in
Auction No -23 & 24. This ore along
with opening stock of ore purchased
in 22nd auction and fresh royalty paid
ore moved out of mines post the
supreme court order, was exported
which further helped us to cover our
fixed cost and some ore were used to
Karnataka & VAB during the year.
EBITDA increased to $245 mn
compared with $117 mn in FY2020
was mainly due to improved margin
and higher volume at Goa.
STRATEGIC PRIORITIES &
OUTLOOK
Our near-term priorities comprise:
Resume mining operations in Goa
through continuous engagement
with the government and
the judiciary
Realign and revamp resources,
assets, HEMM’s for starting the
mine’s operation
Grow our footprint in iron ore
by continuing to participate in
auctions across the country,
including Jharkhand.
Securing EC for the expansion of
production capacity of Pig Iron
plant by 1.7 LTPA
Advocacy for removal of
E-auction/trade barrier in
Karnataka.
Open cast mine at Chitradurga
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Operational review
Steel
THE YEAR IN BRIEF
ESL is an integrated steel plant (ISP) in Bokaro, Jharkhand, with a design capacity of 2.5mtpa. Its current operating
capacity is 1.5mtpa with a diversified product mix of Wire Rod, Rebar, DI Pipe and Pig Iron.
In FY2021, ESL Steel Limited (ESL) has achieved lowest ever cost during the year since acquisition resulting in
higher EBITDA margin vis-à-vis previous period (US$ 95 per tonne v/s US$ 78 per tonne).
118
Integrated Report
Statutory reports
Financial statements
manpower and infrastructure.
On people engagement we have
organised the National Safety
Month Celebrations & Road Safety
Month Celebrations with various
competitions for employees and
business partners.
We have also organised our first-
ever safety summit to discuss ways
and means to enhance our safety
performance as a business unit.
We have won two external
recognitions- CII HSE Excellence
Award (Certificate of Appreciation) &
Greentech Safety Award.
We have also implemented
the COVID protocol/SOP
formulated to ensure business
continuity by ensuring minimum
footfall and mitigating COVID
risk. This includes staggered
shift schedules, zero touch
auto sanitising facilities, daily
sanitization of workplace,
vaccination for frontline warriors,
SOP and handbook on COVID,
Vigilance of PPE compliances
through automation, Cardinal
COVID rules, etc.
OCCUPATIONAL HEALTH &
SAFETY
We had one unfortunate incident
on the road inside the plant
on July 29, 2020, wherein the
driver while standing on road
in front of the truck was struck
by a payloader. The vehicle
was coming from the opposite
direction and resulted in fatality.
Actions were undertaken as per
the detailed investigation to avoid
such incidents in future. Currently
our LTIFR is 0.38.
Capability development of our
employees and business partners
continue to be our priority. We
have engaged various external
agencies in providing specialised
trainings such as rescue
training, training for signalman
and riggers, defensive driving
training, Vedanta safety standard
requirements, MBRD sessions,
and so on.
As a part of our 24x7 safety
culture, we have commenced
monthly shutdowns, continuous
engagement with all team
members, in which the senior
leadership visits the shopfloors
and communicates with workers
on lessons learnt from recent
incidents. Our safety alerts are
also available in local languages
and displayed at all strategic
locations.
External studies have been
conducted on ergonomics,
hygiene study (qualitative)
illumination, noise and arc flash
assessment. We have also
strengthened our firefighting
capability both in terms of
72%
Of VAP sales in FY2021
maintained by ESL Steel
ESL plant
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VEDANTA RESOURCES LIMITED | INTEGRATED REPORT AND ANNUAL ACCOUNTS 2020-21 | MANAGEMENT DISCUSSION AND ANALYSIS CONTINUED...
Operational review
Steel
Plantation Drive at ESL for a Sustainable Future
Usage of LP steam in blast furnace
to minimise the fuel requirement, LD
gas and BF gas in several operations
such as reheating furnace of
rolling mills, Blast Furnace, DIP and
lime and Dolo to reduce the fuel
consumption, Running of TG through
steam generated from Waste Heat
recovery.
In Air Emission Management,
Revamping of Oxygen Convertor
Gas Recovery (OG) system in Steel
Melting Shop (SMS) to reduce
fugitive emission, Upgradation of
Air pollution control equipment’s
to meet the norms stipulated
by the regulatory authorities,
ESP revamping of Sinter Plant,
Installation of fixed sprinklers all
along the roads and dry fog system
in all the closed conveyors and
deployment of mechanical sweepers
for road sweeping is carried out.
PRODUCTION PERFORMANCE
Particulars
Production (kt) 1,187
Pig iron
189
Billet
165
TMT bar
338
Wire rod
361
Ductile iron
135
pipes
FY2021 FY2020
1,231
167
27
468
413
155
%
change
(4)
13
-
(28)
(13)
(13)
ENVIRONMENT
In Waste Management system,
100% utilisation of Blast furnace
granulated Slag, Fly Ash to cement
industries through long-term
contracts and brick manufacturers,
disposal of LD Slag, disposal of
Biomedical waste to CBWTF, selling
of Used Oil and Zinc Dust to Pollution
Control Board authorised recyclers
and re-processors is being ensured.
E-Waste and battery waste is also
sent to authorised recyclers and
re-processors and membership with
Treatment, Storage and Disposal
Facility (TSDF) has also been done
and hazardous waste is disposed-off
to that facility.
In Water Management, treatment
of 4500 Kl of effluent daily in the
Effluent Treatment Plant is done
and it is being reutilised in several
processes such as Coke Quenching,
BF Slag granulation, in Greenbelt
Development, Fire Fighting, Dust
Suppression and in operations of
Lime and Dolo, DIP and others.
Recycling percentage has increased
from 12% to 26 %.
In Energy Management, the usage
of waste heat from coke oven
flue gas for generation of steam
which ultimately helps in power
generation, reduction in auxiliary
power consumption from 12 % to 8
% through improvement in station
heat rate is carried out.
120
OPERATIONS
There have been significant gains
in operational efficiencies, such
as optimization of the coal mix in
coke ovens and iron ore blending.
Improved yields of the converters
and finishing mills also added to
the efficiency.
During FY2021, we produced
11,87,310 tonnes of saleable
product, down 4% y-o-y on account
of reduced availability of hot metal
due to lower production amidst the
disruption caused by the pandemic.
The priority remains to enhance
production of value-added products
(VAPs), i.e., TMT Bar, Wire Rod and
DI Pipe. ESL maintained 72% of VAP
sales, in line with priority.
Our Consent to Operate (CTO) for
the steel plant at Bokaro, which was
valid until December 2017, was not
renewed by the Jharkhand State
Pollution Control Board (JSPCB).
This was followed by the Ministry of
Environment, Forests and Climate
Change (MoEF&CC) revoking the
Environmental Clearance (EC) dated
February 21, 2018. MoEF&CC, on
August 25, 2020, has granted a Terms
of Reference to ESL for 3 MTPA
plant with conditions like fresh EIA/
EMP reports and public hearing. The
Honorable High Court of Jharkhand
had extended the interim protection
granted in the pending writ petitions
till September 16, 2020. Hon’ble
High Court on September 16,
2020 pronounced and revoked the
interim stay for plant continuity
w.e.f September 23, 2020. ESL
filed a SLP before Hon’ble Supreme
Court against September 16, 2020
order for grant of interim status
quo order and plant continuity. Vide
order dated September 22, 2020
Hon’ble Supreme Court issued
notice and allowed plant operations
to continue till further orders. Public
hearing has been concluded on
December 16, 2020, and ESL has
applied for grant of Environment
Clearance to MoEF & CC on January
11, 2021 on Parivesh Portal of MoEF
& CC and presented before EAC on
Integrated Report
Statutory reports
Financial statements
11th February 2021. The revised
proposal has been submitted on
March 14, 2021 post inputs from
February 11, 2021 meeting.
PRICES
Particulars
Pig Iron
Billet
TMT
Wire rod
DI pipe
Average steel
price (US$ per
tonne)
(US$ per tonne)
%
change
8
(20)
9
3
(10)
FY2021 FY2020
354
418
494
519
602
382
336
539
537
544
488
495
(1)
Average sales realisation decreased
1% y-o-y from US$495 per tonne
in FY2020 to US$488 per tonne in
FY2021. Prices of iron and steel
are influenced by several macro-
economic factors. These include
global economic slowdown, US-
China trade war, supply chain
destocking, government expenditure
on infrastructure, the emphasis on
developmental projects, demand-
supply dynamics, the Purchasing
Managers’ Index (PMI) in India and
production and inventory levels
across the globe especially China.
Even though the NSR dipped by US$
7 per tonne, we were able to increase
our EBITDA margin to US$ 95 per
tonne for the year (against US$ 78
per tonne in FY2020) through better
control over costs.
UNIT COSTS
Particulars
Steel (US$ per
tonne)
FY2021 FY2020
418
393
%
change
(6)
Cost has decreased by 6 % y-o-y
from US$ 418 per tonne to US$ 393
per tonne in FY2021, primarily on
account of softening of coking coal
price during the year and operational
efficiencies which was managed
through improvement in key
operational metrics.
Vaccination drive for employee safety & wellbeing
FINANCIAL PERFORMANCE
(US$ mn, unless stated)
Particulars
Revenue
EBITDA
EBITDA margin
(%)
Depreciation
and
amortisation
Operating Profit
before special
items
Share in Group
EBITDA (%)
Capital
Expenditure
Sustaining
Growth
FY2021
630
117
19%
37
80
3%
(21)
14
(36)
FY2020
604
83
14%
%
change
4%
42%
-
34
9%
49
65%
3%
11
-
-
11 (27)%
-
-
Revenue increased by 4% to $630
mn (FY2020: $604 mn), primarily due
to higher volume. EBITDA increased
by 42% to $117 mn in line with
higher sales and improved cost of
production.
STRATEGIC PRIORITIES AND
OUTLOOK
Steel demand is expected to surge
owing to the gradual recovery in
economic activities across the world,
and the emphasis of governments
to ramp up infrastructure spend.
The focus is to operate with the
highest Environment, Health and
Safety standards, while improving
efficiencies and unit costs.
The focus areas comprise:
Ensuring business continuity
Greater focus on Reliability
Centred Maintenance
Obtain clean ‘Consent to Operate’
and environmental clearances
Raw material securitisation
through –long-term contracts;
approaching FTA countries for
coking coal
Ensure zero harm and zero
discharge, fostering a culture of
24x7 safety culture
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VEDANTA RESOURCES LIMITED | INTEGRATED REPORT AND ANNUAL ACCOUNTS 2020-21 | MANAGEMENT DISCUSSION AND ANALYSIS CONTINUED...
Operational review
Copper – India / Australia
THE YEAR IN BRIEF
Tuticorin’s copper smelter plant was shut down for FY2021. We continue to engage with the Government of India
and relevant authorities to enable the restart of operations at Copper India. We continued to operate our refinery
and rod plant at Silvassa, catering to the domestic market.
122
< BACK TO CONTENTS
Integrated Report
Statutory reports
Financial statements
OCCUPATIONAL HEALTH AND
SAFETY
The lost time injury frequency
rate (LTIFR) was zero till Mar’21
(FY2020: 0).
site retained its ISO accreditation
in safety, environment and quality
management systems and the
opportunity of a production lull was
used to review and further improve
these systems.
ENVIRONMENT
Copper Mines of Tasmania
continued in care and
maintenance awaiting a decision
on restart. Meanwhile, a small,
dedicated team is maintaining the
site and there were no significant
safety or environmental
incidents during the year. The
PRODUCTION PERFORMANCE
Particulars
Production (kt)
India – cathode
FY2021 FY2020
%
change
101
77
31
OPERATIONS
The Tamil Nadu Pollution Control
Board (TNPCB) vide order, dated
9 April 2018, rejected the consent
renewal application of Vedanta
Resources Limited for its copper
smelter plant at Tuticorin. It
directed Vedanta not to resume
production operations without
formal approval/consent (vide
order dated 12 April 2018), and
directed the closure of the
plant and the disconnection of
electricity (vide order dated 23
May 2018).
The Government of Tamil Nadu
also issued an order dated 28
May 2018 directing the TNPCB
to permanently close and seal
the existing copper smelter
at Tuticorin; this was followed
by the TNPCB on 28 May 2018.
Vedanta Resources Limited filed
a composite appeal before the
National Green Tribunal (NGT)
against all the above orders
passed by the TNPCB and the
Government of Tamil Nadu. In
December 2018, NGT set aside
the impugned orders and directed
the TNPCB to renew the CTO.
The order passed by the NGT
was challenged by the Tamil Nadu
State Government in the Hon’ble
Supreme Court.
The Company had filed a writ
petition before the Madras High
Court challenging various orders
passed against the Company in
2018 and 2013. On August 18,
2020, the Madras High Court
delivered the judgement wherein
20%
Increase in y-o-y revenue
achieved by Sterlite Copper
Refinery at Sterlite Copper
123
VEDANTA RESOURCES LIMITED | INTEGRATED REPORT AND ANNUAL ACCOUNTS 2020-21 | MANAGEMENT DISCUSSION AND ANALYSIS CONTINUED...
Operational review
Copper – India / Australia
Encouraging diversity for inclusive talent growth
it dismissed all the Writ Petitions filed
by the Company.
The Company has approached the
Supreme Court and challenged
the said High Court order by way
of a Special Leave Petition (SLP)
to Appeal and also filed an interim
relief for care and maintenance
of the plant. The matter was then
listed on December 02, 2020 before
the Supreme Court Bench. The
Bench after having heard both the
sides concluded that at this stage
the interim relief in terms of trial
run could not be allowed. Further,
considering the voluminous nature
of documents and pleadings, the
matter shall be finally heard on
merits. Besides, Hon’ble Supreme
Court held that the case will be listed
once physical hearing resumes in
the Supreme Court. The matter was
again mentioned before the bench
on 17th March 2021, wherein the
matter was posted for hearing on
17th August, 2021.
Meanwhile, the Company’s Silvassa
refinery and rod plant continues to
operate as usual, enabling us to cater
to the domestic market.
Our copper mine in Australia has
remained under extended care and
maintenance since 2013. However,
we continue to evaluate various
options for its profitable restart,
given the Government’s current
favourable support and prices.
(`crore, unless stated)
FY2021 FY2020
5,855
6,897
%
change
18
PRICES
Particulars
Average
LME cash
settlement
prices (US$
per tonne)
Average LME copper prices
increased by 18% compared with
FY2020.
124
FINANCIAL PERFORMANCE
(US$ mn, unless stated)
Particulars
Revenue
EBITDA
EBITDA margin
(%)
Depreciation
and
amortisation
Operating Profit
before special
items
Share in Group
EBITDA (%)
Capital
Expenditure
Sustaining
Growth
FY2021
1,469
(21)
(1)%
FY2020
1,278
(40)
(3)%
%
change
15
-
-
21
21
(42)
(61)
(1)%
(1)%
-
-
-
7
2
5
15
(52)
8
7
(74)
(26)
Integrated Report
Statutory reports
Financial statements
During the year, EBITDA was negative
$21 mn and revenue was $1,469 mn,
an increase of 25% on the previous
year’s revenue of $1,278 mn. The
increase in revenue was mainly due to
higher Copper LME prices and higher
volume. EBITDA loss decreased to
$21 mn on account of increase in sales
realizations by 20%.
STRATEGIC PRIORITIES &
OUTLOOK
Over the following year our focus
and priorities will be to:
Engage with the Government and
relevant authorities to enable
the restart of operations at
Copper India.
Sustain operating efficiencies,
reducing our cost profile; and
Upgrade technology to ensure
high-quality products and services
that sustain market leadership and
exceeds customer expectations.
PORT BUSINESS
Vizag General Cargo Berth (VGCB)
During FY2021, VGCB operations
showed a decline of 29% in discharge
and 25% in dispatch compared to
FY2020. This drop was mainly due
to worldwide lockdown during the
pandemic and Government of India’s
initiatives towards curtailing import
coal volumes and encouraging
domestic coal production or
consumption. This has resulted
in c.26% reduction of import coal
volumes in the Vizag region and c.12%
across India on a year-on-year basis.
Purity check of copper samples, Sterlite Copper
125
VEDANTA RESOURCES LIMITED | INTEGRATED REPORT AND ANNUAL ACCOUNTS 2020-21 | Governance
The Board is responsible for ensuring the long-term
success of the Group by balancing the needs of its various
stakeholders. Good governance plays a key role in the
delivery of shareholder value and the Board remains
committed to maintaining the highest standards of
corporate governance and ethical business practices.
SECTION 172 STATEMENT
The following section serves as our “section 172(1)
statement” and explains how the Board considers the
interests of key stakeholders and the broader matters
set out in s172 of the Companies Act 2006 (s172) when
performing their duty to promote the success of the
Company under s172, the Board’s engagement with those
stakeholders and their influence on decision making.
THE BOARD’S APPROACH TO S172 AND
DECISION MAKING
The Board is ultimately responsible for the long-term
success of the Group. It recognizes that this is dependent
on fostering good relationships with its key stakeholders
in the pursuit of sustainable growth for the benefit of the
Company’s shareholders. The Board therefore considers
the interests of and the impact of its decisions on the
Group’s key stakeholders as part of its decision-making
process.
When making decisions, each Director ensures that he
acts in the way he considers, in good faith, would most
likely promote the Company’s success for the benefit
of its members as a whole, and in doing so have regard
(among other matters) to those set out in s172.
HOW THE BOARD OPERATES
Vedanta Resources Limited is the parent company of
the Vedanta Group. Through its subsidiaries, it holds its
principal operating businesses such as Vedanta Limited.
It is the Board’s view that good governance of the Group
is best achieved by the delegation of authority from
the Board to its operating subsidiaries. Accordingly,
the Board has well-established arrangements for the
delegation of authority to its operating subsidiaries,
together with a schedule of matters which are reserved
for the Company’s Board. Therefore, while the interests
of the Group’s stakeholders are considered by the
Company’s Board, at a business level, the interests of
each business’ stakeholders are considered by the boards
of Vedanta Limited and each of its operating subsidiaries.
Each subsidiary is responsible for their own decision
making and formulates its own policies in line with local
regulations in the country they operate in. Details of the
Company’s governance framework and delegation of
authority to the Board and Management committees,
which is regularly reviewed to ensure it remains fit for
purpose, can be found of pages 128-129.
126
For every strategic proposal, the primary focus of the
Board is to promote the long-term success of the group
to the benefit of members and other stakeholders.
Decision making by both the Company’s Board, and
under its delegated authorities to its principal operating
subsidiaries, take into account the assessment of the
impact of the decision of the long-term success of the
Group to the benefit of its shareholders, with regard to
other stakeholders.
The Company’s Schedule of Matters Reserved for the
Board is being revised to require principal operating
subsidiaries to report back to the Company’s Board on
the consideration taken by the respective subsidiary
boards of the s172 factors on all strategic decisions taken
by them.
As Vedanta Limited is listed on the Bombay Stock Exchange
and National Stock Exchange in India as well as the New
York Stock Exchange, stringent compliance and reporting
measures are in place to ensure good governance and to
consider the interests of its key stakeholders.
THE ROLE OF THE CHAIR
The chairman encourages open dialogue between the
Directors and Management on all Board discussions. This
includes constructive discussion, to assess the long-term
impact for the Group including its stakeholders, of any
strategic proposals presented to the Board.
INFORMATION
The associated briefing papers circulated to the Board
for consideration and approval detail potential impacts,
if any, on the members and other stakeholders and the
long-term consequences for the business.
The s172 assessment is performed internally by
Management, and where required, the Board may request
external assurance of the quality of information provided.
POLICIES AND PRACTICES
Vedanta Limited, as the principal operating subsidiary,
has an established stakeholder engagement standard
which governs the procedure for identifying key
stakeholders. At Vedanta Limited, a review of key
stakeholders is undertaken every 3 years and discussed
by the Group Executive Committee. This subsequently
gets presented to the Vedanta Limited Board for
information.
In line with the Group’s delegated authority structure,
stakeholder identification is undertaken at a Business
Unit level. Vedanta’s social responsibility performance
standard aims to ensure effective engagement with
all key stakeholders. Details on the Group’s ongoing
engagement with stakeholders can be found on
pages 58-61.
Integrated Report
Statutory reports
Financial statements
TRAINING
The relevance of stakeholder considerations in the
context of the Board’s decision-making has long been a
part of Board as they are aligned to the Group’s vision,
values and sustainability principles. We recognise the
importance of keeping the interests of our stakeholders
at the forefront of decision-making and continue to
provide refresher training to Directors.
We have taken action to make the regular consideration
of stakeholder interests a key part of the Group’s
business culture by providing training to the Board and
the Company’s senior management on the duties of the
Directors and the new reporting requirements under s172
of Companies Act 2006.
The Board and Company’s senior management team have
received briefings on the Directors’ duties as outlined
in s172 of Companies Act 2006. These training briefings
have also been cascaded to the management teams
including those at the principal operating subsidiary,
Vedanta Limited to ensure that delegated decision
making adequately covers the impact assessment of
these s172 factors and that stakeholder considerations
are at the forefront of all strategic decisions.
CULTURE AND STAKEHOLDER ENGAGEMENT
The Board is committed to maintaining strong
relationships with its shareholders, bondholders and
other stakeholders. The Group is working to continually
improve its engagement with its various stakeholders.
The Group has a number of governance standards
which facilitate the pursuit of its goals and vision
with adherence to its purpose and values. The
Group’s stakeholder engagement standard and social
responsibility performance standard ensure that
the Group’s stakeholders are at the forefront of its
operations and decision making. They also facilitate
effective engagement with all key stakeholders. Further
details on ongoing engagement with stakeholders can be
found on pages 58-61 of the Strategic Report.
All Group governance standards including the
stakeholder engagement standard and social
responsibility performance standards are rolled out
across the Group and include new operating businesses
following their acquisition by the Group in order to
promote consistency across the Group.
MAINTAINING OUR LICENCE TO OPERATE
Our licence to operate is dictated by our reputation and
the way the Group is perceived by its stakeholders. The
Board’s leadership ensures that management of the
respective businesses run the businesses in an ethical
and responsible manner in relation to all stakeholders.
The Board has an established set of corporate values
which guide its decision-making process and operations.
Further details of the Group’s purpose and values can be
found on page 9.
The Group has a Code of Business Conduct and Ethics,
a Supplier Code of Conduct and its Whistleblower Policy
which reinforce the Board’s commitment to operating in
an ethical manner in the pursuit of its goals. Furthermore,
staff receive regular training updates on ethical
practices including anti-bribery and corruption and anti-
money laundering. The Group Internal Audit function
regularly reports to the Board on the operation of the
Whistleblower policy including remedial actions taken
following the investigation of any complaints received.
CREATING VALUE FOR OUR STAKEHOLDERS
The Group maintains ongoing dialogue with its
stakeholders to understand their expectations and
how their concerns can be addressed. Consideration of
stakeholder interests forms a vital part of the Board’s
deliberations.
Details of what the Board considers are the key interests
of the Group’s stakeholders and the Group’s actions
in FY2021 to foster these interests can be found in the
sustainability section on pages 58-61.
The Board and subsidiary boards ensure that stakeholder
considerations are taken into account in strategic
decision making by requiring that all strategic proposals
coming to the Board include an analysis of stakeholder
impacts, which form part of the discussions when making
decisions. The Company Secretary provides support to
the Board to ensure that sufficient consideration is given
to stakeholder issues. In accordance with the Schedule of
Matters Reserved for the Board, the principal operating
subsidiaries will regularly report to the Board on the
considerations taken for key strategic decisions.
MAKING STRATEGIC DECISIONS FOR A BETTER
FUTURE
During the year, the Company’s Board approved a
proposal to acquire all of the minority share interest in
Vedanta Limited and the subsequent delisting of Vedanta
Limited. Prior to doing so, the Board received information
materials on the proposed transaction which outlined
a consideration of the impact of the transaction on the
Group’s key stakeholders. The Board deliberated on and
concluded that the transaction would promote the long-
term success of the Company without any significant
detrimental impact to key stakeholders. The board of
Vedanta Limited also considered the aforementioned
proposal and concluded that it was to the benefit of its
shareholders and would promote the long-term success
of the company.
Subsequently, as the aforementioned transaction
was not successful, the Board approved a proposal to
embark on a Voluntary Open Offer for up to 18.5% of
the minority share interest in Vedanta Limited. As for
all strategic matters, the Board received information
materials on the proposed transaction which outlined
a consideration of the impact of the transaction on the
Group’s key stakeholders. The Board deliberated on and
concluded that the transaction would promote the long-
term success of the Company without any significant
detrimental impact to key stakeholders. The board of
Vedanta Limited also considered the aforementioned
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proposal and concluded that it was to the benefit of its
shareholders and would promote the long-term success
of the company.
GOVERNANCE FRAMEWORK
The Company’s Board of Directors collectively provides
entrepreneurial leadership for the Group and strategic
direction to management for the delivery of sustainable
shareholder value.
The reporting structure, as outlined below, between
the Board and Management represents the Group’s
Delegation of Authority and Corporate Governance
framework. As part of its decision-making processes,
the Board considers the long-term consequences of its
decisions, the interests of various stakeholders including
employees, the impact of the Group’s operations on
the environment and the need to conduct its business
ethically. This is achieved through a prudent and robust
risk management framework, internal controls and strong
governance processes.
BOARD
Comprises of four directors including the Executive
Chairman, Executive Vice Chairman and two Non-
Executive Directors.
THE BOARD’S RESPONSIBILITIES
Set the values and vision of the Group;
Determine strategic priorities and risk appetite;
Review the delivery of strategy by management and
provide challenge or support as necessary;
Oversee the Group’s internal controls and risk
management framework;
Monitor the Group’s risk environment and tolerances;
Stakeholder engagement;
Financial and performance reporting; and
Determine remuneration of Directors.
The Group Company Secretary acts as Secretary to the
Board and attends all its meetings to formally record each
meeting.
DIVISION OF RESPONSIBILITIES
There is a clear division between the functioning of the
Board in providing effective oversight and the executive
responsibility for the operation of the Company’s
business. The Board has an established policy which
prescribes how it discharges its mandate. This policy
sets out the roles and responsibilities of the Executive
Chairman, Executive Vice Chairman and Non-Executive
Directors.
AUDIT COMMITTEES
The Board delegates certain responsibilities to the Audit
Committee including oversight of the Group’s financial
reporting, the efficacy of the internal control and risk
128
management framework and providing scrutiny of the
work of the internal and external auditors.
The Audit Committee’s duties are included in its terms of
reference, which are available on the Company’s website
at www.vedantaresources.com/boardcommittees.
The Audit Committee’s terms of reference facilitate its
effective operation. The chair of the Audit Committee
reports formally to the Board on the Committee’s
activities following each meeting. Additionally, from
time to time, the Audit Committee submits reports and
recommendations to the Board on any matter which it
considers significant to the Group.
Only the members of the Audit Committee have the
right to attend its meetings. At the invitation of the Audit
Committee, members of the senior management team
regularly attend Audit Committee meetings to report on
issues and facilitate discussions with the external auditor.
The external auditor attends Audit Committee meetings
to ensure effective communication of matters relating
to the external audit of the Group’s full year and interim
financial statements. The Group Company Secretary acts
as Secretary to the Audit Committee and attends all its
meetings to formally record each meeting.
The Audit Committee is authorised to obtain legal or
other professional advice as necessary at the expense
of the Company, to secure the attendance of external
advisers at their meetings and to seek information from
any employee of the Company in order to perform their
duties.
NON-EXECUTIVE DIRECTORS
The Non-Executive Directors are responsible for helping
to develop the Company’s strategy and providing
rigorous, objective and constructive challenge to create
accountability and drive performance. Collectively, the
current Non-Executive Directors have the appropriate
balance of expertise and independent judgement,
together with a good understanding of the Group’s
risk environment to enable them to provide effective
oversight in the context of uncertainty and volatile
markets.
MANAGEMENT COMMITTEES
The Management Committee
The Management Committee oversees the day- to-day
running of the Company. The Management Committee:
Ensures effective implementation of Board decisions;
Reviews operational business plans and recommends
annual budgets to the Board for approval;
Overseas the senior management team in their
delivery of the Group’s operational business plans
following Board approval;
Provides oversight of all of the Group’s operations,
and performance including environmental, social,
governance, health and safety, sustainability;
Manages the Group’s risk profile in line with the risk
appetite set by the Board;
Integrated Report
Statutory reports
Financial statements
Ensures that prudent and robust risk management and
internal control systems are in place throughout the
Group;
Operational and financial performance
Approved the appointment of a new auditor for the
Company;
Supports the Executive Chairman in maintaining
Approved the Group’s Business Plan FY2020-2021;
effective communications with various stakeholders.
The Executive Committee
The Executive Committee is responsible for the day-
to-day running of the Group and meets monthly. It is
responsible for implementing the strategy adopted by
the Board, allocating resources in line with delegated
authorities, managing risk and monitoring the operational
and financial performance of the Group. Authority is
delegated by the Executive Committee to the respective
chief executive officer of each of the Group’s businesses.
During the year, the CEO of Vedanta Limited attended
the Company’s Board meetings to brief the Board on
strategic and operational matters. The CEO of Vedanta
Limited reports to the Board on all operational matters.
The Finance Standing Committee
The Finance Standing Committee has delegated
authority from the Board for approval of certain matters
including approval of financing arrangements and
corporate guarantees below the financial threshold
for Board approval. The Company Secretary updates
the Board on the activities of the Finance Standing
Committee at the subsequent Board meeting and the
minutes of all Finance Standing Committee meetings are
reviewed by the Board.
KEY MATTERS RESERVED FOR BOARD
CONSIDERATION
The duties of the Board are set out in its terms of
reference, including those matters specifically reserved
for its consideration. The Board’s terms of reference
also set out those matters which must be reported to
the Board, such as details of fatalities within the Group
and the adoption or material amendment to the Group
policies relating to business conduct, environment and
health and safety.
The formal schedule of reserved matters is replicated
in internal delegation of authorities within the Group to
provide the businesses with flexibility to operate whilst
ensuring that strategic matters are always considered
and decided by the Board. The Board reviews its schedule
of reserved matters regularly.
BOARD FOCUS DURING THE YEAR
Strategy
Approved the buyout of the minority interest in the
Company’s principal subsidiary, Vedanta Limited.
Approved a bond consent solicitation process of the
Group’s bond holders for revisions to certain financial
covenants;
Approved the change in the Company’s status from a
holding company to enable it to participate in trading
with NALCO and other suppliers for the benefit of the
Group;
Approved the conversion of share premium into
distributable reserves;
Reviewed the Group’s operational performance,
including safety and environment across its
businesses, through updates from the Chief Executive
Officer at each scheduled Board meeting;
Received updates on the provisional liquidation of
Konkola Copper Mines and approved arbitration
proceedings and indemnification of the Company’s
directors in respect of this;
Reviewed the Group’s financial performance and
debt management initiatives through updates from
the Chief Financial Officer at each scheduled Board
meeting;
Reviewed the Group’s Treasury position and
considered Management’s liability management
proposals including the approval of various bond
offerings and associated interim financial statements;
Approval of a parent company guarantee for its
subsidiary Vedanta Limited to participate in the
auction for 10 oil & gas blocks;
Discussed the Group’s operational and financial
performance, reviewed its going concern status and
approved the going concern statements for inclusion
in the Company’s Annual Report 2020.
Received updated on the significant accounting issues
and approved the Group’s Annual Report and full- and
half-year financial results;
Declared dividends payable to the Company’s
shareholders;
Governance and Risk
Reviewed the composition of the Board and approved
a new Board appointment;
Reviewed the Group’s progress on compliance with the
Modern Slavery Act;
Approval of the Payments to Governments’ and Tax
transparency reports;
Received updates from the Audit Committee; and
Reviewed the Company’s going concern position.
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VEDANTA RESOURCES LIMITED | INTEGRATED REPORT AND ANNUAL ACCOUNTS 2020-21 | Effectiveness
The Board is comprised of executive and independent
Non-Executive Directors for effective governance.
Each of the Non-Executive Directors is considered fully
independent in character and judgement and free from
any relationship or circumstance that could affect or
appear to affect their independent judgement.
The Board operates in an open and collaborative manner
to support and constructively challenge management to
deliver operational success. The Directors harness their
collectively wide-ranging expertise and experience to
shape decision making.
BOARD INDUCTION
On appointment to the Board, each Director undergoes
a comprehensive induction programme which is tailored
to their individual needs but is intended to provide an
introduction to the Group’s operations, challenges and
risks. Newly appointed Directors also receive an overview
of their duties, corporate governance policies and Board
processes.
ONGOING BOARD TRAINING AND
DEVELOPMENT
The Board is committed to the continuing development
of its Directors and they are offered training as required
to assist them in the performance of their duties. There
are also procedures in place to provide the Directors with
appropriate and timely information, including receiving
information between meetings regarding Group business
development and financial performance. The Directors
have access to the Company’s professional advisers,
where necessary, as well as to the Company Secretary,
who is responsible for ensuring that Board procedures are
followed. The Company Secretary is also responsible for
advising the Board on governance matters.
130
Integrated Report
Statutory reports
Financial statements
Accountability: Audit Committee
Current composition
A R Narayanaswamy (Chairman)
Geoffrey Green
The Directors who serve on the Audit Committee have necessary qualifications and bring a wide range and depth
of financial and commercial experience across various industries. Their collective knowledge, skills, experience and
objectivity enables the Audit Committee to work effectively and to challenge management. Mr Narayanaswamy is a
qualified Chartered Accountant and has recent and relevant financial experience to undertake his role on the Committee.
SUMMARY OF THE AUDIT COMMITTEE’S ACTIVITIES DURING THE YEAR
Area of responsibility
Financial reporting
The Audit Committee oversees the
integrity of the Company’s financial
reporting process to ensure that
the information provided to the
Company’s shareholders and other
stakeholders is fair, balanced and
understandable and provides the
information necessary to assess
the Company’s financial position,
performance, business model and
strategy.
The Group has a comprehensive
financial reporting system, which is
reviewed and modified in line with
accounting standards to ensure that
all published financial information is
accurate.
Internal controls, risk management
and governance
The Audit Committee reviews
internal control and risk
management processes and output
from the regular review of risks
carried out during the year by the
internal audit function.
Activities
During the year, the Audit Committee reviewed the preliminary announcement, Annual
Report and financial statements for the Board’s approval. As part of the process, it reviewed
and challenged the key accounting and other judgements presented by management.
A detailed audit plan (the Audit Plan) was prepared by the external auditor. The Audit Plan
set out the audit scope, key audit risks identified, materiality issues, the client team working
on the audit and the audit timetable. The audit scope covered the significant components
of the audit and audit plans for each component and geographical location. Each of the key
audit risks and the external auditor’s response on how it will investigate these risks was
considered by the Audit Committee.
The Committee discussed the key accounting issues as outlined in the audit opinion. In
respect of this, the Committee considered the impact of KCM and the PSC extension and
discussed these at length with Management and the external auditor.
As a result, and as supported by the high standard of reporting by management, the
Audit Committee concluded that it has discharged its responsibilities effectively and
recommended the Company’s Annual Report and Accounts FY21 to the Board for approval.
The Audit Committee’s other activities include;
Six-monthly reviews of significant accounting issues and impact on the Group;
Review and approval of the half-year report;
Discussion on impairment reviews;
Review of pending tax issues and the financial exposure to the Group;
Review of legal and tax cases and the associated risks arising to ensure that appropriate
provisions are made and disclosed;
Going concern assessment
Review of the going concern basis for the preparation of the financial statements
including working capital forecasts, monthly projections and funding requirements;
Vedanta’s risk management framework serves to identify, assess and report on the principal
and emerging risks facing the Group’s businesses in a consistent manner. Further details on
the Group’s risk management framework are on pages 46-55 of the Strategic Report.
During the year and up to the date of this Report, the Audit Committee reviewed the
internal control system in place to ensure that it remains effective. The review included a
report on the risk matrix, significant risks and actions put in place to mitigate these risks.
Any weaknesses identified by the review were addressed by enhanced procedures to
strengthen the relevant controls and these are in turn reviewed at regular intervals.
The Committee also continued to monitor the market conditions, risks and
uncertainties relevant to the Group, reviewed the risk management framework and
reported to the Board on relevant risks affecting the Group. The Committee received
regular updates from management confirming that risks relevant to the Group were
appropriately categorised, the potential impact to the Group and adequacy of resources
allocated to manage the risks. The Committee has reviewed the Principal Risks and
Uncertainties for the Group disclosed in the Annual Report and Accounts 2021 and
consider them to be appropriate.
Internal audit review including reviews of the internal control framework, changes to the
control gradings within the Group and whistle-blower cases;
Review of the Group’s risk management infrastructure, risk profile, significant risks, risk
matrix and resulting action plans;
Review of reports from subsidiary company audit committees and the Risk Management
Committee; and
Reviewing the Group’s cyber security controls;
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VEDANTA RESOURCES LIMITED | INTEGRATED REPORT AND ANNUAL ACCOUNTS 2020-21 |
ACCOUNTABILITY: AUDIT COMMITTEE CONTINUED...
Area of responsibility
Activities
Review of the significant audit risks with the external auditor during interim review and
year-end audit;
Consideration of external audit findings and review of significant issues raised;
Review of key audit issues and management’s report;
Review of the independence of the external auditor and the provision of non-audit
services including non-audit fees paid to the external auditor;
Review of the external auditor’s performance and making recommendations in respect
of the re-appointment of the external auditor;
Review of the management representation letter;
Review of the audit plan, scope of the 2020 external audit of the financial statements
and key risk areas for the 2020 audit.
Receive updates from MAS on the Group’s whistle-blower arrangements, including the
outcome of investigations, for assurance that all reported whistle-blower incidents are
appropriately investigated and actioned.
Review of internal audit observations and monitoring of implementation of any
corrective actions identified;
Review of the performance of the internal audit function; and
Review of 2020-2021 internal audit plan.
The audit and external auditor
Internal audit
The Board has a zero-tolerance
policy for corruption. Vedanta’s
Code of Business Conduct & Ethics
contains guidelines for conducting
the Company’s business with the
highest standards of business
ethics. Vedanta also maintains a
Supplier Code of Conduct which
ensures that all its suppliers and
service providers are also operating
with the highest standards on
business ethics.
The Group’s whistle-blower
policy encourages employees
of the Company, its subsidiaries
and all external stakeholders to
raise concerns about suspected
wrongdoing within the Group in
confidence. The whistle-blower
policy also covers the requirements
of the UK legislation in respect
of slavery and human trafficking
reporting.
effectiveness. The Audit Committee also determines the
external auditor’s remuneration on behalf of the Board
and includes all the fees that the Company pays for audit,
audit-related and non-audit services performed by MHA.
NON-AUDIT SERVICES
The Group has a policy that governs the provision of
non-audit services by the external auditor which specifies
the services which the external auditor is permitted to
undertake. It also specifies non-audit services which
MHA is prohibited from undertaking in order to safeguard
their objectivity as such services present a high risk
of conflict and could undermine the external auditor’s
independence. The Audit Committee reviews the fees
paid to the external auditor for non-audit services
to ensure auditor independence is safeguarded. A
breakdown of the non-audit fees paid to the external
auditor is disclosed in Note 37 to the financial statements.
SIGNIFICANT ISSUES CONSIDERED BY THE
AUDIT COMMITTEE
The preparation of financial statements requires
management to make judgements, estimates and
assumptions, that affect the application of accounting
policies and the reported amount of assets, liabilities,
income, expenses and disclosures of contingent
liabilities at the date of these financial statements and
the reported amount of revenues and expenses for the
years presented. The Audit Committee reviews whether
the Group’s accounting policies are appropriate, and
management’s estimate and judgements applied in
the financial statements are reasonable. The Audit
Committee also reviewed the disclosures made in the
financial statements and the views of the external
auditor as outlined in the audit opinion on pages 142-150
on these significant issues were considered by the
Audit Committee.
EXTERNAL AUDITOR
MHA MacIntyre Hudson (MHA) is the Company’s external
auditor. The Audit Committee reviews the external
auditor’s independence and assesses their ongoing
132
Integrated Report
Statutory reports
Financial statements
Directors’ Report
The Directors are pleased to present their annual report
on the business of the Group, together with the financial
statements and auditor’s report, for the year ended 31
March 2021.
Report has been prepared on the basis of information
and knowledge available to the Directors at the date of
preparation and the Company does not undertake to
update or revise the content during the year ahead.
Information required by Schedule 7 of the Large and
Medium-sized Companies and Groups (Accounts and
Reports) Regulations 2008 as amended to be included in
the Directors’ Report but, which is instead included in the
Strategic Report or elsewhere in the Annual Report, is set
out in the table below.
Review of the business and future
developments of the business of
the Company
Employment policies and
employee involvement
Strategic Report on
pages 2-125
Strategic Report on page
74-79
STRATEGIC REPORT
The Strategic Report has been prepared in accordance
with the Companies Act 2006 (‘the Act’) which requires
the Company to set out a fair review of the business of
the Group during the financial year, including an analysis
of the position of the Group at the end of the financial
year and the trends and factors likely to affect the
future development, performance and position of the
business. The Strategic Report on pages 2-125 provides a
comprehensive review of Vedanta’s strategy, operations,
its financial position and its business prospects, and is
incorporated by reference into, and forms part of this
Directors’ report.
REVIEW OF BUSINESS AND FUTURE
DEVELOPMENTS
Certain items that would ordinarily need to be included
in this Directors’ report (including an indication of likely
future developments in the business of the company and
the Group) have, as permitted, instead been discussed in
the Strategic report. A review of the business and future
developments of the Group is presented in the Strategic
Report on pages 2-125.
DIRECTORS’ DECLARATION
The Directors’ declaration on page 138 is also
incorporated into this Directors’ report.
FORWARD LOOKING STATEMENTS
The Strategic Report and other sections of this Annual
Report contain forward looking statements. By their
nature, forward looking statements involve risks and
uncertainties because they relate to events and depend
on circumstances that may or may not occur in the
future and may be beyond the Company’s ability to
control or predict. Forward looking statements and past
performance are therefore not guarantees of future
performance. The information contained in the Strategic
DIVIDENDS
The Directors are not recommending a final dividend for
the year ended 31 March 2021. An interim dividend of US
cents 88.0 per ordinary share was paid during the year.
(2020: An interim dividend of US cents 70 per ordinary
share was paid for the during the year)
DIRECTORS
The Directors as at the date of this Report are Messrs
Anil Agarwal, Navin Agarwal, Geoffrey Green, and A R
Narayanaswamy. Details biographies for each of the
Directors can be found on the Company’s website at
www.vedantaresources.com
The following directors were appointed or resigned
during the year or to the date of signing this Annual
Report:
Deepak Parekh- Resigned on 31 March 2021
Ravi Rajagopal- Resigned on 31 March 2021
Ed Story- Resigned on 23 May 2021
A R Narayanaswamy- Appointed as a Director on 1 June
2021.
Details of the remuneration of the Directors of the
Company and service contracts are contained in the
Directors’ Remuneration Report on pages 139-141.
DIRECTORS’ AND OFFICERS’ INDEMNITY
The Company had in place qualifying third party
indemnity provisions for the benefit of its Directors and
officers during the year which remain in force as at the
date of this report.
DIRECTORS’ INDEMNITIES AND INSURANCE
Directors and Officers insurance cover is in place for
all Directors to provide cover against certain acts or
omissions on behalf of the Company.
MATERIAL INTEREST IN SHARES
The shares of Vedanta Resources Limited are held
by Volcan Investments Limited and its wholly owned
subsidiary, Volcan Investments Cyprus Limited as follows:
Volcan Investments Limited- 187,488,092 shares –
65.73%
Volcan Investments Cyprus Limited- 97,758,606 shares –
34.27%
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VEDANTA RESOURCES LIMITED | INTEGRATED REPORT AND ANNUAL ACCOUNTS 2020-21 | SHARE CAPITAL
As at 31 March 2021 the issued share capital of the
Company was comprised of 285,246,698 ordinary shares
of US$0.10 each and 50,000 deferred shares of £1 each.
the Company’s website at www.vedantaresources.com.
The statement outlines the steps taken by the Group
to address the risk of slavery and human trafficking
occurring within its operations and supply chains.
RIGHTS AND OBLIGATIONS ATTACHING TO
SHARES
The rights and obligations attaching to the ordinary and
deferred shares are set out in the Articles. Details of the
issued share capital together with movements in the
Company’s issued share capital during the year are shown
in Note 30 of the financial statements.
Apart from the above, each ordinary share carries the
right to one vote at general meetings of the Company.
Holders of deferred shares are not entitled to attend,
speak or vote at any general meeting of the Company,
nor are they entitled to the payment of any dividend or to
receive notice of general meetings.
Further details of the rights attaching to the deferred
shares are set out in the Articles and summarised in Note
30 of the financial statements.
FINANCIAL INSTRUMENTS
An explanation of the Group’s financial management
objectives and policies, together with details of the
Group’s exposure to price risk, credit risk, liquidity and
cash flow risk and foreign currency risk, appears in Note
25 to the financial statements.
BRANCHES
During the year and to the date of this report, the
Company has opened a branch overseas, situated in
Jharsuguda, Orissa, India.
EMPLOYEES
Information on the Group’s employees and its policies
with respect to employees can be found in the
Sustainability Report section of the Strategic Report
on page 74-79. In summary, the Group’s commitment
to communication and dialogue with employees
continues. The existence of a Group-wide intranet
enables engagement and communication with employees
throughout the Group. It also helps management to
share information, ideas and opportunities quickly
and to achieve a common awareness on the part of all
employees of the financial and economic factors affecting
the performance of the Company. Employees have
opportunities to voice their opinions and ask questions
through the Group intranet and engage in question and
answer sessions with the Executive Chairman.
SLAVERY AND HUMAN TRAFFICKING
STATEMENT
The Group’s slavery and human trafficking statement
for the year ended 31 March 2021 in accordance with
s54 of the Modern Slavery Act 2015 will be published on
DIVERSITY & INCLUSION POLICY
The Board has formalised its approach to diversity
and inclusion with its approval of the Group’s Diversity
and Inclusion Policy. The policy reinforces the Group’s
commitment to promoting an inclusive environment,
in which every member of its workforce feels valued
and respected, with a zero tolerance of discrimination
and harassment. While our commitment extends
to embracing diversity in all its forms, including but
not limited to, age, gender, ethnicity, abilities, sexual
orientation and religious beliefs, the Group’s is
specifically focussing on improving the gender balance.
The objective of the Diversity and Inclusion Policy is to
have a workforce which is representative of the countries
and communities in which we operate and where every
individual is valued, respected and empowered to utilize
their different abilities and experiences to realize their full
potential.
GENDER DIVERSITY
The Board is driving the efforts to address gender
imbalances across the Group in a holistic way by
addressing the barriers to female progression in a heavily
male dominated industry. Our Group companies have
adopted path breaking initiatives for redressing gender
imbalance. We have well defined diversity hiring targets,
as we hire from the market and premiere colleges across
the globe. Our empanelled search firms are necessarily
mandated to present diverse slates for staffing and
recruitment. Internally, we ensure that the interview
panels have the right diversity mix, ensuring fairness in
our selection practices.
Every year, we recruit a large number of graduate
engineer trainees, management trainees and associates
for Vedanta Leadership Development Program, across
the globe, at the entry level and we endeavour to
appoint at least 50% female candidates through campus
recruitment. This provides us a strong and solid base
for developing future home grown diverse leaders at
Vedanta. During the year, 35.3% of the recruitment
across the Group comprised of women, compared to
41.89% the previous year.
We also encourage the concept of ‘second career
opportunity’ for women returning from sabbaticals
and career breaks due to maternity or other family
commitments. From time to time, hiring initiatives are
launched, targeting this particular talent pool. Family
friendly policies including enhanced maternity leave,
paternity and adoption leave, benchmarked against global
best practice, have been rolled out across our businesses
in India, in excess of legal requirements and encourage
the return of women to work.
134
DIRECTORS REPORT CONTINUED... Integrated Report
Statutory reports
Financial statements
PROGRESS ON MEASURABLE OBJECTIVES
WOMEN IN SENIOR
MANAGEMENT
WOMEN RECRUITED
DURING THE YEAR
TOTAL FULL TIME
FEMALE EMPLOYEES
ACROSS THE GROUP
FY2020-21
7.96%
FY2019-20
7.85%
35.3%
41.89%
10.58%
10.93%
POLITICAL DONATIONS
It is the Board’s policy that neither the Company nor any
of its subsidiary companies outside India may, under
any circumstances, make donations or contributions to
political organisations. Subsidiaries in India may make
political donations or contributions as this is customary
in India and permitted under local legislation. Any
political donations made in India will be disclosed in the
Company’s Annual Report and Accounts.
The Company’s subsidiary, Vedanta Limited did not
purchase any electoral bonds during the financial year
ended 31 March 2021 (2020: US$ 15million). Vedanta
Limited also made no contributions through any electoral
trust during the year ended 31 March 2021. (2020
US$0.3mn)
GOING CONCERN
The Group has prepared the consolidated financial
statements on a going concern basis. The Directors have
considered a number of factors in concluding on their
going concern assessment.
The Group monitors and manages its funding position
and liquidity requirements throughout the year and
routinely forecasts its future cash flows and financial
position. The key assumptions for these forecasts include
production profiles, commodity prices and financing
activities.
The last Going concern assessment carried out for the
period ended September 30, 2020 was approved by the
Board of Directors in December, 2020. The Directors
were confident that the Group will be able to ensure
production is not materially impacted by the COVID-19
virus, that the Group will be able to roll-over or obtain
external financing as required and that prices will remain
within their expected range.
Since then, while the other mitigating actions as
highlighted in the period ended September 30, 2020
financial statements remain available to the Group,
following recent significant developments have had a
positive bearing on the liquidity and company’s ability to
continue as going concern;
The Group has raised $1 Bn Bonds in December 2020 to
take out upcoming maturity of bonds in June’21 while
providing certain liquidity for other repayments in Q4
FY21.
On 24th December 2020, VRL purchased on the market
185,000,000 shares of Vedanta Limited (VEDL) at a
price of `159.94 per share, increasing its overall stake
from 50.13% to 55.11% of the total paid-up share capital
of VEDL. In January 2021, VRL announced a voluntary
open offer (VOO) to acquire an additional 10% stake in
VEDL which was subsequently increased to an offer for
acquiring 17.51% of paid up share capital of VEDL at a
price of `235 per share in March 2021.
In April 2021, 374,231,161 equity shares representing
10.1% of paid up share capital of Vedanta Limited
were validly tendered in the voluntary open offer. The
acquisition of such equity shares was completed, and
consideration for such acquisition was paid in April 2021.
Post this acquisition, Company’s shareholding in Vedanta
Limited increased from current 55.1% to 65.2%
For this stake increase in VEDL by VRL through creeping
acquisition and voluntary open offer (VOO):
The Group raised $1bn through private financing in
December 2020, $0.4bn drawn in December for the
creeping acquisition of 4.98% Vedanta Limited stake,
$0.1bn drawn in April 2021 for the VOO.
$1.2bn Bond raised in February 2021 @8.95% for stake
purchase in Vedanta Limited under VOO/refinancing,
c. $0.8bn used for VOO in April 2021; and
c. $0.4bn Term Loan facility entered with Credit Suisse
and Standard Chartered.
The Directors consider that the expected operating cash
flows of the Group combined with the current finance
facilities which are in place give them confidence that
the Group has adequate resources to continue as a going
concern.
The Directors have considered the Group’s ability
to continue as a going concern in the period to 30
September 2022 (“the going concern period”) under both
a base case and a downside case.
The downside case assumes, amongst other sensitivities,
delayed ramp-up and re-opening of projects, deferment
of additional capital expenditure and conservative
assumptions of uncommitted refinancing.
COVENANT COMPLIANCE
The Group’s financing facilities, including bank loans and
bonds, contain covenants requiring the Group to maintain
specified financial ratios. The Group has complied with all
the covenant requirements till 31st March 2021.
Management notes that the Group has previously
obtained covenant waivers, including in response to
the appointment of a provisional liquidator at KCM.
Additionally, the Group has recently successfully
amended the covenants for its listed bonds. The
Directors of the Group are confident that they will be able
to execute mitigating actions (see below) to ensure that
the Group avoids, or secures waivers or relaxations for
135
VEDANTA RESOURCES LIMITED | INTEGRATED REPORT AND ANNUAL ACCOUNTS 2020-21 | future period breaches, if any, of its covenants during the
going concern period.
MITIGATING ACTIONS
The mitigating options available to the Group and
Company to address the uncertainties in relation to going
concern include:
Out of the $1.2 bn bonds raised in February 2021, c.
$0.4bn available for refinancing/ interest servicing at
VRL. Out of $1.0bn private financing in December’20,
$0.5bn is undrawn. Further, $0.2bn one year term loans
tied up with two foreign banks.
Vedanta Limited entered in to a ~$1.4bn long term
syndicated long term facility agreement with overall
maturity of seven years with State Bank of India, Bank
of Baroda, Indian Bank and Yes Bank as arrangers. Out
of ~$1.4bn, ~$1.2bn has been drawn till March’21 and
further ~$0.2bn will be drawn in Q1 FY21.
Execution of an off-take agreement covering certain
future production and amounting potentially to c.$1bn.
The Group is currently negotiating with a number
of interested bidders an off-take agreement, under
which the Group would receive an advance payment
in return for supply of certain future production.
However, no agreement has been concluded and there
is a therefore uncertainty as to the Group’s ability to
access these funds.
Extension of working capital facilities and rollover of
commercial papers. As at 31 March 2021, the Group
had unutilised working capital facilities amounting to
c.$1.8bn and commercial papers in issue amounting
to c.$0.3bn. These facilities are not committed
for the full duration of the going concern period to
September 2022, but rather must be extended or
rolled over. There is therefore a risk that, in adverse
market conditions, the Group would not be able to
extend or roll over these facilities. However, the
Directors assess that the Group has a strong record of
extending and rolling over these short-term facilities
and has historically had significantly higher levels of
commercial papers in issue.
Access to supplier credit and customer advances. As
at 31 March 2021, the Group had c.$1.1bn of supplier’s
credit and c.$0.7bn of advances from customers.
These financing arrangements are integral to the
business of certain Group divisions but are not
committed for the full duration of the going concern
period. There is therefore a risk that the Group will
not be able to access these financing arrangements in
the future. Nevertheless, the Directors note that the
Group has in the past consistently obtained supplier
credit and customer advances at current levels.
CONCLUSION
Notwithstanding the uncertainties described above,
the Directors have confidence in Group’s ability to
execute sufficient mitigating actions. Based on these
considerations, the Directors have a reasonable
136
expectation that the Group and the Company will meet
its commitments as they fall due over the going concern
period. Accordingly, the Directors continue to adopt the
going concern basis in preparing the Group’s consolidated
financial statements and Company’s standalone financial
statements.
POST BALANCE SHEET EVENTS
The Company (“Acquirer”) together with Twin Star
Holdings Limited, Vedanta Holdings Mauritius Limited
and Vedanta Holdings Mauritius II Limited, as persons
acting in concert with the Acquirer (“PACs”), acquired
374,231,161 equity shares of Vedanta Limited under the
voluntary open offer made to the public shareholders
of Vedanta Limited in accordance with the Securities
and Exchange Board of India (Substantial Acquisition
of Shares and Takeovers) Regulations, 2011, thereby
increasing their aggregate shareholding in Vedanta
Limited from 55.29% to 65.39%.
There are no other material adjusting or non-adjusting
subsequent events, except as already disclosed.
Details of significant events since the balance sheet date
are disclosed in Note 36 to the financial statements.
RESEARCH AND DEVELOPMENT
The Group’s business units carry out research and
development activities necessary to further their
options.
AGREEMENTS: CHANGE OF CONTROL
There are a number of agreements that take effect, alter
or terminate upon a change of control of the Company,
(defined as a transfer of 35% shareholding) such as
commercial contracts, bank loan agreements and capital
market borrowing. The following are considered to be
significant in terms of their likely impact on the business
of the Group as a whole:
1.
The US$1,000 million 6.375% bonds due in 2022,
US$400million 8% bonds due in 2023; US$500
million 7.125% bonds due in 2023, US$1,000 million
6.125% bonds due in 2024, US$600million 9.25%
bonds due in 2026, US $1000 million 13.875% bond
due in 2024 and US $1200 million 8.95% bond due
in 2025 where a change of control together with a
rating decline requires the Company to make an
offer to purchase all of the outstanding bonds at
101% of the principal amount together with any
accrued and unpaid interest.
2.
Under various other financing facilities entered
into by the Group where a change of control gives
the majority lenders the right to declare the loans
payable.
There are no agreements between the Company and
any of its Directors or employees that provide for
compensation for loss of office or employment that
occurs because of a takeover bid.
DIRECTORS REPORT CONTINUED... Integrated Report
Statutory reports
Financial statements
SECR DISCLOSURE WITHIN THE DIRECTORS
REPORT.
Whilst we provide global Greenhouse gas and energy
data within this report, we are a private limited group
whose operations and turnover are based overseas and
as such fall outside of the reporting requirements for an
unquoted company. The UK element of our operations
falls below both the turnover and employee thresholds
for a large company and as such no SECR disclosures are
required or made.
GREENHOUSE GAS (GHG) EMISSIONS
REPORTING
Climate risk is recognized as a global risk. Since the
Paris accord, significant efforts are made by global
communities to mitigate and adapt climate change
impacts. Last year, at Vedanta, we had formulated
a Carbon Forum, under the leadership of our Power
business head, to develop strategies and actions
to manage climate related business risk. The forum
is comprised of the chief operating officers of our
businesses. The Group now has a Climate related Risk
Management Policy and Strategy in place. In addition to
the Carbon Forum, climate related business risk is on the
Group level risk register which enables us to review the
progress made on climate related risk at the highest risk
committee level of the organization.
We calculate and report greenhouse gas inventory i.e.
Scope 1 (process emissions and other direct emissions)
and Scope 2 (purchased electricity) as defined under the
World Business Council for Sustainable Development
(WBCSD) and World Resource Institute (WRI) GHG
protocols.
GHG Emissions (million TCO2e)
Scope 1
Scope 2
Total
GHG EMISSIONS (TONNES OF CO2)
Business
Zinc India
Zinc International
Oil & Gas
Iron Ore
Ports
Copper India & Australia
Copper Zambia
Aluminium
Power
Steel
Total
FY2021
58.93
1.31
60.02
FY2020
57.45
1.81
59.26
FY2019
55.12
3.51
58.63
FY2021
FY2020
Scope 1
4,582,808
53,629
1,970,638
1,689,317
Scope 2
307,059
164,686
144,439
1536
4,1284
65,227
35,514,744
12,225,649
2,856,311
520,231
7,473
95,963
Scope 1
4,480,887
186,082
1,841,600
1,750,789
119
-
34,658,486
11,804,,528
2,719,295
Scope 2
253,756
496,104
134,987
762
Included in Iron
Ore numbers
1,152
-
804,257
2,775
113,155
58,934,380
1,306,614
57,441787
1,806,948
The GHG intensity ratio below expresses Vedanta’s annual GHG emissions in relation to the Group’s consolidated
revenue.
GHG INTENSITY RATIO (TONNES OF CO2/MN US$)
Business
Zinc India
Zinc International
Oil & Gas
Iron Ore
Ports
Copper India & Australia
Copper Zambia
Aluminium
Power
Steel
Consolidated Group
FY2021
1,651.98
593.25
2,081.77
2,767.35
-
72.51
-
9,323.41
16,873.27
4,686.15
5,173.57
FY 2020
1,847
1,547
1,106
3,582
-
1
-
9,454
14,277
4,689
5,025
137
VEDANTA RESOURCES LIMITED | INTEGRATED REPORT AND ANNUAL ACCOUNTS 2020-21 | STATEMENT OF DIRECTORS’ RESPONSIBILITIES
IN RESPECT OF THE STRATEGIC REPORT,
DIRECTORS’ REPORT AND FINANCIAL
STATEMENTS
The directors are responsible for preparing the Strategic
Report, Directors’ Report and the financial statements in
accordance with UK law and regulations.
The directors are required by the UK Companies Act
2006 to prepare financial statements for each financial
year that give a true and fair view of the financial position
of the Group and the parent company and the financial
performance and cash flows of the Group and parent
company for that period. Under that law they have
elected to prepare the consolidated financial statements
in accordance with International Financial Reporting
Standards (IFRS) and applicable law and have elected
to prepare the parent company financial statements
in accordance with applicable United Kingdom law and
United Kingdom accounting standards (United Kingdom
generally accepted accounting practice), including FRS
101 “Reduced Disclosure Framework”).
prepare the financial statements on the going concern
basis unless it is inappropriate to presume that the
Company will continue in business.
The directors are responsible for keeping adequate
accounting records that are sufficient to show and
explain the Group and parent company’s transactions
and disclose with reasonable accuracy at any time the
financial position of the Group and parent company and
enable them to ensure that the financial statements
comply with the Companies Act 2006. They are also
responsible for safeguarding the assets of the Company
and hence for taking reasonable steps for the prevention
and detection of fraud and other irregularities.
Having made the requisite enquiries, so far as the
directors are aware, there is no relevant audit information
(as defined by Section 418(3) of the Companies Act 2006)
of which the Company’s auditors are unaware, and the
directors have taken all the steps they ought to have
taken to make themselves aware of any relevant audit
information and to establish that the Company’s auditors
are aware of that information.
Under company law, the directors must not approve the
financial statements unless they are satisfied that they
give a true and fair view of the state of affairs and of the
profit or loss of the Group and Company for that period.
In preparing the parent company financial statements,
the directors are required to:
select suitable accounting policies and then apply
them consistently;
The directors are also responsible for preparing a
Strategic Report and Directors’ Report that comply
with that law and those regulations. The directors are
responsible for the maintenance and integrity of the
corporate and financial information included on the
Company’s website. Legislation in the United Kingdom
governing the preparation and dissemination of
financial statements may differ from legislation in other
jurisdictions.
make judgments and accounting estimates that are
The Directors confirm that to the best of their knowledge:
reasonable and prudent;
state whether Financial Reporting Standard 101
‘Reduced Disclosure Framework’ has been followed,
subject to any material departures disclosed and
explained in the financial statements;
prepare the financial statements on the going concern
basis unless it is inappropriate to presume that the
Company will continue in business.
In preparing the Group financial statements, IAS 1
requires that the directors:
properly select and apply accounting policies;
present information, including accounting policies, in
a manner that provides relevant, reliable, comparable
and understandable information;
provide additional disclosures when compliance with
the specific requirements in IFRSs are insufficient to
enable users to understand the impact of particular
transactions, other events and conditions on the
Group’s financial position and financial performance; and
The consolidated financial statements, prepared
in accordance with IFRS and in accordance with the
provisions of the Companies Act 2006, give a true and
fair view of the assets, liabilities, financial position and
profit or loss of the Group.
The parent company financial statements, prepared in
accordance with United Kingdom generally accepted
accounting practice, give a true and fair view of the
assets, liabilities and financial position of the Company.
The annual report and financial statements, including
the Strategic Report and Directors’ Report, includes a
fair review of the development and performance of the
business and the position of the Group, together with a
description of the principal risks and uncertainties that
they face.
Signed on behalf of the Board
Deepak Kumar
Company Secretary
Vedanta Resources Limited
Registered no: 4740415
138
DIRECTORS REPORT CONTINUED... Integrated Report
Statutory reports
Financial statements
Remuneration Report
During the year, the Remuneration Committee took up various matters pertaining to the remuneration of the Executive
Directors of the Company, which included determining the remuneration for the year 2020-21.
The Annual Report on Remuneration, which provides details of the remuneration earned by Directors in the past
financial year has been produced in the relevant sections of the report.
Yours sincerely,
Geoffrey Green
Director- Vedanta Resources Limited
Directors’ Remuneration Policy
Report
POLICY OVERVIEW
The key objective of the Group’s broad remuneration
policy is to ensure that competitive and fair awards are
linked to key deliverables and are also aligned with market
practice and investor expectations.
The company ensures that remuneration policies and
practices are designed to attract, retain and motivate
the Executive Directors and the senior management
group, while focusing on the delivery of the Group’s
strategic and business objectives. The key focus area is
alignment of the interests of the Executive Directors and
the senior management group with the strategic goals of
the company and the interest of the investors to build a
sustainable performance culture.
When setting remuneration for the Executive Directors,
various aspects are taken into account such as the
business performance, developments in the natural
resources sector and, considering that the majority of the
Group’s operations are based in India, similar information
for high-performing Indian companies.
In setting the policy for Executive Directors’
remuneration, the company considers the pay and
employment conditions across the Group, including
annual base compensation increases across the general
employee population and the overall spend on annual
bonuses. Employees may be eligible to participate in the
annual bonus arrangement and receive awards under
the LTIP. Opportunities and performance metrics may
vary by employee level, with specific business metrics
incorporated where possible.
The company does not formally consult with employees
in respect of the design of the Executive Directors’
Remuneration Policy, although the company will keep this
under review.
There is a formal remuneration policy which details the
various elements of pay, performance measures and their
linkage to objective and the maximum opportunity of
each element for the Executive Directors.
SERVICE CONTRACTS FOR EXECUTIVE
DIRECTORS
The board reviews the contractual terms for new
Executive Directors to ensure these reflect best practice.
Mr Anil Agarwal is employed under a contract of
employment with the Company for a rolling-term, but
which may be terminated by not less than six months’
notice. Provision is made in Mr Anil Agarwal’s contract for
payment to be made in lieu of notice on termination which
is equal to base compensation.
Mr Navin Agarwal has a letter of appointment with
the Company which is a rolling contract and may be
terminated by giving six months’ notice. Mr Navin Agarwal
has a contact of employment with Vedanta Limited which
expires on 31 July 2023, with a notice period of three
months or base compensation in lieu thereof.
LETTERS OF APPOINTMENT FOR NON-
EXECUTIVE DIRECTORS
The Non-Executive Directors have letters of
appointment which may be terminated by either party
giving three months’ notice. The Non-Executive
Directors’ letters of appointment set out the time
requirements expected of them in the performance
of their duties. Non-Executive Directors are normally
expected to spend at least 20 days per year in the
performance of their duties for the Company. There is
no provision in the letters of appointment of the Non-
Executive Directors for compensation to be paid in the
event of early termination.
139
VEDANTA RESOURCES LIMITED | INTEGRATED REPORT AND ANNUAL ACCOUNTS 2020-21 | Annual Report on Remuneration
The board has access to remuneration advisor as and when the advice is needed.
Single total figure for
remuneration
The table below summarises Directors’ remuneration received during the year ended 31 March 2021 and the prior year
for comparison.
Base
compensation
including
salary or fees
£000
Taxable
Benefits
£000
Pension
£0006
Annual bonus
£0007
Long-term
incentives
£000
Total
£0008,9,10
Executive Directors
Anil Agarwal 1
Navin Agarwal 2,3
Srinivasa Venkatakrishnan 4
Non-Executive Directors 5
Geoffrey Green
Ed Story
Deepak Parekh
Ravi Rajagopal
2020/21
2019/20
2020/21
2019/20
2020/21
2019/20
2020/21
2019/20
2020/21
2019/20
2020/21
2019/20
2020/21
2019/20
1439
1656
983
1189
105
1000
115
115
95
95
133
133
115
115
NOTES
1.
Mr Anil Agarwal’s taxable benefits in kind include
provision of medical benefits;
Mr Navin Agarwal is based out of India and is
drawing the majority of his remuneration in INR.
For the financial year ended 31 March 2021, Mr
Navin Agarwal received a Vedanta Limited salary
of `1,48,031,671 (including discretionary award of
`4,00,00,000) , Vedanta Resources Limited fees of
£85,000, Hindustan Zinc Limited fees of `2,75,000 &
Commission of `1,500,000.
Mr Navin Agarwal’s taxable benefits in kind include
housing and related benefits and use of a car and
driver.
Mr. Srinivasan Venkatakrishnan’s taxable benefits
in kind include medical provision in UK. Mr. Venkat
resigned from the organization and exited at the
close of business hours on April 5, 2020.
2.
3.
4.
140
6
7
175
98
1
115
-
-
-
-
-
-
-
-
5.
6.
7.
8.
-
-
61
65
2
250
-
-
-
-
-
-
-
-
-
988
-
646
-
232
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
1445
2650
1219
1998
108
1597
115
115
95
95
133
133
115
115
Non-Executive Directors are reimbursed for
expenses incurred while on Company business.
No other benefits are provided to Non-Executive
Directors
All of the Group’s pension schemes are based on
cash contribution and do not confirm an entitlement
to a defined benefit. Pension contributions are
made into the Executive Vice Chairman and Chief
Executive Officer’s personal pension schemes (or
local provident fund) and will become payable on
the retirement. The Executive Chairman does not
receive pension benefits.
Amounts shown in the table relate to the payment of
the annual bonus made to the Executive Directors in
FY 2019-20.
Additionally, In FY’2020-21, Mr. Anil Agarwal was
paid a discretionary award of GBP 869,000 and
Mr. Navin Agarwal was paid a discretionary award of
Integrated Report
Statutory reports
Financial statements
`4,00,00,000. This has been awarded to employees
associated with the company as in November 2020,
who relentlessly worked during the pandemic times
and supported the organization.
NIC Contribution as per the statutory requirement is
made for all Executive and Non-Executive Directors
The exchange rate applicable as at 31 March 2020
was `90.1024 to £1 & USD 1.2715 to £1 and at 31
March 2021 was `96.8653to £1 & USD 1.3071to £1
9.
10.
EXTERNAL APPOINTMENTS
The Board’s policy on external appointments is that an
Executive Director may, only with the prior approval of
the Board, accept an appointment external to the Group.
None of the other executive directors currently receive
fees for non-executive appointments with other
companies.
PAYMENTS TO PAST DIRECTORS
No payments were made to past Executive Directors
during the year ended 31 March 2021
PAYMENTS FOR LOSS OF OFFICE
No payments were made in respect of loss of office during
the year ended 31 March 2021.
NON-EXECUTIVE DIRECTORS’ FEES
As detailed in the Remuneration Policy, fees for the Non-
Executive Directors are determined by the Board.
APPROVAL OF THE DIRECTORS’ REMUNERATION
REPORT
The Directors’ Remuneration Report, including both the
Directors’ Remuneration Policy Report and the Annual
Report on Remuneration, was approved by the Board on
18 June 2021
Geoffrey Green
Director- Vedanta Resources Limited
141
VEDANTA RESOURCES LIMITED | INTEGRATED REPORT AND ANNUAL ACCOUNTS 2020-21 | Independent auditor’s report to the
members of Vedanta Resources Limited
For the purpose of this report, the terms “we” and
“our” denote MHA MacIntyre Hudson in relation to
UK legal, professional and regulatory responsibilities
and reporting obligations to the members of Vedanta
Resources Limited. For the purposes of the tables in
this report that sets out the key audit matters and how
our audit addressed the key audit matters, the terms
“we” and “our” refer to MHA MacIntyre Hudson and/or
our component teams. The Group financial statements,
as defined below, consolidate the accounts of Vedanta
Resources Limited and its subsidiaries (the “Group”) and
include the Group’s share of associates. The “Parent
Company” is defined as Vedanta Resources Limited. The
relevant legislation governing the Parent Company is the
United Kingdom Companies Act 2006 (“Companies Act
2006”).
OPINION
We have audited the financial statements of Vedanta
Resources Limited.
The financial statements that we have audited comprise:
Consolidated Income Statement for the year ended 31
March 2021.
Consolidated Statement of Comprehensive Income
for the year ended 31 March 2021.
Consolidated Statement of Financial Position as at 31
March 2021.
Consolidated Cash Flow Statement for the year ended
31 March 2021.
Consolidated Statement of Changes In Equity for the
year ended 31 March 2021.
Notes 1 to 40 of the consolidated financial statements,
including the accounting policies.
Company Balance Sheet as at 31 March 2021.
Company Statement of Changes in Equity for the year
ended 31 March 2021.
Notes 1 to 12 of the Company financial statements,
including the accounting policies.
The financial reporting framework that has been applied
in their preparation of the Group financial statements is
applicable law and international accounting standards in
conformity with the requirements of the Companies Act
2006.
The financial reporting framework that has been applied
in the preparation of the Parent Company financial
statements is applicable law and United Kingdom
Accounting Standards, including FRS 101 Reduced
Disclosure Framework (United Kingdom Generally
Accepted Accounting Practice).
In our opinion:
the financial statements give a true and fair view of
the state of the Group’s and of the Parent Company’s
affairs as at 31 March 2021 and of the Group’s profit
and cash flows for the year then ended;
the Group financial statements have been properly
prepared in accordance international accounting
standards in conformity with the requirements of the
Companies Act 2006;
the Parent Company financial statements have been
properly prepared in accordance with United Kingdom
Generally Accepted Accounting Practice ; and
the financial statements have been prepared in
accordance with the requirements of the Companies
Act 2006.
Our opinion is consistent with our reporting to the Audit
Committee.
BASIS FOR OPINION
We conducted our audit in accordance with International
Standards on Auditing (UK) (ISAs (UK)) and applicable law.
Our responsibilities under those standards are further
described in the Auditor’s Responsibilities for the Audit
of the Financial Statements section of our report. We
are independent of the Group in accordance with the
ethical requirements that are relevant to our audit of the
financial statements in the UK, including the FRC’s Ethical
Standard, and we have fulfilled our ethical responsibilities
in accordance with those requirements. We believe that
the audit evidence we have obtained is sufficient and
appropriate to provide a basis for our opinion.
CONCLUSIONS RELATING TO GOING CONCERN
In auditing the financial statements, we have concluded
that the Directors’ use of the going concern basis of
accounting in the preparation of the financial statements
is appropriate. Our evaluation of the Directors’
assessment of the entity’s ability to continue to adopt the
going concern basis of accounting included:
The consideration of inherent risks to the Company’s
operations and specifically its business model.
The evaluation of how those risks might impact on the
Company’s available financial resources.
Where additional resources may be required the
reasonableness and practicality of the assumptions
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Financial statements
made by the Directors when assessing the probability
and likelihood of those resources becoming available.
Liquidity considerations including examination of cash
flow projections.
Solvency considerations including examination of
budgets and forecasts and their basis of preparation,
including review and assessment of the model’s
mechanical accuracy and the reasonableness of
assumptions included within.
Consideration of terms and conditions attaching
to financing facilities in place as at the date of the
approval of the financial statements and compliance
with covenants attaching to those facilities both up
to the date of the approval of the financial statements
and into the forecast period.
Consideration of availability of funds required to settle
funding facilities due for repayment during the going
concern review period. Assessing the reasonableness
and practicality of the mitigation measures identified
by management in their conservative case scenario
and considered by them in arriving at their conclusions
about the existence of any uncertainties in respect of
going concern.
Viability assessment including consideration of
reserve levels and business plans.
Based on the work we have performed, we have not
identified any material uncertainties relating to events
or conditions that, individually or collectively, may cast
significant doubt on the Company’s ability to continue
as a going concern for a period of at least twelve months
from when the financial statements are authorised for
issue.
Our responsibilities and the responsibilities of the
directors with respect to going concern are described in
the relevant sections of this report.
OVERVIEW OF OUR AUDIT APPROACH
Materiality
Group
Parent
2021
$95m
$18.7m
2020
$55m 2.5% of EBITDA (2020 2% of EBITDA)
$17.56m 0.5% of gross assets capped by group materiality
allocation (2020 1% of equity)
Reporting threshold
$4.8m
$2.7m Threshold for reporting to those charged with
governance
KEY AUDIT MATTERS
SCOPE
Valuation of Konkola Copper Mines plc (KCM) receivables and equity investment
Rajasthan block Profit Sharing Contract (PSC) extension
Impairment of property, plant and equipment and exploration and evaluation assets
Taxation claims and exposures
Deferred taxation and Minimum Alternative Tax (MAT) credit recoverability
Completeness of related party relationships and transactions
Management override of controls in relation to revenue recognition
We directed and supervised component auditors in India to report on the entities which are
considered material components and these were as follows:
Vedanta Limited
Cairn India Holdings Limited
Talwandi Sabo Power Limited
Hindustan Zinc Limited
Bharat Aluminium Company Limited
ESL Steel Limited
Material components were determined based on:
1) financial significance of the component to the Group as a whole; and
2)
Our audit scope results in all major operations of the Group being subject to audit work. Full
scope audit assignments covered in excess of 85% of the Group’s Revenue, 89% of the Group’s
EBITDA and 92% of the Group’s Net Assets. In addition to those subsidiaries subject to full
scope audits by either ourselves or component auditors, additional coverage was obtained
through specific audit procedures being carried out on certain items and group analytical review
of the non-material components.
assessment of the risk of material misstatements applicable to each component.
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VEDANTA RESOURCES LIMITED | INTEGRATED REPORT AND ANNUAL ACCOUNTS 2020-21 | KEY AUDIT MATTERS
Key Audit Matters are those matters that, in our
professional judgement, were of most significance in
our audit of the financial statements of the current
period and include the most significant assessed risks
of material misstatement (whether or not due to fraud)
that we identified. These matters included those
matters which had the greatest effect on: the overall
audit strategy, the allocation of resources in the audit;
and directing the efforts of the engagement team and,
as required for public interest entities, our results from
those procedures. These matters were addressed in
the context of our audit of the financial statements as a
whole, and in forming our opinion thereon, and we do not
provide a separate opinion on these matters.
VALUATION OF KCM RECEIVABLES AND EQUITY INVESTMENT
Key audit matter description As at 31 March 2021, KCM related receivables with a carrying value of $682 million (2020: $660
million) were recognised in the financial statements of Vedanta Resources Limited, whilst the
value of the equity investment in KCM was $Nil (2020 $Nil).
We draw attention to note 3b of the accompanying consolidated financial statements which
describes the uncertainty arising in respect of the valuation of KCM related receivables and
equity interests a result of the liquidation proceedings initiated by KCM’s minority shareholder,
ZCCM Investments Holdings Plc (“ZCCM”), against KCM. As at 31 March 2021, the carrying value
of KCM related receivables was $682 million (2020: $660 million) and the equity interest in KCM
was $Nil (2020: $Nil). Our opinion is not modified in respect of this matter.
Due to the high level of subjectivity and material nature of this receivable, we have designated
this as a key audit matter.
We have obtained an understanding of the liquidation proceedings through inquiries of the
Company’s management and review internal reports in relation to the matter.
We have obtained and reviewed legal opinions obtained in the year from management, and
assessed the competency of those providing legal opinions, and have considered how this has
impacted on the fair value calculation.
We engaged in discussion and challenged the approach of management appointed experts
appointed to perform a fair value exercise in relation to the KCM economic interest.
We performed procedures to assess the reasonableness of the key assumptions included in the
valuation report, and the view taken by management in respect of the final value to be included
in the financial statements.
We engaged directly with third party valuation specialists, who formed their own opinion on the
matter, to ensure that the conclusions reached by management and their experts were in line
with those of an independent party.
We concluded that the fair value determined is reasonable and that the uncertainties
surrounding the valuation have been appropriately disclosed in the financial statements.
How the scope of our audit
responded to the key audit
matter
Key Observations
PRODUCTION SHARING CONTRACT EXTENSION FOR THE RAJASTHAN OIL BLOCK
Key audit matter description We draw attention to note 2(c)(i)(viii) of the accompanying IFRS financial statements which
describes the uncertainty arising out of the demands that have been raised on the Group, with
respect to government’s share of profit oil by the Director General of Hydrocarbons and one of
the pre-conditions for the extension of the Production Sharing Contract (PSC) for the Rajasthan
oil block is the settlement of these demands. The Government has granted permission to the
Group to continue operations in the block till 31 July 2021 or signing of the PSC addendum,
whichever is earlier. The Group, based on external legal advice, believes it is in compliance with
the necessary conditions to secure an extension of this PSC and that the demands are untenable
and hence no provision is required in respect of these demands. Our opinion is not modified in
respect of this matter.
Were the Director General of Hydrocarbons’ demands be allowed by the competent courts, that
would have a significant financial impact on the Group financial statements. Due to continued
uncertainty surrounding the licence extension we have considered this as a key audit matter.
We have obtained an understanding of the matter through inquiries of the Company’s
management and review internal reports in relation to the matter.
We have obtained and reviewed legal opinions obtained in the year from management, and
assessed the competency of those providing legal opinions, and have considered how this has
impacted on assessment of the matter.
We have reviewed workpapers and conclusions reached by component auditors in relation to
PSC extension and demands made by the Director General of Hydrocarbons, and appropriately
challenged the conclusions reached.
We concluded that the treatment and disclosure adopted by management is appropriate.
How the scope of our audit
responded to the key audit
matter
Key Observations
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Financial statements
IMPAIRMENT OF PROPERTY PLANT AND EQUIPMENT AND EXPLORATION AND EVALUATION ASSETS
Key audit matter description The recoverability of PP&E and E&E assets was considered a key audit matter due to the
How the scope of our audit
responded to the key audit
matter
Key Observations
significant carrying value at 31 March 2021 $13,302 million (2020: $13,245 million). There is a
history in the Group of significant impairment charges due to the nature of operations, volatility
of commodity prices and various legal and licencing challenges across the Group.
We have obtained an understanding of the Group’s process for identifying indicators of
impairment, and when identified, their methodology for measuring the fair value of the Cash
Generating Unit under review.
We made our own assessments of the presence of impairment indicators considering recent
trends in commodity price, and legal developments at the various operating components.
Where impairment indicators were identified, we obtained and reviewed audit procedures
completed by component auditors, assessing the appropriateness of the methodology and
conclusions reached.
As part of this review, we reviewed models prepared by management in their assessment of net
present value of PP&E and E&E assets.
We concluded that management’s assessment is appropriate and as detailed in note 2(c)(i)(vii) to
the financial statements.
TAXATION CLAIMS AND EXPOSURES
Key audit matter description The Group is subject to various tax disputes, mainly with the Indian authorities, which have
been ongoing for numerous years. A material risk exists that the provision for these disputes is
insufficient, or the contingent liability disclosed is understated, due to the inherent uncertainty
in such disputes and the requirement for management judgements on whether the tax risk is
remote, possible, or probable.
The most material disputes relate to:
1.
2.
Indirect Transfer Issue and the withholding tax liability arising on the acquisition of shares of
Cairn India Holdings Ltd from Cairn UK Holdings Ltd. In December 2020 the case was ruled
in favour of the taxpayer at The Permanent Court of Arbitration at The Hague, though there
are reports that the Indian authorities are appealing the decision.
Recomputed tax holiday claim on plants engaged in processing and casting zinc and lead
ingots from zinc and lead cathodes and silver from silver mud. The majority of this dispute
was classified as possible, which is the same classification as the prior year.
3.
Rajasthan VAT Matter - Writ petition relating to sales tax. This was deemed as a remote tax
risk by management.
We have engaged internal tax specialists to assist the audit team in performing work over all tax
related matters.
We have obtained an understanding of the processes in place to identify and assess risk in
relation to tax disputes.
We have critically reviewed detailed papers prepared by management assessing such risks and
concluding on the appropriate accounting treatment of any potential liabilities.
We have, along with local component auditors, reviewed the positions taken by management,
and the relevant legal opinions, in respect of the major material taxation matters.
We concluded that management’s assessment is appropriate and as detailed in notes 11 and
33d.
How the scope of our audit
responded to the key audit
matter
Key Observations
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VEDANTA RESOURCES LIMITED | INTEGRATED REPORT AND ANNUAL ACCOUNTS 2020-21 | DEFERRED TAXATIONS AND MINIMUM ALTERNATIVE TAX (MAT) CREDIT RECOVERABILITY
Key audit matter description The assessment and recoverability of deferred tax assets and MAT assets requires key
management judgement regarding future suitable profits arising within a relevant timeframe,
thus an inherent uncertainty and significant risk exists.
The three most material elements of the recognised net deferred tax asset are MAT Credit
Entitlement ($1,125m asset), Unabsorbed depreciation and business losses ($640m asset) and
Property, Plant and Equipment, Exploration and Evaluation and other intangible assets ($1,096m
liability).
We have obtained an understanding of the relevant controls in relation to the Group’s deferred
tax and MAT calculations.
We have reviewed the completeness and accuracy of movements in deferred tax balances in
light of the relevant accounting requirements.
We have critically assessed the MAT recoverability information provided to us regarding the key
risk in Vedanta Limited.
We have challenged management’s judgements and significant assumptions in relation to the
movements in the deferred tax and MAT balances by way of inquiry of management, including at
local component level, and inspection of relevant documentation involving our tax specialists.
We have analysed the Group income tax reconciliation and determined whether there were any
unidentified temporary tax differences,
(including where certain material losses have not been recognised historically, though are now
being recognised by ESL).
We have evaluated deferred tax balances and verified their mathematical accuracy including
related to movements in the carrying amount of assets and liabilities used in management’s
calculation were correct.
We have reviewed the accuracy and completeness of the Group’s disclosures in respect of
deferred tax and MAT.
We concluded that management’s assessment is appropriate and as detailed in note 11c.
How the scope of our audit
responded to the key audit
matter
Key Observations
COMPLETENESS OF RELATED PARTY RELATIONSHIPS AND TRANSACTIONS
Key audit matter description The Group enters into a number of trading, financing and investing transactions with related
parties, including with key management personnel and with entities in which key management
have interest and exercise a significant influence or control.
There is a risk in respect of the existence of unidentified or undisclosed related parties and
transactions, including the risk relating to significant transactions outside the normal course of
business that could involve related parties.
We therefore considered completeness of related party transactions to be a Key Audit Matter
in light of the potential for unidentified or undisclosed related party transactions. This risk was
considered greatest in respect of transactions outside the normal course of business or those
entered into that are not recorded or disclosed by management in accordance with IAS 24.
We have reviewed and evaluated management’s process for identifying and recording related
parties and approving related party transactions.
We have conducted review procedures of the audit work completed by component auditors to
ensure the audit risk has been suitably addressed and aligns with the Group methodology.
We have reviewed minutes of meetings of the Board of Directors and relevant sub-committees
to assess whether there are new related party transactions entered during the financial year that
are significant or outside the normal course of business.
On Vedanta Resources Limited we have used our data analytics tool to search for transactions
which have not been included in the related party disclosures.
We have challenged management on potential counterparties identified which may include
linkages to the Group to establish whether they should have been identified as related parties.
We have performed independent searches of the Board of Directors’ and other key management
personnel’s other appointments and shareholdings.
We have conducted a review of the whistleblowing reports made to those charged with
governance for any signs of undisclosed related party transactions or relationships.
We have undertaken a review of press releases and media coverage to detect any potential
undisclosed related party transactions either within or outside of the Group.
We have reviewed the Group financial statements disclosures of related parties to ensure it is
compliant with the requirements of IAS 24.
We are satisfied that related party transactions are appropriately accounted for, and that
required disclosures in accordance with IAS 24 have been made.
How the scope of our audit
responded to the key audit
matter
Key Observations
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Statutory reports
Financial statements
MANAGEMENT OVERRIDE OF CONTROLS IN RELATION TO REVENUE RECOGNITION
Key audit matter description The Group has a diverse range of revenue streams, some of which are subject to complex
calculations and recognition criteria. Revenue for the year ended 31 March 2021 was $11,722
million (2020: $11,790 million).
Revenue recognition criteria for the Group’s material income streams is described in the note
2a iii. In our opinion, the complexity and diversity of revenue recognised means that it is subject
increased risk of material misstatement, either through fraud or error, and it has therefore been
highlighted as a Key Audit Matter.
All major sources of revenue come from components where a component auditor was engaged
to report to us. As part of their procedures, which we reviewed and critically assessed, the
component auditors completed the following:
Performed walkthroughs of revenue recognition processes at all full scope components, and at
those components where revenue was highlighted as a specific risk area.
Performed detailed controls testing, including IT controls, to confirm the operating
effectiveness.
Reviewed and inspected agreements in respect to assess reasonability of income recognised in
Power businesses.
Reviewed and inspected terms of profit-sharing agreements to assess reasonability of revenue
recognised in Oil and Gas businesses.
Designed tests of detail, where appropriate, to test the completeness and accuracy of revenue
recognised.
Performed suitable analytical procedures, comparing key ratios such as gross profit margin, to
ensure reasonable to analyse, explain and corroborate any unexpected differences.
Performed detailed cut off procedures including checking to source shipping documentation and
other third-party information to ensure appropriate recognition of income.
Reviewed journal entries using suitable data analytics software, to identify and query any
unusual or unexpected entries affecting turnover.
We concluded that revenue had been recorded appropriately.
How the scope of our audit
responded to the key audit
matter
Key Observations
OUR APPLICATION OF MATERIALITY
Our definition of materiality considers the value of error
or omission on the financial statements that, individually
or in aggregate, would change or influence the economic
decision of a reasonably knowledgeable user of those
financial statements. Misstatements below these levels
will not necessarily be evaluated as immaterial as we also
take account of the nature of identified misstatements,
and the particular circumstances of their occurrence,
when evaluating their effect on the financial statements
as a whole. Materiality is used in planning the scope of our
work, executing that work and evaluating the results.
GROUP
Materiality in respect of the Group was set at $95m
(2020 $55m) which was determined based on 2.5% of
EBITDA (2020 2.0% of EBITDA), as this was viewed as the
financial measure that was of greatest relevance to all key
stakeholders including management, shareholders, and
external finance providers. EBITDA is a key performance
indicator for the Group and is a key metric in assessing
the performance of management. EBITDA also forms the
basis of key restrictive covenants on external borrowings
of the Group.
The increase in materiality relative to the previous year
was due to an improvement in the Group EBITDA, which
for the current year was $3,808m (2020: $3,003m) and a
benchmark change from 2% to 2.5% which is in line with
our firm’s audit methodology.
Performance materiality is the application of materiality
at the individual account or balance level, set at an
amount to reduce to an appropriately low level the
probability that the aggregate of uncorrected and
undetected misstatements exceeds materiality for the
financial statements as a whole.
Performance materiality for the Group was set at $57m
(2020 $27m) which represents 60% (2020 – 50%) of the
above materiality levels.
The determination of performance materiality reflects
our assessment of the risk of undetected errors existing,
the adequacy of the Group’s systems and controls, the
impact of there being a number of components and
locations, and our knowledge of the number, size and
nature of misstatements identified in previous audits.
PARENT COMPANY
Materiality in respect of the parent was set at $18.7m
(2020 $17.5m) which was determined on the basis of 0.5%
of gross assets (2020 1% of equity), however was capped
as a result of applying the Group materiality across
components using the appropriate procedures. As a
largely non-trading business, EBITDA was not considered
an appropriate measure to base materiality on. As
part of our materiality allocation across components,
Balance Sheet measures of non-trading companies were
considered when allocating component materiality.
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VEDANTA RESOURCES LIMITED | INTEGRATED REPORT AND ANNUAL ACCOUNTS 2020-21 | Performance materiality for the Parent Company was set
at $11.2m (2020: $8.75m) which represents 60% (2020 –
50%) of the above materiality levels.
The Group comprises 17 trading entities, a parent
Company and 43 other non-trading investment or
financing entities.
The determination of performance materiality reflects
our assessment of the risk of undetected errors existing,
the adequacy of the Group’s systems and controls, the
impact of there being a number of components and
locations, and our knowledge of the number, size and
nature of misstatements identified in previous audits.
SPECIFIC MATERIALITY
We applied the following materiality to the audit of
specific financial statement areas:
$1m
Related parties
Our audit work on the significant components of the
Group, and for determining and evaluating the specific
targeted procedures on other components, was executed
at levels of materiality applicable to the individual entity
which were lower than Group materiality. Financial
statement materiality applied to these components of the
Group was in the range of $3m to $76m.
We agreed to report any corrected or uncorrected
adjustments exceeding $4.7m to the audit committee as
well as differences below this threshold that in our view
warranted reporting on qualitative grounds.
THE SCOPE OF OUR AUDIT
Our Group audit was scoped by obtaining an
understanding of the Group and its environment,
including the Group’s system of internal control, and
assessing the risks of material misstatement in the
financial statements. We also addressed the risk of
management override of internal controls, including
assessing whether there was evidence of bias by the
directors that may have represented a risk of material
misstatement.
The Group manages its operations from India and has
common financial systems, processes and controls
covering all significant components.
There were 6 significant components that were subjected
to a full scope audit, as listed in the scope section above.
As well as this, the parent Company was subject to a full
scope audit.
Specific targeted procedures were performed on 4
trading components and 7 non-trading components
where we considered that additional procedures on top of
the use of component auditors was required.
There were a further 7 trading components and 36
non-trading components that were subject to group-
wide analytical procedures.
Use of Component Auditors
Our audit of the Group financial statements also involved
the use of component auditors in India. The Group audit
team provided comprehensive instructions to those
component auditors. These instructions included details
of the identified risks of material misstatement including
those risks identified above. Those instruction also
included an assessment of component materiality which
ranged from $3m to $76m.
The Group audit team discussed and agreed the proposed
approach to addressing these risks with the component
auditors and the nature and form of their reporting on the
results of their work. The Group team conducted remote
reviews of the working papers prepared by component
auditors. They also participated in conference calls
at various phases of the audit engagement as part
of their management and control of the Group audit
engagement.
The work over the significant components, combined
with the specific targeted procedures on certain
components, gave us coverage of 98% of EBITDA and
we performed analytical review procedures over the
remaining trading entities to ensure we had the evidence
needed to form our opinion on the financial statements as
a whole.
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ACCOUNTS Integrated Report
Statutory reports
Financial statements
EBITDA
2%
9%
REVENUE
5%
9%
89%
86%
GROSS ASSETS
6%
2%
NET ASSETS
6%
2%
Full Scope
Limited Scope
Analytical Review
92%
92%
REPORTING ON OTHER INFORMATION
The directors are responsible for the other information.
The other information comprises the information
included in the Annual Report and Accounts, other than
the financial statements and our auditor’s report thereon.
Our opinion of the financial statements does not cover
the other information and, except to the extent otherwise
explicitly stated in our report, we do not express any form
of assurance conclusion thereon.
In connection with our audit of the financial statements,
our responsibility is to read the other information and,
in doing so, consider whether the other information is
materially inconsistent with the financial statements, or
our knowledge obtained in the audit or otherwise appears
to be materially misstated. If we identify such material
inconsistencies or apparent material misstatements,
we are required to determine whether there is a material
misstatement in the financial statements or a material
misstatement of the other information. If, based on the
work we have performed, we conclude that there is a
material misstatement of this other information, we are
required to report that fact.
the strategic report and the directors’ report have
been prepared in accordance with applicable legal
requirements.
In the light of the knowledge and understanding of the
Group and the parent Company and its environment
obtained in the course of the audit, we have not identified
material misstatements in the strategic report or the
directors’ report.
MATTERS ON WHICH WE ARE REQUIRED TO
REPORT BY EXCEPTION
We have nothing to report in respect of the following
matters in relation to which the Companies Act 2006
requires us to report to you if, in our opinion:
adequate accounting records have not been kept by
the Parent Company, or returns adequate for our audit
have not been received by branches not visited by us;
or
the financial statements of the Parent Company are
not in agreement with the accounting records and
returns; or
We have nothing to report in this regard.
certain disclosures of directors’ remuneration
STRATEGIC REPORT AND DIRECTORS REPORT
In our opinion, based on the work undertaken in the
course of the audit:
specified by law are not made; or
we have not received all the information and
explanations we require for our audit.
the information given in the strategic report and the
directors’ report for the financial year for which the
financial statements are prepared is consistent with
the financial statements; and
RESPONSIBILITIES OF DIRECTORS
As explained more fully in the directors’ responsibilities
statement, the directors are responsible for the
preparation of the financial statements and for being
149
VEDANTA RESOURCES LIMITED | INTEGRATED REPORT AND ANNUAL ACCOUNTS 2020-21 | satisfied that they give a true and fair view, and for such
internal control as the directors determine is necessary
to enable the preparation of financial statements that are
free from material misstatement, whether due to fraud or
error.
In preparing the financial statements, the directors are
responsible for assessing the Group’s and the parent
Company’s ability to continue as a going concern,
disclosing, as applicable, matters related to going
concern and using the going concern basis of accounting
unless the directors either intend to liquidate the Group
or the parent Company or to cease operations, or have no
realistic alternative but to do so.
AUDITOR’S RESPONSIBILITIES FOR THE AUDIT
OF THE FINANCIAL STATEMENTS
Our objectives are to obtain reasonable assurance about
whether the financial statements as a whole are free from
material misstatement, whether due to fraud or error,
and to issue an auditor’s report that includes our opinion.
Reasonable assurance is a high level of assurance but is
not a guarantee that an audit conducted in accordance
with ISAs (UK) will always detect a material misstatement
when it exists.
Misstatements can arise from fraud or error and are
considered material if, individually or in aggregate, they
could reasonably be expected to influence the economic
decisions of users taken on the basis of these financial
statements.
Irregularities, including fraud, are instances of non-
compliance with laws and regulations. We design
procedures in line with our responsibilities, outlined
above, to detect material misstatements in respect of
irregularities, including fraud.
Because of the inherent limitations of an audit, there is
a risk that we will not detect all irregularities, including
those leading to a material misstatement in the financial
statements or non-compliance with regulation. This
risk increases the more that compliance with a law or
regulation is removed from the events and transactions
reflected in the financial statements, as we will be less
likely to become aware of instances of non-compliance.
The risk is also greater regarding irregularities occurring
due to fraud rather than error, as fraud involves
intentional concealment, forgery, collusion, omission or
misrepresentation.
The specific procedures for this engagement and
the extent to which these are capable of detecting
irregularities, including fraud is detailed below:
Obtaining an understanding of the legal and regulatory
frameworks that the Group operates in, focusing on
those laws and regulations that had a direct effect on
the financial statements. The key laws and regulations
we considered in this context included, the Companies
Act 2006 and applicable tax legislation. In addition, we
considered compliance with the UK Bribery Act and
employee legislation, as fundamental to the Group’s
operations.
Enquiry of management to identify any instances of
non-compliance with laws and regulations.
150
Reviewing financial statement disclosures and testing
to supporting documentation to assess compliance
with applicable laws and regulations.
Enquiry of management around actual and potential
litigation and claims including review of professional
legal opinions where appropriate.
Enquiry of the audit committee concerning actual and
potential litigation and claims.
Enquiry of management to identify any instances of
known or suspected instances of fraud.
Discussing among the engagement team regarding
how and where fraud might occur in the financial
statements and any potential indicators of fraud.
Reviewing minutes of meetings of those charged with
governance.
Reviewing internal audit reports.
Reviewing the control systems in place and testing the
effectiveness of certain controls.
Performing audit work over the risk of management
override of controls, including testing of journal entries
and other adjustments for appropriateness, evaluating
the business rationale of significant transactions
outside the normal course of business, and reviewing
accounting estimates for bias.
Challenging assumptions and judgements made by
management in their significant accounting estimates,
in particular with respect to provisions for claims
incurred but not reported; and
Assessment of the procedures performed by
component auditors in respect of the capability of
such procedures to detect irregularities including
fraud, from a detailed review of their work.
A further description of our responsibilities for the
financial statements is located on the FRC’s website at:
www.frc.org.uk/auditorsresponsibilities . This description
forms part of our auditor’s report.
USE OF OUR REPORT
This report is made solely to the Company’s members,
as a body, in accordance with Chapter 3 of Part 16 of
the Companies Act 2006. Our audit work has been
undertaken so that we might state to the Company’s
members those matters we are required to state to
them in an auditor’s report and for no other purpose. To
the fullest extent permitted by law, we do not accept or
assume responsibility to anyone other than the Company
and the Company’s members as a body, for our audit
work, for this report, or for the opinions we have formed.
Rakesh Shaunak (Senior Statutory Auditor) for and on
behalf of MHA MacIntyre Hudson Statutory Auditor
London
18 June 2021
ACCOUNTS Integrated Report
Statutory reports
Financial statements
Consolidated Income
Statement
(US$ million)
Year ended 31 March 2021
Year ended 31 March 2020
Note
5
Before Special
items
11,722
(8,494)
Special items
(Note 6)
-
(16)
Total
11,722
(8,510)
Before Special
items
11,790
(9,611)
Special items
(Note 6)
-
24
Revenue
Cost of sales
Gross profit
Other operating income
Distribution costs
Administrative expenses
Impairment (charge)/reversal
[net]
Operating profit/ (loss)
Investment revenue
Finance costs
Other gains and (losses) [net]
Profit/ (loss) before taxation
from continuing operations (a)
Net (expense)/tax credit (b)
Profit/ (loss) for the year from
continuing operations (a+b)
Profit/ (Loss) after tax for
the year from discontinued
operations
Profit/ (loss) for the year
Attributable to:
Equity holders of the parent
Non-controlling interests
Profit/ (loss) for the year
6
7
8
9
11
3(b)
3,228
178
(272)
(433)
-
2,701
292
(1,209)
11
1,795
(316)
1,479
-
1,479
303
1,176
1,479
(16)
-
-
-
(33)
(49)
-
(58)
(5)
(112)
18
(94)
91
(3)
20
(23)
(3)
3,212
178
(272)
(433)
(33)
2,652
292
(1,267)
6
1,683
(298)
1,385
91
1,476
323
1,153
1,476
Total
11,790
(9,587)
2,203
142
(257)
(490)
(2,072)
(474)
394
(1,179)
(87)
(1,346)
370
(976)
(771)
2,179
142
(257)
(473)
-
1,591
382
(1,179)
(87)
707
(411)
296
24
-
-
(17)
(2,072)
(2,065)
12
-
-
(2,053)
781
(1,272)
-
(771)
296
(2,043)
(1,747)
(202)
498
296
(1,366)
(677)
(1,568)
(179)
(2,043)
(1,747)
151
VEDANTA RESOURCES LIMITED | INTEGRATED REPORT AND ANNUAL ACCOUNTS 2020-21 | Consolidated Statement of
Comprehensive Income
Profit/ (Loss) for the year
Items that will not be reclassified subsequently to income statement:
Remeasurement of net defined benefit plans (note 27)
Tax effects on net defined benefit plans
Profit/ (Loss) on fair value of financial asset investment
Total (a)
Items that may be reclassified subsequently to income statement:
Exchange differences arising on translation of foreign operations
(Loss)/ Gains of cash flow hedges recognized during the year
Tax effects arising on cash flow hedges
Gains/ (loss) on cash flow hedges recycled to income statement
Tax effects arising on cash flow hedges recycled to income statement
Total (b)
Other comprehensive profit/ (loss) for the year (a+b)
Total comprehensive profit/ (loss) for the year
Attributable to:
Equity holders of the parent
Non-controlling interests
Total comprehensive profit/ (loss) for the year
Year ended
31 March 2021
1,476
(US$ million)
Year ended
31 March 2020
(1,747)
(1)
(1)
9
7
232
(34)
12
24
(8)
226
233
1,709
419
1,290
1,709
(30)
10
(10)
(30)
(652)
18
(6)
(4)
2
(642)
(672)
(2,419)
(1,802)
(617)
(2,419)
152
ACCOUNTS Integrated Report
Statutory reports
Financial statements
Consolidated Statement of
Financial Position
ASSETS
Non-current assets
Goodwill
Intangible assets
Property, plant and equipment
Exploration and evaluation assets
Financial asset investments
Non-current tax assets
Other non-current assets
Financial Instruments (derivatives)
Deferred tax assets
Current assets
Inventories
Trade and other receivables
Financial instruments (derivatives)
Current tax assets
Short-term investments
Cash and cash equivalents
Total assets
LIABILITIES
Current liabilities
Borrowings
Operational buyer’s credit/supplier’s credit
Trade and other payables
Financial instruments (derivatives)
Retirement benefits
Provisions
Current tax liabilities
Net current liabilities
Non-current liabilities
Borrowings
Trade and other payables
Financial instruments (derivatives)
Deferred tax liabilities
Retirement benefits
Provisions
Non equity non-controlling interests
Total liabilities
Net assets
Equity
Share capital
Share premium
Hedging reserve
Other reserves
Retained earnings
Equity attributable to equity holders of the parent
Non-controlling interests
Total equity
*Restated. Refer note 1(b)(i)
Note
14
15
16
16
17
11(d)
18
25
11(c)
19
18
25
20
21
22(a)
22(c)
24
25
27
26
22(a)
24
25
11(c)
27
26
23
30
31
(US$ million)
As at
31 March 2021
As at
31 March 2020*
12
99
12,968
334
21
375
1,701
-
1,018
16,528
1,358
1,465
10
1
5,002
955
8,791
25,319
3,673
1,104
4,442
38
16
32
38
9,343
(552)
12,704
205
10
299
20
407
-
13,645
22,988
2,331
29
-
(97)
(296)
(2,783)
(3,147)
5,478
2,331
12
100
13,005
240
12
354
1,548
-
1,114
16,385
1,515
1,102
93
1
4,385
705
7,801
24,186
10,186
1,361
4,358
13
15
32
26
15,991
(8,190)
4,909
232
6
397
22
356
-
5,922
21,913
2,273
29
202
(95)
(331)
(3,068)
(3,263)
5,536
2,273
Financial Statements of Vedanta Resources Limited with registration number 4740415 were approved by the Board of
Directors on 18 June 2021 and signed on their behalf by
Navin Agarwal
Director
153
VEDANTA RESOURCES LIMITED | INTEGRATED REPORT AND ANNUAL ACCOUNTS 2020-21 |
Consolidated Cash Flow
Statement
Note
Year ended
31 March 2021
Year ended
31 March 2020*
(US$ Million)
OPERATING ACTIVITIES
Profit/(Loss) before taxation from continuing operations
Adjustments for:
Depreciation and amortisation
Investment revenues
Finance costs
Other (gains) and losses (net)
(Profit)/ Loss on disposal of PP&E
Write-off of unsuccessful exploration costs
Share-based payment charge
Impairment charge (net)
Other special items
Other non-cash items
Operating cash flows before movements in working capital
Decrease in inventories
Increase in receivables
(Decrease)/ Increase in payables
Cash generated from operations
Dividend received
Interest received
Interest paid
Income taxes paid (net of refunds)
Dividends paid
Cash Flows from operating activities (Continuing activities)
Net cash from Operating Activities (Discontinued operations)
Net cash inflow from operating activities
CASH FLOWS FROM INVESTING ACTIVITIES
Consideration paid for business acquisition (net of cash and cash equivalents
acquired)
Purchases of property, plant and equipment, intangibles, exploration and
evaluation assets
Proceeds on disposal of property, plant and equipment, intangibles,
exploration and evaluation assets
Proceeds from redemption of short-term investments
Purchases of short-term investments
Proceeds from sale of financial asset investments
Payments toward financial asset investments
Amount paid against guarantees issued on behalf of KCM
Reduction in cash and cash equivalents from discontinued operations
Cash Flows from investing activities (Continuing activities)
Net cash used in investing activities (Discontinued operations)
Net cash used in investing activities
3(b)
22(b)
22(b)
22(b)
22(b)
1,683
1,099
(292)
1,267
(8)
(10)
1
8
33
16
-
3,797
187
(409)
(241)
3,334
-
320
(1,336)
(315)
(162)
1,841
-
1,841
(6)
(913)
23
13,988
(14,723)
-
-
-
-
(1,631)
-
(1,631)
(1,346)
1,412
(394)
1,179
87
8
-
10
2,072
(7)
-
3,021
292
(713)
411
3,011
2
130
(1,136)
(165)
(536)
1,306
3
1,309
(5)
(1,104)
21
15,178
(15,460)
428
(63)
(251)
(1)
(1,257)
(4)
(1,261)
154
ACCOUNTS Integrated Report
Statutory reports
Financial statements
Consolidated Cash Flow
Statement
Note
Year ended
31 March 2021
Year ended
31 March 2020*
(US$ Million)
CASH FLOWS FROM FINANCING ACTIVITIES
Payment for acquiring non-controlling interest
Dividends paid to non-controlling interests of subsidiaries
Exercise of stock options in subsidiary
Repayment of working capital loan (net)
Proceeds from other short-term borrowings
Repayment of other short-term borrowings
Proceeds from long-term borrowings
Repayment of long-term borrowings
Payment of lease liabilities
Cash Flows from financing activities (Continuing activities)
Net cash from Financing Activities (Discontinued operations)
Net cash used in financing activities
Net decrease in cash and cash equivalents
Effect of foreign exchange rate changes
22(b)
22(b)
22(b)
22(b)
22(b)
Cash and cash equivalents at beginning of the year
Cash and cash equivalents at end of the year
21 & 22(b)
*Refer Note 1(b)(ii)
(403)
(992)
-
(1,294)
3,569
(3,394)
5,182
(2,845)
(46)
(223)
-
(223)
(13)
22
692
701
(15)
(101)
-
(1,604)
317
(551)
4,294
(2,650)
(45)
(355)
-
(355)
(307)
(62)
1,061
692
155
VEDANTA RESOURCES LIMITED | INTEGRATED REPORT AND ANNUAL ACCOUNTS 2020-21 | Consolidated Statement of
Changes in Equity
For the year ended 31 March 2021
Attributable to equity holders of the parent
Share
capital
(Note 30)
29
-
-
Share
premium
202
-
-
Hedging
reserve
(95)
-
(2)
Other
reserves1
(331)
-
98
Retained
earnings
(3,068)
323
-
Total
(3,263)
323
96
Non-
controlling
Interests
5,536
1,153
137
Total
equity
2,273
1,476
233
(US$ million)
-
-
-
-
-
-
-
-
-
29
-
-
-
(202)
-
-
-
-
-
-
(2)
98
(63)
-
-
-
-
-
-
323
63
(251)
5
202
-
(38)
(19)
419
1,290
1,709
-
(251)
5
-
-
(38)
(19)
-
(992)
3
-
(4)
(365)
15
-
(1,243)
8
-
(4)
(403)
(4)
-
-
-
(5)
(5)
-
-
-
-
-
-
-
-
(97)
(296)
(2,783)
(3,147)
5,478
2,331
At 1 April 2020
Profit for the year
Other comprehensive income/ (loss) for
the year
Total comprehensive income/ (loss)
for the year
Transfers
Dividends paid/ payable (note 13)
Exercise of stock options of subsidiary
On account of Capital reduction3
Acquisition of FACOR
Share buy back
Change in fair value of put option
liability/conversion option asset/
derecognition of non controlling interest
Other changes in non-controlling
interests2
At 31 March 2021
1.
2.
3.
Other reserves comprise the currency translation reserve, merger reserve, investment revaluation reserve, debenture redemption
reserve, capital redemption reserve and the general reserves established in the statutory accounts of the Group’s subsidiaries.
Includes share-based payment charge by subsidiaries and exercise of stock options of subsidiary.
Pursuant to Section 641 (1) (a) of Companies Act 2006, US$ 202 million of share premium was converted into distributable reserves.
Accordingly, the share premium account was reduced to nil.
For the year ended 31 March 2020
Attributable to equity holders of the parent
Share
capital
(Note 30)
29
-
-
Share
premium
202
-
-
Hedging
reserve
(98)
-
3
Other
reserves1
(97)
-
(237)
Retained
earnings
(964)
(1,568)
-
Total
(928)
(1,568)
(234)
Non-
controlling
Interests
6,181
(179)
(438)
Total
equity
5,253
(1,747)
(672)
(US$ million)
-
-
-
-
-
-
-
-
-
-
-
-
-
-
3
-
-
-
-
-
-
(237)
(1,568)
(1,802)
(617)
(2,419)
(14)
-
-
17
-
-
14
(537)
-
-
(16)
-
(537)
-
17
(16)
-
(101)
86
(33)
12
-
(638)
86
(16)
(4)
3
3
8
11
At 1 April 2019
Loss for the year
Other comprehensive income/ (loss) for
the year
Total comprehensive income/(loss)
for the year
Transfers
Dividends paid/ payable (note 13)
Derecognition of Non-controlling
interest pertaining to KCM (refer note
3(b))
Acquisition of Non-controlling interest
of ESL
Change in fair value of put option
liability/conversion option asset/
derecognition of non-controlling
interest
Other changes in non-controlling
interests2
At 31 March 2020
29
202
(95)
(331)
(3,068)
(3,263)
5,536
2,273
1.
2.
Other reserves comprise the currency translation reserve, merger reserve, investment revaluation reserve, debenture redemption
reserve, capital redemption reserve and the general reserves established in the statutory accounts of the Group’s subsidiaries.
Includes share-based payment charge by subsidiaries and exercise of stock options of subsidiary.
156
ACCOUNTS Integrated Report
Statutory reports
Financial statements
Other Reserves Comprise
At 1 April 2019
Exchange differences on
translation of foreign operations
Loss on fair value of financial
asset investments
Remeasurements
Acquisition of Non-controlling
interest of ESL
Transfer to retained earnings (1)
At 1 April 2020
Exchange differences on
translation of foreign operations
Loss on fair value of financial
asset investments
Remeasurements
Transfer to retained earnings (1)
Currency
translation
reserve
(2,380)
(225)
-
-
-
-
(2,605)
93
-
-
-
At 31 March 2021
(2,512)
Merger
reserve(2)
4
-
-
-
-
-
4
-
-
-
-
4
Financial asset
investment
revaluation
reserve
11
-
(5)
-
-
-
6
-
5
-
-
11
Capital Reserve
12
-
-
-
17
-
29
-
-
-
-
29
(US$ million)
Total
(97)
(225)
(5)
(7)
17
(14)
(331)
93
5
0
(63)
(296)
Other
reserves(3)
2,256
-
-
(7)
-
(14)
2,235
-
-
0
(63)
2,172
(1)
(2)
(3)
Transfer to retained earnings during the year ended 31 March 21 includes withdrawal of US$ 39 million from debenture redemption
reserve (31 March 2020: US$ 14 million of debenture redemption reserve).
The merger reserve arose on incorporation of the Company during the year ended 31 March 2004. The investment in Twin Star had a
carrying amount value of US$ 20 million in the accounts of Volcan. As required by the Companies Act 1985, Section 132, upon issue of
156,000,000 Ordinary shares to Volcan, Twin Star’s issued share capital and share premium account have been eliminated and a merger
reserve of US$ 4 million arose, being the difference between the carrying value of the investment in Twin Star in Volcan’s accounts and
the nominal value of the shares issued to Volcan.
Other reserves includes legal reserves of US$ 4 million (31 March 2020: US$ 4 million), debenture redemption reserve of US$ 91 million
(31 March 2020 US$ 130 million) and balance mainly includes general reserve and capital redemption reserve. Debenture redemption
reserve is required to be created under the Indian Companies Act from annual profits until such debentures are redeemed. Legal reserve
is required to be created by Fujairah Gold by appropriation of 10 % of profits each year until the balance reaches 50% of the paid up
share capital. This reserve is not available for distribution except in circumstances stipulated by the Articles of Incorporation. Under the
erstwhile Indian Companies Act, 1956, general reserve was created in relation to Group’s Indian subsidiaries through an annual transfer
of net income to general reserve at a specified percentage in accordance with applicable regulations. The purpose of these transfers is
to ensure that the total dividend distribution is less than total distributable reserves for that year. The said requirement was dispensed
with w.e.f. 1 April 2013 and there are no restrictions of use of these reserves.
157
VEDANTA RESOURCES LIMITED | INTEGRATED REPORT AND ANNUAL ACCOUNTS 2020-21 | Group Overview
Vedanta Resources Limited (“Vedanta” or “VRL” or
“Company”) is a company incorporated and domiciled in
the United Kingdom. Registered address of the Company
is 8th Floor, 20 Farringdon Street, London, EC4A 4AB.
Vedanta and its consolidated subsidiaries (collectively,
the “Group”) is a diversified natural resource group
engaged in exploring, extracting and processing minerals
and oil and gas. The Group engages in the exploration,
production and sale of zinc, lead, silver, copper,
aluminium, iron ore and oil & gas and have a presence
across India, South Africa, Namibia, Ireland, Australia,
Liberia and UAE. The Group is also in the business of
commercial power generation, steel manufacturing
and port operations in India and manufacturing of glass
substrate in South Korea and Taiwan.
Details of the Group’s various businesses are as follows.
Zinc India business is owned and operated by
Hindustan Zinc Limited (“HZL”).
Zinc international business is comprising of Skorpion
mine and refinery in Namibia operated through
THL Zinc Namibia Holdings (Proprietary) Limited
(“Skorpion”), Lisheen mine in Ireland operated through
Vedanta Lisheen Holdings Limited (“Lisheen”) (Lisheen
mine ceased operations in December 2015) and Black
Mountain Mining (Proprietary) Limited (“BMM”), whose
assets include the operational Black Mountain mine
and the Gamsberg mine located in South Africa.
The Group’s oil and gas business is owned and
operated by Vedanta Limited and its subsidiary,
Cairn Energy Hydrocarbons Limited and consists of
exploration, development and production of oil and
gas.
The Group’s iron ore business is owned by Vedanta
Limited, and by two wholly owned subsidiaries of
Vedanta Limited, i.e., Sesa Resources Limited and
Sesa Mining Corporation Limited and consists of
exploration, mining and processing of iron ore, pig
iron and metallurgical coke and generation of power
for captive use. Pursuant to the order of Honourable
Supreme Court of India, mining operations in the state
of Goa are currently suspended. The Group’s iron ore
business includes Western Cluster Limited (“WCL”) in
Liberia which has iron ore assets and is wholly owned
by the Group. WCL’s assets include development
rights to Western Cluster and a network of iron ore
deposits in West Africa. WCL’s assets have been fully
impaired.
The Group’s copper business comprises three
operations divided into two segments, namely (i)
Copper India/Australia, comprising Vedanta Limited’s
custom smelting operations in India (including captive
power plants at Tuticorin in Southern India) and (ii)
Copper Zambia comprising Konkola Copper Mines
plc’s (“KCM”) mining and smelting operations in
Zambia. In view of ongoing litigations in relation to the
Zambian operations, the Group believes that it has lost
control over KCM and has accordingly deconsolidated
the same (refer note 3(b)(iii) for further details).
The Group’s copper business in India has received
an order from Tamil Nadu Pollution Control Board
(“TNPCB”) on 09 April 2018, rejecting the Group’s
application for renewal of consent to operate
under the Air and Water Acts for the 400,000 tpa
copper smelter plant in Tuticorin for want of further
clarification and consequently the operations were
suspended. The Group has filed an appeal with TNPCB
Appellate authority against the said order. During
the pendency of the appeal, TNPCB through its order
dated 23 May 2018 ordered for disconnection of
electricity supply and closure of the copper smelter
plant. Post such order, the state government on 28
May 2018 ordered the permanent closure of the plant.
(Refer Note 3(a)(vii)).
Further, the Group’s copper business includes refinery
and rod plant Silvassa consisting of a 133,000 MT
of blister/ secondary material processing plant, a
216,000 tpa copper refinery plant and a copper rod
mill with an installed capacity of 258,000 tpa. The
plant continues to operate as usual, catering to the
domestic market.
In addition, the Group owns and operates the Mt.
Lyell copper mine in Tasmania, Australia through its
subsidiary, CMT and a precious metal refinery and
copper rod plant in Fujairah, UAE through its subsidiary
Fujairah Gold FZC. The operations of Mt Lyell copper
mine were suspended in January 2014 following a mud
slide incident and were put into care and maintenance
since 09 July 2014 following a rock fall incident in June
2014.
The Group’s Aluminium business is owned and
operated by Vedanta Limited and by Bharat Aluminium
Company Limited (“BALCO”). The aluminium
operations include a refinery and captive power plant
at Lanjigarh and a smelter and captive power plants
at Jharsuguda both situated in the State of Odisha
in India. BALCO’s partially integrated aluminium
operations comprise two bauxite mines, captive power
plants, smelting and fabrication facilities in the State
of Chhattisgarh in central India.
The Group’s power business is owned and operated
by Vedanta Limited, BALCO, and Talwandi Sabo Power
Limited (“TSPL”), a wholly owned subsidiary of Vedanta
Limited, which are engaged in the power generation
business in India. Vedanta Limited power operations
include a thermal coal- based commercial power
facility of 600 MW at Jharsuguda in the State of Odisha
in Eastern India. BALCO power operations include
300 MW thermal coal-based power plant at Korba.
158
ACCOUNTS Integrated Report
Statutory reports
Financial statements
Group Overview
TSPL power operations include 1,980 MW (three units
of 660 MW each) thermal coal- based commercial
power facilities. Power business also includes the wind
power plants commissioned by HZL and a power plant
at MALCO Energy Limited (“MEL”) (under care and
maintenance) situated at Mettur Dam in State of Tamil
Nadu in southern India.
The Group’s other activities include ESL Steel Limited
(“ESL”) acquired on 04 June 2018. ESL is engaged in
the manufacturing and supply of billets, TMT bars, wire
rods and ductile iron pipes in India.
The Group’s other activities also include Vizag General
Cargo Berth Private Limited (“VGCB”) and Maritime
Ventures Private Limited (“MVPL”). Vizag port project
includes mechanization of coal handling facilities and
upgradation of general cargo berth for handling coal at
the outer harbour of Visakhapatnam Port on the east
coast of India. VGCB commenced operations in the
fourth quarter of fiscal year 2013. MVPL is engaged in the
business of rendering logistics and other allied services
inter alia rendering stevedoring, and other allied services
in ports and other allied sectors. The Group’s other
activities also include AvanStrate Inc. (“ASI”) and Ferro
Alloys Corporation Limited (“FACOR”). ASI is involved
in manufacturing of glass substrate in South Korea and
Taiwan. FACOR was acquired on 21 September 2020
and is involved in business of producing Ferro Alloys and
owns a Ferro Chrome plant with capacity of 72,000 TPA,
two operational Chrome mines and 100 MW of Captive
Power Plant through its subsidiary, FACOR Power Limited
(“FPL”).
DELISTING OF VEDANTA LIMITED
On 12 May 2020, the Company announced its intention to
acquire outstanding shares of Vedanta Limited from the
market and take Vedanta Limited private by delisting it
from all stock exchanges in India and SEC.
The Company also informed Vedanta Limited Board vide
letter dated 12 May 2020 and in turn Vedanta Limited
had informed the Indian stock exchanges that it has
received a letter from VRL, wherein VRL has expressed
its intention to, either individually or along with one or
more subsidiaries, acquire all fully paid-up equity shares
of Vedanta Limited (“Equity Shares”) that are held by
the public shareholders (as defined under the Delisting
Regulations, to be referred to as “Public Shareholders”)
and consequently voluntarily delist the Equity Shares
from BSE Limited and National Stock Exchange of India
Limited, the recognized stock exchanges where the
Equity Shares are presently listed (“Stock Exchanges”),
in accordance with the Delisting Regulations (“Delisting
Proposal”) and if such delisting is successful, then to also
delist the company’s American Depositary Shares from
the New York Stock Exchange (“NYSE”) and deregister
the company from the Securities and Exchange
Commission (“SEC”), subject to the requirements of the
NYSE and the SEC.
Further, the board of directors of Vedanta Limited in
their meeting held on 18 May 2020 have considered and
granted their approval for the said Delisting Proposal and
to seek shareholders’ approval for the said proposal via
postal ballot. The Shareholder notices for postal ballot
was posted on 24 May 2020 and shareholder approved the
delisting of Vedanta Limited on 25 June 2020.
The Stock Exchanges granted in-principal approval for
delisting vide their letters each dated 28 September 2020.
VRL and its wholly owned subsidiaries, namely, Vedanta
Holdings Mauritius Limited and Vedanta Holdings
Mauritius II Limited had issued a public announcement
with regard to the delisting offer on 29 September 2020
in accordance with Regulation 10(1) of the Delisting
Regulations.
The Public Shareholders holding Equity Shares were
invited to submit bids through reverse book building
process conducted through the Stock Exchange
Mechanism of BSE during the bid period (5 October 2020
to 9 October 2020), in accordance with the Delisting
Regulations.
The total number of Offer Shares validly tendered by
the Public Shareholders in the Delisting Offer were
1,25,47,16,610, which were less than the minimum
number of Offer Shares required to be accepted by the
Acquirers in order for Delisting Offer to be successful in
terms of Regulation 17(1)(a) of the Delisting Regulations.
Thus, the Delisting Offer was considered to be
unsuccessful in terms of Regulation 19(1) of the
Delisting Regulations. Accordingly, the Acquirers did
not acquire any Equity Shares tendered by the Public
Shareholders in the Delisting Offer and the Equity Shares
of Vedanta Limited continue to remain listed on the Stock
Exchanges.
159
VEDANTA RESOURCES LIMITED | INTEGRATED REPORT AND ANNUAL ACCOUNTS 2020-21 | 1.
BASIS OF PREPARATION AND BASIS OF
MEASUREMENT OF FINANCIAL STATEMENTS
a) Basis of preparation
The consolidated financial statements have
been prepared in accordance with those
parts of the Companies Act, 2006 applicable
to companies reporting under International
Financial Reporting Standards (IFRS) and
IFRS in conformity with the requirements of
Companies Act 2006.
These financial statements have been prepared
in accordance with the accounting policies, set
out below and were consistently applied to all
periods presented unless otherwise stated.
These financial statements are approved for
issue by the Board of Directors on 18 June
2021.
These financial statements are presented in
US dollars being the functional currency of
the Company and all values are rounded off
to the nearest million except when indicated
otherwise. Amounts less than US$ 0.5 million
have been presented as “0”.
b) Restatement/Reclassification
On an ongoing basis, the management reviews
the changes in the nature of the Company’s
operations, selection and application of
accounting policies and recent accounting
pronouncements to assess appropriateness
of presentation or classifications of items in
the financial statements. For the year ended
31 March 2021, the Company has revised the
presentation of:
i)
ii)
operational buyer’s/suppliers’ credit and
vendor financing (Refer note 22(c)) on
the face of the balance sheet, which were
previously included under trade payables
to enhance the understanding of the
financial statements. The value of such
liabilities as at 01 April 2020 was US$ 1,361
Million (As at 31 March 2021: US$ 1,104
Million) and this reclassification has not
had any material impact on the financial
statements.
the constituents of cash and cash
equivalents for the purpose of cash flow
statement and movement in net debt
(Refer Note 22(b)) do not consider the
restricted cash and cash equivalents
amount hitherto included in other bank
balance. Consequently, such accounts
amounting to US$ 72 Million and US$ 13
Million as at 31 March 2019 and 31 March
160
iii)
2020 respectively have been excluded
from opening and closing cash and cash
equivalents for the year ended March 31,
2020 for the purpose of above notes.
the constituents of ‘Short term
investments’ for the purpose of
movement in net debt to include only
those amounts of restricted funds that
are corresponding to liabilities (e.g. margin
money deposits) and non-current bank
deposit included for purpose of Movement
in net debt disclosure. Consequently,
restricted funds amounting to US$ 27
Million and US$ 8 Million as at 31 March
2019 and 31 March 2020 have been
excluded from opening and closing ‘Short-
term investments’ and non-current bank
deposit amounting to US$ 3 Million and
US$ 5 Million as at 31 March 2019 and 31
March 2020 included in movement in net
debt disclosure.
c) Basis of Measurement
The consolidated financial statements have
been prepared using historical cost convention
and on an accrual method of accounting, except
for certain financial assets and liabilities which
are measured at fair value as explained in the
accounting policies below.
d) Going concern
The Group has prepared the consolidated
financial statements on a going concern basis.
The Directors have considered a number of
factors in concluding on their going concern
assessment.
The Group monitors and manages its funding
position and liquidity requirements throughout
the year and routinely forecasts its future
cash flows and financial position. The key
assumptions for these forecasts include
production profiles, commodity prices and
financing activities.
The last going concern assessment carried
out for the period ended 30 September 2020
was approved by the Board of Directors in
December 2020. The Directors were confident
that the Group will be able to ensure production
is not materially impacted by the COVID-19
pandemic, that the Group will be able to roll-
over or obtain external financing as required
and that prices will remain within their expected
range.
Since then, while the other mitigating
actions as highlighted in the period ended
30 September 2020 financial statements
ACCOUNTSNotes to the Financial Statements
Integrated Report
Statutory reports
Financial statements
remain available to the Group, following recent
significant developments have had a positive
bearing on the liquidity and Company’s ability
to continue as going concern;
a.
b.
c.
The Group has raised $ 1Bn Bonds in
December 2020 to repay upcoming
maturity of bonds in June 2021 while
providing certain liquidity for other
repayments in Q4 FY21.
On 24 December 2020, VRL purchased
on the market 185,000,000 equity shares
of Vedanta Limited (“VEDL”) at a price of
INR 159.94 per share, increasing its overall
stake from 50.13% to 55.11% of the total
paid-up share capital of VEDL.
In January 2021, VRL announced a
voluntary open offer (“VOO”) to acquire
an additional 10% stake in VEDL which
was subsequently increased to an offer for
acquiring 17.51% of paid up share capital
of VEDL at a price of INR 235 per share in
March 2021.
In April 2021, 374,231,161 equity shares
representing 10.1% of paid up share capital of
Vedanta Limited were validly tendered in the
VOO. The acquisition of such equity shares
was completed, and consideration for such
acquisition was paid in April 2021. Post this
acquisition, the Company’s shareholding in
Vedanta Limited increased from current 55.1%
to 65.2%
For this stake increase in VEDL by VRL through
creeping acquisition and VOO:
the Group raised $1bn through private
financing in December 2020, $0.4bn drawn in
December for creeping acquisition of 4.98%
VEDL Stake, $0.1bn drawn in April’21 for
VOO;
$1.2bn Bond raised in February 2021 at the
rate of 8.95% for stake purchase in VEDL
under VOO/refinancing, c. $0.8bn used for
VOO in April 2021; and
c. $0.4bn term loan facilities executed with
certain banks.
The Directors consider that the expected
operating cash flows of the Group combined
with the current finance facilities which are
in place give them confidence that the Group
has adequate resources to continue as a going
concern.
The Directors have considered the Group’s
ability to continue as a going concern in the
period to 30 September 2022 (“the going
concern period”) under both a base case and a
downside case.
The downside case assumes, amongst other
sensitivities, delayed ramp-up and re-opening
of projects, deferment of additional capital
expenditure and a conservative assumption of
uncommitted refinancing.
•
Covenant Compliance
The Group’s financing facilities, including bank
loans and bonds, contain covenants requiring
the Group to maintain specified financial ratios.
The Group has complied with all the covenant
requirements till 31 March 2021.
Management notes that the Group has
previously obtained covenant waivers,
including in response to the appointment of a
provisional liquidator at KCM. Additionally, the
Group has recently successfully amended the
covenants for its listed bonds. The Directors
of the Group are confident that they will be
able to execute mitigating actions (see below)
to ensure that the Group avoids, or secures
waivers or relaxations for future period
breaches, if any, of its covenants during the
going concern period.
Mitigating actions
The mitigating options available to the Group
and Company to address the uncertainties in
relation to going concern include:
Out of the $1.2 bn bonds raised in February
2021, c. $0.4bn available for refinancing/
interest servicing at VRL. Out of $1.0bn
private financing obtained in December
2020, $0.5bn is undrawn. Further, $0.2bn
one year term loans tied up with two foreign
banks.
Vedanta Limited executed a ~$1.4bn
long term syndicated long term facility
agreement with overall maturity of seven
years with State Bank of India, Bank of
Baroda, Indian Bank and Yes Bank Limited as
arrangers. Out of ~$1.4bn, ~$1.2bn has been
drawn till March 2021 and further ~$0.2bn
will be drawn in Q1 FY21-22.
Execution of an off-take agreement covering
certain future production and amounting
potentially to c. $1bn. The Group is currently
negotiating with a number of interested
bidders an off-take agreement, under
which the Group would receive an advance
payment in return for supply of certain
future production. However, no agreement
161
Notes to the Financial StatementsVEDANTA RESOURCES LIMITED | INTEGRATED REPORT AND ANNUAL ACCOUNTS 2020-21 |
has been concluded and there is a therefore
uncertainty as to the Group’s ability to
access these funds.
2(A) ACCOUNTING POLICIES
(i) Basis of consolidation
Extension of working capital facilities
and rollover of commercial papers: As at
31 March 2021, the Group had unutilised
working capital facilities amounting to c.
$1.8bn and commercial papers in issue
amounting to c. $0.3bn. These facilities are
not committed for the full duration of the
going concern period to September 2022,
but rather must be extended or rolled over.
There is therefore a risk that, in adverse
market conditions, the Group would not be
able to extend or roll over these facilities.
However, the Directors assess that the
Group has a strong record of extending and
rolling over these short-term facilities and
has historically had significantly higher levels
of commercial papers in issue.
Access to supplier credit and customer
advances: As at 31 March 2021, the Group
had c. $1.1bn of supplier’s credit and c.
$0.7bn of advances from customers. These
financing arrangements are integral to the
business of certain Group divisions, but are
not committed for the full duration of the
going concern period. There is therefore a
risk that the Group will not be able to access
these financing arrangements in the future.
Nevertheless, the Directors note that the
Group has in the past consistently obtained
supplier credit and customer advances at
current levels.
Conclusion
Notwithstanding the uncertainties described
above, the Directors have confidence in Group’s
ability to execute sufficient mitigating actions.
Based on these considerations, the Directors
have a reasonable expectation that the Group
and the Company will meet its commitments
as they fall due over the going concern period.
Accordingly, the Directors continue to adopt
the going concern basis in preparing the
Group’s consolidated financial statements and
Company’s standalone financial statements.
e)
Parent Company financial statements
The financial statements of the parent
company, Vedanta Resources Limited,
incorporated in the United Kingdom, have
been prepared in accordance with FRS 101
and UK company law. The Company financial
statements and associated notes have been
presented separately.
162
Subsidiaries:
The consolidated financial statements
incorporate the results of the Company and all
its subsidiaries (the “Group”), being the entities
that it controls. Control is evidenced where
the Group has power over the investee, is
exposed, or has rights, to variable returns from
its involvement with the investee and has the
ability to affect those returns through its power
over the investee. Power is demonstrated
through existing rights that give the ability to
direct relevant activities, which significantly
affect the entity’s returns.
The financial statements of subsidiaries are
prepared for the same reporting year as the
Company. Where necessary, adjustments
are made to the financial statements of
subsidiaries to align the accounting policies in
line with accounting policies of the Group.
For non-wholly owned subsidiaries, a share
of the profit/(loss) for the financial year and
net assets is attributed to the non-controlling
interests as shown in the consolidated
income statement, consolidated statement
of comprehensive income and consolidated
statement of financial position.
Liability for put option issued to non-controlling
interests which do not grant present access to
ownership interest to the Group is recognised
at present value of the redemption amount and
is reclassified from equity. At the end of each
reporting period, the non-controlling interests
subject to put option is derecognised and the
difference between the amount derecognised
and present value of the redemption amount,
which is recorded as a financial liability, is
accounted for as an equity transaction.
For acquisitions of additional interests in
subsidiaries, where there is no change in
control, the Group recognises a reduction to
the non-controlling interest of the respective
subsidiary with the difference between
this figure and the cash paid, inclusive of
transaction fees, being recognised in equity.
Similarly, upon dilution of controlling interests
the difference between the cash received from
sale or listing of the subsidiary shares and the
increase to non-controlling interest is also
recognised in equity. The results of subsidiaries
acquired or disposed off during the year are
included in the consolidated income statement
ACCOUNTSNotes to the Financial Statements
Integrated Report
Statutory reports
Financial statements
from the effective date of acquisition or up to
the effective date of disposal, as appropriate.
in the carrying value of investments in joint
venture.
Intra-group balances and transactions, and
any unrealised profits arising from intra-group
transactions, are eliminated. Unrealised
losses are eliminated unless costs cannot be
recovered.
Joint arrangements
A Joint arrangement is an arrangement of
which two or more parties have joint control.
Joint control is considered when there is
contractually agreed sharing of control of
an arrangement, which exists only when
decisions about the relevant activities require
the unanimous consent of the parties sharing
control. Investments in joint arrangements
are classified as either joint operations or
joint venture. The classification depends on
the contractual rights and obligations of each
investor, rather than the legal structure of the
joint arrangement. A joint operation is a joint
arrangement whereby the parties that have
joint control of the arrangement, have rights
to the assets, and obligations for the liabilities,
relating to the arrangement. A joint venture is
a joint arrangement whereby, the parties that
have joint control of the arrangement have
rights to the net assets of the arrangement.
The Group has both joint operations and joint
ventures.
Joint operations
The Group has Joint operations within its Oil
and gas segment. It participates in several
unincorporated joint operations which involve
the joint control of assets used in oil and gas
exploration and producing activities. The Group
accounts for its share of assets, liabilities,
income and expenditure of joint operations in
which the Group holds an interest. Liabilities
in unincorporated joint operations where the
Group is the operator, is accounted for at gross
values (including share of other partners) with
a corresponding receivable from the venture
partners. These have been included in the
consolidated financial statements under the
appropriate headings.
Details of joint operations are set out in note
38.
Joint venture
The Group accounts for its interest in joint
venture using the equity method, after initially
being recognised at cost in the consolidated
statement of financial position. Goodwill arising
on the acquisition of joint venture is included
Investments in associates:
An associate is an entity over which the
Group has significant influence. Significant
influence is the power to participate in the
financial and operating policy decisions of the
investee, but is not control or joint control
over those policies. Investments in associates
are accounted for using the equity method.
Goodwill arising on the acquisition of associates
is included in the carrying value of investments
in associate.
Equity method of accounting
Under the equity method of accounting
applicable for investments in associates
and joint ventures, investments are initially
recorded at the cost to the Group and then,
in subsequent periods, the carrying value
is adjusted to reflect the Group’s share of
the post-acquisition profits or losses of the
investee, and the Group’s share of other
comprehensive income of the investee, other
changes to the investees net assets and is
further adjusted for impairment losses, if any.
Dividend received or receivable from associate
and joint ventures are recognised as a reduction
in carrying amount of the investment.
The consolidated income statement and
consolidated statement of comprehensive
income include the Group’s share of
investee’s results, except where the investee
is generating losses, share of such losses in
excess of the Group’s interest in that investee
are not recognised. Losses recognised under
the equity method in excess of the Group’s
investment in ordinary shares are applied to the
other components of the Group’s interest that
forms part of Group’s net investment in the
investee in the reverse order of their seniority
(i.e., priority in liquidation).
If the Group’s share of losses in an associate or
joint venture equals or exceeds, its interests
in the associate or joint venture, the Group
discontinues the recognition of further losses.
Additional losses are provided for, only to the
extent that the Group has incurred legal or
constructive obligations or made payments on
behalf of the associate/ joint venture.
Unrealised gains arising from transactions
with associates are eliminated against the
investment to the extent of the Group’s
interest in these entities. Unrealised losses are
eliminated in the same way as unrealized gains,
163
Notes to the Financial StatementsVEDANTA RESOURCES LIMITED | INTEGRATED REPORT AND ANNUAL ACCOUNTS 2020-21 |
but only to the extent that there is no evidence
of impairment of the asset transferred.
Accounting policies of equity accounted
investees is changed where necessary to
ensure consistency with the policies adopted
by the Group.
The carrying amount of equity accounted
investments are tested for impairment in
accordance with the policy described in note 2
(a)(xi) below.
(ii) Business combinations
Business combinations are accounted for
under the acquisition method. The acquiree’s
identifiable assets, liabilities and contingent
liabilities that meet the conditions for
recognition under IFRS 3 are recognised at their
fair value at the acquisition date, except certain
assets and liabilities required to be measured as
per the applicable standards.
Excess of fair value of purchase consideration
and the acquisition date non-controlling
interest over the acquisition date fair value
of identifiable assets acquired and liabilities
assumed is recognised as goodwill. Goodwill
arising on acquisitions is reviewed for
impairment annually. Where the fair values of
the identifiable assets and liabilities exceed
the purchase consideration, the Group re-
assesses whether it has correctly identified all
of the assets acquired and all of the liabilities
assumed and reviews the procedures used
to measure the amounts to be recognised
at the acquisition date. If the reassessment
still results in an excess of the fair value of
net assets acquired over the aggregate
consideration transferred, then the surplus is
credited to the consolidated income statement
in the period of acquisition. Where it is not
possible to complete the determination of fair
values by the date on which the first post-
acquisition financial statements are approved, a
provisional assessment of fair value is made and
any adjustments required to those provisional
fair values are finalised within 12 months of the
acquisition date.
Those provisional amounts are adjusted
through goodwill during the measurement
period, or additional assets or liabilities are
recognised to reflect new information obtained
about facts and circumstances that existed
as of the acquisition date that, if known,
would have affected the amounts recognised
at that date. These adjustments are called
164
as measurement period adjustments. The
measurement period does not exceed twelve
months from the acquisition date.
Any non-controlling interest in an acquiree is
measured at fair value or as the non-controlling
interest’s proportionate share of the acquiree’s
net identifiable assets. This accounting choice
is made on a transaction by transaction basis.
Acquisition expenses are charged to the
consolidated income statement.
If the Group acquires a group of assets in a
company that does not constitute a business
combination in accordance with IFRS 3
‘Business Combinations’, the cost of the
acquired group of assets is allocated to the
individual identifiable assets acquired based on
their relative fair value.
Common control transactions
A business combination involving entities or
businesses under common control is a business
combination in which all of the combining
entities or businesses are ultimately controlled
by the same party or parties both before and
after the business combination and the control
is not transitory. The transactions between
entities under common control are scoped
out of IFRS 3 and there is no authoritative
literature for these transactions under IFRS.
As a result, the Group adopted accounting
principles similar to the pooling-of-interest
method based on the predecessor values. The
assets and liabilities of the acquired entity
are recognised at the book values recorded
in the ultimate parent entity’s consolidated
financial statements. The components of
equity of the acquired companies are added
to the same components within Group equity
except that any share capital and investments
in the books of the acquiring entity is cancelled
and the differences, if any, is adjusted in the
opening retained earnings/ capital reserve.
The Company’s shares issued in consideration
for the acquired companies are recognised
from the moment the acquired companies
are included in these financial statements and
the financial statements of the commonly
controlled entities would be combined,
retrospectively, as if the transaction had
occurred at the beginning of the earliest
reporting period presented. However, the prior
years’ comparative information is only adjusted
for periods during which the entities were under
common control.
ACCOUNTSNotes to the Financial Statements
Integrated Report
Statutory reports
Financial statements
(iii) Revenue recognition
Sale of goods/ rendering of services (Including
revenue from contracts with customers)
The Group’s revenue from contracts with
customers is mainly from the sale of copper,
aluminium, iron ore, zinc, oil and gas, power,
steel, glass substrate and port operations.
Revenue from contracts with customers
is recognised when control of the goods or
services is transferred to the customer which
usually is on delivery of the goods to the
shipping agent at an amount that reflects the
consideration to which the Group expects
to be entitled in exchange for those goods
or services. Revenue is recognised net of
discounts, volume rebates, outgoing sales
taxes/ goods and service tax and other indirect
taxes. Revenues from sale of by-products are
included in revenue.
Certain of the Group’s sales contracts provide
for provisional pricing based on the price on
the London Metal Exchange (“LME”) and crude
index, as specified in the contract. Revenue
in respect of such contracts is recognised
when control passes to the customer and is
measured at the amount the entity expects
to be entitled – being the estimate of the price
expected to be received at the end of the
measurement period. Post transfer of control
of goods, provisional pricing features are
accounted in accordance with IFRS 9 ‘Financial
Instruments’ rather than IFRS 15 ‘Revenue from
contracts with customers’ and therefore the
IFRS 15 rules on variable consideration do not
apply. These ‘provisional pricing’ adjustments,
i.e., the consideration adjusted post transfer
of control are included in total revenue from
operations on the face of the Consolidated
Income Statement and disclosed by way of note
to the financial statements. Final settlement
of the price is based on the applicable price
for a specified future period. The Group’s
provisionally priced sales are marked to market
using the relevant forward prices for the future
period specified in the contract and is adjusted
in revenue.
Revenue from oil, gas and condensate sales
represent the Group’s share in the revenue
from sale of such products, by the joint
operations, and is recognised as and when
control in these products gets transferred
to the customers. In computing its share of
revenue, the Group excludes government’s
share of profit oil which gets accounted for
when the obligation in respect of the same
arises.
Revenue from sale of power is recognised when
delivered and measured based on rates as per
bilateral contractual agreements with buyers
and at a rate arrived at based on the principles
laid down under the relevant Tariff Regulations
as notified by the regulatory bodies, as
applicable.
Where the Group acts as a port operator,
revenues relating to operating and
maintenance phase of the port contract are
measured at the amount that Group expects to
be entitled to for the services provided.
A contract asset is the right to consideration
in exchange for goods or services transferred
to the customer. If the Group performs part
of its obligation by transferring goods or
services to a customer before the customer
pays consideration or before payment is due,
a contract asset is recognised for the earned
consideration when that right is conditional on
the Group’s future performance.
A contract liability is the obligation to transfer
goods or services to a customer for which the
Group has received consideration from the
customer. If a customer pays consideration
before the Group transfers goods or services to
the customer, a contract liability is recognised
when the payment is received. The advance
payments received plus a specified rate of
return/ discount, at the prevailing market
rates, is settled by supplying respective goods
over a period of up to twenty four months
under an agreed delivery schedule as per the
terms of the respective agreements. As these
are contracts that the Group expects, and
has the ability, to fulfil through delivery of a
non-financial item, these are presented as
advance from customers and are recognised
as revenue as and when control of respective
commodities is transferred to customers
under the agreements. The fixed rate of return/
discount is treated as finance cost. The portion
of the advance where either the Group does
not have a unilateral right to defer settlement
beyond 12 months or expects settlement
within 12 months from the balance sheet date is
classified as current liability.
Interest income
Interest income from debt instruments is
recognised using the effective interest rate
method. The effective interest rate is the
rate that exactly discounts estimated future
165
Notes to the Financial StatementsVEDANTA RESOURCES LIMITED | INTEGRATED REPORT AND ANNUAL ACCOUNTS 2020-21 |
cash receipts through the expected life of the
financial asset to the gross carrying amount
of a financial asset. When calculating the
effective interest rate, the Group estimates
the expected cash flows by considering all the
contractual terms of the financial instrument
(for example, prepayment, extension, call and
similar options) but does not consider the
expected credit losses.
Dividends
Dividend income is recognised in the
consolidated income statement only when
the right to receive payment is established,
provided it is probable that the economic
benefits associated with the dividend will flow
to the Group, and the amount of the dividend
can be measured reliably.
(iv) Special items
Special items are those items that management
considers, by virtue of their size or incidence
(including but not limited to impairment
charges and acquisition and restructuring
related costs), should be disclosed separately
to ensure that the financial information
allows an understanding of the underlying
performance of the business in the year, so
as to facilitate comparison with prior years.
Also, tax charges related to Special items and
certain one-time tax effects are considered
Special. Such items are material by nature
or amount to the year’s result and require
separate disclosure in accordance with IFRS.
The determination as to which items should
be disclosed separately requires a degree of
judgement.
(v) Property, plant and equipment
Mining properties and leases
When a decision is taken that a mining property
is viable for commercial production (i.e., when
the Group determines that the mining property
will provide sufficient and sustainable return
relative to the risks and the Group decided
to proceed with the mine development), all
further pre-production primary development
expenditure other than that on land, buildings,
plant, equipment and capital work in progress
is capitalised as property, plant and equipment
under the heading “Mining properties and
leases” together with any amount transferred
from “Exploration and evaluation” assets. The
costs of mining properties and leases include
the costs of acquiring and developing mining
properties and mineral rights.
to the extent the current period stripping
cost exceeds the average period stripping
cost over the life of mine and recognised as
an asset if such cost provides a benefit in
terms of improved access to ore in future
periods and certain criteria are met. When the
benefit from the stripping costs are realised
in the current period, the stripping costs are
accounted for as the cost of inventory. If the
costs of inventory produced and the stripping
activity asset are not separately identifiable, a
relevant production measure is used to allocate
the production stripping costs between the
inventory produced and the stripping activity
asset. The group uses the expected volume
of waste compared with the actual volume of
waste extracted for a given value of ore/mineral
production for the purpose of determining the
cost of the stripping activity asset.
Deferred stripping costs are included in
mining properties within property, plant and
equipment and disclosed as a part of mining
properties. After initial recognition, the
stripping activity asset is depreciated on a unit
of production method over the expected useful
life of the identified component of the ore body.
In circumstances where a mining property is
abandoned, the cumulative capitalised costs
relating to the property are written off in the
period in which it occurs, i.e., when the Group
determines that the mining property will not
provide sufficient and sustainable returns
relative to the risks and the Group decides not
to proceed with the mine development.
Commercial reserves are proved and probable
reserves as defined by the ‘JORC’ Code,
‘MORC’ code or ‘SAMREC’ Code. Changes
in the commercial reserves affecting unit
of production calculations are dealt with
prospectively over the revised remaining
reserves.
The estimates of hydrocarbon reserves and
resources have been derived in accordance with
the Society of Petroleum Engineers “Petroleum
Resources Management System (2018)”.
Oil and gas assets- (developing/producing
assets)
For oil and gas assets a successful efforts based
accounting policy is followed. Costs incurred
prior to obtaining the legal rights to explore
an area are expensed immediately to the
consolidated income statement.
The stripping cost incurred during the
production phase of a surface mine is deferred
All costs incurred after the technical feasibility
and commercial viability of producing
166
ACCOUNTSNotes to the Financial Statements
Integrated Report
Statutory reports
Financial statements
hydrocarbons has been demonstrated
are capitalised within property, plant and
equipment - development/producing assets on
a field-by-field basis. Subsequent expenditure
is capitalised only where it either enhances
the economic benefits of the development/
producing asset or replaces part of the existing
development/producing asset. Any remaining
costs associated with the part replaced are
expensed.
Net proceeds from any disposal of
development/producing assets are credited
against the previously capitalised cost. A gain
or loss on disposal of a development/producing
asset is recognised in the consolidated income
statement to the extent that the net proceeds
exceed or are less than the appropriate portion
of the net capitalised costs of the asset.
Exploration and evaluation assets
Exploration and evaluation expenditure
incurred prior to obtaining the mining right
or the legal right to explore are expensed as
incurred.
Exploration and evaluation expenditure
incurred after obtaining the mining right or
the legal right to explore, are capitalised as
exploration and evaluation assets (property,
plant and equipment) and stated at cost less
impairment, if any. Exploration and evaluation
assets are transferred to the appropriate
category of property, plant and equipment
when the technical feasibility and commercial
viability has been determined. Exploration and
evaluation assets are assessed for impairment
and impairment loss, if any, is recognised prior
to reclassification.
Exploration expenditure includes all direct
and allocated indirect expenditure associated
with finding specific mineral resources
which includes depreciation and applicable
operating costs of related support equipment
and facilities and other costs of exploration
activities:
Acquisition costs - costs associated with
acquisition of licences and rights to explore,
including related professional fees.
General exploration costs - costs of
surveys and studies, rights of access to
properties to conduct those studies (e.g.,
costs incurred for environment clearance,
defence clearance, etc.), and salaries and
other expenses of geologists, geophysical
crews and other personnel conducting those
studies.
Costs of exploratory drilling and equipping
exploratory and appraisal wells.
Exploration expenditure incurred in the
process of determining oil and gas exploration
targets is capitalised within “exploration and
evaluation assets “and subsequently allocated
to drilling activities. Exploration drilling costs
are initially capitalised on a well-by-well basis
until the success or otherwise of the well has
been established. The success or failure of
each exploration effort is judged on a well-
by-well basis. Drilling costs are written off on
completion of a well unless the results indicate
that hydrocarbon reserves exist and there is a
reasonable prospect that these reserves are
commercial.
Following appraisal of successful exploration
wells, if commercial reserves are established
and technical feasibility for extraction
demonstrated, then the related capitalised
exploration costs are transferred into a
single field cost centre within property, plant
& equipment - development/ producing
assets (oil and gas properties) after testing
for impairment. Where results of exploration
drilling indicate the presence of hydrocarbons
which are ultimately not considered
commercially viable, all related costs are
written off to the consolidated income
statement.
Expenditure incurred on the acquisition of
a licence interest is initially capitalised on
a licence-by-licence basis. Costs are held
undepleted, within exploration and evaluation
assets until such time as the exploration phase
on the licence area is complete or commercial
reserves have been discovered.
Net proceeds from any disposal of an
exploration asset are initially credited against
the previously capitalised costs. Any surplus/
deficit is recognised in the consolidated income
statement.
Other property, plant and equipment
The initial cost of property, plant and
equipment comprises its purchase price,
including import duties and non-refundable
purchase taxes, and any directly attributable
costs of bringing an asset to working condition
and location for its intended use. It also includes
the initial estimate of the costs of dismantling
and removing the item and restoring the site
on which it is located. If significant parts of an
item of property, plant and equipment have
different useful lives, then they are accounted
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Notes to the Financial StatementsVEDANTA RESOURCES LIMITED | INTEGRATED REPORT AND ANNUAL ACCOUNTS 2020-21 |
for as separate items (major components)
of property, plant and equipment. All other
expenses on existing property, plant and
equipment, including day-to-day repair and
maintenance expenditure and cost of replacing
parts, are charged to the consolidated income
statement for the period during which such
expenses are incurred.
Gains and losses on disposal of an item of
property, plant and equipment computed as the
difference between the net disposal proceeds
and the carrying amount of the asset is included
in the consolidated income statement when
the asset is derecognised. Major inspection
and overhaul expenditure is capitalised, if the
recognition criteria are met.
(vi) Assets under construction
Assets under construction are capitalised in
the assets under construction account. At the
point when an asset is capable of operating
in the manner intended by management,
the cost of construction is transferred to
the appropriate category of property, plant
and equipment. Costs associated with the
commissioning of an asset and any obligatory
decommissioning costs are capitalised until the
period of commissioning has been completed
and the asset is ready for its intended use.
(vii) Depreciation, depletion and amortisation
expense
Mining properties and other assets in the
course of development or construction,
freehold land and goodwill are not depreciated
or amortised.
Mining properties
The capitalised mining properties are
amortised on a unit-of-production basis over
the total estimated remaining commercial
proved and probable reserves of each property
or Group of properties and are subject to
impairment review. Costs used in the unit
of production calculation comprise the net
book value of capitalised costs plus the
estimated future capital expenditure required
to access the commercial reserves. Changes
in the estimates of commercial reserves
or future capital expenditure are dealt with
prospectively.
Oil and gas assets
All expenditures carried within each field
are amortised from the commencement of
production on a unit of production basis,
which is the ratio of oil and gas production
in the period to the estimated quantities of
168
commercial reserves at the end of the period
plus the production in the period, generally on
a field-by-field basis or group of fields which are
reliant on common infrastructure.
Commercial reserves are proven and
probable oil and gas reserves, which are
defined as the estimated quantities of crude
oil, natural gas and natural gas liquids which
geological, geophysical and engineering
data demonstrate with a specified degree of
certainty to be recoverable in future years from
known reservoirs and which are considered
commercially producible.
Costs used in the unit of production
calculation comprise the net book value of
capitalised costs plus the estimated future
field development costs required to access
the commercial reserves. Changes in the
estimates of commercial reserves or future
field development costs are dealt with
prospectively.
Other assets
Depreciation on Property, plant and equipment
is calculated using the straight-line method
(SLM) to allocate their cost, net of their residual
values, over their estimated useful lives
(determined by the management) as given
below. Management’s assessment takes into
account, inter alia, the nature of the assets, the
estimated usage of the assets, the operating
conditions of the assets, past history of
replacement and maintenance support.
Estimated useful life of assets are as follows:
Buildings operations and
administration
Plant and machinery
Railway Sidings
Office equipment
Furniture and fixtures
Vehicles
3-60 years
15-40 years
15 years
3–6 years
8-10 years
8-10 years
Major inspection and overhaul costs are
depreciated over the estimated life of the
economic benefit to be derived from such
costs. The carrying amount of the remaining
previous overhaul cost is charged to the
consolidated income statement if the next
overhaul is undertaken earlier than the
previously estimated life of the economic
benefit.
The Group reviews the residual value and useful
life of an asset at least at each financial year
end and, if expectations differ from previous
ACCOUNTSNotes to the Financial Statements
Integrated Report
Statutory reports
Financial statements
estimates, the change is accounted for as a
change in accounting estimate.
the change is accounted for prospectively as a
change in accounting estimate.
(viii) Intangible assets
Intangible assets acquired separately are
measured on initial recognition at cost.
Subsequently, intangibles assets are measured
at cost less accumulated amortisation and
accumulated impairment losses, if any.
The Group recognises port concession
rights as “Intangible Assets” arising from a
service concession arrangement, in which
the grantor controls or regulates the services
provided and the prices charged, and also
controls any significant residual interest in
the infrastructure such as property, plant
and equipment, irrespective whether the
infrastructure is existing infrastructure of the
grantor or the infrastructure is constructed
or purchased by the Group as part of the
service concession arrangement. Such an
intangible asset is recognised by the Group
initially at cost determined as the fair value
of the consideration received or receivable
for the construction service delivered and is
capitalised when the project is complete in all
respects. Port concession rights are amortised
on straight line basis over the balance of license
period. The concession period is 30 years from
the date of the award. Any addition to the port
concession rights are measured at fair value on
recognition. Port concession rights also include
certain property, plant and equipment in
accordance with IFRIC 12 ”Service Concession
Arrangements”.
Intangible assets are amortised over their
estimated useful life on a straight line basis.
Software is amortised over the estimated
useful life ranging from 2 – 5 years. Amounts
paid for securing mining rights are amortised
over the period of the mining lease ranging
from 16-25 years. Technological know-how
and acquired brand are amortised over the
estimated useful life of 10 years.
Gains or losses arising from derecognition
of an intangible asset are measured as the
difference between the net disposal proceeds
and the carrying amount of the asset and
are recognised in the consolidated income
statement when the asset is derecognised.
The amortisation period and the amortisation
method are reviewed at least at each financial
year end. If the expected useful life of the
asset is different from previous estimates,
(ix) Non-current assets held for sale
Non-current assets and disposal groups are
classified as held for sale if their carrying
amount will be recovered through a sale
transaction rather than through continuing
use. This condition is regarded as met only
when the sale is highly probable and the asset
(or disposal group) is available for immediate
sale in its present condition. Management
must be committed to the sale which should
be expected to qualify for recognition as a
completed sale within one year from the date of
classification.
(x)
Non-current assets and disposal groups
classified as held for sale are not depreciated
and are measured at the lower of carrying
amount and fair value less costs to sell. Such
assets and disposal groups are presented
separately on the face of the consolidated
statement of financial position.
Impairment
Non-financial assets
Impairment charges and reversals are assessed
at the level of cash-generating units. A
cash-generating unit (“CGU”) is the smallest
identifiable group of assets that generate cash
inflows that are largely independent of the cash
inflows from other assets or group of assets.
The Group assesses at each reporting date,
whether there is an indication that an asset
may be impaired. The Group conducts an
internal review of asset values annually, which
is used as a source of information to assess
for any indications of impairment or reversal
of previously recognised impairment losses.
Internal and external factors, such as worse
economic performance than expected,
changes in expected future prices, costs and
other market factors are also monitored to
assess for indications of impairment or reversal
of previously recognised impairment losses.
If any such indication exists or in case of
goodwill where annual testing of impairment
is required then an impairment review is
undertaken, the recoverable amount is
calculated, as the higher of fair value less costs
of disposal and the asset’s value in use.
Fair value less costs of disposal is the price that
would be received to sell the asset in an orderly
transaction between market participants and
does not reflect the effects of factors that may
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Notes to the Financial StatementsVEDANTA RESOURCES LIMITED | INTEGRATED REPORT AND ANNUAL ACCOUNTS 2020-21 |
be specific to the group and not applicable to
entities in general. Fair value for mineral and
oil and gas assets is generally determined as
the present value of the estimated future cash
flows expected to arise from the continued
use of the asset, including any expansion
prospects, and its eventual disposal, using
assumptions that an independent market
participant may take into account. These cash
flows are discounted at an appropriate post-tax
discount rate to arrive at the net present value.
Value in use is determined as the present
value of the estimated future cash flows
expected to arise from the continued use of
the asset in its present form and its eventual
disposal. The cash flows are discounted using
a pre-tax discount rate that reflects current
market assessments of the time value of
money and the risks specific to the asset for
which estimates of future cash flows have not
been adjusted. Value in use is determined by
applying assumptions specific to the Group’s
continued use and cannot take into account
future development. These assumptions are
different to those used in calculating fair value
and consequently the value in use calculation
is likely to give a different result to a fair value
calculation.
The carrying amount of the CGU is determined
on a basis consistent with the way the
recoverable amount of the CGU is determined.
The carrying value is net of deferred tax liability
recognised in the fair value of assets acquired in
the business combination.
If the recoverable amount of an asset or
CGU is estimated to be less than it’s carrying
amount, the carrying amount of the asset or
CGU is reduced to its recoverable amount.
An impairment loss is recognised in the
consolidated income statement.
Any reversal of the previously recognised
impairment loss is limited to the extent
that the asset’s carrying amount does not
exceed the carrying amount that would have
been determined if no impairment loss had
previously been recognised except if initially
attributed to goodwill.
Exploration and evaluation assets:
In assessing whether there is any indication
that an exploration and evaluation asset may be
impaired, the Group considers, as a minimum,
the following indicators:
the period for which the Group has the right
to explore in the specific area has expired
during the period or will expire in the near
future, and is not expected to be renewed;
substantive expenditure on further
exploration for and evaluation of mineral
resources in the specific area is neither
budgeted nor planned;
exploration for and evaluation of mineral
resources in the specific area have not led
to the discovery of commercially viable
quantities of mineral resources and the
Group has decided to discontinue such
activities in the specific area;
sufficient data exist to indicate that,
although a development in the specific area
is likely to proceed, the carrying amount
of the exploration and evaluation asset
is unlikely to be recovered in full from
successful development or by sale; and
reserve information prepared annually by
external experts.
When a potential impairment is identified,
an assessment is performed for each area
of interest in conjunction with the group
of operating assets (representing a cash-
generating unit) to which the exploration and
evaluation assets is attributed. Exploration
areas in which reserves have been discovered
but require major capital expenditure before
production can begin, are continually evaluated
to ensure that commercial quantities of
reserves exist or to ensure that additional
exploration work is under-way or planned. To
the extent that capitalised expenditure is no
longer expected to be recovered, it is charged
to the consolidated income statement.
(xi) Financial Instruments
A financial instrument is any contract that
gives rise to a financial asset of one entity
and a financial liability or equity instrument of
another entity.
(a)
Financial Assets – Recognition & subsequent
measurement
All financial assets are recognised initially at
fair value plus, in the case of financial assets
not recorded at fair value through profit or loss,
transaction costs that are attributable to the
acquisition of the financial asset. Purchases or
sales of financial assets that require delivery
of assets within a time frame established by
regulation or convention in the market place
(regular way trades) are recognised on the trade
date, i.e., the date that the Group commits to
purchase or sell the asset.
170
ACCOUNTSNotes to the Financial Statements
Integrated Report
Statutory reports
Financial statements
For purposes of subsequent measurement,
financial assets are classified in four categories:
Debt instruments at amortised cost
A ‘debt instrument’ is measured at amortised
cost if both the following conditions are met:
a)
b)
The asset is held within a business model
whose objective is to hold assets for
collecting contractual cash flows, and
Contractual terms of the asset give rise
on specified dates to cash flows that
are solely payments of principal and
interest (SPPI) on the principal amount
outstanding.
After initial measurement, such financial assets
are subsequently measured at amortised cost
using the Effective Interest Rate (EIR) method.
Amortised cost is calculated by taking into
account any discount or premium on acquisition
and fees or costs that are an integral part of the
EIR. The EIR amortisation is included in interest
income in consolidated income statement. The
losses arising from impairment are recognised
in consolidated income statement.
Debt instruments at fair value through other
comprehensive income (FVOCI)
A ‘debt instrument’ is classified as at FVOCI if
both of the following criteria are met:
a)
The objective of the business model is
achieved both by collecting contractual
cash flows and selling the financial assets,
and
b)
The asset’s contractual cash flows
represent SPPI.
Debt instruments included within the FVOCI
category are measured initially as well as
at each reporting date at fair value. Fair
value movements are recognised in other
comprehensive income (OCI). However,
interest income, impairment losses and
reversals and foreign exchange gain or loss
are recognised in the consolidated income
statement. On derecognition of the asset,
cumulative gain or loss previously recognised
in other comprehensive income is reclassified
from the equity to consolidated income
statement. Interest earned whilst holding fair
value through other comprehensive income
debt instrument is reported as interest income
using the EIR method.
Debt instruments at fair value through profit
or loss (FVTPL)
FVTPL is a residual category for debt
instruments. Any debt instrument, which does
not meet the criteria for categorization as at
amortised cost or as FVOCI, is classified as at
FVTPL.
In addition, the Group may elect to designate
a debt instrument, which otherwise meets
amortised cost or FVOCI criteria, as at FVTPL.
However, such election is allowed only if doing
so reduces or eliminates a measurement or
recognition inconsistency (referred to as
‘accounting mismatch’). The Group has not
designated any debt instrument as at FVTPL.
Debt instruments included within the FVTPL
category are measured at fair value with all
changes being recognised in consolidated
income statement.
Equity instruments
All equity investments in the scope of IFRS 9
are measured at fair value. Equity instruments
which are held for trading and contingent
consideration recognised by an acquirer
in a business combination to which IFRS 3
applies are classified as at FVTPL. For all other
equity instruments, the Group may make
an irrevocable election to present in other
comprehensive income subsequent changes in
the fair value. The Group makes such election
on an instrument-by-instrument basis. The
classification is made on initial recognition and
is irrevocable.
If the Group decides to classify an equity
instrument as at FVOCI, then all fair value
changes on the instrument, excluding
dividends, are recognised in the OCI. There is
no recycling of the amounts from OCI to profit
and loss, even on sale of investment. However,
the Group may transfer the cumulative gain
or loss within equity. For equity instruments
which are classified as FVTPL, all subsequent
fair value changes are recognised in the
consolidated income statement.
(b) Financial Assets - Derecognition
The Group derecognises a financial asset
when the contractual rights to the cash
flows from the asset expire, or it transfers
the rights to receive the contractual cash
flows on the financial asset in a transaction in
which substantially all the risks and rewards of
ownership of the financial asset are transferred.
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Notes to the Financial StatementsVEDANTA RESOURCES LIMITED | INTEGRATED REPORT AND ANNUAL ACCOUNTS 2020-21 |
(c)
Impairment of financial assets
In accordance with IFRS 9, the Group applies
expected credit loss (“ECL”) model for
measurement and recognition of impairment
loss on the following financial assets:
i.
ii.
iii.
Financial assets that are debt instruments,
and are measured at amortised cost e.g.,
loans, debt securities and deposits;
Financial assets that are debt instruments
and are measured as at FVOCI;
Trade receivables or any contractual right
to receive cash or another financial asset
that result from transactions that are
within the scope of IFRS 15.
The Group follows ‘simplified approach’ for
recognition of impairment loss allowance on
trade receivables, contract assets and lease
receivables. The application of simplified
approach does not require the Group to track
changes in credit risk. Rather, it recognises
impairment loss allowance based on lifetime
ECLs at each reporting date, right from its initial
recognition.
At each reporting date, for recognition of
impairment loss on other financial assets and
risk exposure, the Group determines whether
there has been a significant increase in the
credit risk since initial recognition. If credit risk
has not increased significantly, 12-month ECL is
used to provide for impairment loss. However,
if credit risk has increased significantly, lifetime
ECL is used. If, in a subsequent period, credit
quality of the instrument improves such that
there is no longer a significant increase in
credit risk since initial recognition, then the
Group reverts to recognising impairment loss
allowance based on 12-month ECL.
Lifetime ECL are the expected credit losses
resulting from all possible default events over
the expected life of a financial instrument.
The 12-month ECL is a portion of the lifetime
ECL which results from default events that are
possible within 12 months after the reporting
date.
ECL is the difference between all contractual
cash flows that are due to the Group in
accordance with the contract and all the
cash flows that the entity expects to receive,
discounted at the original EIR.
ECL impairment loss allowance (or reversal)
during the year is recognised as income/
expense in consolidated income statement.
The consolidated statement of financial
172
position presentation for various financial
instruments is described below:
i)
ii)
Financial assets measured at amortised
cost: ECL is presented as an allowance, i.e.,
as an integral part of the measurement of
those assets. The Group does not reduce
impairment allowance from the gross
carrying amount.
Debt instruments measured at FVOCI:
Since financial assets are already reflected
at fair value, impairment allowance is not
further reduced from its value. Rather,
ECL amount is presented as ‘accumulated
impairment amount’ in the OCI.
For assessing increase in credit risk and
impairment loss, the Group combines financial
instruments on the basis of shared credit risk
characteristics with the objective of facilitating
an analysis that is designed to enable significant
increases in credit risk to be identified on a
timely basis.
The Group does not have any purchased or
originated credit-impaired (“POCI”) financial
assets, i.e., financial assets which are credit
impaired on purchase/origination.
(d)
Financial liabilities – Recognition and
Subsequent measurement
Financial liabilities are classified, at initial
recognition, as financial liabilities at fair
value through profit or loss, or as loans and
borrowings, payables, or as derivatives
designated as hedging instruments in an
effective hedge, as appropriate.
All financial liabilities are recognised initially at
fair value, and in the case of financial liabilities
at amortised cost, net of directly attributable
transaction costs.
The Group’s financial liabilities include trade
and other payables, loans and borrowings
including bank overdrafts, financial guarantee
contracts and derivative financial instruments.
The measurement of financial liabilities
depends on their classification, as described
below:
Financial liabilities at fair value through profit
or loss
Financial liabilities at fair value through profit or
loss include financial liabilities held for trading
and financial liabilities designated upon initial
recognition as at fair value through profit or
loss. Financial liabilities are classified as held for
trading if they are incurred for the purpose of
ACCOUNTSNotes to the Financial Statements
Integrated Report
Statutory reports
Financial statements
repurchasing in the near term. This category
also includes derivative financial instruments
entered into by the Group that are not
designated as hedging instruments in hedge
relationships as defined by IFRS 9. Separated
embedded derivatives are also classified as
held for trading unless they are designated as
effective hedging instruments.
Gains or losses on liabilities held for trading
are recognised in the consolidated income
statement.
Financial liabilities designated upon initial
recognition at fair value through profit or loss
are designated as such at the initial date of
recognition, and only if the criteria in IFRS 9 are
satisfied. For liabilities designated as FVTPL,
fair value gains/losses attributable to changes
in own credit risk are recognised in OCI. These
gains/ losses are not subsequently transferred
to consolidated income statement. However,
the Group may transfer the cumulative gain
or loss within equity. All other changes in fair
value of such liability are recognised in the
consolidated income statement. The Group has
not designated any financial liability as at fair
value through profit or loss.
Financial liabilities at amortised cost (Loans
and Borrowings and Trade and Other payables)
After initial recognition, interest-bearing loans
and borrowings and trade and other payables
are subsequently measured at amortised cost
using the EIR method. Gains and losses are
recognised in consolidated income statement
when the liabilities are derecognised as well as
through the EIR amortisation process.
Amortised cost is calculated by taking into
account any discount or premium on acquisition
and fees or costs that are an integral part of the
EIR. The EIR amortisation is included as finance
costs in the consolidated income statement.
(e) Financial liabilities – Derecognition
A financial liability is derecognised when the
obligation under the liability is discharged or
cancelled or expires. When an existing financial
liability is replaced by another from the same
lender on substantially different terms, or the
terms of an existing liability are substantially
modified, such an exchange or modification
is treated as the derecognition of the original
liability and the recognition of a new liability.
The difference in the respective carrying
amounts is recognised in the consolidated
income statement.
(f) Embedded Derivatives
An embedded derivative is a component of a
hybrid (combined) instrument that also includes
a non-derivative host contract – with the effect
that some of the cash flows of the combined
instrument vary in a way similar to a stand-
alone derivative. An embedded derivative
causes some or all of the cash flows that
otherwise would be required by the contract
to be modified according to a specified interest
rate, financial instrument price, commodity
price, foreign exchange rate, index of prices
or rates, credit rating or credit index, or other
variable, provided in the case of a non-financial
variable that the variable is not specific to a
party to the contract. Reassessment only
occurs if there is either a change in the terms
of the contract that significantly modifies the
cash flows that would otherwise be required or
a reclassification of a financial asset out of the
fair value through profit or loss.
If the hybrid contract contains a host that
is a financial asset within the scope of IFRS
9, the Group does not separate embedded
derivatives. Rather, it applies the classification
requirements contained in IFRS 9 to the entire
hybrid contract. Derivatives embedded in
all other host contracts are accounted for as
separate derivatives and recorded at fair value
if their economic characteristics and risks
are not closely related to those of the host
contracts and the host contracts are not held
for trading or designated at fair value though
profit or loss. These embedded derivatives are
measured at fair value with changes in fair value
recognised in Consolidated Income Statement,
unless designated as effective hedging
instruments.
(g) Equity instruments
An equity instrument is any contract that
evidences a residual interest in the assets of
an entity after deducting all of its liabilities.
Equity instruments issued by the Group are
recognised at the proceeds received, net of
direct issue costs.
(h) Offsetting of financial instruments
Financial assets and financial liabilities are
offset and the net amount is reported in the
consolidated statement of financial position if
there is a currently enforceable legal right to
offset the recognised amounts and there is an
intention to settle on a net basis or to realise
the asset and settle the liability simultaneously.
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Notes to the Financial StatementsVEDANTA RESOURCES LIMITED | INTEGRATED REPORT AND ANNUAL ACCOUNTS 2020-21 |
(i)
Derivative financial instruments and hedge
accounting
Initial recognition and subsequent
measurement
In order to hedge its exposure to foreign
exchange, interest rate, and commodity
price risks, the Group enters into forward,
option, swap contracts and other derivative
financial instruments. The Group does not hold
derivative financial instruments for speculative
purposes.
Such derivative financial instruments are
initially recognised at fair value on the date on
which a derivative contract is entered into and
are subsequently re-measured at fair value.
Derivatives are carried as financial assets
when the fair value is positive and as financial
liabilities when the fair value is negative.
Any gains or losses arising from changes in
the fair value of derivatives are taken directly
to consolidated income statement, except
for the effective portion of cash flow hedges,
which is recognised in OCI and later reclassified
to consolidated income statement when the
hedge item affects profit or loss or treated
as basis adjustment if a hedged forecast
transaction subsequently results in the
recognition of a non-financial asset or non-
financial liability.
For the purpose of hedge accounting, hedges
are classified as:
Fair value hedges when hedging the
exposure to changes in the fair value
of a recognised asset or liability or an
unrecognised firm commitment
Cash flow hedges when hedging the
exposure to variability in cash flows that
is either attributable to a particular risk
associated with a recognised asset or liability
or a highly probable forecast transaction or
the foreign currency risk in an unrecognised
firm commitment
Hedges of a net investment in a foreign
operation
At the inception of a hedge relationship, the
Group formally designates and documents the
hedge relationship to which the Group wishes
to apply hedge accounting. The documentation
includes the Group’s risk management
objective and strategy for undertaking hedge,
the hedging/economic relationship, the hedged
item or transaction, the nature of the risk
being hedged, hedge ratio and how the Group
174
will assess the effectiveness of changes in the
hedging instrument’s fair value in offsetting the
exposure to changes in the hedged item’s fair
value or cash flows attributable to the hedged
risk. Such hedges are expected to be highly
effective in achieving offsetting changes in
fair value or cash flows and are assessed on an
ongoing basis to determine that they actually
have been highly effective throughout the
financial reporting periods for which they were
designated.
Hedges that meet the strict criteria for hedge
accounting are accounted for, as described
below:
(i)
Fair value hedges
Changes in the fair value of derivatives
that are designated and qualify as
fair value hedges are recognised
in consolidated income statement
immediately, together with any changes
in the fair value of the hedged asset or
liability that are attributable to the hedged
risk.
When an unrecognised firm commitment
is designated as a hedged item, the
subsequent cumulative change in the fair
value of the firm commitment attributable
to the hedged risk is recognised as an
asset or liability with a corresponding
gain or loss recognised in consolidated
income statement. Hedge accounting
is discontinued when the Group revokes
the hedge relationship, the hedging
instrument or hedged item expires or is
sold, terminated, or exercised or no longer
meets the criteria for hedge accounting.
(ii) Cash flow hedges
The effective portion of the gain or loss
on the hedging instrument is recognised
in OCI in the cash flow hedge reserve,
while any ineffective portion is recognised
immediately in the consolidated income
statement.
Amounts recognised in OCI are
transferred to consolidated income
statement when the hedged transaction
affects profit or loss, such as when the
hedged financial income or financial
expense is recognised or when a forecast
sale occurs. When the hedged item is
the cost of a non-financial asset or non-
financial liability, the amounts recognised
in OCI are transferred to the initial
ACCOUNTSNotes to the Financial Statements
Integrated Report
Statutory reports
Financial statements
carrying amount of the non-financial asset
or liability
If the hedging instrument expires or is
sold, terminated or exercised without
replacement or rollover (as part of the
hedging strategy), or if its designation as
a hedge is revoked, or when the hedge
no longer meets the criteria for hedge
accounting, any cumulative gain or loss
previously recognised in OCI remains
separately in equity until the forecast
transaction occurs or the foreign currency
firm commitment is met.
(iii) Hedges of a net investment
Hedges of a net investment in a foreign
operation, including a hedge of a monetary
item that is accounted for as part of the
net investment, are accounted for in a
way similar to cash flow hedges. Gains
or losses on the hedging instrument
relating to the effective portion of the
hedge are recognised in OCI while any
gains or losses relating to the ineffective
portion are recognised in the consolidated
income statement. On disposal of the
foreign operation, the cumulative value
of any such gains or losses recorded in
equity is reclassified to the consolidated
income statement (as a reclassification
adjustment).
(iv) Financial guarantees
Financial guarantees issued by the
Group on behalf of related parties are
designated as ‘Insurance Contracts’.
The Group assesses at the end of each
reporting period whether its recognised
insurance liabilities (if any) are adequate,
using current estimates of future cash
flows under its insurance contracts. If
that assessment shows that the carrying
amount of its insurance liabilities is
inadequate in the light of the estimated
future cash flows, the entire deficiency
is recognised in consolidated income
statement.
(xii) Leases
The Group assesses at contract inception,
all arrangements to determine whether they
are, or contain, a lease. That is, if the contract
conveys the right to control the use of an
identified asset for a period of time in exchange
for consideration.
(a) Group as a lessor
Leases in which the Group does not transfer
substantially all the risks and rewards of
ownership of an asset are classified as
operating leases. Rental income from operating
lease is recognised on a straight-line basis over
the term of the relevant lease. Initial direct
costs incurred in negotiating and arranging
an operating lease are added to the carrying
amount of the leased asset and recognised
over the lease term on the same basis as rental
income. Contingent rents are recognised as
revenue in the period in which they are earned.
Leases are classified as finance leases when
substantially all of the risks and rewards of
ownership transfer from the Group to the
lessee. Amounts due from lessees under
finance leases are recorded as receivables
at the Group’s net investment in the leases.
Finance lease income is allocated to accounting
periods so as to reflect a constant periodic rate
of return on the net investment outstanding in
respect of the lease.
(b) Group as a lessee
The Group applies a single recognition and
measurement approach for all leases, except
for short-term leases and leases of low-value
assets. The Group recognises lease liabilities
towards future lease payments and right-of-
use assets representing the right to use the
underlying assets.
(i)
Right-of-use assets
The Group recognises right-of-use assets
at the commencement date of the lease
(i.e., the date when the underlying asset is
available for use). Right-of-use assets are
measured at cost, less any accumulated
depreciation and impairment losses, and
adjusted for any remeasurement of lease
liabilities. The cost of right-of-use assets
includes the amount of lease liabilities
recognised, initial direct costs incurred,
and lease payments made at or before
the commencement date less any lease
incentives received. The right-of-use
assets are also subject to impairment.
Right-of-use assets are depreciated on a
straight-line basis over the shorter of the
lease term and the estimated useful lives
of the assets as described in (vii) above.
(ii) Lease liabilities
At the commencement date of the lease,
the Group recognises lease liabilities
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measured at the present value of lease
payments to be made over the lease
term. The lease payments include fixed
payments (and, in some instances,
in-substance fixed payments) less any
lease incentives receivable, variable
lease payments that depend on an index
or a rate, and amounts expected to be
paid under residual value guarantees.
The lease payments also include the
exercise price of a purchase option
reasonably certain to be exercised by
the Group and payments of penalties for
terminating the lease, if the lease term
reflects the Group exercising the option
to terminate. Variable lease payments
that do not depend on an index or a rate
are recognised as expenses (unless they
are incurred to produce inventories) in the
period in which the event or condition that
triggers the payment occurs.
In calculating the present value of
lease payments, the Group uses its
incremental borrowing rate at the
lease commencement date because
the interest rate implicit in the lease is
generally not readily determinable. After
the commencement date, the amount
of lease liabilities is increased to reflect
the accretion of interest and reduced for
the lease payments made. In addition,
the carrying amount of lease liabilities is
remeasured if there is a modification, a
change in the lease term, a change in the
lease payments (e.g., changes to future
payments resulting from a change in an
index or rate used to determine such lease
payments) or a change in the assessment
of an option to purchase the underlying
asset.
The Group’s lease liabilities are included in
Trade and other payables.
(iii)
Short-term leases and leases of low-value
assets
The Group applies the short-term lease
recognition exemption to its short-term
leases of equipment (i.e., those leases
that have a lease term of 12 months or less
from the commencement date and do not
contain a purchase option). It also applies
the lease of low-value assets recognition
exemption to leases of office equipment
that are considered to be low value. Lease
payments on short-term leases and leases
of low-value assets are recognised as
expense on a straight-line basis over the
lease term.
(xiii) Inventories
Inventories and work-in-progress are stated at
the lower of cost and net realisable value.
Cost is determined on the following basis:
Purchased copper concentrate is recorded
at cost on a first-in, first-out (“FIFO”) basis;
all other materials including stores and
spares are valued on weighted average basis;
except in Oil and Gas business where stores
and spares are valued on a FIFO basis;
Finished products are valued at raw material
cost plus costs of conversion, comprising
labour costs and an attributable proportion
of manufacturing overheads based on
normal levels of activity and are moved out
of inventory on a weighted average basis
(except in copper business where FIFO basis
is followed); and
By-products and scrap are valued at net
realisable value.
Net realisable value is determined based on
estimated selling price, less further costs
expected to be incurred for completion and
disposal.
(xiv) Government grants
Grants and subsidies from the government
are recognised when there is reasonable
assurance that (i) the Group will comply with the
conditions attached to them, and (ii) the grant/
subsidy will be received.
When the grant or subsidy relates to revenue, it
is recognised as income on a systematic basis
in the consolidated income statement over
the periods necessary to match them with
the related costs, which they are intended to
compensate.
Government grants relating to tangible fixed
assets are deducted in calculating the carrying
amount of the assets and recognised in the
consolidated income statement over the
expected useful lives of the assets concerned
as a reduced depreciation expense.
When loans or similar assistance are provided
by governments or related institutions, with
an interest rate below the current applicable
market rate, the effect of this favourable
interest is regarded as a government grant.
The loan or assistance is initially recognised
and measured at fair value and the government
grant is measured as the difference between
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Statutory reports
Financial statements
the initial carrying value of the loan and the
proceeds received. The loan is subsequently
measured as per the accounting policy
applicable to financial liabilities.
(xv) Taxation
Tax expense represents the sum of current tax
and deferred tax.
Current tax is provided at amounts expected
to be paid (or recovered) using the tax rates and
laws that have been enacted or substantively
enacted by the reporting date and includes
any adjustment to tax payable in respect of
previous years.
Subject to the exceptions below, deferred tax is
provided, using the balance sheet method, on
all temporary differences at the reporting date
between the tax bases of assets and liabilities
and their carrying amounts for financial
reporting purposes and on carry forward of
unused tax credits and unused tax losses:
Tax payable on the future remittance of
the past earnings of subsidiaries where
the timing of the reversal of the temporary
differences can be controlled and it is
probable that the temporary differences will
not reverse in the foreseeable future;
Deferred income tax is not recognised
on initial recognition as well as on the
impairment of goodwill which is not
deductible for tax purposes or on the
initial recognition of an asset or liability
in a transaction that is not a business
combination, and at the time of the
transaction, affects neither the accounting
profit nor taxable profit (tax loss) ; and
Deferred tax assets (including MAT credit
entitlement) are recognised only to the
extent that it is more likely than not that they
will be recovered.
Deferred tax assets and liabilities are measured
at the tax rates that are expected to apply
to the year when the asset is realised or the
liability is settled, based on tax rates (and tax
laws) that have been enacted or substantively
enacted at the reporting date. Tax relating
to items recognised outside consolidated
income statement is recognised outside
consolidated income statement (either in other
comprehensive income or equity).
The carrying amount of deferred tax assets
(including MAT credit entitlement) is reviewed
at each reporting date and is adjusted to
the extent that it is no longer probable that
sufficient taxable profit will be available to allow
all or part of the asset to be recovered.
Deferred tax assets and deferred tax liabilities
are offset, if a legally enforceable right exists
to set off current income tax assets against
current income tax liabilities and the deferred
taxes relate to the same taxable entity and the
same taxation authority.
Deferred tax is provided on temporary
differences arising on acquisitions that are
categorised as Business Combinations.
Deferred tax is recognised at acquisition as part
of the assessment of the fair value of assets
and liabilities acquired. Subsequently deferred
tax is charged or credited in the consolidated
income statement/other comprehensive
income as the underlying temporary difference
is reversed.
Further, management periodically evaluates
positions taken in the tax returns with respect
to situations in which applicable tax regulations
are subject to interpretation and considers
whether it is probable that a taxation authority
will accept an uncertain tax treatment. The
Group shall reflect the effect of uncertainty for
each uncertain tax treatment by using either
most likely method or expected value method,
depending on which method predicts better
resolution of the treatment.
(xvi) Retirement benefit schemes
The Group operates or participates in a number
of defined benefits and defined contribution
schemes, the assets of which (where funded)
are held in separately administered funds.
For defined benefit schemes, the cost
of providing benefits under the plans is
determined by actuarial valuation each year
separately for each plan using the projected
unit credit method by third party qualified
actuaries.
Remeasurement including, effects of asset
ceiling and return on plan assets (excluding
amounts included in interest on the net defined
benefit liability) and actuarial gains and losses
arising in the year are recognised in full in other
comprehensive income and are not recycled to
the consolidated income statement.
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Past service costs are recognised in the
consolidated income statement on the earlier
of:
the date of the plan amendment or
curtailment, and
the date that the Group recognises related
restructuring costs
Net interest is calculated by applying a discount
rate to the net defined benefit liability or asset
at the beginning of the period. Defined benefit
costs are split into current service cost, past
service cost, net interest expense or income
and remeasurement, and gains and losses on
curtailments and settlements.
Current service cost and past service costs
are recognised within cost of sales and
administrative expenses and distribution
expenses. Net interest expense or income is
recognised within finance costs.
For defined contribution schemes, the amount
charged to the consolidated income statement
in respect of pension costs and other post-
retirement benefits is the contributions
payable in the year, recognised as and when the
employee renders related services.
(xvii) Share-based payments
Certain employees (including executive
directors) of the Group receive part of their
remuneration in the form of share-based
payment transactions, whereby employees
render services in exchange for shares or rights
over shares (‘equity-settled transactions’).
The cost of equity-settled transactions with
employees is measured at fair value of share
awards at the date at which they are granted.
The fair value of share awards is determined
with the assistance of an external valuer and
the fair value at the grant date is expensed on
a proportionate basis over the vesting period
based on the Group’s estimate of shares
that will eventually vest. The estimate of the
number of awards likely to vest is reviewed at
each reporting date up to the vesting date at
which point the estimate is adjusted to reflect
the current expectations.
The resultant increase in equity is recorded in
share-based payment reserve.
In case of cash-settled transactions, a liability
is recognised for the fair value of cash-settled
transactions. The fair value is measured
initially and at each reporting date up to and
including the settlement date, with changes
in fair value recognised in employee benefits
expense. The fair value is expensed over the
period until the vesting date with recognition
of a corresponding liability. The fair value is
determined with the assistance of an external
valuer.
(xviii) Provisions, contingent liabilities and
contingent assets
The assessments undertaken in recognising
provisions and contingencies have been made
in accordance with the applicable IFRS.
Provisions represent liabilities for which the
amount or timing is uncertain. Provisions are
recognised when the Group has a present
obligation (legal or constructive), as a result of
past events, and it is probable that an outflow
of resources, that can be reliably estimated, will
be required to settle such an obligation. If the
effect of the time value of money is material,
provisions are determined by discounting the
expected future cash flows to net present value
using an appropriate pre-tax discount rate that
reflects current market assessments of the
time value of money and, where appropriate,
the risks specific to the liability. Unwinding of
the discount is recognised in the consolidated
income statement as a finance cost. Provisions
are reviewed at each reporting date and are
adjusted to reflect the current best estimate.
A contingent liability is a possible obligation
that arises from past events whose existence
will be confirmed by the occurrence or non-
occurrence of one or more uncertain future
events beyond the control of Group or a
present obligation that is not recognised
because it is not probable that an outflow
of resources will be required to settle the
obligation. A contingent liability also arises in
extremely rare cases where there is a liability
that cannot be recognised because it cannot
be measured reliably. The Group does not
recognise a contingent liability but discloses
its existence in the consolidated financial
statements.
Contingent assets are not recognised but
disclosed in the financial statements when an
inflow of economic benefit is probable.
The Group has significant capital commitments
in relation to various capital projects which are
not recognised in the consolidated statement
of financial position.
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Statutory reports
Financial statements
(xix) Restoration, rehabilitation and environmental
costs
An obligation to incur restoration, rehabilitation
and environmental costs arises when
environmental disturbance is caused by
the development or ongoing production of
a mine or oil fields. Such costs, discounted
to net present value, are provided for and a
corresponding amount is capitalised at the
start of each project, as soon as the obligation
to incur such costs arises. These costs are
charged to the consolidated income statement
over the life of the operation through the
depreciation of the asset and the unwinding
of the discount on the provision. The cost
estimates are reviewed periodically and are
adjusted to reflect known developments which
may have an impact on the cost estimates or
life of operations. The cost of the related asset
is adjusted for changes in the provision due
to factors such as updated cost estimates,
changes to lives of operations, new disturbance
and revisions to discount rates. The adjusted
cost of the asset is depreciated prospectively
over the lives of the assets to which they
relate. The unwinding of the discount is shown
as a finance cost in the consolidated income
statement.
Costs for restoration of subsequent site
damage which is caused on an ongoing basis
during production are provided for at their net
present value and charged to the consolidated
income statement as extraction progresses.
Where the costs of site restoration are not
anticipated to be material, they are expensed as
incurred.
(xx) Accounting for foreign currency transactions
and translations
The functional currency for each entity in
the Group is determined as the currency
of the primary economic environment in
which it operates. For all principal operating
subsidiaries, the functional currency is normally
the local currency of the country in which it
operates with the exception of oil and gas
business operations which have a US Dollar
functional currency as that is the currency of
the primary economic environment in which
they operate. The financial statements are
presented in US Dollars.
In the financial statements of individual group
companies, transactions in currencies other
than the respective functional currencies are
translated into their functional currencies at
the exchange rates ruling at the date of the
transaction. Monetary assets and liabilities
denominated in other currencies are translated
into functional currencies at exchange
rates prevailing on the reporting date. Non-
monetary assets and liabilities denominated
in other currencies and measured at historical
cost or fair value are translated at the exchange
rates prevailing on the dates on which such
values were determined.
All exchange differences are included in the
consolidated income statement except
those where the monetary item is designated
as an effective hedging instrument of the
currency risk of designated forecasted sales or
purchases, which are recognised in the other
comprehensive income.
Exchange differences which are regarded as
an adjustment to interest costs on foreign
currency borrowings, are capitalised as part of
borrowing costs in qualifying assets.
For the purposes of consolidation of financial
statements, items in the consolidated income
statement of those businesses for which the
US dollar is not the functional currency are
translated into US dollars at the average rates
of exchange during the year/ exchange rates
as on the date of transaction. The related
consolidated statement of financial position is
translated into US dollars at the rates as at the
reporting date. Exchange differences arising on
translation are recognised in the consolidated
statement of comprehensive income.
On disposal of such entities the deferred
cumulative exchange differences recognised
in equity relating to that particular foreign
operation are recognised in the consolidated
income statement.
(xxi) Buyers’ credit / Suppliers’ credit
The Group enters into arrangements whereby
banks and financial institutions make direct
payments to suppliers for raw materials and
project materials. The banks and financial
institutions are subsequently repaid by the
Group at a later date providing working capital
timing benefits. These are normally settled up
to twelve months (for raw materials) and up to
36 months (for project and materials). Where
these arrangements are with a maturity of up
to twelve months, the economic substance
of the transaction is determined to be
operating in nature and these are recognised
as operational buyers’ credit/ suppliers’ credit
and disclosed on the face of the balance sheet
(Refer Note 1(b)(i)). Interest expense on these
are recognised in the finance cost. Payments
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made by banks and financial institutions to the
operating vendors are treated as a non-cash
item and settlement of operational buyer’s
credit/ suppliers’ credit by the Group is treated
as cash flows from operating activity reflecting
the substance of the payment.
Where these arrangements are with a maturity
beyond twelve months and up to thirty six
months, the economic substance of the
transaction is determined to be financing
in nature, and these are presented within
borrowings in the consolidated statement of
financial position. Payments made to vendors
are treated as cash item and disclosed as
cash flows from operating/ investing activity
depending on the nature of the underlying
transaction. Settlement of dues to banks and
financial institution are treated as cash flows
from financing activity.
(xxii) Current and non-current classification
The Group presents assets and liabilities in the
consolidated statement of financial position
based on current / non-current classification.
An asset is classified as current when it satisfies
any of the following criteria:
it is expected to be realized in, or is intended
for sale or consumption in, the Group’s
normal operating cycle.
it is held primarily for the purpose of being
traded;
it is expected to be realized within 12 months
after the reporting date; or
it is cash or cash equivalent unless it is
restricted from being exchanged or used to
settle a liability for at least 12 months after
the reporting date.
All other assets are classified as non-current.
A liability is classified as current when it
satisfies any of the following criteria:
it is expected to be settled in the Group’s
normal operating cycle;
it is held primarily for the purpose of being
traded;
it is due to be settled within 12 months after
the reporting date; or
the Group does not have an unconditional
right to defer settlement of the liability for
at least 12 months after the reporting date.
Terms of a liability that could, at the option
of the counterparty, result in its settlement
by the issue of equity instruments do not
affect its classification.
All other liabilities are classified as non-current.
Deferred tax assets and liabilities are classified
as non-current only.
(xxiii) Borrowing costs
Borrowing cost includes interest expense as
per effective interest rate (EIR) and exchange
differences arising from foreign currency
borrowings to the extent they are regarded as
an adjustment to the interest cost.
Borrowing costs directly relating to the
acquisition, construction or production of a
qualifying capital project under construction
are capitalised and added to the project cost
during construction until such time that the
assets are substantially ready for their intended
use, i.e., when they are capable of commercial
production. Borrowing costs relating to the
construction phase of a service concession
arrangement is capitalised as part of the cost of
the intangible asset. Where funds are borrowed
specifically to finance a qualifying capital
project, the amount capitalised represents
the actual borrowing costs incurred. Where
surplus funds are available out of money
borrowed specifically to finance a qualifying
capital project, the income generated from
such short-term investments is deducted
from the total capitalised borrowing cost. If
any specific borrowing remains outstanding
after the related asset is ready for its intended
use or sale, that borrowing then becomes
part of general borrowing. Where the funds
used to finance a project form part of general
borrowings, the amount capitalised is
calculated using a weighted average of rates
applicable to relevant general borrowings of the
Group during the year.
All other borrowing costs are recognised in the
consolidated income statement in the year in
which they are incurred.
Capitalisation of interest on borrowings related
to construction or development projects is
ceased when substantially all the activities that
are necessary to make the assets ready for
their intended use are complete or when delays
occur outside of the normal course of business.
EIR is the rate that exactly discounts the
estimated future cash payments or receipts
over the expected life of the financial liability
or a shorter period, where appropriate, to the
amortised cost of a financial liability. When
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Statutory reports
Financial statements
calculating the effective interest rate, the
Group estimates the expected cash flows by
considering all the contractual terms of the
financial instrument (for example, prepayment,
extension, call and similar options).
(xxiv) Cash and cash equivalents
Cash and cash equivalents in the consolidated
statement of financial position comprise cash
at bank and in hand and short-term money
market deposits which have a maturity of three
months or less from the date of acquisition,
that are readily convertible to known amounts
of cash and which are subject to an insignificant
risk of changes in value.
For the purpose of the consolidated statement
of cash flows, cash and cash equivalents consist
of cash and short-term deposits, as defined
above and additionally includes unpaid dividend
account.
2(B) APPLICATION OF NEW AND REVISED
STANDARDS
The Group has adopted, with effect from 01 April
2020, the following new and revised standards and
interpretations. Their adoption has not had any
significant impact on the amounts reported in the
consolidated financial statements.
1.
2.
3.
4.
Amendments to IFRS 3 regarding definition of a
Business
Amendments to IFRS 7 and 9 regarding Interest
Rate Benchmark Reform
Amendments to IAS 1 and IAS 8 regarding
definition of Material
Amendments to IFRS 16 regarding COVID-19
related rent concessions
Other Amendments
A number of other minor amendments to existing
standards also became effective on 01 April 2020
and have been adopted by the Group. The adoption
of these new accounting pronouncements did not
have a material impact on the accounting policies,
methods of computation or presentation applied by
the Group.
Standards issued but not yet effective
There are no new standards that are notified, but
not yet effective, upto the date of issuance of the
Group’s financial statements.
2(C) SIGNIFICANT ACCOUNTING ESTIMATES
AND JUDGEMENTS
The preparation of consolidated financial
statements in conformity with IFRS requires
management to make judgements, estimates
and assumptions, that affect the application of
accounting policies and the reported amounts of
assets, liabilities, income, expenses and disclosures
of contingent assets and liabilities at the date of
these consolidated financial statements and the
reported amounts of revenues and expenses for the
years presented. These judgments and estimates
are based on management’s best knowledge of the
relevant facts and circumstances, having regard to
previous experience, but actual results may differ
materially from the amounts included in the financial
statements.
Estimates and underlying assumptions are reviewed
on an ongoing basis. Revisions to accounting
estimates are recognised in the period in which the
estimate is revised and future periods affected.
The information about significant areas of
estimation uncertainty and critical judgements in
applying accounting policies that have the most
significant effect on the amounts recognised in the
financial statements are as given below:
I.
(i)
Significant Estimates:
Impact of COVID-19
The outbreak of novel Coronavirus (COVID-19)
pandemic globally and in India and the
consequent lockdown restrictions imposed
by national governments is causing significant
disturbance and slowdown of economic activity
across the globe. The commodity prices
including oil have seen significant volatility
with downward price pressures due to major
demand centers affected by lockdown.
The Group is in the business of metals and
mining, Oil & gas and generation of power
which are considered as either essential
goods and services or were generally allowed
to continue to carry out the operations with
adequate safety measures. The Group has
taken proactive measures to comply with
various regulations/guidelines issued by the
Government and local bodies to ensure safety
of its workforce and the society in general.
The Group has considered possible effects
of Covid-19 on the recoverability of its
investments, property, plant and equipment
(PPE), inventories, loans and receivables,
etc in accordance with IFRS. The Group has
considered forecast consensus, industry
reports, economic indicators and general
business conditions to make an assessment of
the implications of the Pandemic. The Group
has also performed sensitivity analysis on
the key assumptions identified based on the
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internal and external information, which are
indicative of future economic condition. Based
on the assessment, the Group has recorded
necessary adjustments, including impairment
to the extent the carrying amount exceeds
the recoverable amount and has disclosed the
same as special item during the previous year
ended 31 March 2020. No such impairments
were identified during the current year.
The actual effects of COVID-19 could be
different from what is presently assessed and
would be known only in due course of time,
however no further adjustments are considered
necessary at this stage.
(ii) Oil and Gas reserves
Significant technical and commercial
judgements are required to determine the
Group’s estimated oil and natural gas reserves.
Oil and Gas reserves are estimated on a proved
and probable entitlement interest basis. Proven
and probable reserves are estimated using
standard recognised evaluation techniques.
The estimate is reviewed annually. Future
development costs are estimated taking into
account the level of development required
to produce the reserves by reference to
operators, where applicable, and internal
engineers.
(iii)
Net entitlement reserves estimates
are subsequently calculated using the
Group’s current oil price and cost recovery
assumptions, in line with the relevant
agreements.
Changes in reserves as a result of factors such
as production cost, recovery rates, grade of
reserves or oil and gas prices could impact the
depletion rates, carrying value of assets (refer
note 16) and environmental and restoration
provisions.
Carrying value of exploration and evaluation
oil and gas assets
The recoverability of a project is assessed
under IFRS 6. Exploration assets are assessed
by comparing the carrying value to higher of
fair value less cost of disposal or value in use,
if impairment indicators exist. Change to the
valuation of exploration assets is an area of
judgement. Further details on the Group’s
accounting policies on this are set out in
accounting policy above. The amounts for
exploration and evaluation assets represent
active exploration projects. These amounts
will be written off to the consolidated income
statement as exploration costs unless
commercial reserves are established, or the
determination process is not completed and
there are no indications of impairment. The
outcome of ongoing exploration, and therefore
whether the carrying value of exploration and
evaluation assets will ultimately be recovered,
is inherently uncertain.
Details of carrying values are disclosed in note
16.
(iv)
Carrying value of developing/producing oil
and gas assets
Management performs impairment tests on
the Group’s developing/producing oil and
gas assets where indicators of impairment or
impairment reversal of previously recorded
impairment are identified in accordance with
IAS 36.
In the current year, the management has
reviewed the key assumptions, i.e., future
production, oil prices, discount to price,
Production sharing contract (PSC) life, discount
rates, etc. for all of its oil and gas assets. Based
on analysis of events that have occurred since
then, there did not exist any indication that
the assets may be impaired or previously
recorded impairment charge may reverse.
Hence, detailed impairment analysis has not
been conducted in the current financial year.
However, during the year ended 31 March 2020,
management had performed impairment tests
on the Group’s developing/producing oil and
gas assets and the impairment assessments
were based on a range of estimates and
assumptions, including:
Estimates/
assumptions
Future
production
Commodity
prices
Discount to
price
Extension of
PSC
Discount rates
Basis
proved and probable reserves,
production facilities, resource
estimates and expansion projects
management’s best estimate
benchmarked with external
sources of information, to ensure
they are within the range of
available analyst forecast
Management’s best estimate
based on historical prevailing
discount and updated sales
contracts
granted till 2030 on the expected
commercial terms (Refer note
2(c)(I)(viii)
cost of capital risk-adjusted for
the risk specific to the asset/CGU
Details of carrying values are disclosed in note
16.
182
ACCOUNTSNotes to the Financial Statements
Integrated Report
Statutory reports
Financial statements
(v) Mining properties and leases
The carrying value of mining property and
leases is arrived at by depreciating the assets
over the life of the mine using the unit of
production method based on proved and
probable reserves. The estimate of reserves
is subject to assumptions relating to life of the
mine and may change when new information
becomes available. Changes in reserves as
a result of factors such as production cost,
recovery rates, grade of reserves or commodity
prices could thus impact the carrying
values of mining properties and leases and
environmental and restoration provisions.
Management performs impairment tests
when there is an indication of impairment. The
impairment assessments are based on a range
of estimates and assumptions, including:
Estimates/
assumptions
Future
production
Commodity
prices
Basis
proved and probable reserves,
resource estimates (with an
appropriate conversion factor)
considering the expected
permitted mining volumes and, in
certain cases, expansion projects
management’s best estimate
benchmarked with external
sources of information, to ensure
they are within the range of
available analyst forecast
Exchange rates management best estimate
benchmarked with external
sources of information
cost of capital risk-adjusted for
the risk specific to the asset/CGU
Discount rates
There is no impairment recognised during
the year. For the year ended 31 March 2021,
details of impairment charge/reversal and
the assumptions used and carrying values are
disclosed in note 6 and note 16 respectively.
Recoverability of deferred tax and other
income tax assets
The Group has carry forward tax losses,
unabsorbed depreciation and MAT credit that
are available for offset against future taxable
profit. Deferred tax assets are recognised
only to the extent that it is probable that
taxable profit will be available against which the
unused tax losses or tax credits can be utilized.
This involves an assessment of when those
assets are likely to reverse, and a judgement
as to whether or not there will be sufficient
taxable profits available to offset the assets.
This requires assumptions regarding future
(vi)
profitability, which is inherently uncertain.
To the extent assumptions regarding future
profitability change, there can be an increase or
decrease in the amounts recognised in respect
of deferred tax assets and consequential
impact in the consolidated income statement.
The total deferred tax assets recognised in
this financial statement (refer note 11) includes
MAT credit entitlements of US$ 1,125 million
(31 March 2020: US$ 1,221 million), of which
US$ 46 million is expected to be utilised in
the fourteenth year (31 March 2020: US$ 481
Million was expected to be utilised in fourteenth
and fifteenth year), fifteen years being the
maximum permissible time period to utilise the
MAT credits.
Additionally, the Group has tax receivables
on account of refund arising on account of
past amalgamation and relating to various
tax disputes. The recoverability of these
receivables involves application of judgement
as to the ultimate outcome of the tax
assessment and litigations. This pertains to
the application of the legislation, which in
certain cases is based upon management’s
interpretation of country specific tax law,
in particular India, and the likelihood of
settlement. Management uses in-house and
external legal professionals to make informed
decision (refer note 11(d)).
vii) Copper- India
Existing Plant:
In an appeal filed by the Group against the
closure order of the Tuticorin Copper smelter
by Tamil Nadu Pollution Control Board
(“TNPCB”), the appellate authority National
Green Tribunal (“NGT”) passed an interim order
on 31 May 2013 allowing the copper smelter
to recommence operations and appointed an
Expert Committee to submit a report on the
plant operations. Post the interim order, the
plant recommenced operations on 23 June
2013. Based on Expert Committee’s report
on the operations of the plant stating that
the plant’s emission were within prescribed
standards and based on this report, NGT
ruled on 08 August 2013 that the Copper
smelter could continue its operations and
recommendations made by the Expert
Committee be implemented in a time bound
manner. The Group has implemented all of
the recommendations. TNPCB has filed an
appeal against the order of the NGT before the
Supreme Court of India.
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In the meanwhile, the application for renewal of
Consent to Operate (CTO) for existing copper
smelter, required as per procedure established
by law was rejected by TNPCB in April 2018.
Vedanta Limited has filed an appeal before
the TNPCB Appellate Authority challenging
the Rejection Order. During the pendency of
the appeal, there were protests by a section
of local community raising environmental
concerns and TNPCB vide its order dated 23
May 2018 ordered closure of existing copper
smelter plant with immediate effect. Further,
the Government of Tamil Nadu, issued
orders dated 28 May 2018 with a direction
to seal the existing copper smelter plant
permanently. The Company believes these
actions were not taken in accordance with the
procedure prescribed under applicable laws.
Subsequently, the Directorate of Industrial
Safety and Health passed orders dated 30 May
2018, directing the immediate suspension
and revocation of the Factory License and the
Registration Certificate for the existing smelter
plant.
The Company has appealed this before the
National Green Tribunal (NGT), who vide its
order on 15 December 2018 has set aside the
impugned orders and directed the TNPCB to
pass fresh orders for renewal of consent and
authorization to handle hazardous substances,
subject to appropriate conditions for
protection of environment in accordance with
law.
The State of Tamil Nadu and TNPCB
approached the Supreme Court in Civil Appeals
on 02 January 2019 challenging the above
judgement of NGT and the previously passed
judgement of NGT dated 08 August 2013. The
Supreme Court vide its judgement dated 18
February 2019 set aside the judgements of NGT
dated 15 December 2018 and 08 August 2013
on the sole basis of maintainability and directed
the Company to file an appeal in the High court.
The Company has filed a writ petition before
Madras High Court challenging the various
orders passed against the Company in 2018
and 2013. On 18 August 2020, the Madras
High Court delivered the judgement wherein
it dismissed all the Writ Petitions filed by the
Company. The Company has approached the
Supreme Court and challenged the said High
Court order by way of a Special Leave Petition
(SLP) to Appeal and also filed an interim relief
for care & maintenance of the plant. The matter
was then listed on 02 December 2020 before
the Supreme Court Bench. The Bench after
having heard both the sides concluded that
at this stage the interim relief in terms of trial
run could not be allowed. Further, considering
the voluminous nature of documents and
pleadings, the matter shall be finally heard on
merits. The matter was again mentioned before
bench on 17 March 2021, wherein matter was
posted for hearing on 17 August 2021.
However, subsequent to the year end, the
Company approached the Supreme Court
offering to supply medical oxygen from the said
facility in view of prevailing COVID-19 situation,
which was allowed by the Supreme Court,
under supervision of a committee constituted
by the Government of Tamil Nadu.
As per the Company’s assessment, it is in
compliance with the applicable regulations
and expects to get the necessary approvals in
relation to the existing operations and hence
the Company does not expect any material
adjustments to these financial statements as a
consequence of above actions.
The Company has carried out an impairment
analysis for existing plant assets during the
period ended 31 March 2021 considering the
key variables and concluded that there exists
no impairment. Further, no fresh indicators are
identified for impairment as at 31 March 2021.
The Company has done an additional sensitivity
analysis with commencement of operations of
the existing plant w.e.f 01 April 2024 and noted
that the recoverable amount of the assets
would still be in excess of their carrying values.
The carrying value of the assets as at 31 March
2021 is US$ 250 million (US $260 million as at 31
March 2020).
Expansion Project:
Separately, the Company has filed a fresh
application for renewal of the Environmental
Clearance for the proposed Copper Smelter
Plant 2 (“Expansion Project”) dated 12 March
2018 before the Expert Appraisal Committee
of the Ministry of Environment, Forest and
Climate Change (“MoEFCC”) wherein a sub-
committee was directed to visit the Expansion
Project site prior to prescribing the Terms of
Reference.
In the meantime, the Madurai Bench of the High
Court of Madras in a Public Interest Litigation
held vide its order dated 23 May 2018 that the
application for renewal of the Environmental
Clearance for the Expansion Project shall be
processed after a mandatory public hearing
184
ACCOUNTSNotes to the Financial Statements
Integrated Report
Statutory reports
Financial statements
and in the interim, ordered the company to
cease construction and all other activities on
site for the proposed Expansion Project with
immediate effect. The MoEFCC has delisted
the Expansion Project since the matter is
sub-judice. Separately, the State Industries
Promotion Corporation of Tamil Nadu Limited
(“SIPCOT”) vide its letter dated 29 May 2018,
cancelled 342.22 acres of the land allotted for
the proposed Expansion Project. Further, the
TNPCB issued orders on 07 June 2018 directing
the withdrawal of the Consent to Establish
(CTE) which was valid till 31 March 2023.
The Company has approached Madras High
Court by way of writ petition challenging the
cancellation of lease deeds by SIPCOT pursuant
to which an interim stay has been granted.
The Company has also filed Appeals before
the TNPCB Appellate Authority challenging
withdrawal of CTE by the TNPCB, the matter
is pending for adjudication. Considering the
delay in existing plant matter and accordingly
delay in getting the required approval for
expansion project, management considered to
make provision for impairment for expansion
project basis fair value less cost of disposal
and accordingly made impairment provision of
US$ 94 million in March 2020. During the year,
there are no updates in the expansion matter
and impairment provision of US$ 94 million is
adequate and the net carrying value of US$ 13
million as at 31 March 2021 approximates its
recoverable value.
Impairment recognised during the year ended
31 March 2020
For the Expansion Project, the project
activities are on halt since May 2018. Further,
the environment clearance for the Expansion
Project expired on 31 December 2018 and fresh
application was filed before the competent
authority. However, the process will start only
after reopening of the existing plant and after
obtaining all statutory approvals, the timing of
which is uncertain.
Keeping in view the above factors and the
fact that value in use cannot be reasonably
ascertained, the Company has carried out
recoverability assessment of the items of
property, plant and equipment, capital work in
progress (CWIP) and capital advances. Based on
the realisable value estimate of US$ 38 Million,
the Company had recognised an impairment
of US$ 94 Million (comprising CWIP balances
of US$ 61 million, capital advances of US$ 28
million and other assets of US$ 5 million) during
the previous year.
Property, plant and equipment of US$ 197
million and inventories of US$ 69 million,
pertaining to existing and expansion project,
could not be physically verified, anytime during
the year, as the access to the plant is presently
restricted. However, since operations are
suspended and access to the plant restricted,
any difference between book and physical
quantities is unlikely to be material.
viii) PSC Extension
Rajasthan Block
The Company operates an oil and gas
production facility in Rajasthan under a
Production Sharing Contract (“PSC”). The
management is of the opinion that the
Company is eligible for automatic extension
of the PSC for Rajasthan (“RJ”) block on same
terms w.e.f. 15 May 2020, while Government
of India (“GoI”) in October 2018, accorded its
approval for extension of the PSC, under the
Pre-NELP Extension policy as per notification
dated 07 April 2017 (“Pre-NELP Policy”), for
RJ block by a period of 10 years, w.e.f. 15 May
2020. As per the said policy and extension, the
Company is required to comply with certain
conditions and pay an additional 10% profit
oil to GoI. The Company had challenged the
applicability of Pre-NELP Policy to the RJ block.
The Division Bench of the Delhi High Court in
March 2021 set aside the single judge order of
May 2018 which allowed automatic extension of
PSC. The Company is studying the order and all
available legal remedies are being evaluated for
further action as appropriate.
One of the conditions for extension of
PSC relates to notification of certain audit
exceptions raised for FY 16-17 as per PSC
provisions and provides for payment of
amounts, if such audit exceptions result into
any creation of liability.
The Directorate General of Hydrocarbons
(“DGH”) in May 2018 raised a demand on the
Company and its subsidiary for the period up
to 31 March 2017 for Government’s additional
share of Profit oil based on its computation
of disallowance of costs incurred in excess
of the initially approved Field Development
185
Notes to the Financial StatementsVEDANTA RESOURCES LIMITED | INTEGRATED REPORT AND ANNUAL ACCOUNTS 2020-21 |
Plan (“FDP”) of the pipeline project for US$
202 million and retrospective re-allocation of
certain common costs between Development
Areas (“DAs”) of RJ block aggregating to US$
364 million. The DGH vide its letter dated 12
May 2020, reiterated its demand only with
respect to the retrospective re-allocation of
certain common costs between DAs of the RJ
block of US$ 364 million towards contractor
share for the period upto 31 March 2017. This
amount was subsequently revised to US$ 458
million till March 2018 vide DGH letter dated 24
December 2020.
The Company in January 2020 received
notifications from the DGH on audit exceptions
arising out of its audit for the FY 2017-18, which
comprises the consequential effects on profit
oil due to the aforesaid matters and certain
new matters on cost allowability plus interest
aggregating to US$ 645 million, representing
share of the Company and its subsidiary, CEHL
(“the Claimants”), which have been suitably
responded to by the Company.
The Company believes that it has sufficient as
well as reasonable basis pursuant to the PSC
provisions and related approvals, supported
by legal advice, for having claimed such costs
and for allocating common costs between
different DAs. In the Company’s opinion,
these computations of the aforesaid demand
/ audit exceptions are not appropriate, and
the accounting adjustments sought for issues
pertaining to Year 2007 and onwards are based
on assumptions that are not in consonance with
the approvals already in place. The Company’s
view is also supported by independent legal
opinion and the Company has been following
the process set out in PSC to resolve these
aforesaid matters. The Company has also
invoked the PSC process for resolution of
disputed exceptions and has issued notice for
arbitration and the tribunal stands constituted.
Further, on 23 September 2020, the GoI had
filed an application for interim relief before
Delhi High Court seeking payment of all
disputed dues. This matter is now scheduled for
hearing on 05 July 2021.
Also, on Vedanta’s application under section 17
of the Arbitration and Conciliation Act, 1996,
the tribunal in December 2020 ordered that GoI
should not take any action to enforce any of the
amounts at issue in this arbitration against the
Claimants during the arbitral period. The GoI
has challenged the said order before the Delhi
High Court under the said Act. This matter is
also scheduled for hearing on 05 July 2021.
In management’s view, the above mentioned
condition on demand raised by the DGH for
additional petroleum linked to PSC extension
is untenable and has not resulted in creation of
any liability and cannot be a ground for non-
extension. In addition, all necessary procedures
prescribed in the PSC including invocation
of arbitration, in respect of the stated
audit observation have also been fulfilled.
Accordingly, the PSC extension approval
granted vide DGH letter dated 26 October 2018
upholds with all conditions addressed and no
material liability would devolve upon the Group.
Simultaneously, the Company is also
pursuing with the GoI for executing the RJ
PSC addendum at the earliest. In view of
extenuating circumstances surrounding
COVID-19 and pending signing of the PSC
addendum for extension after complying with
all stipulated conditions, the GoI has been
granting interim permission to the Company to
continue Petroleum operations in the RJ block.
The latest permission is valid upto 31 July 2021
or signing of the PSC addendum, whichever is
earlier.
Ravva Block
The Government of India (GoI) has granted its
approval for a ten-year extension of PSC for
Ravva Block with effect from 28 October 2019,
in terms of the provision of the “Policy on the
Grant of the extension to Production Sharing
Contract Signed by Government awarding
small, medium-sized and discovered field to
private joint ventures” dated 28 March 2016.
The PSC addendum recording this extension
has been executed by all parties.
The Ravva Extension Policy, amongst others,
provides for an increased share of profit
petroleum of 10% for the GoI during the
extended term of the Ravva PSC and payment
of royalty and cess as per prevailing rate in
accordance with the PNG Rules, 1959 and OIDB
Act. Under the Ravva PSC, the Company’s oil
and gas business is entitled to recover 100%
of cost of production and development from
186
ACCOUNTSNotes to the Financial Statements
Integrated Report
Statutory reports
Financial statements
(ix)
(x)
crude oil and natural gas sales before any profit
is allocated among the parties.
Cost recovery for exploration cost during
extension period shall be governed as per the
provision of Office Memorandum 2013, 2019
issued by the Ministry of Petroleum and Natural
Gas (“MoPNG”) on exploration in mining lease
area post expiry of the exploration period.
Impact of Taxation Laws (Amendment) Act,
2019
Pursuant to the introduction of Section
115BAA of the Indian Income-tax Act, 1961,
which is effective 1 April 2019, companies
in India have the option to pay corporate
income tax at the rate of 22% plus applicable
surcharge and cess as against the earlier rate
of 30% plus applicable surcharge and cess,
subject to certain conditions like, the company
has to forego all benefits like tax holidays,
brought forward losses generated through
tax incentives/additional depreciation and
outstanding MAT credit. Considering all the
provisions under Section 115BAA and based
on the expected timing of exercising of the
option under Section 115BAA, the Group has
re-measured its deferred tax balances as at
31 March 2021. This computation required
assessment of assumptions regarding future
profitability, which is inherently uncertain.
To the extent assumptions regarding future
profitability change, there can be increase or
decrease in the amounts recognised.
ESL Steel Limited (formerly known as
Electrosteel Steels Limited) (ESL), had filed
application for renewal of Consent to Operate
(‘CTO’) on 24 August 2017 for the period of five
years which was denied by Jharkhand State
Pollution Control Board (‘JSPCB’) on 23 August
2018, as JSPBC awaited response from the
MoEFCC over a 2012 show-cause notice. After
a personal hearing towards the show cause
notice, the MoEFCC revoked the Environmental
Clearance (“EC”) on 20 September 2018. The
Hon’ble High Court of Jharkhand granted stay
against both revocation orders and allowed
the continuous running of the plant operations
under regulatory supervision of the JSPCB. The
Jharkhand High Court on 16 September 2020
passed an order vacating the interim stay in
place beyond 23 September 2020, while listing
the matter for final hearing. ESL filed an Special
Leave Petition (SLP) in the Supreme Court of
India which on 22 September 2020, granted
permission to ESL to run the plant till further
orders. Next date of High Court hearing is 25
June 2021 and the Supreme Court hearing is
yet to be listed.
The Forest Advisory Committee (FAC) of
MoEFCC granted the Stage 1 clearance and
the MoEFCC approved the related Terms of
Reference (TOR) on 25 August 2020. As per
Stage 1 clearance, the Company is required
to provide non-forest land in addition to the
afforestation cost. The Company, based on the
report of an EIA consultant, has recognised a
provision of US$ 29 Million as an Special item
in these financial statement with respect to
the costs to be incurred by the Company for
obtaining the EC.
(xi)
Assessment of impairment of assets at
Aluminium division
During year ended 31 March 2020, considering
lower sales realisation, an impairment trigger
was identified in the aluminium division of
Vedanta Limited. The impairment assessments
were based on a range of estimates and
assumptions, including:
Estimates/
assumption
Future
production
Commodity
prices
Discount rates
Basis
Proved and probable reserves,
production facilities, resource
estimates and expansion projects
management’s best estimate
benchmarked with external
sources of information, to ensure
they are within the range of
available analyst forecast
cost of capital risk-adjusted for
the risk specific to the asset/CGU
The Group carried out impairment analysis,
based on value in use approach, considering
the key variables and concluded that no
impairment exists. The Group had carried
out sensitivity analysis on key assumptions
including commodity price, discount rate
and delay in expansion of refinery. Based on
sensitivity analysis, the recoverable amount
is still expected to exceed the carrying value
of US$ 3,263 million as at 31 March 2020. No
negative developments have occurred since
the previous year and accordingly, it is not
expected that the carrying amount would
exceed the recoverable amount. Hence, the
recoverable value for the year ended 31 March
2021 was not re-determined.
(xii) Discontinued operations - Copper Zambia
187
Notes to the Financial StatementsVEDANTA RESOURCES LIMITED | INTEGRATED REPORT AND ANNUAL ACCOUNTS 2020-21 |
(KCM)
The investment in KCM and loans, receivables
and obligations of KCM towards the Group
are fair valued during the year. The Group
employed third-party experts to undertake the
valuations using the income approach method.
In this approach, the discounted cash flow
method was used to capture the present value
of the expected future economic benefits to
be derived from the ownership of these assets.
The resulting valuation is adjusted to reflect a
number of factors, including the uncertainty
and risks inherent in litigation and recovery.
Details of significant estimates are disclosed in
note 3(b).
II. Significant Judgements:
(i)
Determining whether an arrangement
contains a lease
The Group has ascertained that the Power
Purchase Agreement (PPA) executed between
one of the Subsidiary and a State Grid qualifies
to be an operating lease under IFRS 16 “Leases”.
Accordingly, the consideration receivable
under the PPA relating to recovery of capacity
charges towards capital cost have been
recognised as operating lease rentals and in
respect of variable cost that includes fuel costs,
operations and maintenance etc is considered
as revenue from sale of products/services.
Significant judgement is required in segregating
the capacity charges due from the State Grid,
between fixed and contingent payments. The
Group has determined that since the capacity
charges under the PPA are based on the number
of units of electricity made available by its
Subsidiary which would be subject to variation
on account of various factors like availability
of coal and water for the plant, there are no
fixed minimum payments under the PPA, which
requires it to be accounted for on a straight-
line basis. The contingent rents recognised are
disclosed in note 4 and 5.
(ii) Contingencies
In the normal course of business, contingent
liabilities may arise from litigation, taxation and
other claims against the Group. A provision
is recognised when the Group has a present
obligation as a result of past events, and it is
probable that the Group will be required to
settle that obligation.
Where it is management’s assessment that
the outcome cannot be reliably quantified
or is uncertain the claims are disclosed as
contingent liabilities unless the likelihood of an
adverse outcome is remote. Such liabilities are
disclosed in the notes but are not provided for
in the financial statements.
When considering the classification of a legal
or tax cases as probable, possible or remote
there is judgement involved. This pertains
to the application of the legislation, which in
certain cases is based upon management’s
interpretation of country specific applicable
law, in particular India, and the likelihood of
settlement. Management uses in-house and
external legal professionals to make informed
decision.
Although there can be no assurance regarding
the final outcome of the legal proceedings,
the Group does not expect them to have a
materially adverse impact on the Group’s
financial position or profitability. These are set
out in note 33.
Revenue recognition and receivable recovery
in relation to the power division
In certain cases, the Group’s power customers
are disputing various contractual provisions of
Power Purchase Agreements (PPA). Significant
judgement is required in both assessing the
tariff to be charged under the PPA in accordance
with IFRS 15 and to assess the recoverability
of withheld revenue currently accounted for as
receivables.
In assessing this critical judgment management
considered favourable external legal opinions
the Group has obtained in relation to the claims
and favourable court judgements in the related
matter. In addition, the fact that the contracts
are with government owned companies implies
the credit risk is low. Refer note 18.
(iii)
(iv) Special items
Special items are those items that management
considers, by virtue of their size or incidence
(including but not limited to impairment
charges and acquisition and restructuring
related costs), should be disclosed separately
to ensure that the financial information
allows an understanding of the underlying
performance of the business in the year, so
as to facilitate comparison with prior periods.
188
ACCOUNTSNotes to the Financial Statements
Integrated Report
Statutory reports
Financial statements
Also, tax charges related to Special items and
certain one-time tax effects are considered
Special. Such items are material by nature
or amount to the year’s result and require
separate disclosure in accordance with IFRS.
The determination as to which items should
be disclosed separately requires a degree of
judgement. The details of special items are set
out in note 6.
3. BUSINESS COMBINATION AND OTHERS
a)
Ferro Alloys Corporation Limited
On 21 September 2020, the Group acquired
control over Ferro Alloys Corporation Limited
(“FACOR”). FACOR was admitted under
Corporate insolvency resolution process in
terms of the Insolvency and Bankruptcy Code,
2016 of India. The National Company Law
Tribunal (NCLT) vide its order dated 30 January
2020 approved the resolution plan for acquiring
controlling stake in FACOR. Pursuant to the
approved resolution plan, FACOR will be wholly
owned subsidiary of Vedanta Limited. FACOR
holds 90% in its subsidiary, Facor Power Limited
(FPL).
FACOR is in the business of producing Ferro
Alloys and owns a Ferro Chrome plant with
capacity of 72,000 TPA, two operational
Chrome mines and 100 MW of Captive
Power Plant through its subsidiary, FPL. The
acquisition will complement the Group’s
existing steel business as the vertical
integration of ferro manufacturing capabilities
has the potential to generate significant
efficiencies.
The fair value of the identifiable assets and liabilities of FACOR as at the date of the acquisition were as below:
Particulars
Property, Plant and Equipment including Capital work in progress
Bank deposits
Non-current assets
Inventories
Trade and other receivables
Cash and cash equivalents
Other bank balances
Other financial assets
Other current assets
Current assets
Total Assets (A)
Borrowings
Deferred tax liabilities
Trade payables
Other financial liabilities
Provisions
Other current liabilities
Total Liabilities (B)
Net Assets (C = A-B)
Satisfied by:
Cash consideration paid for equity acquired
Cash consideration paid for debt acquired
Zero coupon, Non-Convertible Debentures (“NCDs”) issued by FACOR repayable equally over 4
years commencing March 2021 (Nominal value US$ 39 million) *
Total Purchase consideration (D)
Non-Controlling interest on acquisition (10% of net liabilities of FPL) (E)
Bargain Gain/Goodwill (C-D-E)
*Includes NCDs of nominal value US$ 0.4 million yet to be issued as part of purchase consideration.
(US$ million)
Fair Value at
Acquisition
48
1
49
6
1
2
9
0
4
22
71
1
8
1
3
1
5
19
52
5
3
32
40
(4)
16
189
Notes to the Financial StatementsVEDANTA RESOURCES LIMITED | INTEGRATED REPORT AND ANNUAL ACCOUNTS 2020-21 |
Since the date of acquisition, FACOR has
contributed US$ 37 million and US$ 5 million to
the Group revenue and profit before taxation
respectively for the year ended 31 March 2021.
If FACOR had been acquired at the beginning of
the year, the Group revenue would have been
US$ 11,752 million and the profit before tax of
the Group would have been US$ 1,674 million.
The carrying amount of all assets and liabilities
within the working capital equals their fair
value. None of the Trade receivables was
impaired and the full contractual amount
were expected to be realised. Mining Rights
have been valued considering the With or
Without method, i.e., based on the cost savings
resulting from the usage of the mines vis a
vis procurement of raw material (chrome ore)
from external vendors. Land has been valued
based on the Right to Fair Compensation
and Transparency in Land Acquisition,
Rehabilitation and Resettlement Act. Buildings,
Plant & Machinery, Other Tangible Assets,
Capital Work in Progress and Capital Advances
pertaining to the Tangible Assets together
have been estimated based on the Value in Use
of FACOR under the Income Approach.
Non-controlling interest has been measured
at the non-controlling interest’s proportionate
share of FPL’s identifiable net assets.
Discontinued operations - Copper Zambia
(KCM):
In 2019, ZCCM Investments Holdings Plc
(ZCCM), a company majority owned by the
Government of the Republic of Zambia (GRZ),
which owns 20.6% of the shares in Konkola
Copper Mines Plc (KCM), filed a petition in the
High Court of Zambia to wind up KCM (Petition)
on “just and equitable” grounds. Subsequently,
ZCCM amended the Petition to include an
additional ground based on allegations that
KCM is unable to pay its debts. ZCCM also
obtained an ex parte order from the High Court
of Zambia appointing a Provisional Liquidator
(PL) of KCM pending the hearing of the Petition.
As a result of the appointment of the PL
following ZCCM’s ex parte application, the PL is
currently exercising almost all the functions of
the Board of Directors, to the exclusion of the
Board.
The Group not only disputes the allegations
and opposes the Petition, but also maintains
that the complaints brought by ZCCM are in
(b)
190
effect “disputes” between the shareholders.
Per the KCM Shareholders’ Agreement,
the parties (including ZCCM and the
Government of the Republic of Zambia) have
agreed that any disputes must be resolved
through international arbitration seated in
Johannesburg, South Africa, applying the
UNCITRAL Arbitration Rules; not the Zambian
courts.
Arbitration Application
Following the filing of the Petition, Vedanta
Resources Holdings Limited (VRHL) and
Vedanta Resources Limited (VRL or Company)
commenced the dispute resolution procedures
prescribed by the KCM Shareholders’
Agreement, and have initiated arbitration
consistent with their position that ZCCM is in
breach of the KCM Shareholders’ Agreement by
reason of its actions in seeking to wind up KCM
before the Zambian High Court and applying
for the appointment of the PL, as opposed
to pursuing its alleged grievances through
arbitration under the KCM Shareholders’
Agreement. As part of the dispute resolution
process under the KCM Shareholders’
Agreement, VRHL obtained injunctive relief
from the High Court of South Africa requiring
ZCCM to withdraw the Petition such that the PL
is discharged from office and declaring ZCCM to
be in breach of the arbitration clause in the KCM
Shareholders’ Agreement. ZCCM was further
prohibited by the High Court of South Africa
from taking any further steps to wind up KCM
until the conclusion of the arbitration. ZCCM
had sought leave to appeal to the Supreme
Court of South Africa. Leave to appeal was
denied on 29 April 2021. ZCCM has renewed its
application for leave to appeal before a single
judge of the Supreme Court. On 4 June 2021,
both Company and PL was given time to submit
the documents and held that basis same ruling
will be rendered.
The arbitration proceedings against ZCCM
continue and a sole arbitrator has been
appointed. The procedural timetable for the
arbitration was varied in October 2020. An
initial hearing of prioritised issues took place,
with the substantive dispute being heard in
November 2021 and February 2022. ZCCM filed
and served its Defence and Counterclaim on
VRL and VRHL on 14 July 2020. VRHL and VRL
filed their reply and defence to ZCCM’s defence
and counterclaims on 31 January 2021, and
ACCOUNTSNotes to the Financial Statements
Integrated Report
Statutory reports
Financial statements
ZCCM filed its reply to VRHL and VRL’s defence
to ZCCM’s counterclaims on 15 April 2021.
Arbitration awards are enforceable in Zambia
under the New York Convention.
Proceedings in the Zambian Courts
VRHL has also made a number of applications
before the Zambian High Court in connection
with the Petition, including an application for a
stay of the Petition, pending the determination
of the arbitration. Although, this application
was dismissed at first instance by the High
Court, VRHL was granted leave to appeal to the
Zambian Court of Appeal.
An Order given by the Zambian High Court
staying certain of the PL’s powers (i.e., those
relating to the PL’s ability to sell assets and
make compromises with creditors) was set
aside until the Petition returns to the High
Court, subject to the outcome of the appeals
to the Zambian Court of Appeal. The PL has
given evidence in the Zambian High Court that
he would not be able to sell assets (beyond that
which is necessary to carry on KCM’s ordinary
business) without seeking the Court’s approval.
Notwithstanding this, on 10 September 2019,
the PL caused KCM to enter into a consent
order disposing of certain surface rights owned
by KCM. On 28 November 2019, VRHL and
KCM (acting through the lawyers appointed
by the directors of KCM) obtained an ex-parte
injunction restraining the PL from taking action
to implement the consent order, halting the
sale of surface rights and preventing any sale
of the land itself. A challenge to the ex-parte
injunction has been heard and the ruling has
been reserved.
In connection with the response to the
Petition, VRL has provided to the Board of KCM
a commitment to provide certain financial
support to KCM. This commitment is subject
to certain conditions, including the dismissal
of the Petition and discharge of the PL.
Additionally since the conditions to the funding
support were not satisfied by 30 September
2019, VRL has reserved the right to withdraw
the offer set out in the letter.
The appeal hearing took place on 25 August
2020, and the ruling of the Appeal Court
was delivered on 20 November 2020. The
Appeal Court ruled in favour of the Group
and concluded that a dispute as defined in
the SHA exists between the parties, and that
the disputes are arbitrable and referable to
arbitration. The Appeal Court ordered a stay
of the winding up proceedings pursuant to
section 10 of the Zambian Arbitration Act, 2000
and that the matter be referred to arbitration.
Costs were awarded in the Group’s favour in
both Courts in Zambia.
Although the Petition is currently stayed, the
PL has insisted that he remains in his post
with his full powers. The PL has argued that
the Court of Appeal has not ordered him to
vacate his seat. The Group’s application for an
Embodiment Order of the Appeal Court ruling
was argued before the Judge President of the
Court of Appeal on 8 December 2020 and the
Judge reserved her ruling. The Group and the
Respondents (ZCCM and KCM) have a different
opinion as to whether the Appeal Court ruling
of 20 November 2020 has the result of the PL
having to vacate his seat. The form in which
the Embodiment Order is issued by the Judge
President will determine the impact of the
Court of Appeal ruling on the PL’s position. The
Judge ultimately adopted the Embodiment
Order in the form preferred by ZCCM, with the
result that the PL has not had to vacate his seat.
Vedanta’s Zambian counsel have applied for a
hearing of the full court of appeal to reconsider
the embodiment order. (The order was made
by a single judge of the court of appeal rather
than the full court.) On 5 May 2021 the Court
of Appeal heard preliminary objections against
Vedanta’s application and have adjourned the
motion to a date after it rules on the objections
raised. The Court of Appeal Marshall has
indicated that the ruling on the objections is
likely to be ready in June 2021.
The Company also applied seeking directions
on the PL’s powers after the Court of Appeal
ruling of 20 November 2020, arguing that the
Court of Appeal judgment did not in any way
stay the supervisory jurisdiction of the High
Court over the PL as an officer of the Court, and
that the Preliminary Issues Applications should
be dismissed. The Judge gave a ruling on 7
May 2021, finding that in light of the stay of the
winding up proceedings ordered by the Court
of Appeal and the referral of the matter to
arbitration, she does not have the jurisdiction
to consider an application requesting her to
give directions on the powers of the PL. Leave
to appeal was denied.
At the date of approval of these financial
statements, the PL remains in office and the
Petition remains stayed.
Notice of Deemed Transfer of Shares
On 14 July 2020, ZCCM served a notice entitled
“Notice of Deemed Transfer of Shares” on
191
Notes to the Financial StatementsVEDANTA RESOURCES LIMITED | INTEGRATED REPORT AND ANNUAL ACCOUNTS 2020-21 |
VRL and VRHL (Notice). The Notice is stated
to be given under clause 10.1.2 of the KCM
Shareholders’ Agreement, notifying VRL
and VRHL of various alleged breaches of
the KCM Shareholders’ Agreement having a
Material Adverse Effect (as defined in the KCM
Shareholders’ Agreement) or other material
breaches of the SHA, and requiring VRL and
VRHL to remedy the notified breaches within
30 days, and reserving its rights in the event
VRHL does not or cannot remedy the breaches
within that time period to treat the event as
deemed service by VRHL of an irrevocable
offer under clause 10.2 to sell its shares in
KCM to ZCCM at ‘Fair Value’. Fair Value is to be
determined in accordance with a mechanism
set out in the KCM Shareholders’ Agreement. If
ZCCM thereafter notifies VRHL that it wishes
to exercise these rights, VRHL will be deemed
to have served an exit notice under clause 9.6 of
the Shareholders’ Agreement, giving rise to the
application of a number of the exit provisions
under the Shareholders’ Agreement, including
the requirement to make payment of budgeted
capex for the succeeding 12 month period
and any capital expenditure underspend in
previous financial years on a cumulative basis,
as determined by KCM’s auditors.
VRL and VRHL intend to challenge the Notice
in accordance with the provisions of the
Shareholders’ Agreement, and note that the
effectiveness and validity of the Notice is to
be determined by the arbitrator as part of the
arbitration proceedings referred to above
before any further steps can be taken by ZCCM
to acquire VRHL’s shares in KCM pursuant
to the mechanism in clause 10 of the KCM
Shareholders’ Agreement.
Accounting Considerations
As all the significant decision-making powers,
including carrying on the business of KCM
and taking control over all the assets of
KCM, rests with the PL, the Group believes
that the appointment of PL has caused
loss of its control over KCM. Accordingly,
the Group deconsolidated KCM with effect
from 21 May 2019 and presented the same
in the consolidated income statement as a
discontinued operation. This also resulted in
derecognition of non-controlling interests in
KCM of US$ 86 million in the previous year.
The Group continues to account for its
investment in KCM and loans, receivables and
obligations of KCM towards the Group at cost.
The loss with respect to KCM operations along
with the loss on fair valuation of the Group’s
interest in KCM has been presented as a special
item in the consolidated income statement.
The Group has total exposure of US$ 1,887
million (31 March 2020: US$ 1,952 million)
(including equity investment in KCM of US$ 266
million) to KCM in the form of loans, receivables,
investments and amounts relating to the
guarantees issued by VRL, which have been
accounted for at fair value on initial recognition
and disclosed under non-current assets in the
Consolidated Statement of Financial Position.
i.
The profit/ (loss) from discontinued operations, i.e., KCM:
Revenue
Cost of sales
Gross loss
Other operating income
Distribution costs
Administrative expenses
Operating loss
Investment revenue
Finance costs
Loss before taxation (a)
Net tax credit/ (expense) (b)
Loss after tax from discontinued operations (a+b)
* Till the date of appointment of PL, i.e., 21 May 2019
192
For the year ended
31 March 2020*
94
(160)
(66)
1
(3)
(12)
(80)
(11)
(9)
(100)
23
(77)
ACCOUNTSNotes to the Financial Statements
Integrated Report
Statutory reports
Financial statements
ii.
Loss on deconsolidation:
On loss of control of KCM, all assets and liabilities of KCM have been derecognised at their carrying value
on the date of loss of control, 21 May 2019. On deconsolidation, the investment in KCM and the loans,
receivables and obligations of KCM towards the Group have been measured at their fair value, at the date of
loss of control. The resulting loss on deconsolidation, recognised in special items in the consolidated income
statement, has been calculated as shown in the table below.
Fair value of assets recognised on deconsolidation:
Investment in KCM (Original cost of investment: US$ 266 million)
Loans, receivables and obligations of KCM towards the Group*
Total (a)
Assets derecognised on deconsolidation:
External Net assets of KCM (refer note iii below)
Non-controlling Interest
External Net assets of KCM attributable to the Group (b)
Loss on deconsolidation (a) – (b)
(US$ million)
As at
21 May 2019
-
693
693
1,268
86
1,354
(661)
*consists of unsecured loans advanced by the Group of US$ 265 million, which is past due, secured borrowings of KCM where the
Group has provided guarantee to the lenders/ creditors of US$ 355 million, monies advanced for goods and other receivables of
US$ 73 million (Refer note 18).
iii.
The carrying amount of assets and liabilities as at 21 May 2019:
Property, plant and equipment
Other non-current assets
Trade and other receivables
Total assets
Borrowings
Trade and other payables2
Total liabilities
Net assets/ (liabilities) of KCM
1
2
External
1,470
68
240
1,778
-
510
510
1,268
VRL Group1
-
-
-
-
1,187
499
1,686
(1,686)
(US$ million)
Total
1,470
68
240
1,778
1,187
1,009
2,196
(418)
Loans, receivables and obligations of KCM towards the Group
During the year ended 31 March 2021, guarantee given by the Group to the lenders/creditors amounting to US$ 69 Million
has been expired.
iv.
The profit/ (loss) from discontinued operations, i.e., KCM including loss on its deconsolidation has been
presented below:
Loss after tax from discontinued operations (refer note i above)
Loss on deconsolidation (refer note ii above)
Gain on expiry of guarantee given by the Group to the lenders/creditors. (refer
note iii (2) above)
Fair value change during the year (refer note v below)
Total
Year ended
31 March 2021
-
-
69
Year ended
31 March 2020
(77)
(661)
-
22
91
(33)
(771)
Key sources of estimation uncertainty
The investment in KCM and loans, receivables and obligations of KCM towards the Group recognised
following deconsolidation of the subsidiary are initially recognized at fair value on the date of loss of control.
193
Notes to the Financial StatementsVEDANTA RESOURCES LIMITED | INTEGRATED REPORT AND ANNUAL ACCOUNTS 2020-21 |
Subsequently, the equity investment in KCM is
measured at fair value through profit or loss and
the loans, receivables and obligations of KCM
towards the Group are measured at amortised
cost, subject to impairment.
The Group employed third-party experts
(“Expert”) to undertake valuations of the
investment in KCM and loans, receivables
and obligations of KCM towards the Group
at the date of loss of control, 21 May 2019,
at 31 March 2020 and at 31 March 2021. The
income approach method was applied for the
purposes of the valuation. In this approach,
the discounted cash flow method was used
to capture the present value of the expected
future economic benefits to be derived from
the ownership of these assets. The resulting
valuation is adjusted to reflect a number of
factors, including the uncertainty and risks
inherent in litigation and recovery. The third-
party valuation provides a range of reasonable
fair values, based on which management
calculated the fair value to be recognised in the
financial statements as the mid-point of the
range.
Cash flow projections are based on financial
budgets and life of mine plans on a going
concern basis and are sensitive to changes in
input assumptions. Input assumptions into the
valuation that involve management judgement
include:
The expectation that the large-scale mining
licence expiring in 2025 will be extended to
the end of the life of mine under the Mines
& Mineral Development Act on payment
of requisite fees and submission of the
proposed programme of mining operation
for the period of renewal. We believe this
licence renewal process is in line with globally
accepted procedural requirement to be
followed by a mining company backed by a
robust life of mine plan and as such, would
get extended for the next permissible period
post fulfilment of procedural requirement in
ordinary course of business.
Expected delay between success of the
litigation proceedings and receipt of any
amounts due.
Liquidity of the market in the event of a sale
of KCM, which has been considered through
benchmarking the resulting valuation
against other recent transactions for similar
mines.
The discount rate used to discount the cash
flow projection, which has been calculated
on a post-tax basis at 12.750% (31 March
2020: 12.125%), using the input of third-
party expert.
To factor in the uncertainties, valuation
under few scenarios in addition to the base
case valuation, assuming equal likelihood,
has been computed a) If Provisional
Liquidator continues to control the assets
for longer than expected, b) additional capex
required to achieve the planned ramp up of
production and c) future implied Zambian
country risk premium.
The key sources of estimation uncertainty, to
which the valuation is most sensitive, are:
The long-term copper prices which are
based on the median of analyst forecasts.
Throughput at the Konkola concentrator:
The timing of ramp up of through put at the
Konkola concentrator is based on internal
management forecasts. The forecasts
incorporate management experience and
expectations as well as the risks associated
therewith (for example availability
of required fleets, skill sets for level
developments at critical areas).
The probability of achieving an award or
positive settlement outcome in respect of
the litigation proceedings. As discussed
above, the Group believes, based on
the legal advice it has obtained, that it is
probable that it will succeed with its appeal
to the Zambian Court of Appeal, which
would result in the Petition being stayed
until the outcome of the arbitration and the
Group believes at some stage the Petition
will be dismissed and the appointment of
the PL discharged. The probability used
in the valuation is based on the Expert’s
assumption based on external legal advice
that it is probable that the Group will
succeed with its appeal to the Zambian
Court of Appeal and benchmarked using
external data on historical outcomes for
similar claims.
The potential proportion of the claim value
that may be expected to be recovered in
the event of achieving an award or positive
settlement outcome. This includes the
ability of ZCCM to make payments in the
event of a successful award or settlement
outcome.
194
ACCOUNTSNotes to the Financial Statements
Integrated Report
Statutory reports
Financial statements
Where discounted cash flow models based
on management’s assumptions are used, the
resulting fair value measurements are considered
to be at level 3 in the fair value hierarchy, as
defined in IFRS 13 Fair Value Measurement,
as they depend to a significant extent on
unobservable valuation inputs.
v.
Fair value measurements
The valuation of the investment in KCM and
the loans, receivables and obligations of
KCM towards the group is determined using
discounted future cash flows and adjusted to
reflect Expert’s current views on litigation risk
and other unobservable inputs as described
below. These assets are considered to be
level 3 in the fair value hierarchy. Quantitative
information about the significant unobservable
inputs used in level 3 fair value measurements are
set out in the table below:
Financial asset
Investments and
Loans, receivables
and obligations of
KCM towards the
Group
Fair value at
31 March
2021
682
31 March
2020
660
Significant
unobservable Inputs
21 May
2019
693 Probability of
achieving an award or
positive settlement
outcome in respect
of litigation
proceedings
Potential proportion
of the claim value
that may expected to
be recovered in the
event of achieving
an award or positive
settlement outcome
Copper price
Long term price of
US$ 6,850 / tonne
(31 March 2021), US$
6,559 / tonne (31
March 2020) and US$
6,503 / tonne (21
May 2019)
(US$ million, unless stated otherwise)
Relationship of unobservable
inputs to fair value
A decrease in probability of success would
decrease the fair value.
A 10% decrease in the probability of success,
with no change to any other inputs, would
decrease the fair value by US$ 54 million.
We have used a 10% assumption to calculate
our exposure as it represents a change in the
probability of success that we deem to be
reasonably probable.
A decrease in the recovery percentage would
decrease the fair value.
A 10% decrease in the recovery percentage,
with no change to any other inputs, would
decrease the fair value by US$ 136 million.
We have used a 10% assumption to calculate
our exposure as it represents a change in
the recovery probability that we deem to be
reasonably probable.
A decrease in the copper price would
decrease the fair value.
A 10% reduction in the long-term copper
price, with no change to any other inputs,
would decrease the fair value by US$ 140
million.
We have used a 10% assumption to calculate
our exposure as it represents the annual
copper price movement that we deem to be
reasonably probable (on an annual basis over
the long run).
c) Acquisition of Global coke plant
On 28 July 2019, the Group acquired Sindhudurg
plant of Global Coke Limited which was under
liquidation as per the Insolvency and Bankruptcy
Code, 2016 (including all amendments for the
time being in force) for a cash consideration
of US$ 5 Million. The assets acquired mainly
included Land, Building and Plant and Equipment
of similar value as the cash consideration. The
acquisition complements backward integration
opportunity for the Group’s existing pig iron
division and also increase Group’s footprint in
met coke market in south western part of India.
Detailed disclosure of fair value of the identifiable
assets and liabilities of Sindhudurg plant has
not been provided as the same is not material.
Acquisition costs related to this acquisition were
not material.
4. SEGMENT INFORMATION
The Group is a diversified natural resources Group
engaged in exploring, extracting and processing
minerals and oil and gas. The Group produces zinc,
lead, silver, copper, aluminium, iron ore, oil and gas
and commercial power and have a presence across
India, Zambia, South Africa, Namibia, UAE, Ireland,
195
Notes to the Financial StatementsVEDANTA RESOURCES LIMITED | INTEGRATED REPORT AND ANNUAL ACCOUNTS 2020-21 |
Australia, Liberia, Japan, South Korea and Taiwan.
The Group is also in the business of port operations
and manufacturing of glass substrate, ferro alloys &
steel.
Each of the reportable segments derives its
revenues from these main products and hence these
have been identified as reportable segments by the
Group’s chief operating decision maker (“CODM”).
The Group’s reportable segments defined in
accordance with IFRS 8 are as follows:
Zinc- India
Zinc-International
Oil & Gas
Iron Ore
Copper-India/Australia
Aluminium
Power
‘Others’ segment mainly comprises of port/berth,
steel, ferro alloys and glass substrate business and
those segments which do not meet the quantitative
threshold for separate reporting.
(a) Reportable segments
Year ended 31 March 2021
Management monitors the operating results of
reportable segments for the purpose of making
decisions about resources to be allocated and for
assessing performance. Segment performance is
evaluated based on the Earnings Before Interest,
Taxes, Depreciation, and Amortization (“EBITDA”)
of each segment. Business segment financial data
includes certain corporate costs, which have been
allocated on an appropriate basis. Inter-segment
sales are charged based on prevailing market prices.
The following tables present revenue and profit
information and certain asset and liability information
regarding the Group’s reportable segments for the years
ended 31 March 2021 and 31 March 2020. Items after
operating profit are not allocated by segment.
Zinc-
India
Zinc-
International
Oil and
gas
Iron
Ore
Copper-
India/
Australia
Aluminium Power Others Elimination
Total
operations
(US$ million)
368
-
1,016
-
606
5
1,469
-
3,856
9
725
-
722
5
-
(19)
11,722
-
368
1,016
611
1,469
3,865
725
727
(19)
11,722
120
43
438
287
245
30
77
151
215
(21)
21
(42)
1,046
230
190
79
214
77
816
111
137
-
-
-
2,960
-
2,960
1,568
332
1,236
REVENUE
Sales to external customers
Inter-segment sales
Segment revenue
Segment Result
EBITDA (1)
Depreciation and amortisation(2)
Operating profit / (loss) before
special items
Investment revenue
Finance costs
Other gains and (losses) [net]
Special items
2,730
828
2,419
451
825
6,564
2,235
1,062
-
644
146
1,508
173
590
2,142
245
287
-
Loss before taxation from
continuing operations
Segments assets
Financial asset investments
Deferred tax assets
Short-term investments
Cash and cash equivalents
Tax assets
Others
TOTAL ASSETS
Segment liabilities
Borrowings
Current tax liabilities
Deferred tax liabilities
Others
TOTAL LIABILITIES
196
3,800
1,099
2,701
292
(1,209)
11
(112)
1,683
17,114
21
1,018
5,002
955
375
834
25,319
5,735
16,377
38
299
539
22,988
ACCOUNTSNotes to the Financial Statements
Integrated Report
Statutory reports
Financial statements
Zinc-
India
Zinc-
International
Oil and
gas
Iron
Ore
Copper-
India/
Australia
Aluminium Power Others Elimination
Total
operations
(US$ million)
340
51
188
13
-
-
-
-
8
-
232
24
4
-
82
9
-
-
919
33
(US$ million)
Zinc-
India
Zinc-
International
Oil and
gas
Iron
Ore
Copper-
India/
Australia
Aluminium Power Others Elimination
Total
operations
2,563
-
2,563
1,230
319
911
441 1,787
-
-
487
2
1,277
-
441 1,787
489
1,277
54 1,032
117
(40)
90
566
(36)
466
34
83
21
(61)
3,746
5
3,751
281
233
827
-
827
232
81
48
151
662
13
675
97
68
29
-
(20)
11,790
-
(20)
11,790
-
-
-
2,762
692 2,079
461
879
6,560 2,333 1,072
-
637
164 1,344
164
606
2,396
214
207
-
651
107
642
15
31
200
10
44
-
-
1,906
-
94
-
-
72
-
-
3,003
1,412
1,591
382
(1,179)
(87)
(2,053)
(1,346)
16,838
12
1,114
4,385
705
355
777
24,186
5,732
15,095
26
397
663
21,913
1,700
2,072
Other segment information
Additions to property, plant and
equipment, exploration and
evaluation assets and intangible
assets (4)
Impairment charge (3)
Year ended 31 March 2020
REVENUE
Sales to external customers
Inter-segment sales
Segment revenue
Segment Result
EBITDA (1)
Depreciation and
amortisation (2)
Operating profit / (loss) before
special items
Investment revenue
Finance costs
Other gains and (losses) [net]
Special items
Loss before taxation from
continuing operations
Segment assets
Financial asset investments
Deferred tax assets
Short-term investments
Cash and cash equivalents
Tax assets
Others
TOTAL ASSETS
Segment liabilities
Borrowings
Current tax liabilities
Deferred tax liabilities
Others
TOTAL LIABILITIES
Other segment information
Additions to property, plant and
equipment, exploration and
evaluation assets and intangible
assets
Impairment charge (3)
(1)
EBITDA is a non-IFRS measure and represents earnings before special items, depreciation, amortisation, other gains and losses,
interest and tax.
(2) Depreciation and amortisation are also provided to the chief operating decision maker on a regular basis.
(3)
(4)
Included under special items (Note 6).
Additions to property, plant and equipment, exploration and evaluation assets and intangible assets includes US$ 1 Million not allocated
to any segment. It also includes US$ 48 Million acquired through business combination.
197
Notes to the Financial StatementsVEDANTA RESOURCES LIMITED | INTEGRATED REPORT AND ANNUAL ACCOUNTS 2020-21 | (b) Geographical segmental analysis
The Group’s operations are located in India, Zambia, Namibia, South Africa, UAE, Liberia, Ireland, Australia, Japan,
South Korea and Taiwan. The following table provides an analysis of the Group’s revenue by region in which the
customer is located, irrespective of the origin of the goods.
India
China
UAE
Malaysia
Others
Total
Year ended
31 March 2021
7,236
705
94
959
2,728
(US$ million)
Year ended
31 March 2020
7,652
380
116
1,079
2,563
11,722
11,790
The following is an analysis of the carrying amount of non-current assets, excluding deferred tax assets, derivative
financial assets, financial asset investments and other non-current financial assets analysed by the geographical
area in which the assets are located:
India
Namibia
South Africa
Taiwan
Others
Total
Carrying amount of non-current assets
(US$ million)
As at
31 March 2021
13,083
121
607
137
101
As at
31 March 2020
13,091
100
498
155
145
14,049
13,989
Information about major customer
Revenue from one customer amounted to US$ 1,414 Million for the year ended 31 March 2021 (31 March 2020: No
customer), arising from sales made in the Aluminium, Zinc and Copper segment. No other customer contributed
to 10% or more of revenues.
Disaggregation of revenue
Below table summarises the disaggregated revenue from contracts with customers:
Particulars
Zinc Metal
Lead Metal
Silver Bars
Oil
Gas
Iron ore
Pig Iron
Metallurgical coke
Copper Products
Aluminium Products
Power
Steel Products
Ferro Alloys
Others
Year ended
31 March 2021
2,245
524
593
874
92
293
327
35
1,377
3,832
493
535
37
287
(US$ million)
Year ended
31 March 2020
2,223
490
349
1,539
112
209
316
8
1,037
3,589
622
534
-
529
Revenue from contracts with customers*
11,544
11,557
198
ACCOUNTSNotes to the Financial Statements
Integrated Report
Statutory reports
Financial statements
Particulars
Revenue from contingent rents
Losses on provisionally priced contracts under IFRS 9 (refer note 5)
JV partner’s share of the exploration costs approved under the OM (refer note 5)
Total Revenue
Year ended
31 March 2021
204
(26)
-
(US$ million)
Year ended
31 March 2020
236
(183)
180
11,722
11,790
*Includes revenues from sale of services aggregating to US$ 30 million (31 March 2020: US$ 30 million) which is recorded over a period of
time and the balance revenue is recognised at a point in time.
5. TOTAL REVENUE
Sale of products a,b
Sale of services a
Revenue from contingent rents
Total Revenue
Year ended
31 March 2021
11,488
30
204
(US$ million)
Year ended
31 March 2020
11,524
30
236
11,722
11,790
a)
b)
Revenue from sale of products and from sale of
services for the year ended 31 March 2021 includes
revenue from contracts with customers of US$
11,554 million (31 March 2020: US$ 11,557 million)
and a net loss on mark-to-market of US$ 26 million
(31 March 2020: US$ 183 million) on account of
gains/ losses relating to sales that were provisionally
priced at the beginning of the respective year
with the final price settled in the subsequent year,
gains/ losses relating to sales fully priced during the
respective year, and marked to market gains/ losses
relating to sales that were provisionally priced as at
the beginning of the respective year.
Government of India (GoI) vide Office Memorandum
(“OM”) No. O-19025/10/2005-ONG-DV dated
01 February 2013 allowed for Exploration in the
Mining Lease Area after expiry of Exploration
period and prescribed the mechanism for recovery
of such Exploration Cost incurred. Vide another
Memorandum dated 24 October 2019, GoI clarified
that all approved Exploration costs incurred
on Exploration activities, both successful and
unsuccessful, are recoverable in the manner as
prescribed in the OM and as per the provisions of
PSC. Accordingly, during the previous year, the
Group has recognized revenue of US $ 180 million,
for past exploration costs, through increased
share in the joint operations revenue as the Group
believes that cost recovery mechanism prescribed
under OM for profit petroleum payable to GOI is not
applicable to its Joint operation partner, view which
is also supported by an independent legal opinion.
However, the Joint operation partner carries a
different understanding and the matter is pending
resolution.
c)
Majority of the Group’s sales are against advance
or are against letters of credit/ cash against
documents/ guarantees of banks of national
standing. Where sales are made on credit, the
amount of consideration does not contain any
significant financing component as payment terms
are within three months.
As per the terms of the contract with its customers,
either all performance obligations are to be
completed within one year from the date of such
contracts or the Group has a right to receive
consideration from its customers for all completed
performance obligations. Accordingly, the Group
has availed the practical expedient available under
paragraph 121 of IFRS 15 and dispensed with the
additional disclosures with respect to performance
obligations that remained unsatisfied (or partially
unsatisfied) at the balance sheet date. Further,
since the terms of the contracts directly identify
the transaction price for each of the completed
performance obligations, in all material respects,
there are no elements of transaction price which
have not been included in the revenue recognised in
the financial statements.
Further, there is no material difference between the
contract price and the revenue from contract with
customers.
199
Notes to the Financial StatementsVEDANTA RESOURCES LIMITED | INTEGRATED REPORT AND ANNUAL ACCOUNTS 2020-21 |
6. SPECIAL ITEMS
Year ended 31 March 2021
Year ended 31 March 2020
(US$ million)
Revision of Renewable Purchase Obligation
(RPO)5
Provision for settlement of dispute
regarding environmental clearance11
Gross profit special items (a)
Impairment (charge)/reversal of oil and gas
assets1
Impairment (charges) of CWIP & capital
advances 2, 9, 10
Impairment (charge) of ASI assets 3
Total impairment reversal/ (charge)
(net) (b)
Provision on Iron ore assets 4 (c)
Operating special items (a+b+c)
Investment Revenue Special item 7
Transaction costs paid to the ultimate
parent company on structured investment
sold in previous year 12
Bargain gain on acquisition of FACOR 13
Delisting expenses 8
Profit/ (Loss) on Discontinued Operations 6
Total of Special items
Special items
13
(29)
(16)
-
(33)
-
(33)
-
(49)
-
(14)
16
(65)
91
(21)
Tax effect of
Special items
(3)
Special items
after tax
10
Special items
24
-
24
(1,906)
(94)
(72)
(17)
(2,065)
12
-
-
-
(771)
Tax effect of
Special items
(8)
Special items
after tax
16
-
-
(8)
742
33
11
786
6
784
(3)
-
-
-
-
16
(1,164)
(61)
(61)
(1,286)
(11)
(1,281)
9
-
-
-
(771)
(2,824)
781
(2,043)
(19)
(9)
-
(22)
-
-
(31)
-
(14)
16
(65)
91
(3)
(22)
(2,072)
10
7
-
11
-
11
-
18
-
-
-
-
-
18
1
During the year ended 31 March 2020, the Group has
recognized impairment charge of US$ 1,906 on its
assets in the oil and gas segment comprising of:
I.
During the year ended 31 March 2020,
impairment charge of US$ 1,795 million relating
to Rajasthan oil and gas block (“RJ CGU”)
triggered by the significant fall in the crude
oil prices. Of this charge, US$ 1,648 million
impairment charge has been recorded against
oil and gas producing facilities and US$ 147
million impairment charge had been recorded
against exploration intangible assets under
development.
For oil & gas assets, CGUs identified are on
the basis of a production sharing contract
(PSC) level, as it is the smallest group of assets
that generates cash inflows that are largely
independent of the cash inflows from other
assets or group of assets.
The recoverable amount of the RJ CGU, US$
1,405 million, was determined based on the
fair value less costs of disposal approach, a
level-3 valuation technique in the fair value
hierarchy. Also, as it more accurately reflects
the recoverable amount based on our view
of the assumptions that would be used by
200
a market participant. This is based on the
cash flows expected to be generated by the
projected oil and natural gas production
profiles up to the expected dates of cessation
of production sharing contract (PSC)/cessation
of production from each producing field based
on the current estimates of reserves and
risked resources. Reserves assumptions for
fair value less costs of disposal tests consider
all reserves that a market participant would
consider when valuing the asset, which are
usually broader in scope than the reserves used
in a value-in-use test. Discounted cash flow
analysis used to calculate fair value less costs
of disposal uses assumption for short-term
oil price of US$ 38 per barrel for the next one
year and scales upto long-term nominal price
of US$ 57 per barrel three years thereafter
derived from a consensus of various analyst
recommendations. Thereafter, these have
been escalated at a rate of 2% per annum. The
cash flows are discounted using the post-
tax nominal discount rate of 10.35% derived
from the post-tax weighted average cost
of capital after factoring the risks ascribed
to the successful implementation of key
growth projects. Additionally, in computing
the recoverable value, the effects of market
ACCOUNTSNotes to the Financial Statements
Integrated Report
Statutory reports
Financial statements
participant’s response on production sharing
contract matters have also been appropriately
considered (refer note 2(c)(I)(viii) for PSC
extension matters). Based on the sensitivities
carried out by the Group, change in crude price
assumptions by US$ 1/bbl and changes to
discount rate by 1% would lead to a change in
recoverable value by US$ 45 million and US$ 66
million respectively.
4.
5.
II.
During the year ended 31 March 2020,
impairment charge of US$ 36 million relating
to KG-ONN-2003/1 CGU mainly due to the
reduction in crude oil price forecast.
The recoverable amount of the CGU, US$ 20
million was determined based on fair value
less cost of disposal approach, a level-3
valuation technique in the fair value hierarchy
as described in above paragraph. Discounted
cash flow analysis used to calculate fair value
less costs of disposal uses assumption for oil
price as described in above paragraph. The
cash flows were discounted using the post-tax
nominal discount rate of 11.1% derived from the
post-tax weighted average cost of capital. The
sensitivities around change in crude price and
discount rate are not material to the financial
statements.
6.
7.
2.
3.
III.
During the year ended 31 March 2020,
impairment charge of US$ 75 Million, in
exploration block KG-OSN-2009/3, was
provided for as the Government of India
approval on extension and grant of excusable
delay was awaited.
Refer note 2(c)(I)(vii).
During the year ended 31 March 2020, the Group
has recognized impairment charge of US$ 72
million on the assets of AvanStrate Inc (ASI) mainly
due to the significant changes in the market and
economic environment in which ASI operates
leading to decrease in demand and profitability in
the glass substrate business. The charge relates to
ASI business in Japan, Taiwan and Korea classified
in the ‘others’ segment. Given the significant
interdependence of these entities on each other,
these are considered as a single cash-generating
unit.
The net recoverable value of assets and liabilities has
been assessed at US$ 205 million based on the value
in use approach.Based on the sensitivities carried
out by the Group, decrease in volume assumptions
by 1% would lead to decrease in recoverable value
by US$ 2 million and increase in discount rate by 1%
would lead to a decrease in recoverable value by US$
6 million.
8.
9.
During the year ended 31 March 2020, a parcel of
land relating to the Iron Ore business having carrying
value of US$ 17 million was reclassified from freehold
land to other financial asset due to an ongoing legal
dispute relating to title of the land. Subsequently,
during the year, the financial asset was fully provided
for impairment and recognized under special items.
During the year ended 31 March 2020, Vedanta
Limited restated its Renewable Power Obligation
(RPO) liability pursuant to Odisha Electricity
Regulatory Commission (OERC) notification dated
31 December 2019 which clarified that for CPPs
commissioned before 01 April 2016, RPO should be
pegged at the RPO obligation applicable for 2015-
16. Based on the notification, liability of Vedanta
Limited’s Jharsuguda and Lanjigarh plants have
been revised and US$ 24 million reversal relating to
previous years has been recognised under special
items.
During the year ended 31 March 2021, Vedanta
Limited has recomputed its Renewable Power
Obligation (RPO) pursuant to Chhattisgarh State
Electricity Regulatory Commission (CSERC)
notification dated 13 July 2020 (published on 22 July
2020) which clarified that for Captive Power Plants
commissioned before 01 April 2016, RPO should be
pegged at the RPO obligation percentage rates (both
for solar and non-solar) applicable for FY 2015-16.
Consequent to the aforesaid notification, Vedanta
Limited’s obligation towards RPO relating to the
period upto 31 March 2020 has been reversed to the
extent of US$ 13 million during this year.
Refer note 3(b).
On the contempt petition filed by TSPL, the Hon’ble
Supreme Court of India vide its order dated 07
August 2019 allowed gross calorific value (GCV) on
as received basis (ARB) and actual cost of coal in the
Energy Charge Formula and directed Punjab State
Power Corporation Limited (PSPCL) to make the
payments within 8 weeks. Pursuant to the order,
PSPCL has paid US$ 142 million in September 2019
and October 2019. TSPL has booked an interest of
US$ 20 million due to the delay in receipt of payment
as per the Supreme Court order dated 07 March
2018 allowing the interest on delay in payment. Of
this interest of US$ 12 million pertaining to period
prior to 31 March 2019 is booked as special item and
amount of US$ 8 million for previous year is booked
in investment income.
Refer delisting note in Group overview section.
During the year ended 31 March 2021, the Group has
recognised a loss of US$ 24 Million relating to certain
items of capital work-in-progress at the aluminium
operations, which are no longer expected to be used.
201
Notes to the Financial StatementsVEDANTA RESOURCES LIMITED | INTEGRATED REPORT AND ANNUAL ACCOUNTS 2020-21 |
10.
During the year ended March 31, 2021, ESL Steel
Limited conducted a detailed physical verification
and evaluation of project equipment and material
being carried forward as capital work in progress
at a carrying value of US$ 113 Million. Pending
completion of entire exercise, an interim provision of
US$ 9 Million has been recognized relating to certain
7.
INVESTMENT REVENUE
items of capital work-in-progress, which are no
longer expected to be used.
11. Refer Note 2(c)(I)(x).
12. Refer Note 35.
13. Refer Note 3(a).
Net gain on financial assets held at fair value through profit or loss (FVTPL)*
Interest Income:
Interest income- financial assets held at FVTPL
Interest income- bank deposits at amortised cost
Interest income- loans and receivables at amortised cost
Interest income- others
Investment Revenue – Special item
Dividend Income:
Dividend income- available for sale Investments
Dividend income- financial assets held at FVTPL
Foreign exchange (loss)/ gain (net)
Net Gain arising on qualifying hedges and non-qualifying hedges
Year ended
31 March 2021
109
(US$ million)
Year ended
31 March 2020
97
63
77
37
11
-
-
-
(5)
-
140
33
67
4
12
-
7
7
27
394
Total
* Includes mark to market loss of Nil (31 March 2020: gain of US$ 51 million) relating to structured investment (Refer note 35).
292
8. FINANCE COSTS
Interest expense – financial liabilities at amortised cost
Other finance costs (including bank charges)
Total interest cost
Unwinding of discount on provisions (note 26)
Net interest on defined benefit arrangements
Special items (note 6)
Capitalisation of finance costs/borrowing costs (note 16)
Total
Year ended
31 March 2021
1,170
70
(US$ million)
Year ended
31 March 2020
1,245
61
1,240
10
3
58
(44)
1,267
1,306
14
3
-
(144)
1,179
All borrowing costs are capitalised using rates based on specific borrowings and general borrowings with the interest rate of 6.91% (7.49% for
31 March 2020) per annum for the year ended 31 March 2021.
9. OTHER GAINS AND (LOSSES), (NET)
Foreign exchange gain/ (loss) (net)
Change in fair value of financial liabilities measured at fair value
Net loss arising on qualifying hedges and non-qualifying hedges
Bargain gain on acquisition of FACOR – Special Item (Refer Note 3(a))
Other gains and losses – Special Item
Total
202
Year ended
31 March 2021
55
(1)
(43)
16
(21)
(US$ million)
Year ended
31 March 2020
(79)
(1)
(7)
-
-
6
(87)
ACCOUNTSNotes to the Financial Statements Integrated Report
Statutory reports
Financial statements
10(A). PROFIT/ (LOSS) FOR THE YEAR HAS BEEN STATED AFTER CHARGING/ (CREDITING):
Depreciation & amortization
Costs of inventories recognised as an expense
Auditor’s remuneration for audit services (note 37)
Research and development
Net (gain)/ loss on disposal of Property plant and equipment
Provision for receivables
Impairment charge of oil & gas assets (refer note 6)
Impairment of other assets (refer note 6)
Employee costs (note 28)
Year ended
31 March 2021
1,099
3,192
3
-
(10)
29
-
33
395
(US$ million)
Year ended
31 March 2020
1,412
3,186
4
1
8
15
1,906
166
388
10(B). EXCHANGE GAIN/ (LOSS) RECOGNISED IN THE CONSOLIDATED INCOME STATEMENT:
Cost of sales
Investment revenue (refer note 7)
Other gains and losses (refer note 9)
Total
Year ended
31 March 2021
(26)
(5)
12
(US$ million)
Year ended
31 March 2020
(60)
34
(86)
(19)
(112)
11. TAX
(a) Tax charge/ (credit) recognised in Consolidated Income Statement (including on special items)
Current tax:
Current tax
Total current tax (a)
Deferred tax:
Origination of temporary differences
Credit in respect of Special items (Refer Note 6)
Total deferred tax (b)
Total Income tax expense/ (benefit) for the year((a)+(b))
(Loss)/ Profit before tax from continuing operations
Effective Income tax rate (%)
Tax expense/ (benefit)
Particulars
Tax effect on special items
Tax expense – others
Net tax expense/ (benefit)
Year ended
31 March 2021
(US$ million)
Year ended
31 March 2020
308
308
8
(18)
(10)
298
1,683
17.7%
258
258
153
(781)
(628)
(370)
(1,346)
27.5%
Year ended
31 March 2021
(18)
316
(US$ million)
Year ended
31 March 2020
(781)
411
298
(370)
(b)
A reconciliation of income tax expense/ (credit) applicable to profit/ (loss) before tax at the Indian statutory
income tax rate to income tax expense/ (credit) at the Group’s effective income tax rate for the year indicated are
as follows.
203
Notes to the Financial StatementsVEDANTA RESOURCES LIMITED | INTEGRATED REPORT AND ANNUAL ACCOUNTS 2020-21 |
Given majority of the Group’s operations are located in India, the reconciliation has been carried out from Indian
statutory income tax rate.
Profit/ (Loss) before tax from continuing operations
Indian statutory income tax rate
Tax at statutory income tax rate
Disallowable expenses
Non-taxable income
Tax holidays and similar exemptions
Effect of tax rate differences of subsidiaries operating at other tax rates
Tax on distributable reserve of/ dividend from subsidiary
Unrecognized tax assets (Net)**
Change in deferred tax balances due to change in tax law*
Capital Gains/ Other Income subject to lower tax rate
Credit in respect of earlier years
Other permanent differences
Total
Year ended
31 March 2021
1,683
34.944%
(US$ million)
Year ended
31 March 2020
(1,346)
34.944%
588
30
(17)
(104)
64
117
(420)
(42)
(23)
-
105
298
(470)
30
(20)
(70)
55
276
66
(251)
(39)
-
53
(370)
* Deferred tax charge for the year ended 31 March 2020 includes deferred tax credit of US$ 233 million on remeasurement of deferred
tax balances as at 31 March 2019. Also refer note 2(c)(I)(ix).
** In June 2018, the Company acquired majority stake in ESL, which has since been focusing on operational turnaround. Based on
management’s estimate of future outlook, financial projections and requirements of Ind AS 12 – Income taxes, ESL has recognized
deferred tax assets of US$ 434 million during the year ended 31 March 2021.
Certain businesses of the Group within India are
eligible for specified tax incentives which are
included in the table above as tax holidays and
similar exemptions. Most of such tax exemptions are
relevant for the companies operating in India. These
are briefly described as under:
The location based exemption
In order to boost industrial and economic
development in undeveloped regions, provided
certain conditions are met, profits of newly
established undertakings located in certain areas
in India may benefit from tax holiday under section
80IC of the Income-tax Act, 1961. Such tax holiday
works to exempt 100% of the profits for the first five
years from the commencement of the tax holiday,
and 30% of profits for the subsequent five years.
This deduction is available only for units established
up to 31 March 2012. However, such undertaking
would continue to be subject to the Minimum
Alternative tax (‘MAT’).
In the current year, an undertaking at Pantnagar,
which is part of Hindustan Zinc Limited, is the only
unit eligible for deduction at 30% of taxable profit.
The location based exemption: SEZ Operations
In order to boost industrial development and
exports, provided certain conditions are met,
profits of undertaking located in Special Economic
Zone (‘SEZ’) may benefit from tax holiday. Such tax
holiday works to exempt 100% of the profits for the
first five years from the commencement of the tax
holiday, 50% of profits for five years thereafter and
50% of the profits for further five years provided the
amount allowable in respect of deduction is credited
to Special Economic Zone Re-Investment Reserve
account. However, such undertaking would continue
to be subject to the Minimum Alternative tax (‘MAT’).
The Group has setup SEZ Operations in its
aluminium division of Vedanta Limited (where no
benefit has been drawn).
Sectoral Benefit - Power Plants and Port
Operations
To encourage the establishment of infrastructure
certain power plants and ports have been offered
income tax exemptions of upto 100% of profits and
gains for any ten consecutive years within the 15
year period following commencement of operations
subject to certain conditions under section 80IA of
the Income-tax Act, 1961. The Group currently has
total operational capacity of 8.4 Giga Watts (GW)
of thermal based power generation facilities and
wind power capacity of 274 Mega Watts (MW) and
port facilities. However, such undertakings would
continue to be subject to MAT provisions.
204
ACCOUNTSNotes to the Financial Statements
Integrated Report
Statutory reports
Financial statements
The Group has power plants which benefit from
such deductions, at various locations of Hindustan
Zinc Limited (where such benefits have been drawn),
Talwandi Sabo Power Limited, Vedanta Limited
and Bharat Aluminium Company Limited (where no
benefit has been drawn).
The Group operates a zinc refinery in Export
Processing Zone, Namibia which has been granted
tax exempt status by the Namibian government.
In addition, the subsidiaries incorporated in
Mauritius are eligible for tax credit to the extent of
80% of the applicable tax rate on foreign source
income.
The total effect of such tax holidays and exemptions
was US$ 104 million for the year ended 31 March
2021 (31 March 2020: US$ 70 million).
(c) Deferred tax assets/liabilities
The Group has accrued significant amounts of
deferred tax. The majority of the deferred tax
liability represents accelerated tax relief for the
depreciation of property, plant and equipment, the
depreciation of mining reserves and the fair value
uplifts created on acquisitions, net of losses carried
forward by the Group and unused tax credits in the
form of MAT credits carried forward in the Group.
Significant components of Deferred tax (assets) and
liabilities recognized in the Consolidated Statement
of financial position are as follows:
For the year ended 31 March 2021:
Significant components
of deferred tax (assets)/
liabilities
Property, plant and
equipment, Exploration
and Evaluation and other
intangible assets
Voluntary retirement
scheme
Employee benefits
Fair value of derivative
asset/ liability
Fair valuation of other
asset/liability
MAT credit entitlement
Unabsorbed depreciation
and business losses
Other temporary
differences
Opening
balance as
at 01 April
2020
Charged/
(credited)
to
Income
Statement
Charged/
(credited) to
other
comprehensive
income
Charged
to Equity
Business
Combination
Discontinued
Operations
1,045
(2)
(4)
(25)
(12)
140
(1,221)
(732)
(3)
(3)
6
(33)
121
106
92
(202)
-
-
1
(4)
-
-
-
-
-
-
4
-
-
-
-
4
7
-
-
-
-
-
1
8
-
-
-
-
-
-
(2)
(2)
Total
(717)
(10)
(3)
(US$ million)
Exchange
difference
transferred
to
translation
of foreign
operation
46
Closing
balance
as at
31 March
2021
1,096
(1)
(1)
-
(1)
(8)
(24)
(10)
106
(25)
(14)
(1,125)
(640)
(3)
(114)
1
(719)
205
Notes to the Financial StatementsVEDANTA RESOURCES LIMITED | INTEGRATED REPORT AND ANNUAL ACCOUNTS 2020-21 |
For the year ended 31 March 2020:
Significant components of deferred tax (assets)/
liabilities
Property, plant and equipment, Exploration
and Evaluation and other intangible assets
Voluntary retirement scheme
Employee benefits
Fair value of derivative asset/ liability
Fair valuation of other asset/liability
MAT credit entitlement
Unabsorbed depreciation and business
losses
Other temporary differences
Total
Opening
balance as
at 01 April
2019
Charged/
(credited) to
Income
Statement
2,442
(860)
(5)
(17)
(8)
130
(1,492)
(879)
(173)
(2)
1
-
(9)
13
167
(130)
190
(628)
Charged/
(credited) to
other
comprehensive
income
Discontinued
operations
-
-
(10)
4
-
-
-
-
(6)
427
-
-
-
-
-
(244)
(69)
114
Exchange
difference
transferred to
translation of
foreign
operation
(964)
-
2
1
(3)
104
521
144
(195)
(US$ million)
Closing
balance
as at
31 March
2020
1,045
(4)
(25)
(12)
140
(1,221)
(732)
92
(717)
Deferred tax assets and liabilities have been offset where they arise in the same taxing jurisdiction with a legal
right to offset current income tax assets against current income tax liabilities but not otherwise. Accordingly, the
net deferred tax (assets)/liability has been disclosed in the Consolidated Statement of financial position as follows:
Deferred tax assets
Deferred tax liabilities
Net Deferred tax (assets) / Liabilities
As at
31 March 2021
(1,018)
299
(US$ million)
As at
31 March 2020
(1,114)
397
(719)
(717)
Recognition of deferred tax assets on MAT credits entitlement is based on the respective legal entity’s present
estimates and business plans as per which the same is expected to be utilized within the stipulated fifteen year
period from the date of origination (Refer Note 2(c)(I)(vi)).
Deferred tax assets in the Group have been recognised to the extent there are sufficient taxable temporary
differences relating to the same taxation authority and the same taxable entity which are expected to reverse. For
certain components of the Group, deferred tax assets on carry forward unused tax losses have been recognised to
the extent of deferred tax liabilities on taxable temporary differences available. It is expected that any reversals of
the deferred tax liability would be offset against the reversal of the deferred tax asset at respective entities.
Unused tax losses / unused tax credit for which no deferred tax asset has been recognized amount to US$ 4,669
million and US$ 5,193 million as at 31 March 2021 and 31 March 2020 respectively.
206
ACCOUNTSNotes to the Financial Statements
Integrated Report
Statutory reports
Financial statements
As at 31 March 2021
Unused tax losses/ Unused tax credit
Particulars
Unutilized business losses
Unabsorbed depreciation
Unutilized R&D credit
Unabsorbed interest allowance*
Total
As at 31 March 2020
Unused tax losses/ Unused tax credit
Particulars
Unutilized business losses
Unabsorbed depreciation
Unutilized R&D credit
Unabsorbed interest allowance*
Total
Within
one year
70
1
-
-
71
Greater than
one year, less
than five
years
451
14
-
-
465
Greater than
five years
No expiry
date
420
41
-
-
461
2,156
321
1
1,194
3,672
Within
one year
143
-
-
-
143
Greater than
one year, less
than five
years
550
-
-
-
550
Greater than
five years
No expiry
date
657
-
-
-
657
2,098
1,072
1
672
3,843
(US$ million)
Total
3,097
377
1
1,194
4,669
(US$ million)
Total
3,448
1,072
1
672
5,193
* As per UK’s corporate interest restriction rules, the disallowed interest expense for any year can be carried forward and claimed in
future years for unlimited life subject to specified conditions
No deferred tax assets have been recognised on these unused tax losses/ unused tax credit as there is no evidence
that sufficient taxable profit will be available in future against which these can be utilised by the respective entities.
MAT credits are taxes paid to Indian tax authorities which can be offset against future tax liabilities, subject to
certain restrictions, within a period of 15 years from the year of origination. The Group recognises MAT assets only
to the extent it expects to realise the same within the prescribed period.
Further, the Group had unused MAT credit amounting to US$ 57 million as at 31 March 2020. Such tax credits
were not recognised on the basis that recovery is not probable in the foreseeable future. However, as per the
amendments to the tax laws in September 2019, a new tax provision has been introduced whereby a company can
claim the benefits of reduced tax rates, provided it forgoes certain incentives/exemptions under Income-tax Act,
1961. One of the subsidiaries of the group has opted for the same and foregoes the unrecognised MAT Credit for
the earlier years.
Unrecognised MAT credit expires, if unutilized, based on the year of origination was as follows:
Year of Expiry
2022
2023
2024
2025
2026
2027
2028
2029
Total
As at
31 March 2021
-
-
-
-
-
-
-
-
(US$ million)
At at
31 March 2020
15
2
7
7
15
9
1
1
-
57
The Group has not recognised any deferred tax liabilities for taxes that would be payable on the Group’s share in
unremitted earnings of certain of its subsidiaries because the Group controls when the liability will be incurred, and
207
Notes to the Financial StatementsVEDANTA RESOURCES LIMITED | INTEGRATED REPORT AND ANNUAL ACCOUNTS 2020-21 |
it is probable that the liability will not be incurred in the foreseeable future. The amount of unremitted earnings is
US$ 3,958 million and US$ 3,312 million as at 31 March 2021 and 31 March 2020 respectively.
(d) Non-current tax assets
Non-current tax assets of US$ 375 million (31 March 2020: US$ 354 million) mainly represents income tax
receivable from Indian Tax authorities by Vedanta Limited relating to the refund arising consequent to the Scheme
of Amalgamation & Arrangement made effective in August 2013 pursuant to approval by the jurisdiction High
Court and receivables relating to matters in tax disputes in Group companies including tax holiday claim.
(e)
The tax department had raised demands on account of remeasurement of certain tax incentives, as described
above, under section 80IA and 80 IC of the Income-tax Act, 1961. During the current year, based on the favourable
orders from Income Tax Appellate Tribunal (“ITAT”) relating to AY 09-10 to AY 12-13, the Commissioner of Income
Tax (Appeals) has allowed these claims for AY 14-15 to AY 15-16, which were earlier disallowed and has granted
refund of amounts deposited under protest. Against the Tribunal order, the tax department had filed an appeal in
Hon’ble Rajasthan High Court in financial year 17-18 which is yet to be admitted. As per the view of external legal
counsel, Department’s appeal seeks re-examination of facts rather than raising any substantial question of law
and hence it is unlikely that appeal will be admitted by the High Court. In view of this, there is a strong prima facie
case that ITAT order will stand confirmed and department’s appeal would be dismissed. The amount involved in
this dispute as at 31 March 2021 is US$ 1,538 million (31 March 2020: US$ 1,412 million) plus applicable interest
upto the date of settlement of the dispute.
12. UNDERLYING ATTRIBUTABLE PROFIT/(LOSS) FOR THE YEAR
Underlying earnings is an alternative earnings measure, which the management considers to be a useful additional
measure of the Group’s performance. The Group’s Underlying profit/ loss is the profit/ loss for the year after adding
back special items, other losses/(gains) [net] (note 9) and their resultant tax (including taxes classified as special items)
& non-controlling interest effects and (Gain)/loss on discontinued operations. This is a Non-IFRS measure.
Year ended
31 March 2021
323
112
(11)
(16)
5
(91)
12
334
(US$ million)
Year ended
31 March 2020
(1,568)
2,053
87
(799)
(684)
771
(30)
(170)
Year ended
31 March 2021
(US$ million)
Year ended
31 March 2020
251
-
-
-
-
152
200
185
Profit/(Loss) for the year attributable to equity holders of the parent
Special items
Other (gains)/losses [net]
Tax effect of special items (including taxes classified as special items) and other
gains/ (losses) [net]
Non-controlling interest on special items and other gains/ (losses)
(Gain)/loss on discontinued operations
Non-controlling interest on loss after tax from discontinued operations
Underlying attributable profit/ (loss) for the year
Note
6
9
3(b)
13. DIVIDENDS
Amounts recognised as distributions to equity holders:
Equity dividends on ordinary shares:
Interim Dividend for 2020-21: 88.0 US cents per share*
1st Interim Dividend for 2019-20: 53.0 US cents per share
2nd Interim dividend for 2019-20: 70.0 US cents per share
Final dividend paid for 2018-19: 65.0 US cents per share
* US$ 90million is payable as at 31 March 2021.
208
ACCOUNTSNotes to the Financial Statements
Integrated Report
Statutory reports
Financial statements
14. GOODWILL
At 01 April
Impairment during the year
At 31 March
As at
31 March 2021
12
-
(US$ million)
At at
31 March 2020
12
-
12
12
Goodwill is allocated for impairment testing purposes to the following CGUs”
US$ 12 million Copper India (As at 31 March 2021 & 31 March 2020)
The Group tests goodwill annually for impairment or more frequently if there are indications that goodwill might be
impaired.
The Company has undertaken an impairment review of goodwill of US$ 12 million as at 31 March 2021. The carrying
amount of goodwill allocated to the relevant cash generating unit is considered to be insignificant in comparison with
the total carrying value of the cash generating unit. The carrying amount of goodwill was evaluated using the higher of
fair value less cost of disposal (‘FVLCD’) or value in use based on discounted future cash flows of the cash generating
unit to which the goodwill pertains and comparing this to the total carrying value of the relevant cash generating units.
It was determined that the carrying amount of goodwill is not impaired and nor was impairment indicated following a
reasonably possible change in a key assumption.
15. INTANGIBLE ASSETS
Intangible assets include Port concession rights to operate a general cargo berth for handling coal at the outer harbour
of the Visakhapatnam port on the east coast of India, software licences, technological know-how, acquired brand and
others.
Port concession
rights (1)
Software license
Others (2)
Total
(US$ million)
Cost
As at 1 April 2019
Addition
Discontinued operations
Transfers
Exchange differences
As at 1 April 2020
Addition
Transfers
Exchange differences
As at 31 March 2021
Accumulated amortisation
As at 1 April 2019
Charge for the year
Discontinued operations
Exchange differences
As at 1 April 2020
Charge for the year
Exchange differences
As at 31 March 2021
Net book value
As at 1 April 2019
As at 1 April 2020
As at 31 March 2021
87
1
-
-
(8)
80
-
-
2
82
19
3
-
(1)
21
3
-
24
68
59
58
17
1
(11)
-
(2)
5
1
-
1
7
15
2
(11)
(2)
4
1
1
6
2
1
1
42
1
-
5
-
48
4
-
-
52
4
4
-
-
8
4
-
12
38
40
40
146
3
(11)
5
(10)
133
5
-
3
141
38
9
(11)
(3)
33
8
1
42
108
100
99
(1)
Vizag General Cargo Berth Private Limited (VGCB), a special purpose vehicle, was incorporated for the coal berth mechanization and
upgrades at Visakhapatnam port. VGCB is wholly owned by Vedanta Limited. The project is to be carried out on a design, build, finance,
209
Notes to the Financial StatementsVEDANTA RESOURCES LIMITED | INTEGRATED REPORT AND ANNUAL ACCOUNTS 2020-21 | operate, transfer basis and the concession agreement between Visakhapatnam Port Trust (‘VPT’) and the VGCB was signed in June
2010. In October 2010, the VGCB was awarded with the concession after fulfilling conditions stipulated as a precedent to the concession
agreement. VPT has provided, in lieu of license fee an exclusive license to VGCB for designing, engineering, financing, constructing,
equipping, operating, maintaining, and replacing the project/project facilities and services. The concession period is 30 years from
the date of the award. The upgraded capacity is 10.18 mmtpa and VPT would be entitled to receive 38.10% share of the gross revenue
as royalty. VGCB is entitled to recover a tariff from the user(s) of the project facilities and services as per its Tariff Authority for Major
Ports(TAMP) notification. The tariff rates are linked to the Wholesale Price Index (WPI) and would accordingly be adjusted as specified
in the concession agreement every year. The ownership of all infrastructure assets, buildings, structures, berths, wharfs, equipment
and other immovable and movable assets constructed, installed, located, created or provided by VGCB at the project site and/or in
the port’s assets pursuant to concession agreement would be with VGCB until expiry of this concession agreement. The cost of any
repair, replacement or restoration of the project facilities and services shall be borne by VGCB during the concession period. VGCB has
to transfer all its rights, titles and interest in the project facilities and services free of cost to VPT at the end of the concession period.
Intangible asset port concession rights represent consideration for construction services. No revenue from construction contract
of service concession arrangements on exchanging construction services for the port concession rights was recognised for the year
ended 31 March 2021 and 31 March 2020.
(2) Others include technological know-how and acquired brand relating to acquisition of AvanStrate Inc.
210
ACCOUNTSNotes to the Financial Statements Integrated Report
Statutory reports
Financial statements
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Notes to the Financial StatementsVEDANTA RESOURCES LIMITED | INTEGRATED REPORT AND ANNUAL ACCOUNTS 2020-21 |
Disclosure of Right of Use (ROU) Assets as per IFRS 16 “Leases”
Land & Building
Plant and
Equipment
(US $ million)
Total
Cost
At 1 April 2019
ROU assets as at 1 April 2019
Additions
Disposals/Adjustments
Exchange difference
At 1 April 2020
Additions
Transfers
Exchange difference
At 31 March 2021
Accumulated depreciation
At 1 April 2019
Charge for the year
Disposals/Adjustments
Impairment/(Impairment Reversal) of assets
At 1 April 2020
Charge for the year
Exchange difference
At 31 March 2021
Net book value
At 1 April 2019
At 1 April 2020
At 31 March 2021
-
79
59
(32)
(4)
102
14
34
-
150
-
12
(4)
3
11
9
-
20
-
91
130
-
4
95
-
(2)
97
2
-
-
99
-
3
-
-
3
12
-
15
-
94
84
-
83
154
(32)
(6)
199
16
34
-
249
-
15
(4)
3
14
21
-
35
-
185
214
17. FINANCIAL ASSET INVESTMENTS
Financial asset investments represent investments classified and accounted for at fair value through profit or loss or
through other comprehensive income (refer note 25).
Financial Asset Investments
At 1 April 2020
(Sale)/purchase of structured investment (refer note 35)
Movements in fair value (including on investments purchased during the year)
Investment in Bonds*
Exchange difference
At 31 March 2021
*Reclassified during the year from short-term investments
As at
31 March 2021
12
-
9
-
-
(US$ million)
At at
31 March 2020
707
(639)
(61)
7
(2)
21
12
Financial asset investment represents quoted investments in equity shares and other investments that present the
Group with an opportunity for returns through dividend income and gains in value. These securities are held at fair
value. These are classified as non-current as at 31 March 2021 and 31 March 2020.
212
ACCOUNTSNotes to the Financial Statements
Integrated Report
Statutory reports
Financial statements
18. OTHER NON-CURRENT ASSETS AND TRADE AND OTHER RECEIVABLES
Bank Deposits (2)
Site restoration assets
Trade Receivables (1)
Others (4)
Trade receivables from related parties
Cash call / receivables from joint
operations
Receivable from KCM (5)
Financial (A)
Balance with Government authorities
Advance for supplies
Others (3)
Receivable from KCM (5)
Non-financial (B)
Total (A+B)
As at 31 March 2021
As at 31 March 2020
(US$ million)
Non- Current
16
112
431
226
-
-
655
1,440
83
-
151
27
261
1,701
Current
-
-
470
34
7
533
-
1,044
100
167
154
-
421
1,465
Total
16
112
901
260
7
533
Non- Current
5
83
416
164
-
-
655
2,484
183
167
305
27
682
3,166
602
1,270
74
-
146
58
278
1,548
Current
-
-
361
124
14
183
-
682
131
189
100
-
420
1,102
Total
5
83
777
288
14
183
602
1,952
205
189
246
58
698
2,650
The credit period given to customers ranges from zero to 90 days.
(1)
In July 2017, the Appellate Tribunal for Electricity (‘APTEL’) dismissed the appeal filed by one of the Group’s subsidiaries, Talwandi
Sabo Power Limited (TSPL) with respect to the interpretation of how the calorific value of coal and costs associated with it should be
determined. However, APTEL had allowed payment of shunting and unloading charges. TSPL filed an appeal before the Honourable
Supreme Court (‘SC’), which by an order dated 07 March 2018 has decided the matter in favour of TSPL. Consequently, its customer,
PSPCL, has paid majority of the dues. The outstanding dues and interest receivable in relation to this dispute as at 31 March 2021 is US$
2 Million (31 March 2020: US$ 33 Million) and US$ 9 Million (31 March 2020: US$ 19 Million) respectively.
In another matter relating to assessment of whether there has been a change in law following the execution of the Power Purchase
Agreement, the APTEL has dismissed the appeal in July 2017 filed by TSPL. TSPL filed an appeal before the SC to seek relief which is
yet to be listed. The outstanding trade receivables in relation to this dispute and other matters is US$ 217 Million as at 31 March 2021
(31 March 2020: US$ 173 Million). The Group, based on external legal opinion and its own assessment of the merits of the case, remains
confident that it is highly probable that the Supreme court will uphold TSPL’s appeal and has thus continued to treat these balances as
recoverable.
Additionally, as at 31 March 2021, trade receivables amounting to US$ 180 Million (31 March 2020: US$ 180 Million) withheld by GRIDCO
(‘GRIDCO’ or ‘the Customer’) on account of certain disputes relating to computation of power tariffs are pending adjudication by
APTEL, which the Group is confident of recovering fully. The Customer has also raised claims of US$ 56 Million on the Group in respect
of short supply of power for which a provision of US$ 29 Million has been made. Various minutes of meetings were signed with the Group
for computing the short supply claims, which were subject to approval of Odisha State Electricity Regulatory Commission (‘OERC’). On
22 June 2020, OERC pronounced its order on computation methodology for short supply claims, basis which both the parties had to
recompute the amount of claim and settle the matter in two months from the date of the order. On initial impact assessment of the said
Order by the Group, it believes that no further provisioning is required in this regard. Further, the Group filed an appeal before APTEL
against the OERC Order. The matter is now listed before registrar court on 14 July 2021. The Customer has also sought review of the
OERC Order. The matter has been posted for order by OERC in due course. In the meanwhile, power supply to GRIDCO has resumed and
GRIDCO has been making regular payments against monthly energy invoices.
(2)
Includes US$ 4 million (31 March 2020: US$ 3 million) and US$ 1 million (31 March 2020: Nil) under lien with banks and Others respectively,
US$ 1 million (31 March 2020: US$ 1 million) under margin money and US$ 3 million (31 March 2020: Nil) maintained as debt service
reserve account
(3)
Includes claim receivables, advance recoverable (oil and gas business), prepaid expenses, export incentive receivables and others.
(4)
(5)
Includes claims receivables, advance recoverable (oil and gas business) and others. It also includes advance profit petroleum US$ Nil
million (31 March 2020: US$ 43 million).
Refer note 3(b). Out of total receivables from KCM of US $ 682 million, US $ 27 million is on account of advance for supplies and hence
classified as non-financial.
213
Notes to the Financial StatementsVEDANTA RESOURCES LIMITED | INTEGRATED REPORT AND ANNUAL ACCOUNTS 2020-21 |
19. INVENTORIES
Raw materials and consumables
Work-in-progress
Finished goods
Total
As at
31 March 2021
827
412
119
(US$ million)
At at
31 March 2020
901
445
169
1,358
1,515
Inventory held at net realizable value amounted to US$ 327 million (31 March 2020: US$ 315 million). A write down of
inventories amounting to US$ 22 million (31 March 2020: US$ 16 million) has been charged to the Consolidated Income
Statement.
20. SHORT-TERM INVESTMENTS
Bank deposits 1,2
Other investments
Total
As at
31 March 2021
1,625
3,377
(US$ million)
At at
31 March 2020
1,101
3,284
5,002
4,385
(1)
(2)
The above bank deposits include US$ 90 million (31 March 2020: US$ 34 million) on lien with banks, US$ 37 million (31 March 2020: US$ 19
million) of margin money, US$ 33 million (31 March 2020: US$ 23 million) maintained as debt service reserve account.
Restricted funds of US$ 3 million (31 March 2020: Nil) on lien with Others and US$ 63 million (31 March 2020: Nil) held as interest reserve
created against interest payment on loans from banks and US$ 6 million (31 March 2020: US$ 8 million) of restricted funds held as
collateral in respect of closure costs.
Bank deposits are made for periods of between three months and one year depending on the cash requirements of the
companies within the Group and earn interest at the respective fixed deposit rates.
Other investments include mutual fund investments and investment in bonds which are recorded at fair value with
changes in fair value reported through the consolidated income statement. These investments do not qualify for
recognition as cash and cash equivalents due to their maturity period and risk of change in value of the investments.
Refer Note 25 for further details.
21. CASH AND CASH EQUIVALENTS
Cash and cash equivalents consist of the following
Cash at bank and in hand
Short-term deposits(2)
Restricted cash and cash equivalents (1)
(US$ million)
As at
31 March 2021
At at
31 March 2020
376
325
254
955
321
371
13
705
Restricted cash and cash equivalents includes US$ 240 million (31 March 2020: Nil) and US$ 14 million (31 March 2020: US$ 13 million)
that are kept in a specified bank account to be utilised solely for the purposes of voluntary open offer and for the payment of dividends
to non-controlling shareholders, which are being carried as a current liability respectively.
Short-term deposits are made for periods of between one day and three months, depending on the immediate cash requirements of the
Group, and earn interest at the respective short-term deposit rates.
Total
(1)
(2)
214
ACCOUNTSNotes to the Financial Statements Integrated Report
Statutory reports
Financial statements
(3) Cash and cash equivalents for the purpose of Statement of Cash Flows comprise the following:
Cash and cash equivalents as above
Less: Restricted cash and cash equivalents
Total
22(A) BORROWINGS
Current borrowings consist of:
Banks and financial institutions
Total short-term borrowings
Add: Current maturities of long-term borrowings
Current borrowings (A)
Non-current borrowings consist of:
Banks and financial institutions
Non- convertible bonds
Non-convertible debentures
Redeemable Preference shares
Others
Total long-term borrowings
Less: Current maturities of long-term borrowings
Non-current borrowings (B)
Total (A+B)
As at
31 March 2021
955
(254)
(US$ million)
At at
31 March 2020
705
(13)
701
692
(US$ million)
As at
31 March 2021
At at
31 March 2020
547
547
3,126
3,673
7,612
5,866
2,264
-
88
15,830
(3,216)
12,704
16,377
1,644
1,644
8,542
10,186
7,099
4,141
2,191
-
20
13,451
(8,542)
4,909
15,095
The Group has discounted trade receivables on recourse basis US$ 4 million (31 March 2020: US$ 4 million). Accordingly,
the monies received on this account are shown as borrowings as the trade receivables do not meet de-recognition
criteria. The Group facilities are subject to certain financial and non-financial covenants. The primary covenants which
must be complied with include fixed charge cover ratio, net borrowing to EBITDA ratio, total net assets to borrowings
ratio, attributable leverage ratio and EBITDA to net interest expense ratio.
Details of the Non-convertible bonds and Non-convertible debentures issued by the Group have been provided below
(carrying value):
Non-Convertible Bonds:
0.28 % bonds due October 2032
9.25% bonds due April 2026
8.95 % bonds due March 2025
6.13 % bonds due August 2024
13.88% bonds due on January 2024
7.12 % bonds due June 2023
7.99 % bonds due April 2023
6.37 % bonds due July 2022
8.25 % bonds due June 2021
(US$ million)
As at
31 March 2021
At at
31 March 2020
21
594
1,194
991
992
497
397
994
186
5,866
20
596
-
994
-
495
398
996
642
4,141
215
Notes to the Financial StatementsVEDANTA RESOURCES LIMITED | INTEGRATED REPORT AND ANNUAL ACCOUNTS 2020-21 | Non-Convertible Debentures
9.20% due February-2030
9.20% due December-2022
8.75% due June-2022
7.50% due March-2022
8.90% due December-2021
8.75% due September-2021
5.35% due September 2021
9.18% due July-2021
9.27% due July-2021
8.50% due June-2021
8.75% due April-2021
8.50% due April-2021
8.55% due April-2021
0% due on March 2021
9.00% due November-2020
8.25% due September-2020
7.85% due August-2020
9.45% due August-2020
7.90% due July-2020
8.70% due April-2020
(US$ million)
As at
31 March 2021
At at
31 March 2020
273
102
173
67
123
34
480
136
136
225
34
321
136
24
-
-
-
-
-
-
267
100
170
-
120
33
-
134
134
221
33
314
134
-
20
57
67
267
40
80
Security Details
The Group has taken borrowings in various countries towards funding of its acquisitions, capital expenditure and
working capital requirements. The borrowings comprise funding arrangements from various banks and financial
institutions taken by the parent and subsidiaries. Out of the total borrowings of US$ 16,337 million (31 March 2020: US$
15,095 million) shown above, total secured borrowings are US$ 6,645 million (31 March 2020: US$ 6,421 million) and
unsecured borrowings are US$ 9,732 million (31 March 2020: US$ 8,674 million). The details of security provided by the
Group in various countries, to various lenders on the assets of Parent and subsidiaries are as follows:
2,264
2,191
Facility Category
Security details
Working Capital Loans
(grouped under banks and
financial institutions)
External commercial
borrowings (grouped
under banks and financial
institutions)
Secured by first pari passu charge on current assets of
Vedanta Limited)
Secured by second pari passu charge on fixed assets of
TSPL and first pari passu charge on current assets of the
company, both present and future*
Other secured working capital loans
The facility is secured by first pari passu charge on all
movable property, plant and equipments related to power
plants and aluminium smelters of BALCO located at Korba
both present and future along with secured lenders
The facility is secured by first pari passu charge on all
movable project assets related to 1200 MW power project
and 3.25 LTPA smelter project both present and future along
with secured lenders at BALCO
As at
31 March 2021
89
(US$ million)
As at
31 March 2020
0
7
-
30
23
33
49
45
37
216
ACCOUNTSNotes to the Financial Statements Integrated Report
Statutory reports
Financial statements
Facility Category
Security details
Non convertible debentures Secured by the whole of the movable fixed assets of (i)
As at
31 March 2021
738
(US$ million)
As at
31 March 2020
657
Term loan from banks
(grouped under banks and
financial institutions)
Alumina Refinery having output of 1 MTPA along with co-
generation captive power plant with an aggregate capacity
of 90 MW at Lanjigarh, Odisha and (ii) Aluminium Smelter
having output of 1.6 MTPA along with a 1,215 (9 X 135) MW
CPP at Jharsuguda, Odisha
Secured by way of charge against all existing assets of
FACOR
Secured by a first pari passu charge on the whole of the
present and future of the movable fixed assets of 2400 MW
(600 MW*4) Power Plant of Vedanta Limited at Jharsuguda
location
Secured by way of first ranking pari passu charge on
movable fixed assets in relation to the Lanjigarh Refinery
Expansion Project (having capacity beyond 2 MTPA and upto
6 MTPA) situated at Lanjigarh, Orissa. The Lanjigarh Refinery
Expansion Project shall specifically exclude the 1 MTPA
alumina refinery of Vedanta Limited along with 90 MW power
plant in Lanjigarh and all its related capacity expansions
Secured by way of first pari passu charge on all present and
future of the movable fixed assets of 2400 MW (600 MW*4)
Power Plant of Vedanta Limited at Jharsuguda location, as
may be identified and notified by the Issuer to the Security
Trustee from time to time, with minimum asset coverage
of 1 time of the aggregate face value of debentures
outstanding at any point of time
Secured by first pari passu charge on movable and/or
immovable fixed assets of TSPL with a minimum asset cover
of 1 time during the tenure of NCD
Other secured non-convertible debentures
Secured by first pari passu charge on fixed assets of TSPL
and second pari passu charge on current assets of TSPL,
both present and future *
First pari passu charge by way of hypothecation/ equitable
mortgage on the movable/ immovable assets of the
Aluminium division of Vedanta Limited comprising of
alumina refinery having output of 1 MTPA along with co-
generation captive power plant with an aggregate capacity
of 90 MW at Lanjigarh, Odisha; aluminium smelter having
output of 1.6 MTPA along with 1215 (9x135) MW CPP at
Jharsuguda, Odisha, both present and future
Secured by a pari passu charge by way of hypothecation of
all the movable fixed assets of Vedanta Limited pertaining
to its Aluminium division project consisting of (i) alumina
refinery having output of 1 MTPA (Refinery) along with co-
generation captive power plant with aggregate capacity of
90 MW at Lanjigarh, Odisha (Power Plant); and (ii) aluminium
smelter having output of 1.6 MTPA along with 1215 (9x135)
MW CPP at Jharsuguda, Odisha (Smelter) (the Refinery,
Power Plant and Smelter). Also, a first pari passu charge by
way of equitable mortgage on the land pertaining to the
mentioned project of aluminium division
Secured by a pari passu charge by way of hypothecation on
the movable fixed assets of the Lanjigarh Refinery Expansion
Project including 210 MW Power Project.Lanjigarh Refinery
Expansion Project shall specifically exclude 1 MTPA alumina
refinery of Vedanta Limited along with 90 MW power plant in
Lanjigarh and all its related expansions
23
546
68
-
535
147
136
134
273
-
701
257
354
364
426
452
299
386
59
61
217
Notes to the Financial StatementsVEDANTA RESOURCES LIMITED | INTEGRATED REPORT AND ANNUAL ACCOUNTS 2020-21 | As at
31 March 2021
167
(US$ million)
As at
31 March 2020
184
149
152
382
399
383
493
30
20
54
30
197
216
144
428
94
173
451
98
Facility Category
Security details
Secured by a pari-passu charge by way of hypothecation on
the movable fixed assets of Vedanta Limited pertaining to
its Aluminium division comprising of 1 mtpa alumina refinery
plant with 90 MW captive power plant at Lanjigarh, Odisha
and 1.6 mtpa aluminium smelter plant with 1215 MW captive
power plant at Jharsuguda, Odisha
First pari passu charge by way of hypothecation/ equitable
mortgage on the movable/ immovable assets of the
Aluminium division of Vedanta Limited comprising of
alumina refinery having output of 1 MTPA along with co-
generation captive power plant with an aggregate capacity
of 90 MW at Lanjigarh, Odisha; aluminium smelter having
output of 1.6 MTPA along with 1215 (9x135) MW CPP at
Jharsuguda , Odisha and additional charge on Lanjigarh
Expansion project, both present and future
Secured by a pari passu charge by way of hypothecation/
equitable mortgage of the movable/immovable fixed assets
of Vedanta Limited pertaining to its Aluminium division
comprising of 1 mtpa alumina refinery plant with 90 MW
captive power plant at Lanjigarh, Odisha and 1.6 mtpa
aluminium smelter plant with 1215 MW captive power plant
at Jharsuguda, Odisha
Secured by (i) floating charge on borrower collection
account and associated permitted investments and (ii)
corporate guarantee from CEHL and floating charge on
collection account and current assets of CEHL
Pledge of 49% of shares & other securities and rights to any
claims held by THL Zinc Limited in and against BMM
The facility is secured by first pari passu charge on all
movable property, plant and equipment related to power
plants and aluminium smelters of BALCO located at Korba
both present and future along with secured lenders
Secured by first pari passu charge on all present and
future movable fixed assets including but not limited to
plant and machinery, spares, tools and accessories of
BALCO (excluding coal block assets ) by way of a deed of
hypothecation.
Secured by first pari passu charge on all present and future
movable fixed assets including but not limited to plant and
machinery, spares, tools and accessories of BALCO by way
of a deed of hypothecation.
First ranking pari passu charge by way of hypothecation/
mortgage on all fixed/ immovable assets of ESL Steel
Limited but excluding any current assets or pledge over any
shares
Secured by first pari passu charge by way of hypothecation
over all the movable assets(save and except Current
Assets) of Vedanta Limited, present or future, pertaining
to Lanjigarh refinery expansion project beyond 1.7 MTPA
to 6.0 MTPA located at Lanjigarh Odisha including but not
limited to plant and machinery, machinery spares, tools
and accessories in relation to aforementioned expansion
project. Among others, the Lanjigarh Refinery Expansion
Project shall specifically exclude the alumina refinery upto
1.7 MTPA of the company along with 90 MW power plant in
Lanjigarh and all its related expansions
218
ACCOUNTSNotes to the Financial Statements Integrated Report
Statutory reports
Financial statements
Facility Category
Security details
Secured by first pari passu charge by way of whole of the
movable fixed assets of (i) Alumina Refinery having output of
1 MTPA along with co-generation captive power plant with
an aggregate capacity of 90MW at Lanjigarh, Odisha and (ii)
Aluminium Smelter having output of 1.6 MTPA along with
1215 (9*135) MW CPP at Jharsuguda, Odisha
Secured by a first pari passu charge on the identified
fixed assets of the Vedanta Limited both present and
future, pertaining to its Aluminium business (Jharsuguda
Plant, Lanjigarh Plant), 2400 MW power plant assets at
Jharsuguda, Copper Plant assets at Silvasa, Iron ore
business in the states of Karnataka and Goa, dividends
receivable from Hindustan Zinc Limited (“HZL”) a subsidiary
of Vedanta Limited, and the DSRA to be opened for the
Facility along with the amount lying to the credit thereof.
Other secured term loans
Secured by Fixed asset (rare metals) of AvanStrate
First charge by way of hypothecation on the entire stocks
of raw materials, semi-finished and finished goods,
consumable stores and spares and such other movables
including book-debts, bills whether documentary or clean,
outstanding monies, receivables and all other current assets
of Vedanta Limited, both present and future, ranking pari
passu with other participating banks
Others (grouped under
banks and financial
institutions)
As at
31 March 2021
157
(US$ million)
As at
31 March 2020
199
1,165
-
-
73
7
206
76
10
Total
6,645
6,421
22(B) MOVEMENT IN NET DEBT (1)
Cash and cash
equivalents **
Short term
investments
and Non-
current Bank
Deposits ***
1,061
(305)
4,140
282
Financial
asset
investment
net of related
liabilities and
derivatives (1)
391
(365)
At 1 April 2019
Cash flow from continuing
operations (3)
Cash flow from discontinued
operations
Net debt on acquisition
through business combination
Other non-cash changes (2)
Foreign exchange currency
translation differences
At 1 April 2020
Cash flow from continuing
operations (3)
Net debt on acquisition
through business combination
(note 3(a))
Other non-cash changes (2)
Foreign exchange currency
translation differences
(1)
(1)
-
(62)
692
(15)
2
-
22
-
-
205
(246)
4,381
431
10
56
67
At 31 March 2021
701
4,945
Total cash and
short-term
investments
Short-term
borrowing
Long-term
borrowing*
Debt carrying
value
Debt carrying
value
(US$ million)
Total Net
Debt
5,592
(388)
(4,132)
1,838
(11,848)
(1,644)
(10,388)
(194)
(1)
(1)
179
(308)
-
128
372
150
-
22
(439)
458
(1)
149
112
300
5,073
416
(1,644)
1,119
(13,451)
(2,337)
(10,022)
(802)
12
56
89
(1)
(1)
(19)
-
11
88
(131)
143
(61)
5,646
(546)
(15,831)
(10,731)
219
-
-
(26)
-
-
-
-
-
-
-
Notes to the Financial StatementsVEDANTA RESOURCES LIMITED | INTEGRATED REPORT AND ANNUAL ACCOUNTS 2020-21 | * Includes current maturities of long-term borrowings of US$ 3,673 million as at 31 March 2021 (31 March 2020: US$ 8,542 million)
** Restated. Refer note 1(b)(ii)
*** The constituents of ‘Short term investments’ for the purpose of this note to include only those amounts of restricted funds that are
corresponding to liabilities (e.g. margin money deposits). Consequently, restricted funds amounting to US$ 72 Million (31 March 2020: US$
8 Million) have been excluded from ‘Short-term investments’ (Refer note 20(2)) and non-current bank deposit included for purpose of in
this note (Refer Note 18).
(1)
(2)
Net debt is a Non-IFRS measure and represents total debt after fair value adjustments under IAS 32 and IFRS 9 as reduced by cash and
cash equivalents, short-term investments and structured investment, net of the deferred consideration payable for such investments
(referred above as Financial asset investment net of related liabilities) (refer note 35), if any
Other non-cash changes comprise amortisation of borrowing costs, foreign exchange difference on net debt. It also includes US$ 195
million (31 March 2020: US$ 159 million) of fair value movement in investments and accrued interest on investments.
(3) Consists of net repayment of working capital loan, proceeds and repayments of short-term and long-term borrowings.
22(C) OPERATIONAL BUYER’S/SUPPLIER’S CREDIT
Operational Buyers’ /Suppliers’ Credit is availed in foreign currency from offshore branches of Indian banks or foreign
banks at an interest rate ranging from 0.4% to 3.5% per annum and in rupee from domestic banks at interest rate
ranging from 4.25%-6.65% per annum. These trade credits are largely repayable within 180 days from the date of draw
down. Operational Buyers’ credit availed in foreign currency is backed by Standby Letter of Credit issued under working
capital facilities sanctioned by domestic banks. Part of these facilities are secured by first pari passu charge over the
present and future current assets of the Group.
23. NON-EQUITY NON-CONTROLLING INTERESTS
As at 31 March 2019, non-equity non-controlling interests amounts to US$ 12 million, being deferred shares in KCM
held by ZCCM. The deferred shares have no voting rights or rights to KCM’s dividends, but are entitled on a winding up
to a return of up to US$ 0.99 per share once all of KCM’s ordinary shares have received a distribution equal to their par
value and any share premium created on their issue and which remains distributable to them.
The deferred shares are held at historic cost, being the fair value attributed to them at the time of initial acquisition of
KCM in the year ended 31 March 2005. They are classified as non-current liabilities as they are repayable only on the
winding up of KCM, for an amount different than the pro rata share of net assets upon liquidation. The shares have been
valued at US$ 0.99 per share, which is the maximum amount payable to the deferred shareholders. These deferred
shares have not been discounted as the effect would not be material.
During the financial year ended 31 March 2020, the net assets of KCM including above balance have been
deconsolidated (refer note 3(b)).
24. TRADE AND OTHER PAYABLES
Lease liability (3)
Dividend payable to NCI
Trade payables
Liabilities for capital expenditure
Profit petroleum payable
Security deposits and retentions
Put option liability with non-controlling
interests (1)
Other payables
Financial (A)
Statutory liabilities
Advance from customers (2)
Other payables
Non-financial (B)
Total (A+B)
*Restated. Refer Note 1(b)(i)
220
As at 31 March 2021
As at 31 March 2020*
(US$ million)
Non- Current
29
-
-
128
-
-
36
12
205
-
-
-
-
205
Current
67
104
1,071
953
200
30
-
708
3,133
429
850
30
1,309
4,442
Total
96
104
1,071
1,081
200
30
36
720
3,338
429
850
30
1,309
4,647
Non- Current
36
-
-
108
-
0
33
32
209
-
23
0
23
232
Current
62
13
1,061
788
92
27
-
808
2,851
422
1,055
30
1,507
4,358
Total
98
13
1,061
896
92
27
33
840
3,060
422
1,078
30
1,530
4,590
ACCOUNTSNotes to the Financial Statements
Integrated Report
Statutory reports
Financial statements
Trade payables are majorly non-interest bearing and are normally settled upto 180 days terms.
The fair value of trade and other payables is not materially different from the carrying value presented.
(1)
(2)
The non-controlling shareholders of ASI have an option to offload their shareholding to the Group. The option is
exercisable at any time within the period of three years following the fifth anniversary of the date of shareholders’
agreement (22 December 2017) at a price higher of US$ 0.757 per share and the fair market value of the share.
Therefore, the liability is carried at higher of the two. Subsequent changes to the put option liability are treated as
equity transaction and hence accounted for in equity.
Advance from customers are contract liabilities to be settled through delivery of goods. The amount of such
balances as on 01 April 2019: US$ 1,425 million. During the current year, the Group has refunded US$ 1 million
(31 March 2020: US$ 92 million) to the customers and recognised revenue of US$ 1,063 million (31 March 2020:
US$ 1,198 million) out of such opening balances. All other changes are either due to receipt of fresh advances or
exchange differences.
(3) Movement in lease liabilities is as follows:
At 01 April 2020
Additions during the year
Interest on lease liabilities
Payments made
Deletions
At 31 March 2021
25. FINANCIAL INSTRUMENTS
(US$ million)
98
50
4
(46)
(10)
96
Financial Assets and Liabilities:
The following tables present the carrying value and fair value of each category of financial assets and liabilities as at 31
March 2021 and 31 March 2020:
Fair value
through profit
or loss
Fair value
through other
comprehensive
income
Derivatives
designated
as hedging
instruments
(US$ million)
Amortised
cost
Total carrying
value
Total fair
value
As at 31 March 2021
Financial Assets
Financial instruments (derivatives)
Financial asset investments held at fair
value
Short term investments
- Bank deposits
- Other investments
Cash and cash equivalents
Other non-current assets and trade and
other receivables
2
7
-
3,377
-
22
-
14
-
-
-
-
Total
3,408
14
8
-
-
-
-
-
8
-
-
1,625
-
955
2,462
10
21
1,625
3,377
955
2,484
10
21
1,625
3,377
955
2,484
5,042
8,472
8,472
221
Notes to the Financial StatementsVEDANTA RESOURCES LIMITED | INTEGRATED REPORT AND ANNUAL ACCOUNTS 2020-21 | As at 31 March 2021
Financial Liabilities
Financial instruments (derivatives)
Trade and other payables
Borrowings
Total
Fair value
through profit
or loss
Derivatives
designated
as hedging
instruments
Amortised
cost
Others*
Total carrying
value
Total fair
value
(US$ million)
12
97
-
109
36
-
-
36
-
4,312
16,377
20,689
-
33
-
33
48
4,442
16,377
20,867
48
4,442
15,951
20,441
*Represents put option liability accounted for at fair value
As at 31 March 2020
Financial Assets
Financial instruments (derivatives)
Financial asset investments held at fair
value
Short term investments
- Bank deposits
- Other investments
Cash and cash equivalents
Other non-current assets and trade and
other receivables
Total
Fair value
through profit
or loss
Fair value
through other
comprehensive
income
Derivatives
designated
as hedging
instruments
(US$ million)
Amortised
cost
Total carrying
value
Total fair
value
37
7
-
3,284
-
7
3,335
-
5
-
-
-
-
5
56
-
-
-
-
-
-
-
1,101
-
705
1,945
93
12
1,101
3,284
705
1,952
93
12
1,101
3,284
705
1,952
56
3,751
7,147
7,147
(US$ million)
As at 31 March 2020
Financial Liabilities
Financial instruments (derivatives)
Trade and other payables
Borrowings
Total
Fair value
through profit
or loss
Derivatives
designated
as hedging
instruments
Amortised
cost
Others*
Total carrying
value
Total fair
value
6
69
-
75
13
-
-
13
-
4,319
15,095
19,414
-
33
-
33
19
4,421
15,095
19
4,421
12,563
19,535
17,003
*Represents put option liability accounted for at fair value
Fair value hierarchy
The Group uses the following hierarchy for determining and disclosing the fair value of financial instruments by
valuation technique:
Level 1: quoted prices (unadjusted) in active markets for identical assets or liabilities
Level 2: inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either
directly (i.e., as prices) or indirectly (i.e., derived from prices)
Level 3: inputs for the asset or liability that are not based on observable market data (unobservable inputs)
The below tables summarise the categories of financial assets and liabilities as at 31 March 2021 and 31 March 2020
measured at fair value:
222
ACCOUNTSNotes to the Financial Statements Integrated Report
Statutory reports
Financial statements
Financial assets
At fair value through profit or loss
- Short term investments
- Financial asset investments held at fair value
- Financial instruments (derivatives)
- Other non-current assets and trade and other receivables
At fair value through other comprehensive income
- Financial asset investments held at fair value
Derivatives designated as hedging instruments
- Financial instruments (derivatives)
Total
Financial liabilities
At fair value through profit or loss
- Financial instruments (derivatives)
- Trade and other payables
Derivatives designated as hedging instruments
- Financial instruments (derivatives)
Trade and other payables- Put option liability with non- controlling
interest
Total
Financial assets
At fair value through profit or loss
- Short term investments
- Financial asset investments held at fair value*
- Financial instruments (derivatives)
- Other non-current assets and trade and other receivables
At fair value through other comprehensive income
- Financial asset investments held at fair value
Derivatives designated as hedging instruments
- Financial instruments (derivatives)
Total
Financial liabilities
At fair value through profit or loss
- Financial instruments (derivatives)
- Trade and other payables
Derivatives designated as hedging instruments
- Financial instruments (derivatives)
Trade and other payables- Put option liability with non -controlling
interest
Total
* Includes structured investment (refer note 35)
(US$ million)
As at 31 March 2021
Level 1
Level 2
Level 3
1,987
-
-
-
13
-
1,390
-
2
22
-
8
2,000
1,422
-
-
-
-
-
12
97
36
-
145
-
7
-
-
1
-
8
-
-
-
33
33
(US$ million)
As at 31 March 2020
Level 1
Level 2
Level 3
1,016
-
-
-
4
-
2,268
-
37
7
-
56
1,020
2,368
-
-
-
-
-
6
69
13
-
88
-
7
-
-
1
-
8
-
-
-
33
33
223
Notes to the Financial StatementsVEDANTA RESOURCES LIMITED | INTEGRATED REPORT AND ANNUAL ACCOUNTS 2020-21 |
The below table summarizes the fair value of borrowings and Loans, receivables and obligations relating to KCM which
are carried at amortised cost as at 31 March 2021 and 31 March 2020:
Borrowings
Total
Loans, receivables and obligations of KCM
towards the Group
As at 31 March 2021
As at 31 March 2020
(US$ million)
Level 1
5,457
5,457
Level 2
10,494
10,494
Level 1
1,568
1,568
Level 2
10,995
10,995
(US$ million)
As at 31 March 2021
As at 31 March 2020
Level 1
-
Level 2
-
Level 3
682
Level 1
-
Level 2
-
Level 3
660
Total
-
-
682
-
-
660
The changes in Level 3 items for the year ended 31 March 2021 and 31 March 2020 are set out in the table below:
Loans, receivables and obligations of KCM towards the Group
1 April 2019
1 April 2020
On deconsolidation of KCM
Fair value change during the year
31 March 2021
As at
31 March 2021
-
660
-
22
(US$ million)
At at
31 March 2020
-
-
693
(33)
682
660
The fair value of the financial assets and liabilities are
at the amount that would be received to sell an asset
and paid to transfer a liability in an orderly transaction
between market participants at the measurement date.
The following methods and assumptions were used to
estimate the fair values:
Investments traded in active markets are determined
by reference to quotes from the financial institutions;
for example: Net asset value (NAV) for investments
in mutual funds declared by mutual fund house. For
other listed securities traded in markets which are not
active, the quoted price is used wherever the pricing
mechanism is same as for other marketable securities
traded in active markets. Other current investments
and structured investments are valued by referring to
market inputs including quotes, trades, poll, primary
issuances for securities and /or underlying securities
issued by the same or similar issuer for similar
maturities and movement in benchmark security, etc.
Financial assets forming part of Trade and other
receivables, cash and cash equivalents (including
restricted cash and cash equivalents), bank deposits,
financial liabilities forming part of trade and other
payables and short-term borrowings: Approximate
their carrying amounts largely due to the short-term
maturities of these instruments.
Other non-current financial assets and financial
liabilities: Fair value is calculated using a discounted
cash flow model with market assumptions, unless the
carrying value is considered to approximate to fair
value.
Long-term fixed-rate and variable rate borrowings:
Listed bonds are fair valued based on the prevailing
market price. For all other long-term fixed-rate and
variable-rate borrowings, either the carrying amount
approximates the fair value, or fair value has been
estimated by discounting the expected future cash
flows using a discount rate equivalent to the risk-free
rate of return adjusted for the appropriate credit
spread.
Quoted financial asset investments: Fair value is
derived from quoted market prices in active markets.
Derivative financial assets/liabilities: The Group
enters into derivative financial instruments with
various counterparties. Interest rate swaps, foreign
exchange forward contracts and commodity forward
contracts are valued using valuation techniques, which
employs the use of market observable inputs. The
most frequently applied valuation techniques by the
Group include forward pricing and swap models, using
present value calculations. The models incorporate
various inputs including the foreign exchange spot
224
ACCOUNTSNotes to the Financial Statements Integrated Report
Statutory reports
Financial statements
and forward rates, yield curves of the respective
currencies, currency basis spreads between the
respective currencies, interest rate curves and
forward rate curves of the underlying commodity.
Commodity contracts are valued using the forward
LME rates of commodities actively traded on the listed
metal exchange, i.e., London Metal Exchange, United
Kingdom (UK).
For all other financial instruments, the carrying amount is
either the fair value, or approximates the fair value.
The changes in counterparty credit risk had no material
effect on the hedge effectiveness assessment for
derivatives designated in hedge relationship and the
value of other financial instruments recognised at fair
value.
The estimated fair value amounts as at 31 March 2021
have been measured as at that date. As such, the fair
values of these financial instruments subsequent to
reporting date may be different than the amounts
reported at each year-end.
There were no significant transfers between level 1, level
2 and level 3 during the current year.
Risk management framework
The Group’s businesses are subject to several risks and
uncertainties including financial risks.
The Group’s documented risk management polices act as
an effective tool in mitigating the various financial risks to
which the businesses are exposed to in the course of their
daily operations. The risk management policies cover
areas such as liquidity risk, commodity price risk, foreign
exchange risk, interest rate risk, counterparty credit risk
and capital management.
Risks are identified at both the corporate and individual
subsidiary level with active involvement of senior
management. Each operating subsidiary in the Group has
in place risk management processes which are in line with
the Group’s policy. Each significant risk has a designated
‘owner’ within the Group at an appropriate senior level.
The potential financial impact of the risk and its likelihood
of a negative outcome are regularly updated.
The risk management process is coordinated by the
Management Assurance function and is regularly
reviewed by the Group’s Audit Committee. The Audit
Committee is aided by the other committees of the
Board including the Risk Management Committee, which
meets regularly to review risks as well as the progress
against the planned actions. Key business decisions
are discussed at the periodic meetings of the Executive
Committee. The overall internal control environment
and risk management programme including financial risk
management is reviewed by the Audit Committee on
behalf of the Board.
The risk management framework aims to:
improve financial risk awareness and risk transparency
identify, control and monitor key risks
identify risk accumulations
provide management with reliable information on the
Group’s risk situation
improve financial returns
Treasury management
Treasury management focuses on liability management,
capital protection, liquidity maintenance and yield
maximization. The treasury policies are approved by the
Committee of the Board. Daily treasury operations of the
subsidiary companies are managed by their respective
finance teams within the framework of the overall Group
treasury policies. Long-term fund raising including
strategic treasury initiatives are managed jointly by
the business treasury team and the central team at
corporate treasury while short-term funding for routine
working capital requirements is delegated to subsidiary
companies. A monthly reporting system exists to inform
senior management of the Group’s investments and debt
position, exposure to currency, commodity and interest
rate risk and their mitigants including the derivative
position. The Group has a strong system of internal
control which enables effective monitoring of adherence
to Group’s policies. The internal control measures are
effectively supplemented by regular internal audits.
The investment portfolio at the Group is independently
reviewed by CRISIL Limited and Group portfolio has
been rated as Tier I or “Very Good” meaning highest
safety. The investments are made keeping in mind safety,
liquidity and yield maximization.
The Group uses derivative instruments to manage the
exposure in foreign currency exchange rates, interest
rates and commodity prices. The Group does not acquire
or issue derivative financial instruments for trading or
speculative purposes. The Group does not enter into
complex derivative transactions to manage the treasury
and commodity risks. Both treasury and commodities
derivative transactions are normally in the form of
forward contracts, interest rate and currency swaps and
these are in line with the Group’s policies.
Commodity Price risk
The Group is exposed to the movement of base metal
commodity prices on the London Metal Exchange. Any
decline in the prices of the base metals that the Group
produces and sells will have an immediate and direct
impact on the profitability of the businesses. As a general
policy, the Group aims to sell the products at prevailing
market prices. The commodity price risk in import
of input commodities such as Copper Concentrate
& Alumina, for our Copper and Aluminium business
225
Notes to the Financial StatementsVEDANTA RESOURCES LIMITED | INTEGRATED REPORT AND ANNUAL ACCOUNTS 2020-21 | respectively, is hedged on back-to back basis ensuring
no price risk for the business. Hedging is used primarily
as a risk management tool and, in some cases, to secure
future cash flows in cases of high volatility by entering
into forward contracts or similar instruments. The
hedging activities are subject to strict limits set out by
the Board and to a strictly defined internal control and
monitoring mechanism. Decisions relating to hedging of
commodities are taken at the Executive Committee level,
basis clearly laid down guidelines.
Whilst the Group aims to achieve average LME prices
for a month or a year, average realised prices may not
necessarily reflect the LME price movements because of
a variety of reasons such as uneven sales during the year
and timing of shipments.
The Group is also exposed to the movement of
international crude oil price and the discount in the price
of Rajasthan crude oil to Brent price.
Financial instruments with commodity price risk are
entered into in relation to following activities:
economic hedging of prices realised on commodity
contracts
cash flow hedging of revenues, forecasted highly
probable transactions
Aluminium
The requirement of the primary raw material, alumina, is
partly met from own sources and the rest is purchased
primarily on negotiated price terms. Sales prices
are linked to the LME prices. At present the Group
on selective basis hedges the aluminium content in
outsourced alumina to protect its margins.
The Group also enters into hedging arrangements for
its aluminium sales to realise average month of sale LME
prices.
Copper
The Group’s custom smelting copper operations at
Tuticorin is benefitted by a natural hedge except to the
extent of a possible mismatch in quotational periods
between the purchase of concentrate and the sale of
finished copper. The Group’s policy on custom smelting
is to generate margins from Refining Charges or “RC”,
improving operational efficiencies, minimising conversion
cost, generating a premium over LME on sale of
finished copper, sale of by-products and from achieving
import parity on domestic sales. Hence, mismatches
in quotational periods are managed to ensure that the
gains or losses are minimised. The Group hedges this
variability of LME prices through forward contracts and
tries to make the LME price a pass-through cost between
purchases of anodes/blisters and sales of finished
products, both of which are linked to the LME price.
RC is a major source of income for the Indian copper
smelting operations. Fluctuation in RC is influenced
by factors including demand and supply conditions
prevailing in the market for mine output. The Group’s
copper business has a strategy of securing a majority
of its anodes/blisters requirement under long-term
contracts with mines.
Zinc, lead and silver
The sales prices are linked to the LME prices. The Group
also enters into hedging arrangements for its Zinc, Lead
and Silver sales to realise average month of sale LME
prices.
Zinc International
Raw material for zinc and lead is mined in South Africa
with sales prices linked to the LME prices.
Iron ore
The Group sells its Iron Ore production from Goa on the
prevailing market prices and from Karnataka through
e-auction route as mandated by State Government of
Karnataka in India.
Oil and Gas
The prices of various crude oils are based upon the price
of the key physical benchmark crude oil such as Dated
Brent, West Texas Intermediate, and Dubai/Oman etc.
The crude oil prices move based upon market factors like
supply and demand. The regional producers price their
crude basis these benchmark crudes with a premium
or discount over the benchmark based upon quality
differential and competitiveness of various grades.
Natural gas markets are evolving differently in important
geographical markets. There is no single global market
for natural gas. This could be owing to difficulties in large-
scale transportation over long distances as compared to
crude oil. Globally, there are three main regional hubs for
pricing of natural gas, which are USA (Henry Hub Prices),
UK (NBP Price) and Japan (imported gas price, mostly
linked to crude oil).
Provisionally priced financial instruments
On 31 March 2021, the value of net financial liabilities
linked to commodities (excluding derivatives) accounted
for on provisional prices was US$ 74 million (31 March
2020: liabilities of US$ 62 million). These instruments
are subject to price movements at the time of final
settlement and the final price of these instruments will be
determined in the financial year beginning 01 April 2021.
Set out below is the impact of 10% increase in LME prices
on pre-tax profit/ (loss) for the year and pre-tax equity
as a result of changes in value of the Group’s commodity
financial instruments:
226
ACCOUNTSNotes to the Financial Statements Integrated Report
Statutory reports
Financial statements
For the year ended 31 March 2021:
Commodity price sensitivity
Total Exposure
Copper
(137)
Effect on pre-tax profit/(loss) of a
10% increase in the LME
(14)
Effect on pre-tax equity of a 10%
increase in the LME
-
(US$ million)
For the year ended 31 March 2020:
Commodity price sensitivity
Total Exposure
Copper
(137)
Effect on pre-tax profit/(loss) of a
10% increase in the LME
(14)
Effect on pre-tax equity of a 10%
increase in the LME
-
(US$ million)
The above sensitivities are based on volumes, costs,
exchange rates and other variables and provide the
estimated impact of a change in LME prices on profit and
equity assuming that all other variables remain constant.
A 10% decrease in LME prices would have an equal and
opposite effect on the Group’s financial statements.
The impact on pre-tax profit/(loss) mentioned above
includes the impact of a 10% increase in closing copper
LME for provisionally priced copper concentrate
purchased at Vedanta Limited Copper division custom
smelting operations of US$ 12 million (31 March 2020:
US$ 10 million), which is pass through in nature and as
such will not have any impact on the profitability.
Financial risk:
The Group’s Board approved financial risk policies include
monitoring, measuring and mitigating the liquidity,
currency, interest rate and counterparty risk. The
Group does not engage in speculative treasury activity
but seeks to manage risk and optimise interest and
commodity pricing through proven financial instruments.
(a) Liquidity risk
The Group requires funds both for short-term operational
needs as well as for long-term investment programmes
mainly in growth projects. The Group is currently
forecasting to generate sufficient cash flows from the
current operations which together with the available cash
and cash equivalents and short term investments provide
liquidity both in the short term as well as in the long term
(refer note 1(d)). Anticipated future cash flows, together
with undrawn fund based committed facilities of US$
1,557 million, and cash and short term investments of
US$ 5,646 million as at 31 March 2021, are expected to be
sufficient to meet the liquidity requirement of the Group
in the near future.
During FY 2021, Moody’s downgraded Corporate Family
Rating of Vedanta Resources from B1 to B2 (and the
ratings of senior unsecured notes from B3 to Caa1)
and placed the ratings “under review for downgrade’ in
December 2020 upon failure of take private transaction
and expectation of high refinancing needs and weak
liquidity at VRL. On 17 February 2021, Moody’s confirmed
Vedanta Resources Limited’s B2 Corporate Family
Rating and Caa1 rating on the senior unsecured notes of
the company and changed the outlook on the rating to
“Negative” from ratings “under review for downgrade”.
The rating confirmation reflects the reduced immediate
refinancing risk at VRL. Further to downgrade of VRL
in March 2020 by S&P to B- with a stable outlook, S&P
placed the ratings on ‘Negative’ outlook in October 2020
upon failure of Take private transaction. On 25 January
2021, S&P revised the outlook to ‘Stable’ from ‘Negative’
on account of reduced refinancing risk and improving
liquidity position at the holding company level while
affirming the ratings at ‘B-‘.
The Group remains committed to maintaining a
healthy liquidity, a low gearing ratio, deleveraging and
strengthening our balance sheet. The maturity profile
of the Group’s financial liabilities based on the remaining
period from the balance sheet date to the contractual
maturity date is given in the table below. The figures
reflect the contractual undiscounted cash obligation of
the Group:
At 31 March 2021
Payment due by period
Trade and other payables (1)
Bank and other borrowings (2)
Lease liability
Derivative liabilities
Total
< 1 year
3,904
5,115
67
38
9,124
1-3 years
139
8,391
12
10
8,552
3-5 years
-
4,439
7
-
4,446
> 5 years
-
2,715
10
-
2,725
(US$ million)
Total
4,043
20,659
96
48
24,846
227
Notes to the Financial StatementsVEDANTA RESOURCES LIMITED | INTEGRATED REPORT AND ANNUAL ACCOUNTS 2020-21 | At 31 March 2020
Payment due by period
Trade and other payables (1)
Bank and other borrowings (2)
Lease liability
Derivative liabilities
Total
< 1 year
3,882
5,600
62
13
9,557
1-3 years
152
6,262
16
6
6,436
3-5 years
-
4,571
9
-
4,580
> 5 years
-
1,981
11
-
1,992
(US$ million)
Total
4,034
18,414
98
19
22,565
(1)
(2)
Excludes accrued interest which has been included with borrowings
Includes current and non-current borrowings and committed interest payments
As at 31 March 2020, the Group could not meet one of the covenant requirements of borrowings of US$ 3,248 million.
Further, as per the terms of the bond agreement, in case any acceleration notice is served by any of these lenders, the
Group would not satisfy the requirement of IAS 1 of unconditional right to defer payment beyond one year from the
balance sheet date in case of non-convertible bonds of US$ 4,140 million. Subsequent to the balance sheet date, the
Group has obtained a waiver on the covenant requirements.
Accordingly, non-current portion of US$ 6,276 million of borrowings have been reclassified under the current maturities
of long-term borrowings. Given all waivers have been subsequently received, for the liquidity risk disclosure, the
above-mentioned borrowings along with contractual interest of US$ 1,360 million has been presented based on original
contractual maturity.
At 31 March 2021, the Group had access to following funding facilities:
As at 31 March 2021
Fund/Non-fund based
As at 31 March 2020
Fund/Non-fund based
Total facility
12,727
Drawn
10,473
Total facility
11,767
Drawn
10,280
(US$ million)
Undrawn
2,254
(US$ million)
Undrawn
1,487
Collateral
The Group has pledged financial instruments with carrying amount of US$ 3,000 million (31 March 2020: US$ 2,887
million) and inventories with carrying amount of US$ 1,044 million (31 March 2020: US$ 1,138 million) as per the
requirements specified in various financial facilities in place. The counterparties have an obligation to release the
securities to the Group when financial facilities are surrendered.
(b) Foreign currency risk
Fluctuations in foreign currency exchange rates may have an impact on the consolidated income statement, the
consolidated statements of change in equity, where any transaction references more than one currency or where
assets/liabilities are denominated in a currency other than the functional currency of the respective consolidated
entities.
Considering the countries and economic environment in which the Group operates, its operations are subject to risks
arising from the fluctuations primarily in the US dollar, Australian dollar, Namibian dollar, AED, ZAR, GBP, INR, JPY and
Euro against the functional currencies of its subsidiaries.
Exposures on foreign currency loans are managed through the Group wide hedging policy, which is reviewed
periodically to ensure that the results from fluctuating currency exchange rates are appropriately managed. The Group
strives to achieve asset liability offset of foreign currency exposures and only the net position is hedged.
The Group’s presentation currency is the US dollar. The majority of the assets are located in India and the Indian Rupee
is the functional currency for the Indian operating subsidiaries except for Oil and Gas business operations which have a
US dollar functional currency. Natural hedges available in the business are identified at each entity level and hedges are
placed only for the net exposure. Short-term net exposures are hedged progressively based on their maturity. A more
conservative approach has been adopted for project expenditures to avoid budget overruns, where cost of the project
is calculated taking into account the hedge cost. The hedge mechanisms are reviewed periodically to ensure that the
risk from fluctuating currency exchange rates is appropriately managed.
228
ACCOUNTSNotes to the Financial Statements Integrated Report
Statutory reports
Financial statements
The following analysis is based on the gross exposure as at the reporting date which could affect the consolidated
income statement. The exposure summarised below is mitigated by some of the derivative contracts entered into by
the Group as disclosed under the section on “Derivative financial instruments”.
The carrying amount of the Group’s financial assets and liabilities in different currencies are as follows:
USD
INR
Others
Total
(US$ million)
As at 31 March 2021
As at 31 March 2020
Financial Assets
2,629
5,728
115
Financial liabilities
11,837
8,685
345
Financial Assets
2,331
4,717
99
Financial liabilities
11,143
8,081
311
8,472
20,867
7,147
19,535
The Group’s exposure to foreign currency arises where a Group company holds monetary assets and liabilities
denominated in a currency different to the functional currency of that entity, with USD (US Dollar) being the major non-
functional currency of the Group’s main operating subsidiaries.
The foreign exchange rate sensitivity is calculated by the aggregation of the net foreign exchange rate exposure with
a simultaneous parallel foreign exchange rates shift in the currencies by 10 % against the functional currencies of the
respective entities.
Set out below is the impact of a 10% strengthening in the functional currencies of the respective entities on pre-tax
profit/(loss) and pre-tax equity arising as a result of the revaluation of the Group’s foreign currency monetary financial
assets/liabilities:
USD
USD
(US$ million)
For the year ended 31 March 2021
Effect on pre-tax
profit/(loss) of 10%
strengthening in
currency
129
Effect on pre-tax equity
of 10% increase in
currency
-
(US$ million)
For the year ended 31 March 2020
Effect on pre-tax
profit/(loss) of 10%
strengthening in
currency
177
Effect on pre-tax equity
of 10% increase in
currency
-
Closing exchange
rate
73.2973
Closing exchange
rate
74.8109
A 10% weakening of the functional currencies of the respective entities would have an equal and opposite effect on the
Group’s financial statements.
Interest rate risk
(c)
At 31 March 2021, the Group’s net debt of US$ 10,731 million (31 March 2020: US$ 10,022 million net debt) comprises
debt of US$ 16,377 million (31 March 2020: US$ 15,095 million) offset by cash, cash equivalents, short-term
investments and non-current bank depsit of US$ 5,646 million (31 March 2020: US$ 5,073 million).
The Group is exposed to interest rate risk on short-term and long-term floating rate instruments and on the refinancing
of fixed rate debt. The Group’s policy is to maintain a balance of fixed and floating interest rate borrowings and the
proportion of fixed and floating rate debt is determined by current market interest rates. The borrowings of the Group
are principally denominated in Indian Rupees and US dollars with mix of fixed and floating rates of interest. The USD
floating rate debt is linked to US dollar LIBOR and INR Floating rate debt to Bank’s base rate. The Group has a policy of
selectively using interest rate swaps, option contracts and other derivative instruments to manage its exposure to
interest rate movements. These exposures are reviewed by appropriate levels of management on a monthly basis.
The Group invests cash and short-term investments in short-term deposits and debt mutual funds, some of which
generate a tax-free return, to achieve the Group’s goal of maintaining liquidity, carrying manageable risk and achieving
satisfactory returns.
229
Notes to the Financial StatementsVEDANTA RESOURCES LIMITED | INTEGRATED REPORT AND ANNUAL ACCOUNTS 2020-21 | Floating rate financial assets are largely mutual fund investments which have debt securities as underlying assets. The
returns from these financial assets are linked to market interest rate movements; however, the counterparty invests in
the agreed securities with known maturity tenure and return and hence has manageable risk.
The exposure of the Group’s financial assets to interest rate risk is as follows:
As at 31 March 2021
As at 31 March 2020
Floating rate
financial assets
Fixed rate
financial assets
1,546
4,325
Non-interest
bearing financial
assets
2,594
Floating rate
financial assets
Fixed rate
financial assets
1,618
4,171
Non-interest
bearing financial
assets
1,358
(US$ million)
Financial
assets
The exposure of the Group’s financial liabilities to interest rate risk is as follows:
As at 31 March 2021
As at 31 March 2020
Floating rate
financial liabilities
Fixed rate
financial liabilities
6,756
10,754
Non-interest
bearing financial
liabilities
3,357
Floating rate
financial liabilities
Fixed rate
financial liabilities
7,413
9,119
Non-interest
bearing financial
liabilities
3,003
(US$ million)
Financial
liabilities
Considering the net debt position as at 31 March 2021 and the investment in bank deposits, corporate bonds and debt
mutual funds, any increase in interest rates would result in a net loss and any decrease in interest rates would result
in a net gain. The sensitivity analysis below has been determined based on the exposure to interest rates for financial
instruments at the balance sheet date.
The below table illustrates the impact of a 0.5% to 2.0% movement in interest rate of floating rate financial assets/
liabilities (net) on profit/(loss) and equity assuming that the changes occur at the reporting date and has been calculated
based on risk exposure outstanding as of date. The year end balances are not necessarily representative of the average
debt outstanding during the year. This analysis also assumes that all other variables, in particular foreign currency
rates, remain constant.
Increase in interest rates
0.5%
1.0%
2.0%
(US$ million)
Effect on pre-tax
profit/(loss) during
the year ended 31
March 2021
(26)
(52)
(104)
Effect on pre-tax
profit/(loss) during
the year ended 31
March 2020
(29)
(58)
(116)
A reduction in interest rates would have an equal and opposite effect on the Group’s financial statements.
(d) Credit risk
Credit risk refers to the risk that counterparty will default on its contractual obligations resulting in financial loss to
the Group. The Group has adopted a policy of only dealing with creditworthy counterparties and obtaining sufficient
collateral, where appropriate, as a means of mitigating the risk of financial loss from defaults.
The Group is exposed to credit risk from trade receivables, contract assets, cash and cash equivalents, short term
investments and other financial instruments.
The Group has clearly defined policies to mitigate counterparty risks. For short-term investments, counterparty limits
are in place to limit the amount of credit exposure to any one counterparty. This, therefore, results in diversification of
credit risk for our mutual fund and bond investments. For derivative and financial instruments, the Group attempts to
limit the credit risk by only dealing with reputable banks and financial institutions.
Credit risk on receivables is limited as almost all credit sales are against letters of credit and guarantees of banks of
national standing. Moreover, given the diverse nature of the Group’s businesses trade receivables are spread over a
number of customers with no significant concentration of credit risk. No single customer accounted for 10% or more
230
ACCOUNTSNotes to the Financial Statements Integrated Report
Statutory reports
Financial statements
of revenue on a consolidated basis in any of the years presented. The history of trade receivables shows a negligible
provision for bad and doubtful debts. Therefore, the Group does not expect any material risk on account of non-
performance by any of our counterparties.
The Group’s maximum gross exposure to credit risk as at 31 March 2021 is US$ 8,421 million (31 March 2020: US$ 7,147
million).
Of the year end trade and other receivable balances, the following, though overdue, are expected to be realised in the
normal course of business and hence, are not considered impaired as at:
Neither past due nor impaired
Past due but not impaired
- Less than 1 month
- Between 1 - 3 months
- Between 3 - 12 months
- Greater than 12 months
Total
31 March 2021
1,522
(US$ million)
31 March 2020
997
83
38
112
601
106
191
223
347
2,356
1,864
Receivables are deemed to be past due or impaired with reference to the Group’s normal terms and conditions of
business. These terms and conditions are determined on a case-to-case basis with reference to the customer’s credit
quality and prevailing market conditions. Receivables that are classified as ‘past due’ in the above table are those that
have not been settled within the terms and conditions that have been agreed with that customer.
The credit quality of the Group’s customers is monitored on an ongoing basis. Where receivables have been impaired,
the Group actively seeks to recover the amounts in question and enforce compliance with credit terms.
Movement in allowances for Financial Assets (other non-current assets, loans and trade and other receivables)
Particulars
As at 01 April 2019
Allowance made during the year
Reversals/write off during the year
Foreign Exchange difference
As at 01 April 2020
Allowance made during the year
Reversals/write off during the year
Exploration costs written off
Foreign Exchange difference
As at 31 March 2021
(US$ million)
151
37
(5)
(10)
173
41
(8)
0
4
210
Derivative financial instruments
The Group uses derivative instruments as part of its
management of exposure to fluctuations in foreign
currency exchange rates, interest rates and commodity
prices. The Group does not acquire or issue derivative
financial instruments for trading or speculative purposes.
The Group does not enter into complex derivative
transactions to manage the treasury and commodity
risks. Both treasury and commodities derivative
transactions are normally in the form of forward
contracts and these are subject to the Group guidelines
and policies.
The fair values of all derivatives are separately recorded
on the balance sheet within other financial assets
(derivatives) and other financial liabilities (derivatives),
current and non-current. Derivatives that are designated
as hedges are classified as current or non-current
depending on the maturity of the derivative.
The use of derivatives can give rise to credit and market
risk. The Group tries to control credit risk as far as
possible by only entering into contracts with reputable
banks and financial institutions. The use of derivative
instruments is subject to limits, authorities and regular
monitoring by appropriate levels of management.
The limits, authorities and monitoring systems are
periodically reviewed by management and the Board.
The market risk on derivatives is mitigated by changes
in the valuation of the underlying assets, liabilities
or transactions, as derivatives are used only for risk
management purposes.
231
Notes to the Financial StatementsVEDANTA RESOURCES LIMITED | INTEGRATED REPORT AND ANNUAL ACCOUNTS 2020-21 |
Cash flow hedges
The Group enters into forward exchange and commodity
price contracts for hedging highly probable forecast
transaction and account for them as cash flow hedges
and states them at fair value. Subsequent changes in
fair value are recognised in consolidated statement of
comprehensive income until the hedged transaction
occurs, at which time, the respective gain or losses are
reclassified to the consolidated income statement. These
hedges have been effective for the year ended 31 March
2021.
The Group uses foreign exchange contracts from time
to time to optimize currency risk exposure on its foreign
currency transactions. The Group hedged part of its
foreign currency exposure on capital commitments
during fiscal year 2021. Fair value changes on such
forward contracts are recognised in the consolidated
statement of comprehensive income.
The majority of cash flow hedges taken out by the
Group during the year comprise non-derivative hedging
instruments for hedging the foreign exchange rate of
highly probable forecast transactions and commodity
price contracts for hedging the commodity price risk of
highly probable forecast transactions.
The cash flows related to above are expected to occur
during the year ending 31 March 2022 and consequently
may impact the consolidated income statement for
that year depending upon the change in the commodity
prices and foreign exchange rates movements. For cash
flow hedges regarded as basis adjustments to initial
carrying value of the property, plant and equipment, the
depreciation on the basis adjustments made is expected
to affect the consolidated income statement over the
expected useful life of the property, plant and equipment.
Fair value hedges
The fair value hedges relate to forward covers taken to
hedge currency exposure and commodity price risks.
The Group’s sales are on a quotational period basis,
generally one month to three months after the date of
delivery at a customer’s facility. The Group enters into
forward contracts for the respective quotational period
to hedge its commodity price risk based on average LME
prices. Gains and losses on these hedge transactions are
substantially offset by the amount of gains or losses on
the underlying sales. Net gains and losses are recognised
in the consolidated income statement.
The Group uses foreign exchange contracts from time
to time to optimize currency risk exposure on its foreign
currency transactions. Fair value changes on such
forward contracts are recognised in the consolidated
income statement.
Non-qualifying/economic hedge
The Group enters into derivative contracts which are
not designated as hedges for accounting purposes, but
provide an economic hedge of a particular transaction
risk or a risk component of a transaction. Hedging
instruments include copper, aluminium and zinc future
contracts on the LME and certain other derivative
instruments. Fair value changes on such derivative
instruments are recognised in the consolidated income
statement.
The fair value of the Group’s open derivative positions as at 31 March 2021, recorded within financial instruments
(derivative) is as follows:
As at 31 March 2021
As at 31 March 2020
Liability
Asset
Liability
Asset
(US$ million)
7
1
-
1
16
-
13
-
38
-
-
-
6
2
-
2
-
-
-
-
1
6
3
3
-
10
13
15
-
-
13
28
1
36
-
93
Current
Cash flow hedges
And other- Commodity contracts
- Interest rate swap
- Forward foreign currency contracts
Fair value hedges
- Commodity contracts
- Forward foreign currency contracts
Non Qualifying hedges
- Commodity contracts
- Forward foreign currency contracts
- Other (Foreign currency swap)
Total
232
ACCOUNTSNotes to the Financial Statements Integrated Report
Statutory reports
Financial statements
As at 31 March 2021
As at 31 March 2020
Liability
Asset
Liability
Asset
(US$ million)
Non-current
Cash flow hedges
- Interest rate swap
Fair value hedges
- Forward foreign currency contracts
Total
Grand Total
26. PROVISIONS
-
10
10
48
-
-
-
10
1
5
6
19
Provision for restoration,
rehabilitation and environmental
Provision for employee benefits
Others
Total
As at 31 March 2021
Current
4
Non- Current
405
21
7
32
2
-
407
Total
409
23
7
439
As at 31 March 2020
Current
3
Non- Current
355
22
7
32
1
-
356
As at 1 April 2019
Additions
Utilised
Unused amounts reversed
Unwinding of discount (note 8)
Revision in estimates
Exchange differences
Discontinued operations (refer note 3(b))
As at 1 April 2020
Additions
Utilised
Unused amounts reversed
Unwinding of discount (note 8)
Revision in estimates
Exchange differences
As at 31 March 2021
Restoration,
rehabilitation and
environmental
371
10
(2)
-
14
(7)
(12)
(16)
358
38
-
(3)
10
(4)
10
409
-
-
-
93
(US$ million)
Total
358
23
7
388
(US$ million)
Other
7
-
-
-
-
-
-
-
7
-
-
-
-
-
-
7
Restoration, rehabilitation and environmental
The provisions for restoration, rehabilitation and environmental liabilities represent the management’s best estimate
of the costs which will be incurred in the future to meet the Group’s obligations under existing Indian, Australian,
Namibian, South African and Irish law and the terms of the Group’s mining and other licences and contractual
arrangements.
Within India, the principal restoration and rehabilitation provisions are recorded within Cairn India where a legal
obligation exists relating to the oil and gas fields, where costs are expected to be incurred in restoring the site of
production facilities at the end of the producing life of an oil field. The Group recognises the full cost of site restoration
as a liability when the obligation to rectify environmental damage arises.
These amounts are calculated by considering discount rates within the range of 2% to 10% and become payable on
closure of mines and are expected to be incurred over a period of one to thirty years. The discount rates at major units
233
Notes to the Financial StatementsVEDANTA RESOURCES LIMITED | INTEGRATED REPORT AND ANNUAL ACCOUNTS 2020-21 | are in the range of 2% to 10% at Zinc International with
lower range at operations in Ireland and higher range at
operations in African Countries, 2% to 3% at Oil & Gas
division.
An obligation to incur restoration, rehabilitation and
environmental costs arises when environmental
disturbance is caused by the development or ongoing
production from a producing field.
Others
Others mainly include provision for disputed cases and
claims.
27. RETIREMENT BENEFITS
The Group participates in defined contribution and
benefit plans, the assets of which are held (where funded)
in separately administered funds.
For defined contribution plans the amount charged to the
consolidated income statement is the total amount of
contributions payable in the year.
For defined benefit plans, the cost of providing benefits
under the plans is determined by actuarial valuation
separately each year for each plan using the projected
unit credit method by independent qualified actuaries
as at the year end. Re-measurement gains and losses
arising in the year are recognized in full in Consolidated
Statement of Comprehensive Income for the year.
(i) Defined contribution plans
The Group contributed a total of US$ 16 million and US$ 12 million for the year ended 31 March 2021 and 31 March 2020
respectively, to the following defined contribution plans.’
Particulars
Employer’s contribution to recognized Provident fund and family pension fund
Employer’s contribution to superannuation
Employer’s contribution to National Pension Scheme
Year ended
31 March 2021
13
3
-
(US$ million)
Year ended
31 March 2020
9
3
-
16
12
Indian pension plans
Central recognised provident fund
In accordance with the ‘The Employees’ Provident Funds
and Miscellaneous Provisions Act, 1952’, employees are
entitled to receive benefits under the Provident Fund.
Both the employee and the employer make monthly
contributions to the plan at a predetermined rate (12%
for the year ended 31 March 2021 and 31 March 2020)
of an employee’s basic salary. All employees have an
option to make additional voluntary contributions.
These contributions are made to the fund administered
and managed by the Government of India (GOI) or to
independently managed and approved funds. The Group
has no further obligations under the fund managed by the
GOI beyond its monthly contributions which are charged
to the consolidated income statement in the year they
are incurred.
Family Pension Fund
The Pension Fund was established in 1995 and is managed
by the Government of India. The employee makes no
contribution to this fund but the employer makes a
contribution of 8.33% of salary each month subject to a
specified ceiling per employee. This is provided for every
permanent employee on the payroll.
At the age of superannuation, contributions ceases
and the individual receives a monthly payment based
on the level of contributions through the years, and on
their salary scale at the time they retire, subject to a
maximum ceiling of salary level. The Government funds
these payments, thus the Group has no additional liability
beyond the contributions that it makes, regardless of
whether the central fund is in surplus or deficit.
Superannuation
Superannuation, another pension scheme applicable
in India, is applicable only to executives above certain
grade. However, in case of oil & gas (applicable from the
second year of employment) and Iron Ore Segment, the
benefit is applicable to all executives. Vedanta Limited
and each relevant Indian subsidiary holds policy with the
Life Insurance Corporation of India (“LIC”), to which each
of these entities contributes a fixed amount relating to
superannuation and the pension annuity is met by the LIC
as required, taking into consideration the contributions
made. The Group has no further obligations under the
scheme beyond its monthly contributions which are
charged to the consolidated income statement in the
year they are incurred.
National Pension Scheme
National Pension Scheme is a retirement savings
account for social security and welfare applicable for
executives covered under the superannuation benefit
of Vedanta Limited and each relevant Indian subsidiary,
on a choice basis. It was introduced to enable employees
to select the treatment of superannuation component
of their fixed salaries and avail the benefits offered by
National Pension Scheme launched by Government of
234
ACCOUNTSNotes to the Financial Statements Integrated Report
Statutory reports
Financial statements
India. Vedanta Limited and each relevant entity holds
a corporate account with one of the pension fund
managers authorized by the Government of India to
which each of the entity contributes a fixed amount
relating to superannuation and the pension annuity will be
met by the fund manager as per rules of National Pension
Scheme. The Group has no further obligations under
the scheme beyond its monthly contributions which are
charged to the consolidated statement of profit and loss
in the year they are incurred.
Non-Indian plans
Australian pension scheme
The Group also participates in defined contribution
superannuation schemes in Australia. The contribution
of a proportion of an employee’s salary into a
superannuation fund is a compulsory legal requirement
in Australia. The employer contributes, into the
employee’s fund of choice 9.5% of the employee’s
gross remuneration where the employee is covered
by the industrial agreement and 12.50% of the basic
remuneration for all other employees. All employees have
an option to make additional voluntary contributions.
The Group has no further obligations under the scheme
beyond its monthly contributions which are charged to
the consolidated income statement in the year they are
incurred.
Skorpion Zinc Provident Fund, Namibia
The Skorpion Zinc Provident Fund is a defined
contribution fund and is compulsory to all full-time
employees under the age of 60. The contribution to the
fund is a fixed percentage of 9% per month of pensionable
salary, whilst the employee contributes 7% with the
option of making additional contributions, over and above
the normal contribution, up to a maximum of 12%.
Normal retirement age is 60 years and benefit payable is
the member’s fund credit which is equal to all employer
and employee contributions plus interest. The same
applies when an employee resigns from Skorpion Zinc.
The Fund provides disability cover which is equal to the
member’s fund credit and a death cover of 2 times annual
salary in the event of death before retirement.
The Group has no additional liability beyond the
contributions that it makes. Accordingly, this scheme has
been accounted for on a defined contribution basis and
contributions are charged directly to the consolidated
income statement in the year they are incurred.
Black Mountain (Pty) Limited, South Africa Pension &
Provident Funds
Black Mountain Mining (Pty) Ltd has two retirement funds,
both administered by Alexander Forbes, a registered
financial service provider. The purpose of the funds is
to provide retirement and death benefits to all eligible
employees. Group contributes at a fixed percentage of
10.5% for up to supervisor grade and 15% for others.
Membership of both funds is compulsory for all
permanent employees under the age of 60 years.
The Group has no additional liability beyond the
contributions that it makes. Accordingly, this scheme has
been accounted for on a defined contribution basis and
contributions are charged directly to the consolidated
income statement in the year they are incurred.
(ii) Defined benefit plans
(a) Contribution to provident fund trust (the “trusts”)
of Iron ore division, Bharat Aluminium Company Limited
(BALCO), Hindustan Zinc Limited (HZL), Sesa Resources
Limited (SRL) and Sesa Mining Corporation Limited
(SMCL)
The provident funds of Iron ore division, BALCO, HZL,
SRL and SMCL are exempted under section 17 of
the Employees’ Provident Funds and Miscellaneous
Provisions Act, 1952. Conditions for grant of exemption
stipulates that the employer shall make good deficiency,
if any, between the return guaranteed by the statute and
actual earning of the Fund. Based on actuarial valuation
in accordance with IAS 19 and Guidance note issued by
Institute of Actuaries of India for interest rate guarantee
of exempted provident fund liability of employees, there
is no interest shortfall that is required to be met by Iron
ore division, BALCO, HZL, SRL and SMCL as at 31 March
2021 and 31 March 2020. Having regard to the assets of
the fund and the return on investments, the Group does
not expect any deficiency in the foreseeable future. The
Group contributed a total of US$ 7 million & US$ 7 million
for the years ended 31 March 2021 and 2020 respectively
in relation to the independently managed and approved
funds.
The present value of obligation and the fair value of plan assets of the trust are summarized below.
Particulars
Fair value of plan assets of trusts
Present value of defined benefit obligation
As at
31 March 2021
330
(324)
(US$ million)
As at
31 March 2020
313
(307)
Net liability arising from defined benefit obligation
-
-
235
Notes to the Financial StatementsVEDANTA RESOURCES LIMITED | INTEGRATED REPORT AND ANNUAL ACCOUNTS 2020-21 | Percentage allocation of Plan assets of the trust
Assets by Category
Government Securities
Debentures / Bonds
Equity
Money Market Instruments
Fixed Deposits
The remeasurement loss of US$ 1 million (31 March
2020: US$ 22 million) has been charged to Other
Comprehensive Income (OCI) during the year.
(b) Post-Retirement Medical Benefits:
The Group has a scheme of medical benefits for
employees at BMM and BALCO subsequent to their
retirement on completion of tenure including retirement
on medical grounds and voluntary retirement on
contributory basis. The scheme includes employee’s
spouses as well. Based on an actuarial valuation
conducted as at year-end, a provision is recognised in
full for the benefit obligation. The obligation relating to
post-retirement medical benefits as at 31 March 2021
was US$ 12 million (31 March 2020: US$ 11 million).
The obligation under this plan is unfunded. The Group
considers these amounts as not material and accordingly
has not provided further disclosures as required by IAS 19
‘Employee benefits. The remeasurement loss/(gain) and
net interest on the obligation of post-retirement medical
benefits of US$ 0 million (31 March 2020: US$ 2 million)
and US$ 1 million (31 March 2020: US$ 1 million) for the
year ended 31 March 2021 have been recognised in other
comprehensive income and finance cost respectively.
(c) Other Post-employment Benefits:
India - Gratuity Plan
In accordance with the Payment of Gratuity Act of 1972,
Vedanta Limited and its Indian subsidiaries contribute to a
defined benefit plan (the “Gratuity Plan”) covering certain
categories of employees. The Gratuity Plan provides a
lump sum payment to vested employees at retirement,
disability or termination of employment being an amount
based on the respective employee’s last drawn salary and
the number of years of employment with the Group.
As at
31 March 2021
63.19%
34.36%
1.63%
0.82%
0.0%
As at
31 March 2020
61.68%
36.67%
1.65%
-
0.0%
Based on actuarial valuations conducted as at year end
using the projected unit credit method, a provision is
recognized in full for the benefit obligation over and above
the funds held in the Gratuity Plan. For entities where
the plan is unfunded, full provision is recognized in the
consolidated statements of financial position.
The iron ore and oil & gas division of Vedanta Limited,
SRL, SMCL, HZL and FACOR have constituted a trust
recognized by Indian Income Tax Authorities for gratuity
to employees, contributions to the trust are funded with
the LIC, ICICI Prudential Life Insurance Company Limited
(“ICICI PL”) and HDFC Standard Life Insurance Company
Limited (“HDFC SL”).
Zambia
Specified permanent employees of KCM are entitled to
receive medical and retirement severance benefits. This
comprises two months’ basic pay for every completed
year of service with an earliest service start date of 1 July
2004. Under this scheme, benefits are provided based on
final pensionable pay and a full actuarial valuation of the
scheme is carried out on an annual basis. The accruals
are not contributed to any fund and are in the form of
provisions in KCM’s accounts.
On the death of an employee during service, a lump sum
amount is paid to his or her dependants. This amount
is equal to sixty months’ basic pay for employees who
joined before 1 April 2000 and thirty months’ basic pay for
employees who joined on or after 1 April 2000. For fixed
term contract employees, the benefit payable on death is
thirty months’ basic pay (refer note 3(b)).
Principal actuarial assumptions
Principal actuarial assumptions used to determine the present value of Other post-employment benefit plan obligation
are as follows:
Particulars
Discount rate
Expected rate of increase in compensation level of covered employees
Year ended 31
March 2021
6.90%
2.0%-15.0%
Year ended 31
March 2020
6.80%
2.0%-15.0%
236
ACCOUNTSNotes to the Financial Statements Integrated Report
Statutory reports
Financial statements
Assumptions regarding mortality for Indian entities are based on mortality table of ‘Indian Assured Lives Mortality
(2012-2014) published by the Institute of Actuaries of India.
Assumptions regarding mortality for KCM are based on World Health Organisation Life Tables for 1999 applicable to
Zambia which has been taken as a reference point. Based on this, a mortality table which is appropriate for the workers
of KCM has been derived. (Refer note 3(b))
Amount recognised in the Consolidated Statement of Financial Position consists of:
Particulars
Fair value of plan assets
Present value of defined benefit obligation
As at
31 March 2021
55
(79)
(US$ million)
As at
31 March 2020
59
(85)
Net liability arising from defined benefit obligation
(24)
(26)
Amounts recognised in Consolidated income statement in respect of Other post-employment benefit plan are as
follows:
Particulars
Current service cost
Net Interest cost
Year ended
31 March 2021
5
2
(US$ million)
Year ended
31 March 2020
6
2
Components of defined benefit costs recognised in consolidated income statement
7
8
Amounts recognised in the Consolidated Statement of Comprehensive Income in respect of Other post-employment
benefit plan are as follows:
Particulars
Remeasurement of the net defined benefit obligation:
Actuarial losses arising from changes in demographic assumptions
Actuarial losses arising from changes in financial assumptions
Actuarial (gains)/ losses arising from experience adjustments
Actuarial losses/ (gains) on plan assets (excluding amounts included in net interest cost)
Components of defined benefit costs recognised in consolidated statement of
comprehensive income- losses
(US$ million)
Year ended
31 March 2021
Year ended
31 March 2020
-
-
(1)
1
-
-
2
4
(0)
6
The movement of the present value of Other post-employment benefit plan obligation is as follows:
Particulars
Opening balance
Acquired in business combination
Discontinued operations (refer note 3(b))
Current service cost
Benefits paid
Interest cost
Actuarial gains/ (losses) arising from changes in assumptions
Foreign currency translation
Year ended
31 March 2021
(85)
(2)
-
(5)
19
(6)
1
(1)
(US$ million)
Year ended
31 March 2020
(135)
-
50
(6)
12
(6)
(6)
6
Closing balance
(79)
(85)
237
Notes to the Financial StatementsVEDANTA RESOURCES LIMITED | INTEGRATED REPORT AND ANNUAL ACCOUNTS 2020-21 | The movement in the fair value of Other post-employment benefit plan assets is as follows:
Particulars
Opening balance
Acquired in business combination
Contributions received
Benefits paid
Remeasurement (loss)/ gain arising from return on plan assets
Interest income
Foreign currency translation
Year ended
31 March 2021
59
2
2
(13)
(1)
4
2
(US$ million)
Year ended
31 March 2020
56
-
12
(9)
-
4
(4)
Closing balance
55
59
The above plan assets have been invested in the qualified insurance policies.
The actual return on plan assets was US$ 3 million and US$ 4 million for the year ended 31 March 2021 and 31 March
2020 respectively.
The weighted average duration of the defined benefit obligation is 14 years and 15 years as at 31 March 2021 and 31
March 2020 respectively.
The Group expects to contribute US$ 7 million to the funded Gratuity plan during the year ending 31 March 2022.
Sensitivity analysis for Defined Benefit Plan
Below is the sensitivity analysis determined for significant actuarial assumptions for the determination of defined
benefit obligations and based on reasonably possible changes of the respective assumptions occurring at the end of
reporting year while holding all other assumptions constant.
Discount rate
Increase by 0.50 %
Decrease by 0.50%
Change in salary assumption
Increase by 0.50 %
Decrease by 0.50%
(US$ million)
Increase/(Decrease) in
defined benefit obligation
(3)
3
3
(3)
The above sensitivity analysis may not be representative of the actual benefit obligation as it is unlikely that the change
in assumptions would occur in isolation of one another as some of the assumptions may be correlated.
In presenting the above sensitivity analysis, the present value of defined benefit obligation has been calculated using
the projected unit credit method at the end of reporting period, which is the same as that applied in calculating the
defined obligation liability recognized in the consolidated statement of financial position.
Risk analysis
The Group is exposed to a number of risks in the defined benefit plans. Most significant risks pertaining to defined
benefits plans and management estimation of the impact of these risks are as follows:
Investment risk
Most of the Indian defined benefit plans are funded with the LIC, ICICI PL and HDFC SL. The Group does not have any
liberty to manage the fund provided to the LIC, ICICI PL and HDFC SL.
The present value of the defined benefit plan obligation is calculated using a discount rate determined by reference to
the Government of India bonds for the Group’s Indian operations. If the return on plan asset is below this rate, it will
create a plan deficit.
Interest risk
A decrease in the interest rate on plan assets will increase the net plan obligation.
238
ACCOUNTSNotes to the Financial Statements Integrated Report
Statutory reports
Financial statements
Longevity risk/ Life expectancy
The present value of the defined benefit plan obligation is calculated by reference to the best estimate of the mortality
of plan participants both during and at the end of the employment. An increase in the life expectancy of the plan
participants will increase the plan obligation.
Salary growth risk
The present value of the defined benefit plan obligation is calculated by reference to the future salaries of plan
participants. An increase in the salary of the plan participants will increase the plan obligation.
28. EMPLOYEE NUMBERS AND COSTS
Average number of persons employed by the Group in the year*
Class of business
Zinc
- India
- International
Iron ore
Copper India/Australia
Aluminium
Power
Oil & Gas
Other
*Non IFRS measure
Year ended
31 March 2021
4,826
3,799
1,027
2,516
837
5,891
214
1,625
2,681
Year ended
31 March 2020
5,698
4,213
1,485
2,617
966
6,473
226
1,573
2,894
18,590
20,447
Costs incurred during the year in respect of Employees and Executive Directors recognized in the Consolidated Income
Statement:
Salaries and wages
Defined contribution pension scheme costs (refer note 27)
Defined benefit pension scheme costs (refer note 27)
Share- based payments charge (refer note 29)
Voluntary retirement scheme cost
Less: Cost allocated/directly booked in joint ventures
Year ended
31 March 2021
415
16
12
6
18
(72)
(US$ million)
Year ended
31 March 2020
441
12
13
10
2
(90)
395
388
29. SHARE-BASED PAYMENTS
Employee share schemes
The Group aims to provide superior rewards for outstanding performance and a high proportion of ‘at risk’
remuneration for Executive Directors. Three employee share schemes were approved by shareholders on Listing in
2003. In 2014, the Board introduced a Performance Share Plan (‘PSP’) which is the primary arrangement under which
share-based incentives are provided to the Executive Directors and the wider management group. In 2015, the Board
also introduced a Deferred Share Bonus Plan (DSBP). In 2016, Vedanta Limited (“VEDL”) introduced an Employee Stock
Option Scheme 2016 (“ESOS”), which was approved by the VEDL shareholders.
The Vedanta Limited Plans
Employee Stock Option Scheme (ESOS) 2016
During the year 2016, VEDL introduced an Employee Stock Option Scheme 2016 (“ESOS”), which was approved by
the VEDL shareholders. The maximum value of shares that can be conditionally awarded to an Executive Committee
in a year is 125% of annual salary. The maximum value of options that can be awarded to members of the wider
management group is calculated by reference to the grade average CTC and individual grade of the employee. The
239
Notes to the Financial StatementsVEDANTA RESOURCES LIMITED | INTEGRATED REPORT AND ANNUAL ACCOUNTS 2020-21 | performance conditions attached to the award is measured by comparing VEDL’s performance in terms of TSR over the
performance period with the performance of the companies as defined in the scheme. The extent to which an award
vests will depend on the VEDL’s TSR rank against a group or groups of peer companies at the end of the performance
period and as moderated by the Remuneration Committee. Dependent on the level of employee, part of these
awards will be subject to a continued service condition only with the remainder measured in terms of TSR. Further in
some schemes under the plan, business performance set against business plan for the financial year is included as an
additional condition.
Options granted during the year ended March 31, 2021 includes business performance based, sustained individual
performance based, management discretion and fatality multiplier based stock options. Business performances will be
measured using Volume, Cost, Net Sales Realisation, EBITDA, ECG & Carbon footprint or a combination of these for the
respective business/ SBU entities.
Options granted during the year ended March 31, 2020 includes business performance based, sustained individual
performance based and market performance based stock options. Business performances will be measured using Volume,
Cost, Net Sales Realisation, EBITDA, free cash flow or a combination of these for the respective business/ SBU entities.
The exercise price of the options is INR 1 per share and the performance period is three years, with no re-testing being
allowed.
The details of share options for the year ended 31 March 2021 and 31 March 2020 is presented below:
Options
outstanding 1
April 2020
1,068,516
Options
granted during
the year
-
Options
forfeited
during the year
8,648
Options
exercised
during the year
1,059,868
Options
outstanding
31 March 2021
-
Options
exercisable
31 March 2021
-
5,514,169
1,136,816
376,940
376,940
Financial Year
of Grant
2016-17
2017-18
2017-18
2018-19
2018-19
2019-20
2019-20
2020-21
2020-21
Exercise Period
15 December 2019 -14
June 2020
1 September 2020 – 28
February 2021
16 October 2020 – 15
April 2021
01 November 2021 – 30
April 2022
Cash settled
29 November 2022 – 28
May 2023
Cash settled
06 November 2023 – 05
May 2024
Cash settled
7,027,925
11,126
11,420,046
2,236,944
15,881,330
-
-
-
-
-
11,126
1,507,806
777,340
2,309,052
3,956,040
-
-
12,711,112
1,636,279
-
-
880,000
-
-
-
-
-
-
-
-
-
9,912,240
1,459,604
13,572,278
2,319,761
12,711,112
880,000
-
-
-
-
-
-
-
41,601,927
13,591,112
11,764,420
2,196,684
40,351,935
376,940
Financial Year
of Grant
Exercise Period
2016-17
2017-18
2017-18
2017-18
2018-19
2018-19
2019-20
2019-20
15 December 2019 -14
June 2020
01 September 2020 – 28
February 2021
16 October 2020 – 15
April 2021
01 November 2020 – 30
April 2021
01 November 2021 – 30
April 2022
Cash settled
29 November 2022 – 28
May 2023
Cash settled
Options
outstanding
1 April 2019
6,508,226
Options
granted during
the year
-
Options
forfeited
during the year
4,819,269
Options
exercised
during the
year *
620,441
Options
outstanding 31
March 2020
1,068,516
Options
exercisable
31 March 2020
1,068,516
8,274,393
11,126
27,638
13,566,200
-
-
-
-
1,246,468
-
27,638
2,146,154
3,847,494
-
-
16,713,640
1,610,550
832,310
-
4,097,030
140,990
-
-
-
-
-
-
-
7,027,925
11,126
-
11,420,046
2,236,944
15,881,330
3,956,040
-
-
-
-
-
-
-
* excludes 58,420 options exercised during the year regarding which the transaction could not be completed before 31 March 2020 and hence,
the corresponding shares were not transferred to the concerned employees.
32,235,077
20,810,670
10,823,379
620,441
41,601,927
1,068,516
240
ACCOUNTSNotes to the Financial Statements Integrated Report
Statutory reports
Financial statements
The fair value of all awards has been determined at the date of grant of the award allowing for the effect of any market-
based performance conditions. This fair value, adjusted by the Group’s estimate of the number of awards that will
eventually vest as a result of non-market conditions, is expensed on a straight-line basis over the vesting period.
Business Performance-Based and Sustained Individual Performance-Based Options:
The fair value of stock options following these types of vesting conditions have been estimated using the Black-
Scholes-Merton Option Pricing model. The value arrived at under this model has been then multiplied by the expected
% vesting based on business performance conditions (only for business performance-based options) and the expected
multiplier on account of sustained individual performance (for both type of options). The inputs used in the Black-
Scholes-Merton Option Pricing model include the share price considered as of the valuation date, exercise price as per
the scheme/ plan of the options, expected dividend yield (estimated based on actual/ expected dividend trend of the
company), expected tenure (estimated as the remaining vesting period of the options), the risk-free rate (considered
as the zero coupon yield as of the valuation date for a term commensurate with the expected tenure of the options)
and expected volatility (estimated based on the historical volatility of the return in company’s share prices for a term
commensurate with the expected tenure of the options). The exercise period of 6 months post vesting period has not
been considered as the options are expected to be exercised immediately post the completion of the vesting period.
Total Shareholder Returns-Based Options:
The fair value of stock options following this type of vesting condition has been estimated using the Monte Carlo
Simulation method. This method has been used to simulate the expected share prices for Vedanta Limited and
the companies of the comparator group over the vesting period of the options. Based on the simulated prices, the
expected pay-off at the end of the vesting period has been estimated and present valued to the valuation date. Further,
based on the simulated share prices and expected dividends the relative rank of Vedanta Limited’s share price return
has been estimated vis-à-vis the Indian and Global Group of the comparator group. This rank has been used to estimate
expected % vesting of the options under this type of vesting condition. The inputs to the monte carlo simulation
method include expected tenure (estimated as the remaining vesting period of the options), the risk-free rate
(considered as the zero coupon yield as of the valuation date for a term commensurate with the expected tenure of the
options), expected dividend yield (estimated based on the actual dividend trend of the companies), expected volatility
(estimated based on the historical volatility of the return in the company’s share prices for a term commensurate with
the expected tenure of the options). The exercise period of 6 months post the vesting period has not been considered
as the options are expected to be exercised immediately post the completion of the vesting period.
The assumptions used in the calculations of the charge in respect of the ESOS awards granted during the year ended 31
March 2021 and 31 March 2020 are set out below:
Number of instruments
Exercise price
Share price at the date of grant
Contractual life
Expected volatility
Expected option life
Expected dividends
Risk free interest rate
Expected annual forfeitures
Fair value per option granted (Non-market performance based)
Fair value per option granted (Market performance based)
Year ended March 2021
ESOS 2019
880,000 (Cash settled)
1,27,11,112 (Equity Settled)
Year ended March 2020
ESOS 2019
4,097,030 (cash settled)
16,713,640 (equity settled)
` 1
` 228.75
2 years and 7 months
49.28%
2 years and 7 months
6.80%
4.84%
10%p.a.
` 150.73
NA
` 1
` 144.60
3 years
36.64%
3 years
7.96%
5.68%
10%p.a.
` 102.30
` 72.12
Weighted average share price at the date of exercise of stock options was INR 131.08 (2020: INR 126.02)
The weighted average remaining contractual life for the share options outstanding was 2.03 years (2020: 2.28 years).
The Group recognized total expenses of US$ 8 million (2020: US$ 10 million) related to equity settled share-based plans
under the above scheme in the year ended 31 March 2021.
The Group has awarded certain other cash settled option plans indexed to shares of its subsidiaries. As the amounts
under these plans are not material, accordingly no further disclosures have been provided.
241
Notes to the Financial StatementsVEDANTA RESOURCES LIMITED | INTEGRATED REPORT AND ANNUAL ACCOUNTS 2020-21 | The total expense recognised on account of these cash settled option plans during the year ended 31 March 2021 is US$
2 million (2020: US$ 3 million) and the carrying value of cash settled share based compensation liability as at 31 March
2021 is US$ 2 million (2020: US$ 7 million).
Out of the total expense pertaining to equity settled and cash settled options for the year ended 31 March 2021, the
Group has capitalised US$ 4 million (2020: US$ 3 million) expense for the year ended 31 March 2021.
30. SHARE CAPITAL
Shares in issue
Ordinary shares of 10 US cents each
Deferred shares of £1 each
Total
As at 31 March 2021
As at 31 March 2020
Number
285,246,698
50,000
285,296,698
Paid up amount
(US$ million)
29
0
Number
285,246,698
50,000
Paid up amount
(US$ million)
29
0
29
285,296,698
29
Rights and obligations attaching to shares
The rights and obligations attaching to the ordinary and deferred shares are set out in the Articles.
Each ordinary share carries the right to one vote at general meetings of the Company and is entitled to dividends. The
Company did not issue any shares during the year ended 31 March 2021.
The holders of deferred shares do not have the right to receive notice of any general meeting of the Company nor the
right to attend, speak or vote at any such general meeting. The deferred shares have no rights to dividends and, on a
winding-up or other return of capital, entitle the holder only to the payment of the amounts paid on such shares after
repayment to the holders of Ordinary Shares of the nominal amount paid up on the Ordinary Shares plus the payment
of £100,000 per Ordinary Share. Of the 50,000 deferred shares, one deferred share was issued at par and has been fully
paid, and 49,999 deferred shares were each paid up as to one-quarter of their nominal value.
31. NON-CONTROLLING INTERESTS (‘NCI’)
The Group consists of a parent Company, Vedanta Resources Limited, incorporated in UK and a number of subsidiaries
held directly and indirectly by the Group which operate and are incorporated around the world. Note 39 to the financial
statements lists details of the interests in the subsidiaries.
Non-controlling interests that are material to the Group relate to Hindustan Zinc Limited (HZL), Cairn India Holdings
Limited (CIHL) and its subsidiaries and Vedanta Limited.
As at 31 March 2021, NCIs hold an economic interest of 64.11%, 44.71%, 71.80%, 59.09% and 44.71% respectively in
HZL, CIHL and its wholly owned subsidiaries, Bharat Aluminium Company Limited (BALCO), Black Mountain Mining
(BMM) and Vedanta Limited. In ASI (partly owned subsidiary of CIHL) and FACOR Power Limited (FPL) (partly owned
subsidiary of Ferro Alloy Corporation Limited), the NCI’s economic interest is 71.45% and 50.24%. As at 31 March 2020,
NCIs held an economic interest of 67.33%, 49.67%, 74.33%, 62.76% and 49.67% respectively in HZL, CIHL and its
wholly owned subsidiaries, Bharat Aluminium Company Limited (BALCO), Black Mountain Mining (BMM) and Vedanta
Limited. In ASI (partly owned subsidiary of CIHL), the NCI’s economic interest was 74.01%.
Principal place of business of HZL, CIHL and its subsidiaries and Vedanta Limited is set out under note 39.
242
ACCOUNTSNotes to the Financial Statements Integrated Report
Statutory reports
Financial statements
The table below shows summarised financial information of subsidiaries of the Group that have material non-
controlling interests. The amounts are presented before intercompany elimination.
Year ended 31 March 2021
Year ended 31 March 2020
(US$ million)
Particulars
HZL
CIHL and its
subsidiaries
25
Vedanta
Limited
679
Others*
Total
(260)
1,153
HZL
643
CIHL and its
subsidiaries
(308)
Vedanta
Limited
(447)
Others*
Total
(67)
(179)
709
2,678
529
4,468
(2,197)
5,478
3,662
668
4,988
(3,782)
5,536
(756)
-
(236)
-
(992)
-
-
(101)
-
(101)
Profit/ (loss) Attributable
to NCI
Equity Attributable to NCI
**
Dividends paid / payable
to NCI
* Others consist of investment subsidiaries of Vedanta Limited, other individual non-material subsidiaries and consolidation adjustments.
** Loss of US$ 10 million (31 March 2020: gain of US$ 5 million) attributable to NCI of CIHL and its subsidiaries transferred to put option
liability. Refer note 24.
Particulars
Non-current assets
Current assets
Current liabilities
Non-current liabilities
As at 31 March 2021
As at 31 March 2020
(US$ million)
HZL
2,773
3,352
1,058
615
CIHL and its
subsidiaries
1,922
864
790
646
Vedanta
Limited
16,275
2,819
4,928
3,053
Others*
Total
HZL
(4,442)
1,756
2,567
9,331
16,528
8,791
9,343
13,645
2,856
3,317
709
25
CIHL and its
subsidiaries
1,400
1,258
544
782
Vedanta
Limited
16,400
2,614
5,859
3,112
Others*
Total
(4,271)
612
8,879
2,003
16,385
7,801
15,991
5,922
Net assets
4,452
1,350
11,113 (14,584)
2,331
5,439
1,332
10,043 (14,541)
2,273
* Others consist of investment subsidiaries of Vedanta Limited, Vedanta Resources Limited, other individual non-material subsidiaries and
consolidation adjustments.
Year ended 31 March 2021
Year ended 31 March 2020
(US$ million)
Particulars
HZL
CIHL and its
subsidiaries
504
78
-
Vedanta
Limited
5,009
1,385
5
Others*
Total
HZL
3,231
(1,147)
(3)
11,722
1,385
1
2,587
955
(14)
CIHL and its
subsidiaries
874
(578)
-
Vedanta
Limited
4,998
(899)
(6)
Others*
Total
3,331
(1,225)
(0)
11,790
(1,747)
(20)
2,978
1,069
(1)
1,598
349
1,168
(1,274)
1,841
982
282
703
(717)
1,250
(533)
(214)
(259)
(625)
(1,631)
(445)
(350)
(287)
(179)
(1,261)
(1,276)
(118)
(772)
1,943
(223)
(272)
(198)
(666)
781
(355)
Revenue
Profit/ (loss) for the year
Other comprehensive
income / (loss)**
Net cash inflow/ (outflow)
from operating activities
Net cash outflow from
investing activities
Net cash inflow/ (outflow)
from financing activities
* Others consist of investment subsidiaries of Vedanta Limited, Vedanta Resources Limited, other Individual non-material subsidiaries and
consolidation adjustments.
** Excluding exchange differences arising on translation of foreign operations.
The effect of changes in ownership interests in subsidiaries that did not result in a loss of control is as follows:
For the year ended 31 March 2021
Other changes in non-controlling interests
HZL
-
CIHL and its
subsidiaries
-
Vedanta
Limited
(4)
Others
14
Total
10
(US$ million)
243
Notes to the Financial StatementsVEDANTA RESOURCES LIMITED | INTEGRATED REPORT AND ANNUAL ACCOUNTS 2020-21 | For the year ended 31 March 2020
Other changes in non-controlling interests
HZL
-
CIHL and its
subsidiaries
-
Vedanta
Limited
8
Others
(33)
Total
(25)
(US$ million)
32. CAPITAL MANAGEMENT
The Group’s objectives when managing capital are to safeguard continuity, maintain a strong credit rating and healthy
capital ratios in order to support its business and provide adequate return to shareholders through continuing growth.
The Group sets the amount of capital required on the basis of annual business and long-term operating plans which
include capital and other strategic investments. The funding requirement is met through a mixture of equity, internal
accruals and other borrowings.
The Group monitors capital using a gearing ratio, being the ratio of net debt as a percentage of total capital.
Particulars
Total equity
Net debt (Refer note 22(b))
Total capital
Gearing Ratio
*Restated. Refer Note 1(b)(iii)
As at
31 March 2021
2,331
10,731
13,062
(US$ million)
As at
31 March 2020*
2,273
10,022
12,295
82%
82%
33. COMMITMENTS, GUARANTEES, CONTINGENCIES AND OTHER DISCLOSURES
A. Commitments
The Group has a number of continuing commitments in the normal course of business including:
Exploratory mining commitments;
Oil and gas commitments;
Mining commitments arising under production sharing agreements; and
Completion of the construction of certain assets.
Capital commitments contracted but not provided
As at
31 March 2021
1,164
(US$ million)
As at
31 March 2020
1,413
Estimated amounts of contracts remaining to be executed on capital accounts and not provided for:
Oil & Gas sector
Cairn India
Aluminium sector
Lanjigarh Refinery (Phase II)
Jharsuguda 1.25 MTPA smelter
Zinc sector
Zinc India (mines expansion, solar and smelter)
Gamsberg mining and milling project
Copper sector
Tuticorin Smelter 400 KTPA*
Others
Total
*currently contracts are under suspension under the force majeure clause as per the contract
244
As at
31 March 2021
(US$ million)
As at
31 March 2020
212
162
63
49
13
409
256
1,164
421
210
55
122
17
373
215
1,413
ACCOUNTSNotes to the Financial Statements
Integrated Report
Statutory reports
Financial statements
Committed work programme (Other than capital commitment):
Oil & Gas sector
Cairn India (OALP - New Oil and Gas blocks)
B. Guarantees
The aggregate amount of indemnities and other
guarantees on which the Group does not expect any
material losses, was US$ 857 million (31 March 2020:
US$ 866 million).
The Group has given guarantees in the normal
course of business as stated below:
i.
ii.
iii.
iv.
v.
Guarantees and bonds advanced to the Indian
customs authorities of US$ 88 million (31 March
2020: US$ 63 million) relating to the export and
payment of import duties on purchases of raw
material and capital goods.
Guarantees issued for the Group’s share of
minimum work programme commitments
of US$ 394 million (31 March 2020: US$ 388
million).
Guarantees of US$ 11 million (31 March 2020:
US$ 7 million) issued under bid bond for placing
bids.
Bank guarantees of US$ 16 million (31 March
2020: US$ 15 million) has been provided by the
Group on behalf of Volcan Investments Limited
to the Indian Income tax department, as a
collateral in respect of certain tax disputes.
Other guarantees worth US$ 348 million
(31 March 2020: US$ 393 million) issued for
securing supplies of materials and services,
in lieu of advances received from customers,
litigation, for provisional valuation of custom
duty and also to various agencies, suppliers and
government authorities for various purposes.
The Group does not anticipate any liability on
these guarantees.
Cairn PSC/RSC guarantee to Government
The Group has provided guarantees for the Cairn
India Group’s obligation under the Production
Sharing Contract (‘PSC’) and Revenue Sharing
Contract (‘RSC’).
C. Export Obligations
The Indian entities of the Group have export
obligations of US$ 295 million (31 March 2020: US$
512 million) on account of concessional rates of
import duty paid on capital goods under the Export
Promotion Capital Goods Scheme and under the
As at
31 March 2021
(US$ million)
As at
31 March 2020
767
781
Advance Licence Scheme for the import of raw
material laid down by the Government of India.
In the event of the Group’s inability to meet its
obligations, the Group’s liability would be US$
48 million (31 March 2020: US$ 81 million) plus
applicable interest.
The Group has given bonds of US$ 242 million (31
March 2020: US$ 227 million) to custom authorities
against these export obligations.
D. Contingencies
The Group discloses the following legal and tax
cases as contingent liabilities.
Hindustan Zinc Limited (‘HZL’): Department of
Mines and Geology
The Department of Mines and Geology of the
State of Rajasthan issued several show cause
notices to HZL in August, September and October
2006, aggregating US$ 46 million as at 31 March
2021 (31 March 2020: US$ 45 million) claiming
unlawful occupation and unauthorised mining of
associated minerals other than zinc and lead at HZL’s
Rampura Agucha, Rajpura Dariba and Zawar mines
in Rajasthan during the period from July 1968 to
March 2006. In response, HZL filed a writ petition
against these show cause notices before the High
Court of Rajasthan in Jodhpur. In October 2006,
the High Court issued an order granting a stay and
restrained the Department of Mines and Geology
from undertaking any coercive measures to recover
the penalty. In January 2007, the High Court issued
another order granting the Department of Mines and
Geology additional time to file their reply and also
ordered the Department of Mines and Geology not
to issue any orders cancelling the lease. The State
Government filed for an early hearing application
in the High Court. The High Court has passed an
order rejecting the application stating that Central
Government should file their replies. HZL believes
it is unlikely that the claim will lead to a future
obligation and thus no provision has been made in
the financial statements.
Vedanta Limited: Income tax
Vedanta Limited (notice was served on Cairn India
Limited which subsequently merged with Vedanta
Limited, accordingly now referred to as Vedanta
245
Notes to the Financial StatementsVEDANTA RESOURCES LIMITED | INTEGRATED REPORT AND ANNUAL ACCOUNTS 2020-21 |
Limited/VEDL) received a demand totalling US$
2,796 million (including interest of US$ 1,398 million)
holding VEDL as ‘assessee in default’ as per Section
201 of Indian Income Tax Act. The Company has
challenged the said order and presently pending
before the Income Tax Appellate Tribunal (ITAT).
VEDL also filed a writ petition before the Delhi High
Court wherein it has raised several grounds against
the order said order. The matter came up for hearing
on 05 February 2020 before Delhi High Court but
adjourned and the next date of hearing is 29 July
2021.
Separately, Vedanta Resources Limited has filed a
Notice of Claim against the Government of India
(‘GOI’) under the UK-India Bilateral Investment
Treaty (“BIT”). The hearing was concluded in May
2019 and award is awaited.
Cairn UK Holdings Limited (“CUHL”), on whom the
primary liability of income tax lies, had received an
Order from the ITAT in the financial year 2016-17
holding that the transaction is taxable in view of
the clarificatory amendment in the Indian Income-
tax Act but also acknowledged that amendment
being a retrospective transaction, interest would
not be levied. Hence, it affirmed a demand of US$
1,398 million excluding the interest portion that had
previously been claimed. Against this demand, the
tax authorities have recovered US$ 800 million from
the CUHL, thus reducing the liability to US$ 599
million from the CUHL. VEDL has also paid interim
dividend of US$ 1 million to the Tax authorities and
thus reducing the liability to US$ 598 million.
In related proceedings, the International Arbitration
Tribunal ruled unanimously in the case of Cairn
Energy Plc that India had breached its obligations
under the BIT. The Company understands that
Government of India has challenged the ruling
before the International Court of Justice at
The Hague. As the Cairn Energy Plc Arbitration
award received on 23 December 2020 regarding
retrospective tax will have a direct influence upon
company’s case, due to the fact that primary liability
of paying the income tax is CUHL’s and in this case
there is expected to be no income tax liability in
the hands of CUHL, the claim of amounts assessed
as in default against VEDL should be eliminated.
Further, going by the recent ruling of Supreme court
in an another unrelated matter, it was held that
person under Section 195 of the said Act cannot
be held responsible to do the impossible, in case of
retrospective act. Thus, it was impossible for VEDL,
as successor in the business of Cairn India Limited,
to deduct income tax and can’t be held responsible
for default under Section 201 of the said Act. The
Company believes that owing to the similarity in
the facts of the case it has a good case to argue and
accordingly it is unlikely that any liability will devolve
upon the Group.
Ravva Joint Operations arbitration proceedings
ONGC Carry
The Ravva Production Sharing Contract (PSC)
obliges the contractor parties to pay a proportionate
share of ONGC’s exploration, development,
production and contract costs in consideration
for ONGC’s payment of costs related to the
construction and other activities it conducted in
Ravva prior to the effective date of the Ravva PSC
(the ONGC Carry). The question as to how the
ONGC Carry is to be recovered and calculated,
along with other issues, was submitted to an
International Arbitration Tribunal in August 2002
which rendered a decision on the ONGC Carry in
favour of the contractor parties (including Vedanta
Limited (Cairn India Limited which subsequently
merged with Vedanta Limited, accordingly now
referred to as Vedanta Limited)) whereas four other
issues were decided in favour of Government of
India (GOI) in October 2004 (Partial Award). The
GOI then proceeded to challenge the ONGC Carry
decision before the Malaysian courts, as Kuala
Lumpur was the seat of the arbitration. The Federal
Court of Malaysia upheld the Partial Award. As the
Partial Award did not quantify the sums, therefore,
contractor parties approached the same Arbitration
Tribunal to pass a Final Award in the subject matter
since it had retained the jurisdiction to do so. The
Arbitral Tribunal was reconstituted and the Final
Award was passed in October 2016 in Vedanta
Limited’s favour. GOI’s challenge of the Final Award
has been dismissed by the Malaysian High Court and
the next appellate court in Malaysia, i.e., Malaysian
Court of Appeal. GOI then filed an appeal at Federal
Court of Malaysia. The matter was heard on 28
February 2019 and the Federal Court dismissed
GOI’s leave to appeal. Vedanta Limited has also filed
for the enforcement of the Partial Award and Final
Award before the Hon’ble Delhi High Court. The
matter has been listed for hearing on 13 July 2021.
Base Development Cost
Ravva joint operations had received a claim from the
Ministry of Petroleum and Natural Gas, Government
of India (GOI) for the period from Year 2000-2005
for US$ 129 million for an alleged underpayment
of profit petroleum (by recovering higher Base
Development Costs (“BDC”) against the cap
imposed in the PSC) to the Government of India
(GOI), out of which, Vedanta Limited’s (Cairn India
Limited which subsequently merged with Vedanta
Limited, accordingly now referred to as Vedanta
Limited) share will be US$ 29 million plus interest.
Joint venture partners initiated the arbitration
246
ACCOUNTSNotes to the Financial Statements
Integrated Report
Statutory reports
Financial statements
proceedings and Arbitration Tribunal published the
Award in January 2011 allowing claimants (including
Vedanta Limited) to recover the development costs
spent to the tune of US$ 278 million and disallowed
over run of US$ 22 million spent in respect of BDC
along with 50% legal costs. Finally, the Supreme
Court of India on 16 September 2020 pronounced
the order in favour of Vedanta Limited, rejecting
all objections of the GOI and allowed enforcement
of the Arbitration Award. With the Supreme Court
order the Ravva BDC Matter stands closed.
In connection with the above two matters,
Vedanta Limited has received an order dated 22
October 2018 from the GOI directing oil marketing
companies (OMCs) who are the offtakers for Ravva
to divert the sale proceeds to GOI’s account. GOI
alleges that the Ravva Joint Operations (consisting
of four joint venture partners) has short paid profit
petroleum of US$ 314 million (the Company’s share
approximately - US$ 93 million) on account of
the two disputed issues of ONGC Carry and BDC
matters, out of which US$ 64 million pertains to
ONGC Carry and US$ 29 million pertains to BDC
Matter. Against an interim application, filed by
Vedanta Limited and other joint venture partner,
seeking stay of such action from GOI, before the
Delhi High Court, where enforcement petitions
for both matters were then pending, the Court
directed the OMCs to deposit above sums to the
Delhi High Court for both BDC and ONGC Carry
matters. However, Vedanta Limited (and other
joint venture partner) has been given the liberty
to seek withdrawal of the amounts from the Court
upon furnishing a bank guarantee of commensurate
value. On the basis of the above direction, the OMCs
have deposited US$ 93 million out of which US$ 84
million has been withdrawn post submission of bank
guarantee. The Hon’ble Delhi High Court vide its
order dated 28 May 2020 read with order dated 04
June 2020 has directed that all future sale proceeds
of Ravva Crude w.e.f. 05 June 2020 be paid directly
to Vedanta Limited by the OMCs. In view of the
closure of the BDC matter, Vedanta Limited has also
filed an application in High Court on 22 September
2020 seeking refund of remaining US$ 9 million
and release of bank guarantees submitted in Court
pertaining to the BDC matter, out of which US$ 20
million have since been received by Vedanta.
During the proceedings of the above matter, GOI
has also filed an interim application seeking deposit
by the said OMCs of an amount of US$ 87 million
(Vedanta’s share of US$ 56 million) towards interest
on the alleged short payment of profit petroleum
by the petitioners, i.e., Vedanta Limited (and other
joint venture partner). The matter has been listed for
hearing on 13 July 2021 along with ONGC carry case.
While the Group does not believe the GOI will be
successful in its challenge, if the Arbitral Awards
in above matter is reversed and such reversal is
binding, the Group would be liable for approximately
US$ 64 million plus interest (31 March 2020: US$ 93
million plus interest).
Proceedings related to the imposition of entry tax
Vedanta Limited and other Group companies,
i.e., Bharat Aluminium Company Limited (BALCO)
and Hindustan Zinc Limited (HZL) challenged the
constitutional validity of the local statutes and
related notifications in the states of Chhattisgarh,
Odisha and Rajasthan pertaining to the levy of
entry tax on the entry of goods brought into the
respective states from outside.
Subsequent to certain contradictory orders of
High Courts across India adjudicating on similar
challenges, the Supreme Court referred the
matters to a nine judge bench. Consequent to
a detailed hearing, although the bench rejected
the compensatory nature of tax as a ground of
challenge, it maintained status quo with respect
to all other issues which have been left open for
adjudication by regular benches hearing the matters.
Following the order of the nine judge bench, the
regular bench of the Supreme Court proceeded with
hearing the matters. The regular bench remanded
the entry tax matters relating to the issue of
discrimination against domestic goods bought from
other States to the respective High Courts for final
determination but retained the issue of jurisdiction
for levy on imported goods, for determination by
the regular bench of the Supreme Court. Following
the order of the Supreme Court, the Group filed writ
petitions in respective High Courts.
On 09 October 2017, the Supreme Court has held
that states have the jurisdiction to levy entry tax
on imported goods. With this Supreme Court
judgement, imported goods will rank pari-passu
with domestic goods for the purpose of levy of
Entry tax. Vedanta Limited and its subsidiaries have
amended their appeals (writ petitions) in Odisha
and Chhattisgarh to include imported goods as well.
With respect to Rajasthan, the State Government
has filed a counter petition in the Rajasthan High
Court, whereby it has admitted that it does not
intend to levy the entry tax on imported goods.
The issue pertaining to the levy of entry tax on the
movement of goods into a Special Economic Zone
(SEZ) remains pending before the Odisha High
Court. The Group has challenged the levy of entry
tax on any movement of goods into SEZ based
on the definition of ‘local area’ under the Odisha
Entry Tax Act, 1999 which is very clear and does
247
Notes to the Financial StatementsVEDANTA RESOURCES LIMITED | INTEGRATED REPORT AND ANNUAL ACCOUNTS 2020-21 |
not include a SEZ. In addition, the Government of
Odisha, further through its SEZ Policy 2015 and the
operational guidelines for administration of this
policy dated 22 August 2016, exempted the entry tax
levy on SEZ operations.
The total claims against Vedanta Limited and its
subsidiaries are US$ 193 million (31 March 2020: US$
183 million) net of provisions made.
BALCO: Challenge against imposition of Energy
Development Cess
BALCO challenged the imposition of Energy
Development Cess levied on generators and
distributors of electrical energy @ 10 paise per unit
on the electrical energy sold or supplied before
the High Court on the grounds that the Cess is
effectively on production and not on consumption or
sale since the figures of consumption are not taken
into account and the Cess is discriminatory since
captive power plants are required to pay @ 10 paise
while the State Electricity Board is required to pay
@ 5 paise. The High Court of Chhattisgarh by order
dated 15 December 2006 declared the provisions
imposing ED Cess on CPPs as discriminatory and
therefore ultra vires the Constitution. BALCO
has sought refund of ED Cess paid till March 2006
amounting to US$ 5 million.
The State of Chhattisgarh moved an SLP in the
Supreme Court and whilst issuing notice has stayed
the refund of the Cess already deposited and the
Supreme Court has also directed the State of
Chhattisgarh to raise the bills but no coercive action
be taken for recovery for the same. Final argument
in this matter started before the Supreme Court. In
case the Supreme Court overturns the decision of
the High Court, the Group would be liable to pay an
additional amount of US$ 121 million (31 March 2020:
US$ 112 million). Accordingly, the total exposure on
the Group would be US$ 126 million (31 March 2020:
US$ 117 million).
Class actions against VRL and KCM on behalf of
Zambian nationals
Two separate proceedings were issued in the UK on
behalf of Zambian nationals who allege that they
have suffered loss and damages as a result of KCM’s
operations in Zambia. The two proceedings were
subsequently combined into a single action as part
of a court-mandated global litigation order (“GLO”).
The claims are for damages for personal injury,
property damage and other damages arising out
of allegations of pollution. VRL and KCM in the first
instance challenged the jurisdiction of the English
courts to hear and adjudicate these claims.
The procedural proceedings on jurisdiction were
initially brought before the English High Court of
Justice, Queen’s Bench Division, Technology and
Construction Court, which on 27 May 2016 ruled
that the English courts have jurisdiction to hear and
adjudicate the claims. This judgment was appealed
by VRL and KCM to the English Court of Appeal and
ultimately to the UK Supreme Court.
On 10 April 2019, the UK Supreme Court delivered
its decision that the English Courts have jurisdiction
to try the claims but agreed with arguments put
forward by VRL and KCM that England is not the
proper place for the trial of these claims and
consequently overturned the lower courts on this
point. However, the Supreme Court found that the
High Court was entitled to conclude on the evidence
before it that there is a real risk that “substantial
justice” will not be obtainable in Zambia and because
of this, the claims may nonetheless be heard in the
English Courts.
On 19 January 2021, VRL announced the settlement,
without admission of liability by VRL or KCM, of
one of the two class action proceedings covered
by the GLO. The terms of the settlement did not
have any material impact on the financial position
of the Group. The date for the trial of the remaining
proceeding in the English High Court has not yet
been set.
The amount of the claims has not been specified.
Given the stage of proceedings, the amount is
presently not quantifiable.
Miscellaneous disputes- Income tax
The Group is involved in various tax disputes
amounting to US$ 268 million (31 March 2020: US$
255 million) relating to income tax. It also includes
similar matters where initial assessment is pending
for subsequent periods and where the Group has
made claims and assessments are in progress.
These mainly relate to the disallowance of tax
holiday for 100% Export Oriented Undertaking
under section 10B of the Income-tax Act, 1961,
disallowance of tax holiday benefit on production of
gas under section 80IB of the Income-tax Act, 1961,
on account of depreciation disallowances of the
Income-tax Act, 1961 and interest thereon which
are pending at various appellate levels. Interest and
penalty, if any would be additional. Refer note 11 for
other income tax disputes.
The Group believes that these disallowances are not
tenable and accordingly no provision is considered
necessary.
Miscellaneous disputes- Others
The Group is subject to various claims and
exposures which arise in the ordinary course
of conducting and financing its business from
the excise, indirect tax authorities and others.
248
ACCOUNTSNotes to the Financial Statements
Integrated Report
Statutory reports
Financial statements
These claims and exposures mostly relate to
the assessable values of sales and purchases or
to incomplete documentation supporting the
companies’ returns or other claims.
The approximate value of claims (excluding the
items as set out separately above) against the Group
companies total US$ 652 million (31 March 2020: 534
million).
The Group considers that it can take steps such
that the risks can be mitigated and that there are no
significant unprovided liabilities arising.
34. OTHER MATTERS
Share transactions Call options
i)
a. HZL
Pursuant to the Government of India’s policy of
divestment, the Group in April 2002 acquired
26% equity interest in HZL from the Government
of India. Under the terms of the Shareholder’s
Agreement (‘SHA’), the Group had two call options
to purchase all of the Government of India’s shares
in HZL at fair market value. The Group also acquired
an additional 20% of the equity capital in HZL
through an open offer. The Group exercised the
first call option on 29 August 2003 and acquired
an additional 18.9% of HZL’s issued share capital,
increasing its shareholding to 64.9%. The second
call option provides the Group the right to acquire
the Government of India’s remaining 29.5% share
in HZL. This call option is subject to the right of the
Government of India to sell 3.5% of HZL shares to
HZL employees. The Group exercised the second
call option on 21 July 2009. The Government of
India disputed the validity of the call option and
has refused to act upon the second call option.
Consequently, the Group invoked arbitration which
is in the early stages. The next date of hearing is
to be notified. The Government of India without
prejudice to the position on the Put / Call option
issue has received approval from the Cabinet for
divestment and the Government is looking to
divest through the auction route. Meanwhile, the
Supreme Court has, in January 2016, directed status
quo pertaining to disinvestment of Government
of India’s residual shareholding while hearing the
public interest petition filed. Vedanta Limited has
filed an early hearing application in Supreme Court.
On 13 August 2020, the Supreme Court passed an
order removing the status quo order in place and has
allowed the arbitration proceedings to continue. The
matter will now be heard in due course.
b. BALCO
Pursuant to the Government of India’s policy of
divestment, the Group in March 2001 acquired 51%
equity interest in BALCO from the Government of
India. Under the terms of the SHA, the Group has a
call option to purchase the Government of India’s
remaining ownership interest in BALCO at any point
from 02 March 2004. The Group exercised this
option on 19 March 2004. However, the Government
of India has contested the valuation and validity of
the option and contended that the clauses of the
SHA violate the (erstwhile) Indian Companies Act,
1956 by restricting the rights of the Government
of India to transfer its shares and that as a result
such provisions of the SHA were null and void. In the
arbitration filed by the Group, the arbitral tribunal
by a majority award rejected the claims of the Group
on the grounds that the clauses relating to the call
option, the right of first refusal, the “tag-along”
rights and the restriction on the transfer of shares
violate the said Act and are not enforceable. The
Group has challenged the validity of the majority
award in the High Court of Delhi and sought for
setting aside the arbitration award to the extent that
it holds these clauses ineffective and inoperative.
The Government of India also filed an application
before the High Court of Delhi to partially set aside
the arbitral award in respect of certain matters
involving valuation. The matter will be listed for
hearing in due course. Meanwhile, the Government
of India without prejudice to its position on the Put
/ Call option issue has received approval from the
Cabinet for divestment and the Government is
looking to divest through the auction route.
On 9 January 2012, the Group offered to acquire
the Government of India’s interests in HZL and
BALCO for US $ 2,114 and US$ 243 respectively. This
offer was separate from the contested exercise of
the call options, and Group proposed to withdraw
the ongoing litigations in relation to the contested
exercise of the options should the offer be accepted.
To date, the offer has not been accepted by the
Government of India and therefore, there is no
certainty that the acquisition will proceed.
In view of the lack of resolution on the options,
the non-response to the exercise and valuation
request from the Government of India, the resultant
uncertainty surrounding the potential transaction
and the valuation of the consideration payable, the
Company considers the strike price of the options to
be at the fair value, which is effectively nil, and hence
the call options have not been recognised in the
financial statements.
ii)
The Department of Mines and Geology (DMG) of the
State of Rajasthan initiated the royalty assessment
process from January 2008 to 2019 and issued a
show cause notice vide an office order dated 31
January 2020 amounting to US $ 263 million, further
an additional demand was issued vide an office order
249
Notes to the Financial StatementsVEDANTA RESOURCES LIMITED | INTEGRATED REPORT AND ANNUAL ACCOUNTS 2020-21 |
iii)
dated December 14, 2020 for US $ 42 million on
similar questions of law. The Group has challenged
(the show cause notice or/and) computation
mechanism of the royalty on the ground that the
State has not complied with the previous orders of
Rajasthan High Court where a similar computation
mechanism was challenged and Court had directed
DMG to reassess basis the judicial precedents and
mining concession rules. Pending compliance of
previous orders, High Court has granted a stay
on the notice and directed DMG not to take any
coercive action. State Government has also been
directed to not take any coercive action in order
to recover such miscomputed dues Based on the
opinion of external council, the Group believes that it
has strong grounds of a successful appeal.
In terms of various notifications issued by the
MoEFCC, ash produced from thermal power plant
is required to be disposed of by the Group in the
manner specified in those notifications. However,
compliance with manner of disposal as specified
in those notifications is not fully achieved due to
lack of demand from user agencies. Consequently,
the Group is storing some of the ash produced
in ash dyke in accordance with conditions of the
Environmental Clearance and Consent to Operate
granted by the MoEFCC, Odisha State Pollution
Control Board (‘OSPCB’) and Chhattisgarh
Environment Conservation Board (‘CECB’) while
giving preference to supplying the same to user
agencies. Management believes storage of ash in ash
dykes/ ash pond in accordance with environmental
clearances received by the Group are sufficient
compliance with the applicable notifications issued
by MoEFCC which is supported by a legal opinion
obtained.
The National Green Tribunal (NGT) has also taken
cognizance of the matter and vide its order dated 12
February 2020 has ordered for levy of environmental
compensation on generating companies on
account of their failure to comply the aforesaid
notifications. The Group has filed SLPs before the
Hon’ble Supreme Court challenging the order of
the NGT and the same was heard by the Court
on 11 September 2020 and granted an ad interim
stay against recoveries in pursuance of NGT order.
Management believes that the outcome of the
appeal will not have any significant adverse financial
impact on the Group which is supported by a legal
opinion obtained.
iv)
Vedanta Limited is purchasing bauxite under long
term linkage arrangement with Orissa Mining
Corporation Ltd (OMC) at provisional price of US$
14/MT from October 2020 onwards based on interim
order dated 08 October 2020 of the Hon’ble High
250
Court of Odisha, which is subject to final outcome
of the writ petition filed by Vedanta Limited as
mentioned below. The last successful e-auction
based price discovery was done by OMC in April
2019 at US$ 9/MT and supplied bauxite at this rate
from September 2019 to September 2020 with an
undertaking from Vedanta Limited to compensate
the differential price discovered through successful
national e-auction. Though the OMC conducted
the next e-auction on 31 August 2020 with floor
price of US$ 23/MT determined on the basis of Rule
45 of Minerals Concession Rules, 2016 (the Rules),
there was no bidder at that floor price and hence,
the auction could not be conducted. However, OMC
raised demand of US$ 38 Million on Vedanta Limited
towards differential pricing and interest for bauxite
supplied till September 2020.
Vedanta Limited had filed a writ petition before
Hon’ble High Court of Odisha in September 2020
for resumption of bauxite supply in accordance
with applicable Government of Odisha Gazette
notification dated 24 February 2018. Hon’ble High
Court has issued interim Order dated 8 October
2020 directing that the petitioner shall be permitted
to lift the quantity of bauxite mutually agreed under
the terms of the long-term linkage arrangement
for the remaining period of the financial year
2020-21 on payment of US$ 14/MT and furnishing
an undertaking for the differential amount with
the floor price arrived at by OMC under the Rules,
subject to final outcome of the petition which is
pending. However, as an abundant precaution,
Vedanta Limited has recognised purchase of Bauxite
from October 2020 onwards at the at the aforesaid
rate of US$ 14/MT paid/payable to OMC.
Supported by legal opinions obtained, management
believes that the provisions of the Rules are not
applicable to sale of bauxite under long term linkage
arrangement and hence, it is not probable that
Vedanta Limited will have any material obligation
towards the aforesaid commitments over and
above the price of US$ 9/MT discovered vide last
successful e-auction. Accordingly, Vedanta Limited
has not recognised above referred OMC claims of
US$ 38 Million in respect of bauxite procured till
September 2020 and further differential price (US$
23/MT less recognised price of US$ 14/MT) of US$ 18
Million for subsequent procurements made during
08 October 2020 to 31 March 2021.
v)
During the current period, Vedanta Limited
executed a US$ 1,358 million long-term syndicated
loan facility agreement. This loan is secured by way
of pledge over the shares held by Vedanta Limited in
Hindustan Zinc Limited (HZL) representing 14.82%
of the paid up share capital of HZL along-with a non-
ACCOUNTSNotes to the Financial Statements
Integrated Report
Statutory reports
Financial statements
vi)
disposal undertaking in respect of its shareholding
in HZL to the extent of 50.1% of the paid up share
capital of HZL. As at 31 March 2021, the principal
amount participated for and outstanding under the
facility is US$ 1,180 million.
The Scheme of Amalgamation and Arrangement
amongst Sterlite Energy Limited (‘SEL’), Sterlite
Industries (India) Limited (‘Sterlite’), Vedanta
Aluminium Limited (‘VAL’), Ekaterina Limited
(‘Ekaterina’), Madras Aluminium Company Limited
(‘Malco’) and Vedanta Limited (the “Scheme”) had
been sanctioned by the Honourable High Court
of Madras and the Honourable High Court of
Judicature of Bombay at Goa and was given effect
to in the year ended March 31, 2014. Subsequently,
the above orders of the Honourable High Court of
Bombay and Madras have been challenged by the
Commissioner of Income Tax, Goa and the Ministry
of Corporate Affairs through a Special Leave Petition
before the Honourable Supreme Court and also by a
creditor and a shareholder of Vedanta Limited. The
said petitions are currently pending for hearing.
vii) Flue-gas desulfurization (FGD) implementation:
Ministry of Environment, Forest and Climate
Change (MOEF&CC) has revised emission norms
for coal-based power plants in India. Accordingly,
both captive and independent coal-based power
plants in India are required to comply with these
revised norms for reduction of sulphur oxide (SOx)
emissions for which the current plant infrastructure
is to be modified or new equipment have to be
installed. Timelines for compliance to the revised
norm for various plants in the Group range from
December 2023 to December 2024. Different power
plants are at different stages of the implementation
process.
Ministry of Power issued notification dated 02
July 2020 to restrict imports from China. Power
China SEPCO1 has communicated their inability to
execute the FGD project quoting aforementioned
MOP notification and prevailing COVID situation
in India. TSPL is proceeding with further steps for
retendering the FGD project.
TSPL filed a petition before Punjab State Electricity
Regulatory Commission (PSERC) for approval
of MoEF notification as change in law in terms of
Article 13 of PPA on 30 June 2017. PSERC vide
its order dated 21 December 2018 has held that
MoEF notification is not a change in law as it does
not impose any new requirements. TSPL had filed
an appeal before Hon’ble Appellate Tribunal for
Electricity (APTEL) challenging the said order of
PSERC. APTEL has pronounced the order 28 August
2020 in favour of TSPL allowing the cost pass
through. PSPCL has filed an appeal against this order
in Supreme Court.
35. RELATED PARTY TRANSACTIONS
Related party transactions
The information below sets out transactions and
balances between the Group and various related
parties in the normal course of business for the year
ended 31 March 2021.
HOLDING COMPANIES
Volcan Investments Limited
Volcan Investments Cyprus Limited
FELLOW SUBSIDIARY (with whom transactions
have taken place)
Sterlite Technologies Limited
Sterlite Power Transmission limited
Sterlite Iron and Steel Company Limited
Sterlite Power Grid Ventures Limited
Twin Star Technologies Limited
ASSOCIATES/JOINT VENTURES (with whom
transactions have taken place)
RoshSkor Township (Pty) Ltd.
Gaurav Overseas Private Limited
Madanpur South Coal Company Limited
OTHERS
India Grid Trust*
Cairn Foundation**
Fujairah Gold Ghana
Vedanta Foundation
Sesa Goa Community Foundation Limited
Vedanta Medical Research Foundation
Sesa Goa Employees Provident Fund Trust
Sesa Group Employees Gratuity Fund and Sesa
Group
Sesa Group Executives Superannuation Scheme
Sesa Resources Limited Employees Provident Fund
Trust
Sesa Resources Limited Employees Gratuity Fund
Sesa Mining Corporation Limited Employees
Provident Fund Trust
Sesa Mining Corporation Limited Employees
Gratuity
Sesa Resources Limited and Sesa Mining
Corporation
251
Notes to the Financial StatementsVEDANTA RESOURCES LIMITED | INTEGRATED REPORT AND ANNUAL ACCOUNTS 2020-21 |
Hindustan Zinc Limited Employees Contributory
Provident Fund Trust
Hindustan Zinc Limited Employee Group Gratuity
Trust
Hindustan Zinc Limited Superannuation Trust
Balco Employees Provident Fund Trust
FACOR Superannuation Trust
FACOR Employees Gratuity Scheme
Runaya Refinery LLP
Minova Runaya Private Limited
*Ceased to be a related w.e.f. 7 May 2019.
** Cairn Foundation though not a related party as per the definition
under IAS 24, related party disclosure has been included by way of
a voluntary disclosure, following the best corporate governance
practices.
Details of transactions for the year ended 31 March 2021 are as follows:
Particulars
Income:
Revenue from operations
(i)
(ii) Dividend income
(iii) Net interest received
Expenditure:
Purchases of goods/services
(i)
(ii) Management fees paid
(iii) Reimbursement for other expenses (net of
recovery) #
(iv) Donation
Interest paid
(v)
(vi) Dividend paid
(vii) Contribution to post retirement employees
benefit trust/fund
Other transactions during the year:
(i)
Loans given/ (repayment thereof)
(ii) Guarantees given during the year (net of
relinquishment)
Holding Company/
Fellow Subsidiaries
Associates / Joint
Ventures
Others
99
-
2
-
2
(14)
-
1
251
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
1
-
-
7
1
-
9
-
-
8
-
(2)
(US$ million)
Total
100
-
2
7
3
(14)
9
1
251
8
-
(2)
Details of balances as at 31 March 2021 are as follows:
Particulars
(i) Net amounts receivable at year end *
(ii) Net amounts payable at year end
(iii)
Investment in equity Share
(iv) Value of bonds held by Volcan
Interest payable
(v)
(vi) Dividend payable
(vii) Net advance given at year end
(viii) Financial guarantee given *
(x) Loans given**
Holding Company/
Fellow Subsidiaries
7
2
14
13
-
90
-
16
-
Associates/ Joint
Ventures
-
-
-
-
-
-
-
-
1
(US$ million)
Others
Total
-
15
-
-
-
-
-
1
-
7
17
14
13
-
90
-
17
1
* Bank guarantee has been provided by the Group on behalf of Volcan in favour of Income tax department, India as collateral in respect of
certain tax disputes of Volcan. The guarantee amount is US$ 16 million (31 March 2020: US$ 15 million).
** During the year ended 31 March 2021, the Group had renewed loan provided to Sterlite Iron and Steel Company Limited (Fellow Subsidiary)
to finance project in earlier years. The loan balance as at 31 March 2021 was US$ 1 million (31 March 2020: US$ 1 million). The loan is
unsecured in nature and carries an interest rate of 7.15% per annum. The loan was due in March 2021 and the agreement was renewed for a
further period of 12 months. During the year, the group has recognised a provision of USD 3 million (including accrued interest) on said loan.
# Structured investment
252
ACCOUNTSNotes to the Financial Statements
Integrated Report
Statutory reports
Financial statements
During the financial year ended 31 March 2019, as part of its cash management activities, CIHL purchased an economic interest in a structured
investment for the equity shares of Anglo American Plc (“AA Plc”), a company listed on the London Stock Exchange, from Volcan for a total
consideration of USD 541 million (GBP 428 million) determined based on an independent third-party valuation. In July 2019, the transaction
was unwound and the investments were redeemed for a total consideration of USD 639 million (GBP 519 million), representing the actual price
Volcan realised from selling the shares of AA Plc. CIHL was informed that the said realization was net of applicable transaction costs of USD 14
million (GBP 10 million), which in January 2021, CIHL agreed to bear. Accordingly, this amount has been recorded in the consolidated income
statement in the current year.
Details of transactions for the year ended 31 March 2020 are as follows:
(US$ million)
Particulars
Income:
Revenue from operations
(i)
(ii) Dividend Income
(iii) Net Interest Received
Expenditure:
Purchases of goods/services
(i)
(ii) Stock option (recovery)
(iii) Management fees paid
(iv) Reimbursement for other expenses (net of
recovery)
(v) Donation
(vi)
Interest paid
(vii) Dividend Paid
(viii) Contribution to Post retirement employees
benefit trust/fund
Investments redeemed during the year*
Other transactions during the year:
(i)
(ii) Loans given / (repayment thereof)
(iii) Guarantees given during the period (net of
relinquishment)
*refer note on structured investment above
Holding Company/
Fellow Subsidiaries
Associates / Joint
Ventures
Others
121
-
2
-
-
2
-
-
1
536
-
639
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
1
-
1
-
1
-
15
-
-
16
-
-
(4)
Total
121
1
2
1
-
3
-
15
1
536
16
639
-
(4)
Details of balances as at 31 March 2020 are as follows:
Particulars
(i) Net amounts receivable at year end
(ii) Net amounts payable at year end
(iii)
Investment in equity Share
(iv) Value of bonds held by Volcan
Interest payable
(v)
(vi) Dividend Payable
(vii) Net Advance received at year end
(viii) Net advance given at year end
(ix) Financial guarantee given
(x) Loans given
Holding Company/
Fellow Subsidiaries
14
1
5
13
-
1
-
1
15
1
Associates/ Joint
Ventures
-
-
-
-
-
-
-
-
-
1
(US$ million)
Others
Total
-
10
-
-
-
-
-
-
3
-
14
11
5
13
-
1
-
1
18
2
253
Notes to the Financial StatementsVEDANTA RESOURCES LIMITED | INTEGRATED REPORT AND ANNUAL ACCOUNTS 2020-21 | Remuneration of Key Management Personnel
Short-term employee benefits
Post-employment benefits
Share-based payments
Compensation for Non-Executive Directors
Commission/Sitting Fees to KMP
Year ended
31 March 2021
18
1
3
22
1
0
(US$ million)
Year ended
31 March 2020
22
2
2
26
1
0
Key management personnel are those persons having authority and responsibility for planning, directing and
controlling the activities of the Group, directly or indirectly, including any director (whether executive or otherwise).
Other related party#
Remuneration to relatives
Commission/ sitting fees to relatives of KMP
# close relatives of the executive chairman
Year ended
31 March 2021
0
0
(US$ million)
Year ended
31 March 2020
2
0
Given that there is no specific requirement in IAS 24 – ‘Related Party Disclosures’ to disclose transactions with each
related party, the presentation was revised during the previous year to aggregate the transactions based on categories
of related parties.
36. SUBSEQUENT EVENTS
The Company (“Acquirer”) together with Twin Star Holdings Limited, Vedanta Holdings Mauritius Limited and Vedanta
Holdings Mauritius II Limited, as persons acting in concert with the Acquirer (“PACs”), have acquired 374,231,161
equity shares of Vedanta Limited under the voluntary open offer made to the public shareholders of its subsidiary
Vedanta Limited in accordance with the Securities and Exchange Board of India (Substantial Acquisition of Shares and
Takeovers) Regulations, 2011 and thereby increasing their shareholding in Vedanta Limited from the current 55.29% to
65.39%.
There are no other material adjusting or non-adjusting subsequent events, except as already disclosed.
254
ACCOUNTSNotes to the Financial Statements Integrated Report
Statutory reports
Financial statements
37. AUDITOR’S REMUNERATION
The table below shows the fees payable globally to the Company’s auditor, MHA Macintyre Hudson and their associate
firms, for statutory external audit and audit related services, as well as fees paid to other accountancy firms for
statutory external audit and audit related services for the year ended 31 March 2021:
(US$ million)
Year ended
31 March 2021
1
0
1
0
-
0
-
0
1
3
2
5
Fees payable to the Company’s auditor for the audit of Vedanta Resources Limited annual accounts
The audit of the Company’s subsidiaries pursuant to legislation
Total audit fees
Fees payable to the Company’s auditor and their associates for other services to the Group
Other services pursuant to legislation (1)
Tax services (2)
Corporate finance services (3)
Other services (4)
Total non-audit fees
Total fees paid to the Company’s auditor
Audit fees payable to other auditors of the Group’s subsidiaries
Non-audit fees payable to other auditors of the Group’s subsidiaries
Total fees paid to other auditors
(1)
Other services pursuant to legislation principally comprise assurance services, being quarterly reviews of the Group’s subsidiaries
results and the half year review of the Group’s results.
Tax services principally comprise certification and assurance services as required by Indian and overseas tax regulations.
Corporate finance services principally comprise services in connection with debt raising transactions, group simplification and other
acquisition related certifications. These assurance-related services are ordinarily provided by the auditor.
Includes certification related services.
(2)
(3)
(4)
For the year ended 31 March 2020, total fee payable globally to the Company’s then auditor, Ernst & Young LLP and their
associate firms, for statutory external audit and audit related services was US$ 4 million and US$ 3 million respectively.
38. JOINT ARRANGEMENTS
Joint Operations
The Group’s principal licence interests in oil and gas business are joint operations. The principal licence interests for the
year ended 31 March 2021 and 31 March 20 are as follows:
Oil & Gas blocks/ fields (a)
Area
Operating blocks
Ravva block-Exploration, Development & production
CB-OS/2 – Exploration
CB-OS/2 - Development & production
RJ-ON-90/1 – Exploration
RJ-ON-90/1 – Development & production
KG-OSN-2009/3 – Exploration
Non-operating blocks
KG-ONN-2003/1
Krishna Godavari
Cambay Offshore
Cambay Offshore
Rajasthan Onshore
Rajasthan Onshore
Krishna Godavari Offshore
Krishna Godavari Onshore
(a)
South Africa Block1-Exploration was relinquished on 10 September 2019.
Participating
Interest
22.50%
60.00%
40.00%
100.00%
70.00%
100.00%
49.00%
39. LIST OF SUBSIDIARIES
The Group owns directly or indirectly through subsidiaries, more than half of the voting power of all of its subsidiaries
as mentioned in the list below, and has power over the subsidiaries, is exposed or has rights, to variable returns from its
involvement with the subsidiaries and has the ability to affect those returns through its power over the subsidiaries.
255
Notes to the Financial StatementsVEDANTA RESOURCES LIMITED | INTEGRATED REPORT AND ANNUAL ACCOUNTS 2020-21 | %
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0
0
0
1
.
%
0
0
0
0
1
.
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R
V
%
0
0
0
0
1
.
%
0
0
0
0
1
.
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i
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Notes to the Financial StatementsVEDANTA RESOURCES LIMITED | INTEGRATED REPORT AND ANNUAL ACCOUNTS 2020-21 |
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Notes to the Financial StatementsVEDANTA RESOURCES LIMITED | INTEGRATED REPORT AND ANNUAL ACCOUNTS 2020-21 |
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4
ACCOUNTSNotes to the Financial Statements
Integrated Report
Statutory reports
Financial statements
Company Balance Sheet
As at 31 March 2021
Fixed assets
Tangible assets
Investments in subsidiaries
Financial asset investment
Current assets
Debtors due within one year
Debtors due after one year
Investments
Cash and cash equivalents
Creditors: amounts falling due within one year
Trade and other creditors
Lease liability
External borrowings
Loan from subsidiary
Net current assets
Total assets less current liabilities
Creditors: amounts falling due after one year
External borrowings
Loan from subsidiary
Other creditors
Lease liability
Net assets
Capital and reserves
Called up share capital
Share premium account
Capital reduction reserve
Other reserves
Retained earnings
Equity shareholders’ funds
Note
As at
31 March 2021
As at
31 March 2020
(US$ million)
2
3
4
5
5
6
7
9
7
7
8
8
8
9
14
1,731
0
1,745
1,420
2,706
1,158
38
5,322
220
2
490
-
712
4,610
6,355
3,591
2,264
13
7
5,875
480
29
-
2
(2)
451
480
16
1,731
0
1,747
2,724
1,169
23
11
3,927
193
1
4,647
177
5,018
(1,091)
656
-
64
-
9
73
583
29
202
2
(2)
352
583
The profit after tax for the year of the Company amounted to US$ 148 million (2020: Loss US$ 367 million).
The separate Financial Statements of Vedanta Resources Limited, registration number 4740415 were approved by the
Board of Directors on 18 June 2021 and signed on their behalf by
Navin Agarwal
Director
263
VEDANTA RESOURCES LIMITED | INTEGRATED REPORT AND ANNUAL ACCOUNTS 2020-21 | (US$ million)
Total
583
148
(251)
-
-
-
-
-
-
(2)
480
(US$ million)
Other
Reserves
(2)
-
-
-
(2)
Total
1,486
(367)
(536)
-
583
Company Statement of
Changes in Equity
For the year ended 31 March 2021
Share capital* Share premium
29
202
Capital
redemption
Reserve
2
Retained
earnings
352
Other
Reserves
(2)
Equity shareholders’ funds at 1 April
2020
Profit for the year
Dividends paid (note 13 of Group
financial statements)
Conversion of share premium
Movement in fair value of Financial
Investment
Equity shareholders’ funds at 31
March 2021
-
-
-
-
-
-
(202)
-
29
-
-
-
-
-
2
148
(251)
202
-
451
Equity shareholders’ funds at 1 April
2019
Loss for the year
Dividends paid (note 13 of Group
financial statements)
Movement in fair value of Financial
Investment
Equity shareholders’ funds at 31
March 2020
Share capital* Share premium
29
202
Capital
redemption
Reserve
2
Retained
earnings
1,255
-
-
-
-
-
-
29
202
-
-
-
2
(367)
(536)
-
352
* For details, refer note 30 of Group financial statements
264
ACCOUNTS Integrated Report
Statutory reports
Financial statements
1. COMPANY ACCOUNTING POLICIES
Basis of Accounting
The Company meets the definition of a qualifying
entity in accordance with Financial Reporting
Standard 100 ‘Application of Financial Reporting
Requirements’ (FRS 100) issued by the Financial
Reporting Council and in accordance with 101
Reduced Disclosure Framework (FRS 101).
Accordingly, these financial statements have been
prepared on a going concern basis and in accordance
with the provisions of the UK Companies Act, 2006
and applicable UK accounting standards.
These financial statements have been prepared
under the historical cost convention. Historical
cost is generally based on the fair value of the
consideration given in exchange for the assets.
As permitted by section 408 of the Companies Act,
2006, the profit and loss account of the Company is
not presented as part of these financial statements.
The profit after tax for the year of the Company
amounted to US$ 148 million (2020: Loss US$ 367
million).
These financial statements are presented in
US dollars being the functional currency of the
Company and all values are rounded off to the
nearest million except when indicated otherwise.
Amounts less than US$ 0.5 million have been
presented as “0”.
In these financial statements, the Company has
applied the exemptions available under FRS 101 in
respect of the following disclosures:
The requirements of paragraph 38, 134 and 136 of
IAS 1 ‘Presentation of Financial Statements’;
The requirements of IAS 7 ‘Statement of Cash
Flows’;
Paragraphs 45 (b) and 46 to 52 of IFRS 2, “Share-
based Payment” (details of the number and
weighted average exercise prices of share options
and how the fair value of goods and services
received was determined);
The requirements of IFRS 7 ‘Financial
Instruments: Disclosures’;
The requirements of Paragraph 17 of IAS 24
“Related Party Disclosures”;
The requirements of IAS 24, “Related Party
Disclosures” to disclose related-party
transactions entered into between two or more
members of a group, provided that any subsidiary
which is a party to the transaction is wholly owned
by such a member;
Paragraphs 91-99 of IFRS 13 “Fair value
measurement” (disclosure of valuation
techniques and inputs used for fair value
measurement of assets and liabilities); and
The requirements of Paragraph 30 and 31 of IAS
8 “Accounting policies, changes in accounting
estimates and errors” in relation to standards not
yet effective.
Significant accounting policies
Investments in subsidiaries
Investments in subsidiaries represent equity
holdings in subsidiaries, valued at cost less
any provision for impairment. Investments are
reviewed for impairment if events or changes in
circumstances indicate that the carrying amount
may not be recoverable.
Cash and cash equivalents
Cash and cash equivalents in the balance sheet
comprise of cash at bank, short term bank deposits
and cash in hand.
Currency translation
Transactions in currencies other than the functional
currency of the Company, being US dollars, are
translated into US dollars at the spot exchange rates
ruling at the date of transaction. Monetary assets
and liabilities denominated in other currencies at the
balance sheet date are translated into US dollars at
year end exchange rates, or at a contractual rate if
applicable.
Tangible fixed assets
Tangible fixed assets are stated at cost less
accumulated depreciation and provision for
impairment.
Deferred taxation
Deferred taxation is provided in full on all temporary
differences that result in an obligation at the balance
sheet date to pay more tax, or a right to pay less
tax, at a future date, subject to the recoverability
of deferred tax assets. Deferred tax assets and
liabilities are not discounted.
Share-based payments
The cost of equity-settled transactions with
employees is measured at fair value at the date
at which they are granted. The fair value of share
awards are determined with the assistance of
an external valuer and the fair value at the grant
date is expensed on a straight-line basis over the
vesting period based on the Company’s estimate
of shares that will eventually vest. The estimate of
the number of awards likely to vest is reviewed at
each balance sheet date up to the vesting date at
which point the estimate is adjusted to reflect the
current expectations. No adjustment is made to the
265
Notes to the Financial StatementsVEDANTA RESOURCES LIMITED | INTEGRATED REPORT AND ANNUAL ACCOUNTS 2020-21 |
fair value after the vesting date even if the awards
are forfeited or not exercised. Amounts recharged
by subsidiaries in respect of awards granted to
employees of the Company are recognised as
intercompany creditors until paid.
The resultant increase in equity is recorded in share
based payment reserve.
In case of cash-settled transactions, a liability
is recognised for the fair value of cash-settled
transactions. The fair value is measured initially
and at each reporting date up to and including
the settlement date, with changes in fair value
recognised in employee benefits expense. The fair
value is expensed over the period until the vesting
date with recognition of a corresponding liability.
The fair value is determined with the assistance of an
external valuer.
Borrowings
Interest bearing loans are recorded at the net
proceeds received, i.e., net of direct transaction
costs. Finance charges, including premiums payable
on settlement or redemption and direct issue costs,
are accounted for on accruals basis and charged
to the profit and loss account using the effective
interest method and are added to the carrying
amount of the instrument to the extent that they are
not settled in the period in which they arise.
Financial guarantees
Guarantees issued by the Company on behalf of
subsidiaries are designated as ‘Insurance Contracts’.
Accordingly, these are shown as contingent
liabilities. (Note 10)
Financial instruments
A financial instrument is any contract that gives
rise to a financial asset of one entity and a financial
liability or equity instrument of another entity.
(a) Financial Assets – Recognition
All financial assets are recognised initially at
fair value plus, in the case of financial assets
not recorded at fair value through profit or loss,
transaction costs that are attributable to the
acquisition of the financial asset on the trade date.
For purposes of subsequent measurement, financial
assets are classified in the following categories:
Debt instruments at amortised cost
A ‘debt instrument’ is measured at amortised cost if
both the following conditions are met:
a)
The asset is held within a business model
whose objective is to hold assets for collecting
contractual cash flows, and
b)
Contractual terms of the asset give rise on
specified dates to cash flows that are solely
payments of principal and interest (SPPI) on the
principal amount outstanding.
After initial measurement, such financial assets are
subsequently measured at amortised cost using the
Effective Interest Rate (EIR) method.
Equity instruments
All equity investments in scope of IFRS 9 are
measured at fair value. For all equity instruments not
held at fair value through profit or loss, the Company
may make an irrevocable election to present in other
comprehensive income subsequent changes in the
fair value.
Dividends
Dividend income is recognised in the consolidated
income statement only when the right to receive
payment is established, provided it is probable that
the economic benefits associated with the dividend
will flow to the Group, and the amount of the
dividend can be measured reliably.
(b) Financial Asset - Derecognition
The Company derecognises a financial asset when
the contractual rights to cash flows from the asset
expire, or it transfers the rights to receive the
contractual cash flows on the financial asset in a
transaction in which substantially all the risks and
rewards of ownership of the financial asset are
transferred.
Impairment of financial assets
(c)
In accordance with IFRS 9, the Company applies
expected credit loss (“ECL”) model for measurement
and recognition of impairment loss on financial
assets.
The Company follows ‘simplified approach’ for
recognition of impairment loss allowance on trade
receivables. The Company recognises impairment
loss allowance based on lifetime ECLs at each
reporting date, right from its initial recognition.
At each reporting date, for recognition of
impairment loss on other financial assets and risk
exposure, the Company determines whether there
has been a significant increase in the credit risk
since initial recognition. If credit risk has increased
significantly, lifetime ECL is used instead of
12-month ECL.
ECL is the difference between all contractual cash
flows that are due to the Company in accordance
with the contract and all the cash flows that the
entity expects to receive, discounted at the original
EIR.
266
ACCOUNTSNotes to the Financial Statements
Integrated Report
Statutory reports
Financial statements
(d)
Financial liabilities – Recognition &
Subsequent measurement
The Company’s financial liabilities include trade
and other payables and loans and borrowings.
All financial liabilities are recognised initially at
fair value, and in the case of financial liabilities
at amortised cost, net of directly attributable
transaction costs.
2. COMPANY TANGIBLE FIXED ASSETS
Cost
At 01 April 2019
ROU Asset as at 01 April 2019
Additions
Deletions/Disposals
At 31 March 2020
Additions
Deletions/Disposals
At 31 March 2021
Accumulated depreciation
At 01 April 2019
Charge for the year
Deletions/Disposals
At 31 March 2020
Charge for the year
Deletions/Disposals
At 31 March 2021
Net book value
At 01 April 2019
At 31 March 2020
At 31 March 2021
Details of Right of Use (ROU) Assets
Particulars
ROU asset as at 01 April 2019
Additions
Depreciation
Net book value/ carrying amount as on 31 March 2020/ 01 April 2020
Additions
Depreciation
Net book value/ carrying amount as on 31 March 2021
After initial recognition, interest-bearing loans
and borrowings and trade and other payables are
subsequently measured at amortised cost using the
EIR method.
(e) Financial liabilities – Derecognition
A financial liability is derecognised when the
obligation under the liability is discharged or
cancelled or expires.
(US$ million)
7
10
1
-
18
-
-
18
-
2
-
2
2
-
4
7
16
14
Building
10
-
(1)
9
-
(1)
8
267
Notes to the Financial StatementsVEDANTA RESOURCES LIMITED | INTEGRATED REPORT AND ANNUAL ACCOUNTS 2020-21 |
3.
INVESTMENTS IN SUBSIDIARIES
Cost
At 1 April 2019
Additions during the year*
At 31 March 2020
At 1 April 2020
Additions during the year**
Investments written off during the year***
At 31 March 2021
(US$ million)
1,226
505
1,731
1,731
0
(0)
1,731
* During the previous year, Vedanta Resources Holdings Limited (VRHL), a fully owned subsidiary of the Company, capitalised an amount
of US$ 505 million outstanding against various loans payable by it to the Company by issuing 504,534,532 ordinary shares of US$ 1 each.
Subsequently, VRHL reduced the face value of its issued share capital from US$ 662,073,056 (662,073,056 shares of US$ 1 each) to US$
6,620,731 (662,073,056 shares of US$0.01 each).
** During the year, the Company acquired one share in Vedanta Holdings Jersey Limited (‘VHJL’), being 100% of its issued equity share capital
for a consideration of $1.
*** During the year, Vedanta Finance Jersey Limited (‘VFJL’) and Vedanta Jersey Investment Limited (‘VJIL’) got liquidated. Accordingly, the
Company has written off its investments in these companies.
At 31 March 2020, the Company held 662,073,200 shares in Vedanta Resources Holdings Limited (‘VRHL’) (March 2020:
662,073,200 shares), being 100% of VRHL’s issued equity share capital. The Company also held one deferred share in
VRHL (31 March 2020: one). At 31 March 2021, the Company held two shares in Vedanta Finance Jersey Limited (‘VFJL’)
(31 March 2020: two), two shares in Vedanta Resources Jersey Limited (‘VRJL’) (31 March 2020: two), two shares in
Vedanta Resources Jersey II Limited (‘VRJL-II’) (31 March 2020: two), two shares in Vedanta Jersey Investment Limited
(‘VJIL’) (31 March 2020: two) and one share in Vedanta Holdings Jersey Limited (‘VHJL’) (31 March 2020: Nil), being 100%
of its issued equity share capital.
VRHL is an intermediary holding company incorporated in the United Kingdom (note 39 of the financial statements of
the Group) and registered in England and Wales. VFJL, VRJL, VJIL, VHJL and VRJL-II are companies, registered and
incorporated in Jersey, established to raise funds for the Vedanta Group.
4. FINANCIAL ASSET INVESTMENT
Fair value
As at 1 April 2020
Fair value movement
As at 31 March 2021
As at 1 April 2019
Fair value movement
As at 31 March 2020
(US$ million)
0
0
0
0
0
0
The investment relates to an equity investment in the shares of Victoria Gold Corporation. As at 31 March 2021,
the investment in Victoria Gold Corporation was revalued and gain of US$ 0 million (2020: gain of US$ 0 million) was
recognised in equity.
268
ACCOUNTSNotes to the Financial Statements Integrated Report
Statutory reports
Financial statements
5. COMPANY DEBTORS
Amounts due from subsidiary undertakings
Amounts due from Konkola Copper Mines (note 3(b) of Group financial statements)
Advance to vendors and deposit
Prepayments and accrued income
Other taxes
Less: Provision for impairment*
Total
Debtors due within one year
Debtors due after one year
Total
As at
31 March 2021
4,945
305
-
-
1
(1,125)
4,126
1,420
2,706
4,126
(US$ million)
As at
31 March 2020
4,763
371
1
1
1
(1,244)
3,893
2,724
1,169
3,893
Amounts due from subsidiary undertakings
At 31 March 2021, the Company had loans of US$ 2,127
million (2020: US$ 1,799 million) due from VRHL which
represented the funds being loaned for funding the
subsidiaries. Out of the total loan US$ 1,245 million bears
interest at 8.09%, US$ 547 million at 6.95%, US$ 135
million at 9.70%, US$ 200 million at 14.375%.
At 31 March 2021, the Company had loans of US$ 1,130
million (2020: US$ 1,085 million) due from Vedanta
Resources Jersey II Limited (VRJL-II). Out of the total loan
US$ 539 million bears interest at 8.09%, US$ 95 million
at 7.11%, US$ 345 million at 6.95% (Net of impairment
provision US$ 1,055 million) and US$ 151 million at 6.82%.
At 31 March 2021, the Company had loan of US$ 36 million
(2020: Nil) due from Vedanta Holdings Mauritius II Limited
(VHM2L) at 14.625%.
The Company was owed US$ 469 million (2020: US$ 281
million) of accrued interest from VRHL and VRJL-II and
VHM2L.
The Company had given a corporate guarantee for loan
facilities/ trade advances on behalf of Konkola Copper
Mines Plc (KCM), an erstwhile subsidiary of Vedanta
Resources Holding Limited (VRHL). During the previous
year, due to loss of control over KCM and the resulting
developments (for details refer note 3 (b) of group
financial statements), the Company had recognised a
liability of US$ 355 million (inclusive of interest), towards
the guarantee liability and a corresponding receivable
from KCM. Of the said liability, the Company had paid an
amount of US$ 250 million to the lenders of KCM. During
the year, the Company has made further payments of
US$ 23 million to lenders of KCM. The Company has also
reversed the amount of corporate guarantees which
have expired, from the amount receivable and from
the corresponding liability. The balance is presented as
creditors due within one year (refer note 11).
Additionally, the Company was owed US$ 16 million
(2020: US$ 16 million) from KCM in the form guarantee
commission and other receivables.
In addition to the loans, the Company was also owed US$
59 million (Net of impairment provision US$ 71 million)
(2020: US$ 32 million (Net of impairment provision US$ 71
million created during the year)) of other receivables from
Group companies. The above amounts include brand fee
receivable from subsidiaries (refer note 11).
* The Company had given loans to its subsidiary, VRJL
- II in previous years, which was further advanced as
inter-company loans to its then fellow subsidiary,
Konkola Copper Mines plc (KCM). With the loss of
control over KCM w.e.f. 21 May 2019 and the ensuing
recoverability assessment (Refer note 3 (b) of Group
Financial Statements for details), VRJL- II had impaired its
receivables from KCM in the previous year. Consequently,
the Company had also carried out an impairment
assessment of its receivables from VRJL- II and had
recognised an impairment of US$ 1,102 million during
the previous year. During the year, VRJL- II has reversed
the impairment recognised on its receivables from
KCM, in the previous year, to the tune of $ 118 million.
Consequently, the Company has also carried out an
impairment assessment of its receivables from VRJL- II
and had recognised an impairment reversal of US$ 118
million during the year.
During the previous year, the Company had also carried
out an impairment assessment of its investment in its
subsidiary, Vedanta Resources Holding Limited (VRHL),
which in turn had impaired its equity investment in KCM
and concluded that there was no impairment.
Furthermore, during the previous year, the Company had
recognised an impairment provision of US$ 71 million on
its receivables from VJIL pursuant to the Expected Credit
Loss (ECL) assessment.
269
Notes to the Financial StatementsVEDANTA RESOURCES LIMITED | INTEGRATED REPORT AND ANNUAL ACCOUNTS 2020-21 | 6. COMPANY CURRENT ASSET INVESTMENTS
Liquid Investments
Bank term deposits
Total
7. COMPANY CREDITORS: AMOUNTS FALLING DUE WITHIN ONE YEAR
Accruals
Advance from related parties
Loan from subsidiary (Note 8)
Term Loans (Note 8)
Bonds
Guarantee amount payable on behalf of KCM (Refer note 5)
Dividend payable
As at
31 March 2021
1,125
33
(US$ million)
As at
31 March 2020
-
23
1,158
23
As at
31 March 2021
85
30
-
305
185
15
90
(US$ million)
As at
31 March 2020
86
1
177
1,489
3,158
105
1
Total
710
5,017
8. COMPANY CREDITORS: AMOUNTS FALLING DUE AFTER ONE YEAR
Loan from subsidiaries
Advance from related parties
Term loans*
Bonds:
6.125% bonds, due August 2024
8.25% bonds, due June 2021
6.375% bonds, due July 2022
7.125% bonds, due May 2023
Less: Current Maturities (Note 7)
Term Loans
Bonds
Total
As at
31 March 2021
2,264
13
1,414
(US$ million)
As at
31 March 2020
64
-
1,489
991
185
994
497
(305)
(185)
5,868
994
669
996
499
(1,489)
(3,158)
64
As at 31 March 2021 loan from subsidiaries included US$ 149 million (2020: US$ 177 million) due to Vedanta Finance UK
Limited. During the previous year, its maturity was extended to January 2021 and the rate of interest was amended to
US$ LIBOR plus 410 basis points. During the current year, maturity of the said loan was further extended to October
2023 and rate of interest was amended to 7.84%. Loan from subsidiaries also included US$ 2,115 million (2020: Nil)
due to Vedanta Resources Finance II Plc (VRF2). Out of the total loan US$ 915 million bears interest at the rate 14.13%
and is repayable in January 2024. The remaining amount of US$ 1,200 million bears interest at the rate of 9.20% and is
repayable in March 2025.
Terms loans are made up of the following loans that the Company has executed:
In March 2015, the Company executed a facility agreement with State Bank of India for borrowing up to US$ 350 million.
US$ 100 million is repayable in June 2021 and bears interest at a rate of US$ LIBOR plus 453 basis points. US$ 250
million is repayable in June 2022 bears interest at a rate of US$ LIBOR plus 453 basis points. As at 31 March 2021, the
outstanding amount under this facility is US$ 249 million.
270
ACCOUNTSNotes to the Financial Statements Integrated Report
Statutory reports
Financial statements
In January 2016, the Company entered into a facility
agreement with State Bank of India for borrowing up to
US$ 300 million. US$ 120 million is repayable in February
2022 and bears interest at a rate of US$ LIBOR plus 500
basis points. US$ 180 million is repayable in February 2023
and bears interest at a rate of US$ LIBOR plus 504 basis
points. As at 31 March 2021, the outstanding amount
under this facility is US$ 297 million.
In November 2017, the Company entered into a facility
agreement with Syndicate Bank for borrowing up to US$
100 million and bears interest at a rate of 3 months US$
LIBOR plus 325 basis points. US$1 million is repayable in
November 2021 and US$ 99 repayable in November 2022.
As at 31 March 2021, the outstanding amount under this
facility is US$ 99 million.
During the year 2017-18, the Company executed facility
agreements with Yes Bank Limited for borrowings
up to US$ 150 million in different tranches and bears
interest at a rate of 3 months US$ LIBOR plus 324 basis
points (increased to 324 basis points from October
2019). During the year, US$ 35 million was repaid. US$
15 million is repayable in July 2021. As at 31 March 2021,
the outstanding amount under this facility is US$ 15
million. Accordingly, entire amount outstanding has been
reclassified from creditors due after one year to creditors
due within one year.
During the year 2017-18, the Company entered
into facility agreements with State Bank of India for
borrowings up to US$ 200 million in different tranches
and bears interest at a rate of US$ LIBOR plus 389 basis
points. The loan is repayable in January 2025. As at 31
March 2021, the outstanding amount under this facility is
US$ 197 million.
During the previous year, the Company entered into
facility agreements with Syndicate Bank in for borrowings
up to US$ 200 million in different tranches and bears
9. LEASE LIABILITY
Movement in Lease liabilities is as follows :
Particulars
At April 01, 2019
Additions during the year
Interest on Lease Liabilities
Payments made
At March 31, 2020/ April 01, 2020
Additions during the year
Interest on Lease Liabilities
Payments made
As at March 31, 2021
interest at a rate of US$ LIBOR plus 375 basis points. The
loan is repayable in various instalments till December
2024. As at 31 March 2021, the outstanding amount under
this facility is US$ 197 million.
During the year 2018-2019, the Company entered
into facility agreements with ICICI Bank Limited for
borrowings up to US$ 200 million in different tranches
and bears interest at a rate of US$ LIBOR plus 390 basis
points. The loan is repayable in various instalments till
September 2023. As at 31 March 2021, the outstanding
amount under this facility is US$ 178 million. During the
year, US$ 20 million was repaid. Out of this US$ 50 million
has been reclassified from creditors due after one year to
creditors due within one year.
During the year 2018-2019, the Company executed
facility agreements with Bank of Baroda for borrowings
up to US$ 200 million in different tranches and bears
interest at a rate of US$ LIBOR plus 350 basis points. The
loan is repayable in various instalments till June 2024.
As at 31 March 2021, the outstanding amount under this
facility is US$ 185 million. During the year, US$ 15 million
was repaid. out of this US$ 20 million has been reclassified
from creditors due after one year to creditors due within
one year.
*As on 31 March 2020, the Company could not meet some
of the covenant requirements of borrowings of US$ 1,489
million. Further, as per the terms of the bond agreement,
in case any acceleration notice is served by any of these
lenders, the Company would not satisfy the requirement
of IAS 1 of unconditional right to defer payment beyond
one year from the balance sheet date in case of non-
convertible bonds of US$ 3,158 million. Subsequent to the
reporting date, the Company obtained a waiver on the
covenant requirements. Accordingly, non-current portion
of US$ 4,562 million of borrowings was reclassified under
the current maturities of long-term borrowings.
(US$ million)
Amount
10
-
-
-
10
-
-
(1)
9
271
Notes to the Financial StatementsVEDANTA RESOURCES LIMITED | INTEGRATED REPORT AND ANNUAL ACCOUNTS 2020-21 | 10. COMPANY CONTINGENT LIABILITIES
The Company has given corporate guarantees for loan
facilities and other obligations on behalf KCM worth
US$ 357 million including interest thereon (2020: US$
355 million). During the previous year, the same was
recognised as liability (refer note 3 (b) of group financial
statements). The Company has guaranteed US$ 170
million (out of which, US$ 108 million was repaid during
the year 19-20) for a loan facility entered by Valliant
Jersey Limited with ICICI Bank Limited. During the year,
entire outstanding amount of US$ 62 million under this
facility has been repaid.
The Company has guaranteed US$ 120 million for
revolving credit facility entered by Twin Star Holdings
Limited with First Abu Dhabi Bank PJSC as facility
agent (2020: US$ 120 million). During the year, entire
outstanding amount under this facility has been repaid.
The Company has provided a guarantee for the Cairn
India Group’s (now merged with Vedanta Limited (‘VEDL’))
obligation under the Production Sharing Contract (‘PSC’)
provided for onshore block RJ-ON-90/1, for making
available financial resources equivalent to Cairn’s share
for its obligations under the PSC, personnel and technical
services in accordance with industry practices and
any other resources in case Cairn is unable to fulfil its
obligations under the PSC. During the current year, the
Board of Directors of the VEDL and CEHL have approved
a consideration to be paid for this guarantee at an annual
charge of 1.2% of net exploration and development
spend, subject to a minimum annual fee of $ 5 million,
applicable from April 2020 onwards to be paid in ratio
of participating interests held equally by VEDL and its
step-down subsidiary, Cairn Energy Hydrocarbons Ltd
(“CEHL”). Similarly, the Company has also provided
financial and performance guarantee to the Government
of India for VEDL’s obligations under the Revenue Sharing
Contract (‘RSC’) in respect of 51 Blocks awarded under
the Open Acreage Licensing Policy (“OALP”) by the
Government of India. During the current year, the Board
of Directors of VEDL have approved a consideration to be
paid for this guarantee consisting of one-time charge of
$ 25 million, i.e., 2.5% of the total estimated cost of initial
exploration phase of approx. $ 1,000 million and an annual
charge of 1% of spend, subject to a minimum fee of $ 10
million and maximum fee of $ 20 million per annum.
During the previous year, the Company had guaranteed
US$ 180 million for a facility agreement entered by
Vedanta Resources Jersey II Limited with Yes Bank
Limited as facility agent (2020: US$ 180 million). During
the year, US$ 18 million has been repaid under the said
facility.
The Company has guaranteed US$ 100 million for a
facility agreement entered by Welter Trading Limited with
Axis Bank Limited as facility agent (2020: US$ 100 million).
During the year, US$ 65 million has been repaid under the
said facility.
The Company has guaranteed US$ 575 million for a facility
agreement entered by Twin Star Holdings Limited with
Citicorp International Limited as facility agent (2020: US$
575 million). During the year, US$ 52 million have been
repaid.
The Company has guaranteed US $100 million for a
facility agreement entered by Twin Star Holdings Limited
with First Abu Dhabi Bank PJSC as facility agent. US$ 80
million was drawn under this facility and US$ 8 million &
US$ 12 million was repaid during the year 2017-18 and
2018-19 respectively. During the year, US$ 16 million was
further repaid.
During the year, the Company has guaranteed US$ 600
million for a facility agreement entered by Twin Star
Holdings Limited with Standard Chartered Bank Limited
as facility agent. The entire amount was repaid during the
year.
During the year, the Company has guaranteed US$ 70
million for a facility agreement entered by Twin Star
Holdings Limited and Vedanta Resources Jersey II Limited
with ICICI Bank Limited as facility agent.
During the previous year, the Company through its wholly
owned subsidiary, Vedanta Resources Finance II Plc
issued US$ 1,000 million bonds which were guaranteed
by the Company. During the current year, the Company
further issued US$ 1,000 million and US$ 1,200 million
bonds which were guaranteed by the Company along
with Twinstar Holdings Ltd and Welter Trading Ltd as co –
guarantors.
During the year, the Company has guaranteed US$
350 million for a facility agreement entered by Vedanta
Holdings Mauritius Limited with First Abu Dhabi Bank
PJSC as facility agent. US$ 110 million was drawn under
this facility.
During the year, the Company, along with Finsider
International Company Limited and Westglobe Limited
as co-guarantors, has guaranteed US$ 1,000 million for a
facility agreement entered by Vedanta Holdings Mauritius
II Limited with OCM Verde XI Investments Pte. Limited
as facility agent. US$ 427 million was drawn under this
facility.
272
ACCOUNTSNotes to the Financial Statements Integrated Report
Statutory reports
Financial statements
11. RELATED PARTY TRANSACTIONS
During the year the Company entered into transactions, in the ordinary course of business, with other related parties.
The Company has taken advantage of the exemption under paragraph 8(k) of FRS101 not to disclose transactions with
wholly owned subsidiaries. Transactions entered into and trading balances outstanding at 31 March with other related
parties, are as follows:
Name of Company
Vedanta Limited
Relationship
Subsidiary
Vedanta Limited
Konkola Copper Mines Plc*
Subsidiary
Subsidiary
Nature of transaction
PCO Income and Management &
Brand Fees charged
Sale of Alumina
Management & Guarantee Fees
charged
Cairn India Holdings Limited
Subsidiary
Volcan Investments Limited
Volcan Investments Cyprus
Limited
Vedanta Limited
Vedanta Limited
Electrosteel Steels Ltd (ESL)
Talwadi Sabo Power Ltd
Namzinc Pty Limited
Black Mountain Mining (Pty)
Limited
Cairn Energy Hydrocarbon
Limited
THL Zinc Limited
THL Zinc Ventures Limited
Bloom Fountain Limited
Holding Company Dividend paid/payable
Holding Company Dividend paid/payable
Subsidiary
Subsidiary
Subsidiary
Subsidiary
Subsidiary
Subsidiary
Receipt of Service
(Reimbursement)/Payment of
Expenses
(Reimbursement)/Payment of
Expenses
Brand Fee charged
Brand Fee charged
Brand Fee charged
Brand Fee charged
Subsidiary
Brand Fee charged
Subsidiary
Subsidiary
Subsidiary
Reimbursement of Expenses
Reimbursement of Expenses
Reimbursement of Expenses
(US$ millions)
Year Ended 2021
128
Year Ended 2020
44
11
-
165
86
-
10
-
9
4
-
5
9
-
-
-
8
-
352
184
-
7
-
9
1
3
4
11
-
-
-
273
Notes to the Financial StatementsVEDANTA RESOURCES LIMITED | INTEGRATED REPORT AND ANNUAL ACCOUNTS 2020-21 | Outstanding balances
Vedanta Limited
Sterlite Technologies Limited
Namzinc Pty Limited
Cairn India Holdings Limited
Electrosteel Steels Ltd (ESL)
Talwadi Sabo Power Ltd
Black Mountain Mining (Pty) Limited
Western Cluster Limited
THL Zinc Limited
THL Zinc Ventures Limited
Monte Cello BV
Cairn Energy Hydrocarbon Limited
Bloom Fountain Limited
Volcan Investments limited
Volcan Investments Cyprus limited
Relationship
Nature of transaction
Subsidiary
Related Party
Subsidiary
Subsidiary
Subsidiary
Subsidiary
Subsidiary
Subsidiary
Subsidiary
Subsidiary
Subsidiary
Subsidiary
Subsidiary
Holding Company Dividend payable
Holding Company Dividend payable
(Payable)/Receivable
Receivable
(Payable)/Receivable
Receivable
(Payable)
(Payable)
Receivable/(Payable)
Receivable
Receivable
Receivable
(Payable)
Receivable
Reimbursement of Expenses
As at
31 March 2021
-
-
-
-
(3)
(1)
2
-
-
-
(1)
(3)
-
59
31
(US$ millions)
As at
31 March 2020
10
-
1
-
(1)
-
1
-
-
-
(1)
11
-
1
-
* Ceased to be a related party w.e.f. 21 May 2019. Vedanta Resources Holdings Limited (VRHL) holds 79.42% in Konkola Copper Mines Plc
(KCM). A provisional liquidator was appointed to manage KCM’s affairs on 21 May 2019, after ZCCM Investments Holdings Plc (ZCCM-IH), an
entity owned by the Government of Zambia and a 20.6% shareholder in KCM, filed a winding up petition against KCM. Since all the significant
decision-making powers, including carrying on the business of KCM and control over all the assets of KCM, rests with the provisional
liquidator, VRHL believes that the event has caused loss of its control over KCM. Consequently, KCM is not a related party of the Company
from that date as per IAS 24.
For details relating to Ultimate controlling party, refer note 40 of Group financial statements.
12. SUBSEQUENT EVENTS
There have been no material events after reporting date, other than those already reported, which would require
disclosure or adjustment to the financial statements for the year ended 31 March 2021.
274
ACCOUNTSNotes to the Financial Statements Integrated Report
Statutory reports
Financial statements
Five Year Summary
SUMMARY CONSOLIDATED INCOME STATEMENT
(US$ million except as stated)
Revenue
EBITDA
Depreciation and amortisation
Special items
Operating profit
Net finance (costs) / investment revenues (including
other gains and Losses)
Profit before taxation from continuing operations (a)
Net tax credit / (expense) (b)
Profit for the period/ year from continuing
operations (a+b)
Profit/ (loss) after tax for the period/ year
from discontinued operations and gain on
deconsolidation
Profit after taxation
Non-controlling interests
Profit attributable to equity shareholders in parent
Dividends
Retained (loss) / profit
Dividend per share (US cents per share)
Year ended
31-Mar-21
11,722
3,800
(1,099)
(49)
2,652
(969)
1,683
(298)
1,385
91
1,476
1,153
323
(251)
72
88
Year ended
31-Mar-20
11,790
3,003
(1,412)
(2,065)
(474)
(872)
(1,346)
370
(976)
(771)
(1,747)
(179)
(1,568)
(352)
(1,919)
123
Year ended
31-Mar-19
13,006
3,457
(1,380)
38
2,115
(747)
1,368
(611)
757
(333)
425
661
(237)
(185)
(422)
65
Year ended
31-Mar-18
15,294
3,963
(1,271)
586
3,278
(790)
2,488
(1,013)
1,475
-
1,475
1,236
239
(182)
57
65
Year ended
31-Mar-17
11,520
3,191
(1,031)
(17)
2,143
(763)
1,380
(500)
880
-
880
(902)
(23)
(138)
(160)
55
SUMMARY CONSOLIDATED FINANCIAL POSITION
(US$ million except as stated)
Goodwill
Intangible assets
Property, plant and equipment
Financial asset investments
Total fixed assets
Stocks
Debtors
Cash & Liquid Investments
Total current assets
Short-term borrowings
Other current liabilities
Total current liabilities
Net current assets
Total assets less current Liabilities
Long-term borrowings
Other long term liabilities
Provisions and deferred tax assets
Total long term liabilities
Equity Non-controlling interests
Non equity Non-controlling interest
Net assets attributable to the equity holders of the
parent
Year ended
31-Mar-21
12
99
13,302
21
13,434
1,358
1,465
5,957
8,780
(3,673)
(5,670)
(9,343)
(552)
15,976
(12,704)
(215)
(726)
(13,645)
(5,478)
-
(3,147)
Year ended
31-Mar-20
12
100
13,245
12
Year ended
31-Mar-19
12
108
17,726
707
Year ended
31-Mar-18
12
123
17,727
25
Year ended
31-Mar-17
17
96
16,751
11
13,369
1,515
1,102
5,090
7,707
(6,065)
(5,805)
(11,870)
(4,069)
12,316
(9,030)
(238)
(775)
(10,043)
(5,536)
(0)
(3,263)
18,553
2,060
1,504
5,297
8,861
(5,456)
(7,060)
(12,516)
(3,643)
17,265
(10,524)
(258)
(1,218)
(12,000)
(6,181)
(12)
(928)
17,887
2,038
1,527
5,606
9,171
(5,460)
(6,194)
(11,654)
(2,457)
17,584
(9,734)
(136)
(1,162)
(11,032)
(6,870)
(12)
(330)
16,874
1,670
1,085
9,725
12,480
(7,659)
(6,413)
(14,072)
(1,588)
17,432
(10,570)
(77)
(758)
(11,405)
(6,423)
(12)
(409)
275
VEDANTA RESOURCES LIMITED | INTEGRATED REPORT AND ANNUAL ACCOUNTS 2020-21 | Five Year Summary
TURNOVER
Turnover
(US$ million)
Zinc-
India
International
Oil and Gas
Iron ore
Copper:-
India/Australia
Zambia
Aluminium
Power
Steel
Other
Group
EBITDA
EBITDA
(US$ million)
Zinc
India
International
Oil and Gas
Iron ore
Copper
India/Australia
Zambia
Aluminium
Power
Steel
Other
Group
EBITDA MARGIN
EBITDA Margin
(%)
Zinc
India
International
Oil and gas
Iron ore
Copper
India/Australia
Zambia
Aluminium
Power
Steel
Group
276
Year ended
31-Mar-21
3,328
2,960
368
1,016
611
1,469
1,469
3,865
725
630
76
Year ended
31-Mar-20
3,004
2,563
441
1,787
489
1,278
1,278
-
3,751
827
604
51
Year ended
31-Mar-19
3,347
2,955
392
1,892
417
1,537
1,537
-
4,183
933
600
97
Year ended
31-Mar-18
3,889
3,354
535
1,480
485
5,111
3,828
1,283
3,545
877
Year ended
31-Mar-17
2,857
2,525
332
1,223
615
4,008
3,134
874
2,040
836
(93)
(59)
11,722
11,790
13,006
15,294
11,520
Year ended
31-Mar-21
1,688
1,568
120
438
245
(21)
(21)
1,046
190
117
97
3,800
Year ended
31-Mar-21
51
53
33
43
40
(1)
(1)
-
27
26
19
Year ended
31-Mar-20
1,283
1,230
54
1,032
117
(40)
(40)
(0)
281
233
83
14
Year ended
31-Mar-19
1,616
1,516
100
1,101
90
(36)
(36)
-
316
219
113
38
Year ended
31-Mar-18
2,122
1,902
220
849
48
235
162
73
414
258
-
37
Year ended
31-Mar-17
1,562
1,423
138
597
194
258
252
6
344
245
-
(9)
3,003
3,457
3,963
3,191
Year ended
31-Mar-20
43
48
12
58
24
(3)
(3)
-
8
28
14
Year ended
31-Mar-19
48
51
25
58
22
(2)
(2)
-
8
23
19
Year ended
31-Mar-18
54
56
41
57
10
5
4
6
12
25
-
Year ended
31-Mar-17
55
56
42
49
32
6
8
1
17
29
-
32
25
27
26
28
ACCOUNTS
Integrated Report
Statutory reports
Financial statements
Five Year Summary
PRODUCTION
Production
(000’s MT)
Aluminium
BALCO
Jharsuguda Aluminium
Copper
Sterlite Copper
KCM
Iron Ore (WMT)
Steel
Zinc total
HZL
Skorpion
Zinc and Lead MIC
BMM
Lisheen
Gamsberg
Oil and Gas- Gross Production
Oil and Gas- Working Interest
Year ended
31-Mar-21
1969
570
1400
101
-
5,607
1,187
930
-*
930
58
145
59
37
Year ended
31-Mar-20
1904
561
1,343
77
77
-
4,562
1,231
937
870
67
174
66
-
108
63
40
* Skorpion produced 0.6kt in April 20 before moving into Care and Maintenance for rest of the year
CASH COST OF PRODUCTION IN US CENTS
Cash costs of production
(US cents/lb)
Aluminium-Balco
Aluminium-Jharsuguda Aluminium
Copper – Sterlite Copper
Copper – KCM
Zinc including Royalty- HZL
Zinc without Royalty- HZL
Zinc COP- Skorpion
Zinc COP- BMM
Zinc COP- Lisheen
Zinc COP- Gamsberg
Oil and Gas (Opex) (US$/ boe)
Year ended
31-Mar-21
66
59
-
-
58
43
-
61
-
58
8
Year ended
31-Mar-20
77
76
-
-
62
47
100
67
-
65
8.9
Year ended
31-Mar-19
1959
571
1,388
90
90
-
4,511
1,199
960
894
66
82
65
-
17
69
44
Year ended
31-Mar-19
92
90
-
276
63
46
110
66
-
67
7.7
Year ended
31-Mar-18
1675
569
1106
599
403
195
7903
-
876
791
84
72
72
-
-
68
43
Year ended
31-Mar-18
87
85
5.7
239
62
44
85
59
-
Year ended
31-Mar-17
1213
427
786
582
402
180
12300
-
757
672
85
70
70
-
-
69
44
Year ended
31-Mar-17
68
65
5.0
209
52
38
75
51
-
6.6
6.2
CASH COST OF PRODUCTION IN INR
Cash costs of production in INR
(INR/ mt)
Aluminium-Balco
Aluminium-Jharsuguda Aluminium
Copper – Sterlite Copper
Zinc including Royalty
Zinc without Royalty
Year ended
31-Mar-21
1,07,500
96,600
95,305
70,700
Year ended
31-Mar-20
120400
119500
-
97248
74300
Year ended
31-Mar-19
1,35,906
1,35,466
-
96,488
70,400
Year ended
31-Mar-18
1,23,947
1,20,349
8,112
87,971
62,882
Year ended
31-Mar-17
1,01,051
96,622
9,047
77,454
55,679
277
VEDANTA RESOURCES LIMITED | INTEGRATED REPORT AND ANNUAL ACCOUNTS 2020-21 | Five Year Summary
CAPITAL EXPENDITURE
Capital expenditure
(US$ million)
Sustaining
Expansion
Year ended
31-Mar-21
467
324
Year ended
31-Mar-20
558
819
Year ended
31-Mar-19
399
1,081
Year ended
31-Mar-18
385
820
Year ended
31-Mar-17
145
668
Total capital expenditure
792
1,376
1,480
1,205
814
Year ended
31-Mar-21
2,097
2,064
32
77
38
48
48
-4,102
-1,062
-7,827
Year ended
31-Mar-20
2,902
2,890
12
693
-51
-49
-49
-4,987
-917
-7,612
Year ended
31-Mar-19
2,528
2,454
74
1,388
-141
-317
-169
-148
-4,494
-1,347
-7,910
Year ended
31-Mar-18
3,507
3411
96
754
-176
-382
-7
-375
-4,400
-1,693
-7,198
Year ended
31-Mar-17
3,881
3,741
140
4,185
-404
-496
57
-553
-5,098
-1,574
-8,997
-10,731
-10,022
-10,292
-9,588
-8,503
Year ended
31-Mar-21
83%
Year ended
31-Mar-20
82%
Year ended
31-Mar-19
66%
Year ended
31-Mar-18
60%
Year ended
31-Mar-17
59%
Year ended
31-Mar-21
1,578
1,253
Year ended
31-Mar-20
1,642
823
Year ended
31-Mar-19
2,411
1,330
Year ended
31-Mar-18
1745
925
Year ended
31-Mar-17
2,212
1,544
Year ended
31-Mar-21
12,679
Year ended
31-Mar-20
13,920
Year ended
31-Mar-19
15,837
Year ended
31-Mar-18
15,323
Year ended
31-Mar-17
14,350
Year ended
31-Mar-21
19.4%
Year ended
31-Mar-20
10.2%
Year ended
31-Mar-19
9.6%
Year ended
31-Mar-18
14.3%
Year ended
31-Mar-17
12.8%
NET CASH/(DEBT)
Net cash / (debt)
(US$ million)
Zinc
India
International
Oil and gas
Iron Ore
Copper
India/Australia
Zambia
Aluminium
Power
Other
Group
GEARING
Gearing
(%)
Gearing
GROUP FREE CASH FLOW
Group Free Cash Flow
(US$ million)
Group Free Cash Flow after capital creditors
Group Free Cash Flow after post capex
CAPITAL EMPLYOED
Capital Employed
(US$ million)
Avg Capital Employed
ROCE
ROCE
(%)
ROCE
278
ACCOUNTS
Integrated Report
Statutory reports
Financial statements
COPPER
COPPER PRODUCTION SUMMARY
Facility
Tuticorin
Silvassa
Product
Copper anode
Sulphuric acid
Phosphoric acid
Copper cathode
Copper rods
Copper cathode
Copper rods
ALUMINIUM, ALUMINA AND BAUXITE
ALUMINIUM PRODUCTION SUMMARY
Company
BALCO
Jharsuguda Aluminium
ALUMINA PRODUCTION SUMMARY
Company
Jharsuguda Aluminium
BAUXITE PRODUCTION SUMMARY
Company
BALCO – Mainpat
BALCO – Bodai Daldali
Year ended
31 March 2021
Mt
-
-
-
-
-
101,435
1,22,390
Year ended
31 March 2020
Mt
-
-
-
-
-
77,490
100,219
Year ended
31 March 2021
Mt
5,69,608
1,399,876
Year ended
31 March 2020
Mt
561,338
1,342,643
Year ended
31 March 2021
Mt
1,840,894
Year ended
31 March 2020
Mt
1,810,702
Year ended
31 March 2021
Mt
-
-
Year ended
31 March 2020
Mt
55,700
469,800
BAUXITE MINE RESOURCE AND RESERVE SUMMARY
Mine
BALCO
Mainpat (Kesra, Kudiridih,
Sapnadar)
Bodai-Daldali (Kawardha)
Total BALCO
MALCO
Kolli Hills and Yercaud
Resources are additional to Reserves
Resources
Measured and
indicated million
mt
Aluminium
grade %
Inferred million
mt
Aluminium
grade %
Reserves
Proved and
probable
reserves million
mt
Aluminium
grade
%
6.2
2.0
8.2
0.8
40.4
43.2
41.1
44.0
1.3
0.5
1.8
42.1
44.4
42.7
4.6
1.9
6.5
0.2
43.6
43.1
43.4
43.0
279
Production and Reserves SummaryVEDANTA RESOURCES LIMITED | INTEGRATED REPORT AND ANNUAL ACCOUNTS 2020-21 | HINDUSTAN ZINC
Zinc and Lead Production Summary:
Company
HZL
Zinc
Lead
Zinc and Lead Mining Summary:
a) Metal mined & metal concentrate
Mine
Type of mine
Rampura Agucha
Rajpura Dariba
Zawar
Kayad
Sindesar Khurd
Total
Underground
Underground
Underground
Underground
Underground
b) Metal in Concentrate (MIC)
Mine
Rampura Agucha
Rajpura Dariba
Zawar
Kayad
Sindesar Khurd
Total
Type of mine
Underground
Underground
Underground
Underground
Underground
Year ended
31 March 2021
Mt
Year ended
31 March 2020
Mt
715,446
2,14,400
688,286
181,370
Ore mined
Zinc concentrate
Lead concentrate
31 March
2021 mt
42,72,902
12,15,169
39,51,282
11,74,825
48,42,264
31 March
2020 mt
39,40,097
10,37,608
32,70,668
11,39,071
50,77,646
31 March
2021 mt
832,646
81,375
170,706
110,447
318,820
31 March
2020 mt
767,935
78,365
139,241
138,219
325,195
31 March
2021 mt
67,764
21,838
1,02,535
11,772
173,017
31 March
2020 mt
60,695
19,119
92,014
13,143
166,776
15,456,442 14,465,090
15,13,995
14,48,956
376,927
351,748
Zinc concentrate
Lead concentrate
31 March
2021 mt
4,14,840
38,452
88,770
56,472
1,57,315
7,55,849
31 March
2020 mt
380,738
37,273
71,672
70,256
160,122
720,060
31 March
2021 mt
38,349
8,395
62,295
6,965
1,00,122
2,16,127
31 March
2020 mt
33,398
7,473
53,765
7,377
95,027
197,041
ZINC AND LEAD MINE RESOURCE AND RESERVE SUMMARY
Zinc India
Mine
Rampura Agucha
Rajpura Dariba
Zawar
Kayad
Sindesar Khurd
Bamnia Kalan
Total
Resources
Reserves
Measured
and
indicated
million mt
10.4
8.1
35.9
0.5
46.7
21.2
122.9
Zinc grade
%
Lead grade
%
Inferred
million
mt
Zinc grade
%
Lead grade
%
14.6
6.4
3.8
11.9
3.9
3.2
4.9
2.2
2.0
2.0
1.6
2.0
1.1
1.9
24.1
33.0
75.2
2.3
19.5
20.8
174.8
8.5
6.5
4.2
6.8
3.5
3.4
5.1
3.1
1.9
2.5
1.2
2.1
1.4
2.3
Proved and
probable
reserves
million
mt
42.7
28.2
31.5
2.6
45.3
-
150.3
Zinc grade
%
Lead grade
%
11.9
5.0
3.1
6.8
3.3
-
6.1
1.4
1.7
1.6
0.8
2.1
-
1.7
Resources are additional to Reserves
280
ACCOUNTSProduction and Reserves Summary
Integrated Report
Statutory reports
Financial statements
Zinc International
Mine
Skorpion
BMM
- Deeps
- Swartberg
- Gamsberg
- Big Syncline Project
Resources
Reserves
Measured
and
indicated
million mt
Zinc grade
%
Lead grade
%
Inferred
million
mt
Zinc grade
%
Lead grade
%
3.6
11.1
10.3
72.6
36.3
6.1
3.0
0.9
6.1
3.0
-
2.6
2.4
0.5
1.1
1.1
-
19.0
78.0
185.6
9.4
-
1.4
8.0
2.4
-
-
2.6
0.6
1.0
Proved and
probable
reserves
million
mt
0.8
4.2
24.4
110.4
-
Zinc grade
%
Lead grade
%
10.8
2.8
0.5
6.1
-
-
2.0
1.8
0.5
-
Resources are additional to Reserves
Zinc Production Summary:
Company
Skorpion
* Skorpion produced 0.6kt in April 20 before moving into Care and Maintenance for rest of the year
Year ended
31 March 2021
Mt
-*
Year ended
31 March 2020
Mt
66,967
Zinc and Lead Mining Summary:
a) Metal mined & metal concentrate
Mine
Type of mine
Skorpion
BMM
Gamsberg
Total
Open Cast
Underground
Underground
Ore mined
Zinc concentrate
Lead concentrate
31 March
2021 mt
-
13,57,068
19,15,561
31 March
2020 mt
1,038,936
1,486,754
3,437,460
31 March
2021 mt
-
62,263
3,05,190
31 March
2020 mt
-
56,857
228,258
31 March
2021 mt
-
40,006
0
31 March
2020 mt
-
54,694
-
Underground
32,72,630
5,963,150
3,67,453
285,115
40,006
54,694
b) Metal in Concentrate (MIC)
Type of mine
Underground
Underground
Underground
Zinc concentrate
Lead concentrate
31 March
2021 mt
30,131
1,44,577
1,74,708
31 March
2020 mt
27,943
107,949
135,892
31 March
2021 mt
27,471
-
27,471
31 March
2020 mt
37,628
-
37,628
Mine
BMM
Gamsberg
Total
IRON ORE
Iron Ore Production Summary
Company
Vedanta Limited
Saleable Iron Ore
Goa
Karnataka
Dempo
Year ended
31 March 2021
Mt
Year ended
31 March 2020
Mt
5.0
0.0
5.0
4.4
0.0
4.4
281
Production and Reserves SummaryVEDANTA RESOURCES LIMITED | INTEGRATED REPORT AND ANNUAL ACCOUNTS 2020-21 | IRON ORE RESOURCE AND RESERVE SUMMARY
Mine
Measured
and indicated
million mt
Iron ore grade
%
Inferred million
mt
Iron ore grade
%
Iron ore Karnataka
14.5
41.7
1.29
47.0
Proved and
probable
reserves million
mt
76.22
Iron ore grade
%
46.3
Resources
Reserves
OIL AND GAS
The Oil and gas reserves data set out below are estimated on the basis set out in the section headed “Presentation of
Information”.
CAIRN INDIA
The Company’s gross reserve estimates are updated at least annually based on the forecast of production profiles,
determined on an asset-by-asset basis, using appropriate petroleum engineering techniques. The estimates of
reserves and resources have been derived in accordance with the Society for Petroleum Engineers “Petroleum
Resources Management System (2018)”. The changes to the reserves are generally on account of future development
projects, application of technologies such as enhanced oil recovery techniques and true up of the estimates. The
management’s internal estimates of hydrocarbon reserves and resources at the period end, based on the current terms
of the PSCs, are as follows:
Particulars
Rajasthan MBA Fields
Rajasthan MBA EOR
Rajasthan Block Other Fields
Ravva Fields
CBOS/2 Fields
Other fields
Gross proved and probable
hydrocarbons initially in place
Gross proved and probable
reserves and resources
Net working interest proved and
probable reserves and resources
(mmboe)
(mmboe)
(mmboe)
31 March 2021
2,307
-
3,603
704
298
352
31 March 2020
2,288
-
3,535
692
292
348
31 March 2021
266
388
470
27
34
44
31 March 2020
317
317
449
28
40
43
31 March 2021
186
271
329
6
14
26
31 March 2020
222
222
314
6
16
25
Total
7,265
7,155
1,194
1,229
832
806
The Company’s net working interest proved and probable reserves is as follows:
Particulars
Reserves as of 1 April 2019*
Additions / revision during the year
Production during the year
Reserves as of 31 March 2020**
Additions / revision during the year
Production during the year
Reserves as of 31 March 2021***
Proved and Probable reserves
Proved and Probable reserves
(developed)
Oil
(mmstb)
315
25
(36)
303
(11)
(32)
260
Gas
(bscf)
264
61
(24)
301
(14)
(28)
259
Oil
(mmstb)
178
22
(36)
164
30
(32)
161
Gas
(bscf)
129
37
(24)
143
51
(28)
166
* Includes probable oil reserves of 116.21 mmstb (of which 16.03 mmstb is developed) and probable gas reserves of 89.00 bscf (of which 24.19
bscf is developed)
** Includes probable oil reserves of 132.23 mmstb (of which 21.94 mmstb is developed) and probable gas reserves of 114.73 bscf (of which
42.64 bscf is developed)
*** Includes probable oil reserves of 111.14 mmstb (of which 23.08 mmstb is developed) and probable gas reserves of 128.41 bscf (of which
52.06 bscf is developed)
282
ACCOUNTSProduction and Reserves Summary
Integrated Report
Statutory reports
Financial statements
SOURCE OF INFORMATION:
In respect of all businesses, the information has been
certified by geologist on behalf of Group management.
BASIS OF PREPARATION
Ore reserves and mineral resources reported herein
comply with the ‘Australasian Code for Reporting of
Identified Mineral Resources and Ore Reserves’. The code
is prepared by the Joint Ore Reserves Committee of the
Australasian Institute of Mining and Metallurgy, Australian
Institute of Geoscientists, and Minerals Council of
Australia, and is commonly referred to as the ‘JORC
Code’. As at the date of this document, the editions of the
JORC Code in force are dated December 2012.
The JORC Code uses the term Ore Reserve for
Reserves. For the purposes of ore and mineral resources
reported herein, the term ore resources have been used
throughout.
Oil and Gas reserves and resources have been
prepared according to the Petroleum Resources
Management Systems (PRMS) approved in June 2018
by the Board of Society of Petroleum Engineers (SPE).
The process included approval by six sponsoring
societies: the World Petroleum Council, the American
Association of Petroleum Geologists, the Society
of Petroleum Evaluation Engineers, the Society of
Exploration Geophysicists, the European Association
of Geoscientists and Engineers, and the Society of
Petrophysicists and Well Log Analysts.
Mineral resources are based on mineral occurrences
quantified on the basis of geological data and an assumed
cut-off grade, and are divided into Measured, Indicated
and Inferred categories reflecting decreasing confidence
in geological and / or grade continuity. The reporting of
resource estimates carries the implication that there are
reasonable prospects for eventual economic exploitation.
An Ore or Mineral Reserve is the economically mineable
part of a Measured or Indicated Mineral Resource. It
includes the effect of dilution and losses which may occur
when the material is mined. Appropriate assessments,
which may include feasibility studies, need to have been
carried out and include consideration of and modification
by realistically assumed mining, metallurgical, economic,
marketing, legal, environmental, social and governmental
factors.
These assessments demonstrate at the time of
reporting that extraction could be reasonably justified.
Ore Reserves are sub-divided in order of decreasing
confidence into Proved Ore Reserves and Probable Ore
Reserves.
The Measured and Indicated mineral resources have been
reported as being exclusive of those mineral resources
modified to produce the ore reserves, in addition to
the ore reserves. The resource and reserve estimates
provided herein comply with the resource and reserve
definitions of the JORC Code.
OTHER INFORMATION:
Alternative performance measures
Introduction
Vedanta Group is committed to providing timely and clear
information on financial and operational performance
to investors, lenders and other external parties, in the
form of annual reports, disclosures, RNS feeds and other
communications. We regard high standards of disclosure
as critical to business success.
Alternative Performance Measure (APM) is an evaluation
metric of financial performance, financial position or cash
flows that is not defined or specified under International
Financial Reporting Standards (IFRS).
The APMs used by the group fall under two categories:
Financial APMs: These financial metrics are usually
derived from financial statements, prepared in
accordance with IFRS. Certain financials metrics
cannot be directly derived from the financial
statements as they contain additional information
such as profit estimates or projections, impact of
macro-economic factors and changes in regulatory
environment on financial performance
Non-Financial APMs: These metrics incorporate non
– financial information that management believes is
useful in assessing the performance of the group.
APMs are not uniformly defined by all the companies,
including those in the Group’s industry. APM’s should be
considered in addition to, and not a substitute for or as
superior to, measures of financial performance, financial
position or cash flows reported in accordance with IFRS.
Purpose
The Group uses APMs to improve comparability of
information between reporting periods and business
units, either by adjusting for uncontrollable or one-
off factors which impacts upon IFRS measures or, by
aggregating measures, to aid the user of the Annual
Report in understanding the activity taking place across
the Group’s portfolio.
APMs are used to provide valuable insight to analysts
and investors along with Generally Accepted Accounting
Practices (GAAP). We believe these measures
assist in providing a holistic view of the company’s
performance.
283
Production and Reserves SummaryVEDANTA RESOURCES LIMITED | INTEGRATED REPORT AND ANNUAL ACCOUNTS 2020-21 | Alternative performance measures (APMs) are denoted by◊ where applicable.
◊ APM terminology*
EBITDA
EBITDA margin (%)
Adjusted revenue
Adjusted EBITDA
Closest equivalent IFRS measure
Operating profit/(loss) before
special items
No direct equivalent
Revenue
Operating profit/(loss) before
special items
Adjusted EBITDA margin
Underlying profit/(loss)
Project Capex
No direct equivalent
Attributable Profit/(loss) before
special items
Expenditure on Property, Plant and
Equipment (PPE)
Free cash flow (FCF) post capex
Net cash flow from operating
activities
Net debt*
ROCE
Net debt is a Non-IFRS measure
and represents total debt after fair
value adjustments under IAS 32
and IFRS 9 as reduced by cash and
cash equivalents, liquid investments
and structured investment, net of
the deferred consideration payable
for such investments (referred as
Financial asset investment net of
related liabilities), if any.
No direct Equivalent
Adjustments to reconcile to primary statements
Operating Profit/(Loss) before special items Add:
Depreciation & Amortization
EBITDA divided by Revenue
Revenue
Less: revenue of custom smelting operations at our
Copper India & Zinc India business
EBITDA
Less:
EBITDA of custom smelting operations at our Copper
India & Zinc India business
Adjusted EBITDA divided by Adjusted Revenue
Attributable profit/(loss) before special items
Less: NCI share in other gains/(losses) (net of tax)
Gross Addition to PPE
Less: Gross disposals to PPE
Add: Accumulated Depreciation on disposals
Less: Decommissioning liability
Less: Sustaining Capex
Net Cash flow from operating activities Less: addition
of property, plant and equipment and intangibles less
proceeds on disposal of property, plant and equipment
Add: Dividend paid and dividend distribution tax paid
Add/less: Other non-cash adjustments
No Adjustments
Not Applicable
*In December 2018, the Group has made a structured investment which is classified as Financial Assets investments. We believe liquidity of
the investment makes its comparable to the other assets included previously in the debt calculation; therefore, inclusion gives more reliable
and relevant information.
ROCE for FY2021 is calculated based on the working summarized below. The same method is used to calculate the
ROCE for all previous years (stated at other places in the report).
Particulars
Operating Profit Before Special Items
Less: Cash Tax Outflow
Operating Profit before special Items less Tax outflow (a)
Opening Capital Employed (b)
Closing Capital Employed (c)
Average Capital Employed (d)= (b+c)/2
ROCE (a)/(d)
284
Period ended
31 March 2021
2,701
242
2,459
12,295
13,062
12,679
19.4%
ACCOUNTSProduction and Reserves Summary Integrated Report
Statutory reports
Financial statements
Adjusted Revenue, EBITDA & EBITDA Margin for FY 2021 is calculated based on the working summarised below. The
same method is used to calculate the adjusted revenue and EBITDA for all previous years (stated at other places in the
report).
Particulars
Revenue
Less: Revenue of Custom smelting operations
Adjusted Revenue(a)
EBITDA
Less: EBITDA of Custom smelting operations
Adjusted EBITDA(b)
Adjusted EBITDA Margin (b)/(a)
Period ended
31 March 2021
11,722
(1,469)
10,253
3,800
(21)
3,821
37%
285
Production and Reserves SummaryVEDANTA RESOURCES LIMITED | INTEGRATED REPORT AND ANNUAL ACCOUNTS 2020-21 | Adapted Comparator Group
The new comparator group of companies used for the
purpose of comparing TSR performance in relation to
the LTIP, adopted by the Remuneration Committee on
01 February 2006 and replacing the previous comparator
group comprising companies constituting the FTSE
Worldwide Mining Index (excluding precious metals)
Adjusted EBITDA
Group EBITDA net of EBITDA from custom smelting
operations at Copper India & Zinc India operations.
Adjusted EBITDA margin
EBITDA margin computed on the basis of Adjusted
EBITDA and Adjusted Revenue as defined elsewhere
Adjusted Revenue
Group Revenue net of revenue from custom smelting
operations at Copper India & Zinc India operations.
Aluminium Business
The aluminium business of the Group, comprising of its
fully-integrated bauxite mining, alumina refining and
aluminium smelting operations in India, and trading
through the Bharat Aluminium Company Limited and
Jharsuguda Aluminium (a division of Vedanta Limited), in
India
Articles of Association
The articles of association of Vedanta Resources Limited
Attributable Profit
Profit for the financial year before dividends attributable
to the equity shareholders of Vedanta Resources Limited
BALCO
Bharat Aluminium Company Limited, a company
incorporated in India.
BMM
Black Mountain Mining Pty
Board or Vedanta Board
The board of directors of the Company
Capital Employed
Net assets before Net (Debt)/Cash
Capex
Capital expenditure
CEO
Chief executive officer
CFO
Chief Financial Officer
CII
Confederation of Indian Industries
CO2
Carbon dioxide
COP
Cost of production
CMT
Copper Mines of Tasmania Pty Limited, a company
incorporated in Australia
Company or Vedanta
Vedanta Resources Limited
Copper Business
The copper business of the Group, comprising:
A copper smelter, two refineries and two copper rod
plants in India, trading through Vedanta Limited, a
company incorporated in India;
One copper mine in Australia, trading through
Copper Mines of Tasmania Pty Limited, a company
incorporated in Australia; and
An integrated operation in Zambia consisting
of three mines, a leaching plant and a smelter,
trading through Konkola Copper Mines Limited, a
company incorporated in Zambia which is treated
as discontinued operations and deconsolidated the
same w.e.f 1st June’2019, affiliation with Zambian
government is in progress.
Board Committees
The committees reporting to the Board: Audit,
Remuneration, Nominations, and Sustainability, each
with its own terms of reference
Copper India
Copper Division of Vedanta Limited comprising of a
copper smelter, two refineries and two copper rod plants
in India.
Businesses
The Aluminium Business, the Copper Business, the
Zinc, lead, silver, Iron ore, Power and Oil & Gas Business
together
Cents/lb
US cents per pound
CRRI
Central Road Research Institute
Boepd
Barrels of oil equivalent per day
Bopd
Barrels of oil per day
Cairn India
Erstwhile Cairn India Limited and its subsidiaries
CRISIL
CRISIL Limited (A S&P Subsidiary) is a rating agency
incorporated in India
CSR
Corporate social responsibility
286
ACCOUNTSGlossary and Definitionsa Integrated Report
Statutory reports
Financial statements
CTC
Cost to company, the basic remuneration of executives,
which represents an aggregate figure encompassing
basic pay, pension contributions and allowances
CY
Calendar year
% Change
It is calculated and presented on absolute numbers.
Hence, it would not match with % calculated on face value
numbers. DDT
Dividend distribution tax
Deferred Shares
Deferred shares of £1.00 each in the Company
DFS
Detailed feasibility study
DGMS
Director General of Mine Safety in the Government of
India
Directors
The Directors of the Company
DMF
District Mineral Fund
DMT
Dry metric tonne
ESP
Electrostatic precipitator
Executive Committee
The Executive Committee to whom the Board has
delegated operational management. It comprises of the
Chief Executive Officer and the senior management of
the Group
Executive Directors
The Executive Directors of the Company
Expansion Capital Expenditure
Capital expenditure that increases the Group’s operating
capacity
FACOR
Ferro Alloys Corporation Ltd.
Financial Statements or Group financial statements
The consolidated financial statements for the Company
and the Group for the year ended 31 March 2019 as
defined in the Independent Auditor’s Report to the
members of Vedanta Resources Limited
Free Cash Flow
Net Cash flow from operating activities Less: purchases
of property, plant and equipment and intangibles Add
proceeds on disposal of property, plant and equipment
Add: Dividend paid and dividend distribution tax paid
Add/less: Other non-cash adjustments
Dollar or $
United States Dollars, the currency of the United States
of America
FY
Financial year i.e. April to March.
EAC
Expert advisory committee
EBITDA
EBITDA is a non-IFRS measure and represents earnings
before special items, depreciation, amortisation, other
gains and losses, interest and tax.
EBITDA Margin
EBITDA as a percentage of turnover
Economic Holdings or Economic Interest
The economic holdings/interest are derived by combining
the Group’s direct and indirect shareholdings in the
operating companies. The Group’s Economic Holdings/
Interest is the basis on which the Attributable Profit and
net assets are determined in the consolidated accounts
E&OHSAS
Environment and occupational health and safety
assessment standards
E&OHS
Environment and occupational health and safety
management system
ESOP
Employee share option plan
GAAP, including UK GAAP
Generally Accepted Accounting Principles, the common
set of accounting principles, standards and procedures
that companies use to compile their financial statements
in their respective local territories
GDP
Gross domestic product
Gearing
Net Debt as a percentage of Capital Employed
GJ
Giga joule
Government or Indian Government
The Government of the Republic of India
Gratuity
A defined contribution pension arrangement providing
pension benefits consistent with Indian market practices
Group
The Company and its subsidiary undertakings and, where
appropriate, its associate undertaking
Gross finance costs
Finance costs before capitalisation of borrowing costs
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Glossary and DefinitionsaVEDANTA RESOURCES LIMITED | INTEGRATED REPORT AND ANNUAL ACCOUNTS 2020-21 | HIIP
Hydrocarbons initially-in place
HSE
Health, safety and environment
LIC
Life Insurance Corporation
LME
London Metals Exchange
HZL
Hindustan Zinc Limited, a company incorporated in India
London Stock Exchange
London Stock Exchange Limited
IAS
International Accounting Standards
IFRIC
IFRS Interpretations Committee
IFRS
International Financial Reporting Standards
INR
Indian Rupees
Interest cover
EBITDA divided by gross finance costs (including
capitalised interest) excluding accretive interest on
convertible bonds, unwinding of discount on provisions,
interest on defined benefit arrangements less investment
revenue
IPP
Independent power plant
Iron Ore Sesa
Iron ore Division of Vedanta Limited, comprising of Iron
ore mines in Goa and Karnataka in India.
Lost time injury
An accident/injury forcing the employee/contractor to
remain away from his/her work beyond the day of the
accident
LTIFR
Lost time injury frequency rate: the number of lost time
injuries per million man hours worked
LTIP
The Vedanta Resources Long-Term Incentive Plan or
Long-Term Incentive Plan
MALCO
The Madras Aluminium Company Limited, a company
incorporated in India
Management Assurance Services (MAS)
The function through which the Group’s internal audit
activities are managed
MAT
Minimum alternative tax
MBA
Mangala, Bhagyam, Aishwarya oil fields in Rajasthan
Jharsuguda Aluminium
Aluminium Division of Vedanta Limited, comprising of an
aluminium refining and smelting facilities at Jharsuguda
and Lanjigarh in Odisha in India.
MIC
Metal in concentrate
KCM or Konkola Copper Mines
Konkola Copper Mines Limited, a company incorporated
in Zambia
Key Result Areas or KRAs
For the purpose of the remuneration report, specific
personal targets set as an incentive to achieve short-
term goals for the purpose of awarding bonuses, thereby
linking individual performance to corporate performance
KPIs
Key performance indicators
KTPA
Thousand tonnes per annum
Kwh
Kilo-watt hour
KBOEPD
Kilo barrel of oil equivalent per day
LIBOR
London inter bank offered rate
288
MOEF
The Ministry of Environment, Forests and Climate change
of the Government of the Republic of India
MMSCFD
Million standard cubic feet per day
MT or Tonnes
Metric tonnes
MU
Million Units
MW
Megawatts of electrical power
NCCBM
National Council of Cement and Building Materials
Net (Debt)/Cash
Net debt is a Non-IFRS measure and represents total debt
after fair value adjustments under IAS 32 and IFRS 9 as
reduced by cash and cash equivalents, liquid investments
and structured investment, net of the deferred
consideration payable for such investments (referred as
Financial asset investment net of related liabilities), if any.
ACCOUNTSGlossary and Definitionsa Integrated Report
Statutory reports
Financial statements
NGO
Non-governmental organisation
Non-executive Directors
The Non-Executive Directors of the Company
Oil & Gas business
Oil & Gas division of Vedanta Limited, is involved in the
business of exploration, development and production of
Oil & Gas.
OALP
Open Acreage licensing Policy
Ordinary Shares
Ordinary shares of 10 US cents each in the Company
ONGC
Oil and Natural Gas Corporation Limited, a company
incorporated in India
OPEC
Organisation of the Petroleum Exporting Countries
PBT
Profit before tax
PPE
Property plant and equipment
Provident Fund
A defined contribution pension arrangement providing
pension benefits consistent with Indian market practices
PSC
A “production sharing contract” by which the
Government of India grants a license to a company or
consortium of companies (the ‘Contractor”) to explore
for and produce any hydrocarbons found within a
specified area and for a specified period, incorporating
specified obligations in respect of such activities
and a mechanism to ensure an appropriate sharing
of the profits arising there from (if any) between the
Government and the Contractor.
PSP
The Vedanta Resources Performance Share Plan
Recycled water
Water released during mining or processing and then
used in operational activities
Senior Management Group
For the purpose of the remuneration report, the key
operational and functional heads within the Group
SEWT
Sterlite Employee Welfare Trust, a long-term investment
plan for Sterlite senior management
SHGs
Self help groups
SBU
Strategic Business Unit
STL
Sterlite Technologies Limited, a company incorporated in
India
Special items
Items which derive from events and transactions that
need to be disclosed separately by virtue of their size or
nature
Sterling, GBP or £
The currency of the United Kingdom
Superannuation Fund
A defined contribution pension arrangement providing
pension benefits consistent with Indian market practices
Sustaining Capital Expenditure
Capital expenditure to maintain the Group’s operating
capacity
% Share in EBITDA
It is % share of respective segment’s EBITDA to Vedanta
Resources Limited’s EBITDA.TCM
Thalanga Copper Mines Pty Limited, a company
incorporated in Australia
TC/RC
Treatment charge/refining charge being the terms used
to set the smelting and refining costs
TGT
Tail gas treatment
TLP
Tail Leaching PlantTPA
Metric tonnes per annum
Return on Capital Employed or ROCE
Operating profit before special items net of tax outflow,
as a ratio of average capital employed
TPM
Tonne per month
Revenue Sharing Contract
Contract between Vedanta & Joint venture which define
share of revenue for each joint venture partner.
RO
Reverse osmosis
TSPL
Talwandi Sabo Power Limited, a company incorporated in
India
TSR
Total shareholder return, being the movement in the
Company’s share price plus reinvested dividends
289
Glossary and DefinitionsaVEDANTA RESOURCES LIMITED | INTEGRATED REPORT AND ANNUAL ACCOUNTS 2020-21 | Twin Star
Twin Star Holdings Limited, a company incorporated in
Mauritius
VRCL
Vedanta Resources Cyprus Limited, a company
incorporated in Cyprus
Twin Star Holdings Group
Twin Star and its subsidiaries and associated undertaking
US cents
United States cents
Underlying profit/ (loss)
Attributable profit/(loss) before special items Less: NCI
share in other gains/(losses) (net of tax)
Vedanta Limited (formerly known as Sesa Sterlite
Limited/ Sesa Goa Limited)
Vedanta Limited, a company incorporated in India
engaged in the business of Oil & Gas exploration and
production, copper smelting, Iron Ore mining, Alumina &
Aluminium production and Energy generation.
VRFL
Vedanta Resources Finance Limited, a company
incorporated in the United Kingdom
VRHL
Vedanta Resources Holdings Limited, a company
incorporated in the United Kingdom
Water Used for Primary Activities
Total new or make-up water entering the operation
and used for the operation’s primary activities; primary
activities are those in which the operation engages to
produce its product
WBCSD
World Business Council for Sustainable Development
VFJL
Vedanta Finance (Jersey) Limited, a company
incorporated in Jersey
ZCI
Zambia Copper Investment Limited, a company
incorporated in Bermuda
VGCB
Vizag General Cargo Berth Private Limited, a company
incorporated in India
ZCCM
ZCCM Investments Holdings Limited, a company
incorporated in Zambia and a minority shareholder of
Konkola Copper Mines Limited
Volcan
Volcan Investments Limited, a company incorporated in
the Bahamas
ZRA
Zambia Revenue Authority
290
ACCOUNTSGlossary and Definitionsa Notes
Notes
VEDANTA LIMITED
1st Floor, ‘C’ wing, Unit 103, Corporate Avenue, Atul Projects,
Chakala, Andheri (E), Mumbai - 400 093, Maharashtra
CIN: L13209MH1065PLC291394
| www. vedantalimited.com