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Channelling
opportunities
VEDANTA LIMITED
INTEGRATED REPORT AND ANNUAL ACCOUNTS
2017-18
Core Purpose
Vedanta is a globally
diversified natural
resources company with
low-cost operations. We
empower our people to
drive excellence and
innovation to create value
for our stakeholders. We
demonstrate world-class
standards of governance,
safety, sustainability and
social responsibility.
Our reporting theme
The theme for our 2018 Integrated Report is
‘Channelling Growth Opportunities’. We expect
FY2019 to be another productive year for your
Company, with ramp-ups across Zinc, Oil & Gas and
Aluminium businesses continuing. The next phase of
growth projects announced during the year set a strong
base for the future. With a strong balance sheet and a
clear capital allocation strategy, we are confident about
Vedanta’s prospects for the coming years and are
optimistic about the long-term outlook for the global
resources sector.
Management
Assurance Statement
About the Report
This is the first Integrated Report of Vedanta Limited.
The Report aims to provide a holistic picture of our
financial and non-financial performance to our
stakeholders. It aims to present the Company’s
preparedness for short, medium and long-term value
creation across financial, environmental, social and
governance aspects. It is in line with the Regulation 34
of the SEBI (Listing Obligations and Disclosure
Requirements) Regulations, 2015 and SEBI circular on
voluntary adoption of Integrated Reporting, dated
February 6, 2017.
The non-financial information, value-creation process,
strategic framework, material issues and other key
content elements of the Report are presented as per
the Integrated Reporting framework of the
Integrated Reporting Council (IIRC).
Regarding the Financial Statements 2018
We have provided consolidated and standalone
financial statements in our printed Report prepared in
accordance with the Indian Accounting Standards (Ind
AS) notified under the Companies (Indian Accounting
Standards) Rules, 2015 (as amended from time to time).
In line with our ambition and value creation, this Report
is structured around our stakeholders and reflects our
transition, successes and future aspirations.
Our primary stakeholders that Vedanta impacts, and
who influence our ability to achieve our vision, have
been identified as our people, shareholders, principals,
suppliers, customers, communities and the
environment.
Our material matters are derived by considering the
factors that could substantially affect our ability to
create value in the short, medium, or long term and
these matters have formed the content of the Report.
An independent audit was performed by SR Batliboi &
Co., LLP, expressing an unmodified opinion. The
opinion on the financial statements is included in the
IAR, on pages 188 and 271.
Scope and Boundary
This Report covers information on manufacturing
operations of Vedanta Limited, its subsidiaries, raw
material locations and corporate offices.
Board responsibility
The Board of Directors acknowledges its
responsibilities to ensure the integrity of this Integrated
Report. The Board believes the Report addresses all
material issues and presents the integrated
performance of the Group and its impact in a fair and
accurate manner. The Board authorized this Report for
release on 3 May, 2018.
Forward-looking statements
Certain statements in this document constitute ‘forward-looking
statements’ which involve known and unknown risks and
opportunities, other uncertainties and important factors that could
turn out to be materially different following the publication of
actual results.
These forward-looking statements speak only as of the date of this
document. The Company undertakes no obligation to update
publicly, or release any revisions, to these forward-looking
statements, to reflect events or circumstances after the date of this
document, or to reflect the occurrence of anticipated events.
Contents
Strategic Report
IFC
Core Purpose & Management
Assurance Statement
2-3
4-5
6-7
8-9
Vedanta at a Glance
Highlights 2017-18
The Vedanta Investment Case
Chairman’s Statement
10-13
CEO’s Statement
Channelling Growth Opportunities
14-15
16-17
18-19
Oil for India, from India
Gamsberg: The Market’s Major
New Source of Zinc
Zinc India: Success Beneath
the Surface
Our Integrated Approach
20-21
22-23
24-25
26-27
28-29
30-37
38-41
42-43
44-47
48-49
Materiality Matrix
Our Six Capitals and Underlying
Values
Value Creation Model
Strategic Framework
Key Performance Indicators
Opportunities and Risks
Stakeholder Engagement
Board of Directors
Executive Committee
Awards & Accolades
Management Review
Market Review
50-55
56-67
Sustainability & CSR
68-105 Management Discussion & Analysis
Statutory Reports
106-117
Business Responsibility Report
118-163
Directors’ Report
164-188
Report on Corporate Governance
Financial Statements
189-271
Standalone Financials
272-372 Consolidated Financials
FY2018 was a transformational year
for Vedanta. The diversified,
well-invested and low-cost
portfolio of the Company delivered
industry-leading volume growth
during the year.
Navin Agarwal
Chairman
Gamsberg mine
2
Vedanta Limited Integrated Report and Annual Accounts 2017-18
Vedanta at a Glance
Large and diversified asset base
of long-life, low-cost assets
Building a world-class portfolio
Oil & Gas
Zinc-Lead-Silver
Aluminium
Power
Copper
Iron Ore
Operator of
25%
of India’s crude oil production
Business
Cairn India
Production volume in FY2018
186 kboepd
(Average daily gross production)
FY2018 exit: 200 kboepd
EBITDA FY2018 (` crore)
5,429
Asset highlights
of market share in India’s zinc market 40%
78%
share in India’s primary market
9 GW
diversified power portfolio
33%
market share for refined copper in India
Largest
private sector exporter in India
Zinc India (HZL)
Zinc International
Aluminium smelters at Jharsuguda
and Korba (BALCO), Lanjigarh
Alumina Refinery
Power plants at Talwandi Sabo,
Copper India
Iron Ore India
Jharsuguda and Korba
960 kt Zinc-lead, Zinc India
558 tonnes Silver, Zinc India
157 kt Zinc-lead, Zinc International
1,675 kt Aluminium
1,209 kt Alumina
12,258 Zinc India
1,415 Zinc International
2,904
11 bn Kwh
(Power Sales)
403 kt
7.1 mt
1,669
1,308
460
• Largest private sector oil and gas
producer in India
• Executing one of the largest polymer
Enhanced Oil Recovery (EOR) projects
in the world
• World’s second-largest integrated
zinc-lead producer, operating the
world’s largest zinc mine at Rampura
Agucha, India
• Among the top 10 silver producers
globally
• Gamsberg R&R potential of 215 mt with
15 mt of Zinc MIC
Application areas
• Largest aluminium capacity in India of
• One of India’s largest power generators
• One of the largest copper producers
• Karnataka iron ore mine Reserves and
2.3 mtpa
• Strategically located large-scale assets
with integrated power plants and an
alumina refinery
• 3.6 GW of commercial power
in India
generation capacity, balance for captive
usage
• Leading producer of wind power in India
Resources (R&R) of 100 mt, with life of
20 years
Crude oil is used by hydrocarbon refineries
and natural gas is mainly used by the
fertiliser and power generation sectors
• Galvanising for infrastructure and
• Finds use in construction, transportation
construction sector
and electrical industries
• Die-casting alloys, brass, oxides and
• Used to produce ingots, wire rods,
chemicals
billets, primary foundry alloys and rolled
products
60% is for captive use while 40% is used
for commercial purposes (92% is backed
by long-term power purchase agreements
with local Indian distribution companies)
• Used for making cables, transformers,
• Essential for steel manufacturing
castings, motors and castings and
• Used in construction, infrastructure and
alloy-based products
automotive sectors
Vedanta Limited Integrated Report and Annual Accounts 2017-18
3
Building a world-class portfolio
Oil & Gas
Zinc-Lead-Silver
Aluminium
Power
Copper
Iron Ore
Operator of
25%
of India’s crude oil production
Business
Cairn India
Production volume in FY2018
186 kboepd
(Average daily gross production)
FY2018 exit: 200 kboepd
EBITDA FY2018 (` crore)
5,429
Asset highlights
78%
of market share in India’s zinc market 40%
share in India’s primary market
9 GW
diversified power portfolio
33%
market share for refined copper in India
Largest
private sector exporter in India
Zinc India (HZL)
Zinc International
Aluminium smelters at Jharsuguda
and Korba (BALCO), Lanjigarh
Alumina Refinery
Power plants at Talwandi Sabo,
Jharsuguda and Korba
Copper India
Iron Ore India
960 kt Zinc-lead, Zinc India
558 tonnes Silver, Zinc India
157 kt Zinc-lead, Zinc International
1,675 kt Aluminium
1,209 kt Alumina
12,258 Zinc India
1,415 Zinc International
2,904
11 bn Kwh
(Power Sales)
403 kt
7.1 mt
1,669
1,308
460
• Largest private sector oil and gas
producer in India
• World’s second-largest integrated
zinc-lead producer, operating the
• Largest aluminium capacity in India of
2.3 mtpa
• Executing one of the largest polymer
world’s largest zinc mine at Rampura
• Strategically located large-scale assets
Enhanced Oil Recovery (EOR) projects
Agucha, India
with integrated power plants and an
in the world
• Among the top 10 silver producers
alumina refinery
• One of India’s largest power generators
• 3.6 GW of commercial power
generation capacity, balance for captive
usage
• Leading producer of wind power in India
• One of the largest copper producers
in India
• Karnataka iron ore mine Reserves and
Resources (R&R) of 100 mt, with life of
20 years
Application areas
globally
• Gamsberg R&R potential of 215 mt with
15 mt of Zinc MIC
Crude oil is used by hydrocarbon refineries
• Galvanising for infrastructure and
• Finds use in construction, transportation
and natural gas is mainly used by the
fertiliser and power generation sectors
construction sector
and electrical industries
• Die-casting alloys, brass, oxides and
• Used to produce ingots, wire rods,
chemicals
billets, primary foundry alloys and rolled
products
60% is for captive use while 40% is used
for commercial purposes (92% is backed
by long-term power purchase agreements
with local Indian distribution companies)
• Used for making cables, transformers,
castings, motors and castings and
alloy-based products
• Essential for steel manufacturing
• Used in construction, infrastructure and
automotive sectors
Integrated Report Management Review Statutory Reports Financial Statements 4
Vedanta Limited Integrated Report and Annual Accounts 2017-18
Highlights 2017-18
Financial highlights
• Revenue increased by 22% to ` 92,923 crore (FY2017:
` 76,171 crore) driven by firmer commodity prices and
volume ramp-ups
• EBITDA at ` 25,470 crore, up 19% (FY2017: ` 21,437
crore)
• Robust adjusted EBITDA margin of 36% (FY2017: 39%)
• ROCE improved by 2.5% to 17.5% (FY2017: 15%)
• Free Cash Flow (FCF) post capex of ` 7,880 crore
(FY2017: ` 13,312 crore)
• Gross debt at ` 58,159 crore (FY2017: ` 71,569 crore),
a reduction of ` 8,512 crore in 12 months (excluding
repayment of temporary borrowing by Zinc India and
preference shares issued pursuant to the Cairn India
merger in April 2017)
• Net debt at ` 21,958 crore (FY2017: ` 8,099 crore)
• Strong financial position with cash and liquid investments
of ` 36,201 crore
Business highlights
Oil & Gas
• March 2018 exit run-rate of over 200 kboepd
• Growth projects on track with contracts of US$1.3 billion
(gross) awarded
Zinc India
• Record annual production of refined zinc-lead at 960 kt
• Record annual production of refined silver at 558 tonnes
• On track for ramp-up of mined metal to 1.2 mt by
FY2020
Zinc International
• Annual production in line with guidance
• Gamsberg project on track with production expected
by mid-CY2018
Iron Ore
• Mining cap allocation for Karnataka increased from
• Crisil upgraded the Company’s Rating (CFR) from
2.3 mt to 4.5 mt
‘AA/Stable’ to ‘AA/Positive’
• Goa mining operations shut due to state-wide ban
• Vedanta Limited announced a record interim dividend of
` 7,881 crore in March 2018
• Contribution to the exchequer of c. ` 33,000 crore
Copper India
• Record annual production
in FY2018
• Vedanta Limited’s resolution plan to acquire Electrosteel
Steels Limited approved by NCLT; the acquisition,
subject to completion of due processes, will complement
the Group’s existing Iron Ore business through vertical
integration
Aluminium
• Record annual production at 1.7 mt, with an exit run-rate
of c. 2.0 mtpa
Power
• 1,980 MW Talwandi Sabo power plant achieved 93%
availability in Q4 FY2018 (FY2018: 74%)
Vedanta Limited Integrated Report and Annual Accounts 2017-18
5
Consolidated results
Net Sales/Income from Operations
EBITDA
EBITDA Margin1 (%)
Profit before Depreciation and Taxes
Profit before Exceptional Items
Profit After Taxes
Profit After Taxes (before Exceptional Items)
Profit After Taxes (before Exceptional Items & DDT)
Attributable PAT after Exceptional Items
Attributable PAT (before Exceptional Items)
Attributable PAT (before Exceptional Items & DDT)
Basic Earnings Per Share (`/share)
Basic EPS before Exceptional Items (`/share)
Basic EPS before Exceptional Items & DDT (`/share)
ROCE (%)
Total Dividend (`/share)
1. Excludes custom smelting at Copper India and Zinc India operations.
2. Previous period figures have been regrouped/rearranged wherever necessary to conform to current period presentation.
(` crore, unless stated)
FY2018
92,923
25,470
36%
22,955
16,672
13,692
12,869
11,333
10,342
9,561
8,025
28.30
26.17
21.96
17.5
21.20
FY2017
76,171
21,437
39%
20,058
13,766
11,319
11,467
11,663
6,958
7,127
7,323
23.47
24.04
24.70
15.0
19.45
% change
22%
19%
-
14%
21%
21%
12%
(3)%
49%
34%
10%
21%
9%
(11)%
17%
9%
Revenue
(` crore)
3
2
9
,
2
9
3
9
9
,
7
6
1
7
1
,
6
7
EBITDA
(` crore)
4
8
1
,
5
1
0
7
4
,
5
2
7
3
4
,
1
2
Return on Capital
Employed (ROCE) (%)
Dividend
(` per share)
%
5
.
7
1
%
0
.
5
1
2
.
1
2
5
.
9
1
%
5
.
4
5
.
3
2016
2017
2018
2016
2017
2018
2016
2017
2018
2016
2017
2018
Integrated Report Management Review Statutory Reports Financial Statements 6
Vedanta Limited Integrated Report and Annual Accounts 2017-18
The Vedanta Investment Case
Our investment case is focused on delivering sustainable long-term returns
to our shareholders and creating value for our broader stakeholder base.
1 A large, low-cost and diversified asset base with
an attractive commodity mix
Vedanta’s large-scale, diversified asset
portfolio, with attractive cost positions in
some of the core businesses, positions the
Company well to deliver strong margins
and free cash flows through the commodity
cycle. Vedanta’s focus on base metals and
oil, commodities with strong fundamentals
and leading demand growth, makes the
Company’s commodity mix particularly
attractive.
In FY2018, markets have seen an upturn
driven by improved demand and supply-
side constraints. This has benefitted the
commodities sector, and in particular
Vedanta’s core commodities, including
zinc, aluminium and oil & gas.
%
2
8
.
%
4
.
1
r
e
p
p
o
C
Demand 2018-2030 CAGR
■ India Demand ■ Global Demand
Vedanta Limited Commodity Presence
Source: Wood Mackenzie, EIA
%
7
6
.
%
4
6
.
%
0
5
.
%
8
4
.
%
6
.
2
%
7
.
1
%
6
.
1
c
n
Z
i
d
a
e
L
%
4
3
.
%
4
3
.
%
3
3
.
%
9
.
1
l
e
k
c
N
i
%
3
.
0
e
r
o
n
o
r
I
%
5
.
0
l
a
o
c
l
a
m
r
e
h
T
%
0
2
.
%
4
.
0
s
a
G
&
l
i
O
%
0
.
1
l
a
o
c
t
e
M
i
i
m
u
n
m
u
A
l
2 We’re ideally positioned to capitalise on India’s growth potential
India is Vedanta’s main market, and one that
has huge growth potential. Current per
capita metal consumption in India is
significantly lower than the global average.
Urbanisation and industrialisation,
supported by government initiatives on
infrastructure and housing, continue to
drive strong economic growth and
generate demand for natural resources.
We are strongly and uniquely positioned to
benefit from this growth due to our:
• Established operations in India;
• Strong market position across our
businesses: we are India’s largest base
metals producer and the largest private
sector oil producer; and
• Operating team with a strong track
record of executing growth in India.
GDP (real)
Per capita income (real)
Urbanisation
India Key Metrics
$6.0 trillion
(2030)
$3,979
(2030)
$2.8 trillion
(2018)
$2,083
(2018)
40%
(2030)
34%
(2018)
India Demand Potential
Improving
regulatory
environment:
Transparent
auctioning and
private ownership
Aluminium
Consumption
(kg/capita)
.
9
5
2
Copper
Consumption
(kg/capita)
Zinc
Consumption
(kg/capita)
0
8
.
.
7
8
7
.
1
0
5
.
9
.
1
.
5
0
1
.
3
.
4
0
Oil
Consumption
(bbl/capita)
.
8
4
4
3
.
3
.
1
India Global China
India Global China
India Global China
India Global China
Source: Wood Mackenzie, EIA, BMI, Global Insight
Note: All commodities-demand correspond to primary demand
3 Well-invested assets driving
Growth Capex
(` Cr)
Free Cash Flow pre Capex
(` Cr)
cash flow growth
We are ramping up production across a
number of our businesses as a result of
investments in the past years. We have
already started seeing the results of our
investments, with Zinc India and Aluminium
delivering record output in the past year.
Now, with the new growth plans for Oil &
Gas that we initiated in FY2018, we expect
further delivery on ramp-ups and strong
growth in FCF generation.
1
5
6
,
0
1
8
1
6
,
9
9
6
4
,
5
2
7
5
,
4
9
6
8
,
3
9
3
1
,
7
1
1
6
0
,
7
2 1
4
0
,
3
1
5
8
8
,
7
1
9
4
3
,
3
1
2014 2015 2016 2017 2018
2014 2015 2016 2017 2018
Vedanta Limited Integrated Report and Annual Accounts 2017-18
7
4 Operational excellence and technology, driving
efficiency and sustainability
We constantly strive to improve our
operations, integrate our businesses
through the value chain and optimise our
performance through operational
efficiencies and innovative technological
solutions. We employ these tools to further
ensure that our operations have a positive
impact on our stakeholders and, more
broadly, society.
EBITDA Margin
(%*)
LTIFR
%
7
4
%
1
4
%
9
3
%
6
3
%
0
3
9
4
0
.
3
4
0
.
1
4
0
.
0
4
0
.
5
3
.
0
2014 2015 2016 2017 2018
2014 2015 2016 2017 2018
*
Excludes custom smelting at
Zinc India and Copper operations
Note: ICMM 2014 methodology adopted
from FY2016 onwards
ROCE
(%)
Strong Balance Sheet
%
5
.
7
1
%
0
.
5
1
%
5
.
4
70%
60%
50%
40%
30%
20%
10%
2
g
n
i
r
a
e
G
Peers1
International
Domestic
0.8, 22%
Vedanta Limited CRISIL rating AA
2016
2017
2018
0%
0.0
0.5
1.0
1.5
2.0
2.5
3.0
3.5
Net Debt/EBITDA3
1. Peers include BHP Billiton, Rio Tinto, Anglo American, Glencore, Teck Resources, Freeport, Hindalco, Tata Steel and
JSW Steel
2. Gearing is calculated as Net Debt divided by the sum of Net Debt and Equity (based on reported numbers)
3. Net Debt as per last reported EBITDA as per CY2018 consensus estimates
5 Strong financial profile
Our operational performance coupled with a
strong focus on optimisation of capital
allocation has helped strengthen Vedanta’s
financial profile. In FY2018, operational
delivery, supported by the robust price
environment, has helped deliver:
• Strong FCF post growth capex of
` 7,880 crore
• Gross debt reduction of ` 8,512 crore
• Robust ROCE of 17.5%
• Highest ever interim dividend of ` 7,881
crore paid in FY2018 (dividend yield of
8%)
• Amongst the strongest balance sheets,
with respect to Net Debt/ EBITDA
(0.9x) and gearing, amidst global
diversified peers, and the best in India
• Cash and liquid investments of
` 36,201 crore
• CRISIL (subsidiary of S&P) and India
Ratings revised outlook to ‘AA/Positive’
from ‘AA/Stable’ in March 2018 and
October 2017, respectively
6 Proven track record
Total Production
(Copper equivalent kt)
We have a proven management team with
a diverse and extensive range of sector and
global experience who ensure that
operations are run efficiently and
responsibly. We have taken a disciplined
approach to development, growing our
production steadily across our operations
with an ongoing focus on operational
efficiency and cost savings. Since our listing
in 2003, our assets have delivered an
average of 16% CAGR production growth.
16% CAGR Production Growth since Listing
7 . 2 x o r 1 6 % C A G R
c. 55%
3,000
2,500
2,000
1,500
1,000
)
t
k
(
n
o
i
t
c
u
d
o
r
P
t
n
e
a
v
u
q
E
l
i
r
e
p
p
o
C
500
0
FY04
FY05
FY06
FY07
FY08
FY09
FY10
FY11
FY12
FY13
FY14
FY15
FY16
FY17
FY18
Design
capacity
Zinc-lead
Silver
Copper
Aluminium
Power
Iron Ore
Oil & Gas
Note: All commodity and power capacities rebased to copper equivalent capacity (defined as production x commodity price/copper price) using average commodity prices for FY2018.
Power rebased using FY2018 realisations, copper custom smelting production rebased at TC/RC for FY2018, iron ore volumes refer to sales with prices rebased at realised prices for FY2018
Integrated Report Management Review Statutory Reports Financial Statements
8
Vedanta Limited Integrated Report and Annual Accounts 2017-18
Chairman’s Statement
Sound
foundations
for the future
Navin Agarwal
Chairman
I am delighted to report that
your Company delivered
another excellent year in
FY2018.
Strong operational achievements were
complemented by a robust financial
performance that returned significant
cash to shareholders. This was made
possible by the skill and commitment of
our management and employees, who
delivered the planned ramp-ups across our
portfolio of well-invested Tier-I assets.
A disciplined capital allocation
approach, underpinned by strong
commodity prices, provided further
strength to our performance.
But we are equally proud of the increasingly
significant role we are playing in Indian
society. As one of the country’s largest
corporates, we continued to create jobs,
support our host communities, generate
value along our entire supply chain and
contribute to the national exchequer.
As you will see, this is our first Integrated
Report, another step that underlines our
commitment to providing transparent and
meaningful disclosures to all our
stakeholders. Vedanta aspires to work to
the highest standards of governance and
transparency, and this report, based on the
‘six capitals’ approach, reflects that
commitment.
A strong performance
The improving commodity market we
saw in the previous year gathered further
momentum in FY2018 and we rapidly
boosted productivity across our various
segments to maximise the favourable
conditions. This blend of positive market
sentiment and production ramp-up led to
a remarkable, and indeed record-breaking,
performance. We delivered unprecedented
annual production of refined zinc-lead
and silver at Zinc India as we made the
successful transition to underground
mining. Our aluminium business also saw
an all-time-high exit rate at c. 2.0 mt.
These record volumes translated into
robust financials. We registered 22%
revenue growth at ` 92,923 crore. Our
strong cash flow and productivity focus
helped to drive 19% y-o-y growth in
EBITDA at ` 25,470 crore, and sustained
our EBITDA margin at a healthy 36%. In
keeping with our philosophy of continually
rewarding our shareholders, we paid
our highest-ever interim dividend of
` 21.2 per share, aggregating to a total
payout of ` 7,881 crore during the year.
Committed to sustainability
We continued to make significant efforts
to strengthen our Health, Safety and
Environmental (HSE) practices, leading
to the lowest Lost-time Injury Frequency
Rate (LTIFR) since 2012. However, with
deep regret, we reported seven fatalities
during the year in our operations. We are
determined to create an environment
where everyone goes home safe every
day and to this end, we have bolstered
our HSE organisation by recruiting ten
experts with global experience and
methods. The safety of our colleagues is
a top priority for me personally as well as
for the Board, and our CEO Kuldip Kaura
addresses this further in his statement.
In the wider community, we have always
believed that a company’s performance
should be measured not just by what it
creates but also by what it gives back.
Over the course of FY2018, Vedanta
invested over ` 244 crore in social
programmes, directly touching the lives of
3.36 million people across 1,400+ villages.
This includes our participation in the ‘Nand
Ghar’ programme in rural India, which
involves setting up and transforming 4,000
state-of-the-art child welfare centres
across the country.
Our social initiatives straddle important
intervention areas such as skill-building;
education for girls; providing safe, clean
drinking water; nutrition and healthcare and
encouraging the health and social benefits
that come through sport. Vedanta, through
the Vedanta Medical Research Foundation,
also inaugurated central India’s first world-
class cancer facility in Raipur, Chhattisgarh
in the past year. This initiative aligns with
the larger vision of Vedanta Group’s
commitment to give back to society and I
look forward to many more R&D initiatives
from the foundation going forward.
During the year, our continuing investments
also helped us to make measurable
progress in reducing our environmental,
energy and carbon footprint. Indeed,
Vedanta Limited Integrated Report and Annual Accounts 2017-18
9
Our immediate focus is to
continue to increase our
output and leverage the
favourable market conditions,
while continuing with
expansions and putting our
strong pipeline of growth
projects into action.
Mangala Processing Terminal, Barmer, Cairn Oil & Gas
we delivered significantly higher levels
of water and energy savings than our
original targets. Similarly, the decrease
we’ve achieved in our Greenhouse Gas
(GHG) emission intensity is right on
track to achieve our stated goal of a 16%
reduction against the 2012 baseline.
These initiatives have been recognised
with a commendable 15th place ranking
on the Dow Jones Sustainability
Index (metal and mining sector).
Strengthened leadership
Last summer, we bade farewell to our
CEO Tom Albanese, who made an
important contribution to the business
during his tenure of over three years.
In September 2017, we appointed
Kuldip Kaura as the Interim CEO
of Vedanta; he had previously held
the role and has over 15 years of
experience with the Group.
In 2017, we welcomed Aman Mehta,
UK Sinha and Priya Agarwal to the
Board. You will read more about their
expertise and experience in this Report,
and I am looking forward to the Board
and our Company benefiting from the
enhanced strategic focus, governance
and leadership they will bring.
Lastly, I cannot close FY2018 without
expressing my sincere appreciation
to each of the 65,000+ employees
who make Vedanta what it is. It was
their energy, talent and commitment
that ensured that the plans laid out by
our senior leaders came to such fine
fruition this year, and I thank them all.
The Indian opportunity
As India’s only diversified natural
resources group, we are uniquely placed
to make a ‘home-grown’ contribution
to the nation’s growth and to assist
in its process of modernisation.
In a little over a decade, India is expected
to be home to 1.5 billion people and boast
an economy worth US$6 trillion. This
presents an exceptional opportunity for
the core sector players, whose products
will be essential to meet the country’s
growing requirements for development,
infrastructure development, asset-
creation, mobility, housing, consumer
goods and general consumption.
The country currently relies on imports
to meet around 80% of its oil and
mineral needs, and the consumption
per capita of metals remains around
70% below the global average. This
backdrop provides immense demand
potential for metals such as aluminium,
zinc and steel. The focus on renewable,
electric and non-fossil fuel energy
notwithstanding, the oil and gas sector is
also expected to witness robust growth.
I am therefore encouraged to see the
Indian government take the initiative with
business-friendly reforms to catalyse
global investment and spur growth.
Indeed, we see many steps in the right
direction, with the impetus behind
domestic manufacturing, long-overdue tax
reforms such as the Goods and Services
Tax (GST), a transparent mine-auctioning
process, privatisation of commercial coal
mining, Open Acreage Licensing Policy
(OALP) for oil and gas blocks and the
new insolvency code for the efficient
resolution of distressed companies. We
have experienced the latter in our recent
bid for Electrosteel; we see favourable
market dynamics for steel in India, and
together with integration efficiencies with
our iron ore business in Jharkhand, this
acquisition is value-accretive for Vedanta.
Looking ahead with confidence
We enter FY2019 with a confident
spring in our step.
From the firm base of owning a resilient
portfolio of commodities that performs
throughout the cycle, our near-to-mid-term
view of the market is one of continuing
strong demand and firm prices.
Therefore, our immediate focus is
to continue to increase our output
and leverage the favourable market
conditions, while continuing with
expansions and putting our strong
pipeline of growth projects into action.
After several years of considered and
strategic efforts, Vedanta is now a stronger,
simpler and more productive organisation.
I look forward to working with our world-
class management team and supporting
them as we pursue continued growth, the
highest standards of corporate governance,
and creating meaningful long-term value for
our shareholders and society as a whole.
In this endeavour, we will strive to
earn your continued support.
With my best regards,
Navin Agarwal
Chairman
May 3, 2018
Integrated Report Management Review Statutory Reports Financial Statements 10
Vedanta Limited Integrated Report and Annual Accounts 2017-18
CEO’s Statement
CEO’s
Statement
Kuldip Kaura
Chief Executive Officer
2018 saw Vedanta deliver a
robust performance, creating a
clear pathway for sustainable
growth.
I am pleased to report significant revenue
and EBITDA growth, driven by a supportive
market coupled with strong production
through the year. The record volumes at our
Zinc and Aluminium businesses resulted
in an excellent financial performance and
ensured strong shareholder returns.
Health, safety and environment
We have a workforce of over 65,000
people and our overriding goal is
that every one of them goes home
safe every single day. Our ‘zero harm’
policy puts health and safety firmly
at the forefront of our operations.
This upward trajectory in production is
expected to continue into FY2019 with
ramp-ups at our Zinc India operations,
the commissioning of Gamsberg and
growth in our Oil & Gas business.
Commodity prices saw solid appreciation
over the year, fuelled by supply-related
reforms and disruptions, stable demand,
a weakening dollar and bullish global
growth indicators. Our commodity basket
benefited from the favourable price
movement and we further capitalised on
this opportunity by increasing our value-
added production in segments such as
Aluminium. However, alongside improving
prices, we have experienced inflationary
headwinds for input commodities.
These impacted our costs, especially
at Aluminium, and in response, we are
focusing on operational improvements and
have implemented a structured approach
to optimise controllable costs, which will
yield results in the coming year, barring
further cost inflationary pressures.
The year gone by has paved the
way for an exciting 2019. We remain
committed to developing all the growth
opportunities available to us, especially
in the Oil & Gas and Zinc businesses,
which will add significantly to volumes.
With a strong balance sheet and
the continued focus on disciplined
capital allocation, we are confident of
delivering yet another strong year.
It is therefore with great sadness that we
reported a total of seven fatalities during
the year’ which is discouraging to our safety
programme. No injury, much less a loss of
life, is ever acceptable and we continue
to invest in training and skill enhancement
to prevent accidents before they can
happen. The need for improvement,
and our determination to achieve zero
harm means that this priority is receiving
the direct attention of the Executive
Committee. Specifically, we have:
• Rigorous implementation of safety
standards and management of high-risk
areas;
• Reinforced our HSE organisation by
recruiting HSE experts with global
experience. We have hired 10 such
experts during the year; and
• Provided training to both employees and
contractors. Last year, both groups
underwent around 890,389 hours in
safety training. Our training programmes
have focused on getting our employee
make better risk decisions so that they
can start identifying behaviours that
result in injuries and fatalities.
In FY2017, we rolled out performance
standards and targets for water, energy
and carbon management and in FY2018
we achieved or exceeded them:
Vedanta Limited Integrated Report and Annual Accounts 2017-18
11
We focused on
debottlenecking our assets,
adopting technology and
digitalisation, strengthening
people practices and
enhancing the vendor and
customer base and spend-
base optimisation.
FY2018: A productive year
At Vedanta, our portfolio ranks alongside
some of the best Tier-I assets in the
world. In FY2018, we displayed our
ability to deliver record production
across those assets while maintaining
our place in the lower half of the cost
curve across most of our businesses.
At Zinc India, record production
exceeded our guidance for the year,
with Rampura Agucha successfully
transitioning to underground production.
Record silver production also
surpassed our original guidance with
excellent output at Sindesar Khurd.
Record production also continued at
Copper India and in Aluminium, where
we exited with a run rate of around 2 mt.
However, our strong progress in increasing
volumes was to some extent offset
by rising raw material input costs, in
particular, for coal and alumina. We are
actively engaging in enhancing operating
efficiencies, by producing more captive
alumina, achieving better materialisation
of coal linkages and thereby working
towards reducing the controllable costs.
At Goa, our iron ore operations are
currently shut down. The Honourable
Supreme Court of India directed the
halting of all mining operations in the
state, effective March 16, 2018, pending
the granting of fresh mining leases
and environmental clearances. Given
our commitment in the region and
the considerable impact on the local
economy, we hope that the Government
will provide clarity around the process
to apply for the licences and facilitate
restarting operations as soon as possible.
Due to the uncertainty around this
process, the Company has taken an
impairment of ` 1,726 crore in FY2018.
At Tuticorin, our copper smelting
operations were shut at the end of March,
initially for scheduled maintenance
activities. The shutdown has since been
extended as the Company’s annual
renewal of its consent to operate was
rejected by the Tamil Nadu State Pollution
Control Board, pending additional
clarifications. The Company is working
with the relevant regulatory authorities to
expedite the restart of the operations.
Our growth agenda
This year, we also invested significantly
in the next phase of our growth and
have made delivering on our various
growth opportunities a strategic
priority as detailed below:
• Oil & Gas: Our vision is to contribute
50% of the country’s domestic crude oil
production by increasing our gross
production to 500,000 boepd. Working
towards this goal, we announced growth
projects, including Enhanced Oil
Recovery (EOR), tight oil and gas
projects, upgrade of liquid-handling
facilities and exploration, for which key
contracts have been awarded to
world-class partners. These projects,
along with an exit run rate of 200,000
boepd in March 2018, will pave the way
to achieve 300,000 boepd in the
near-term and 500,000 boepd in the
medium-term.
Employee at operational site, Cairn Oil & Gas
• We achieved 140% of our water savings
target, saving 1.3 million m3 of water.
• We surpassed our energy savings target,
achieving to 280% (2.44 mn GJ) of the
savings expected.
• Last year, we stated that we had
targeted reducing our GHG intensity by
16%1 by 2020, from a 2012 baseline. I
am pleased to inform you that nearly
two years before the target date, we are
already at 14% and have built real
momentum towards achieving our goal.
This is part of a wider aim to see our
businesses continue to improve their
sustainability practices. On the Dow
Jones Sustainability Index for the
Metal & Mining sector, Hindustan Zinc
improved its overall ranking to 11th and
was inducted into the prestigious Dow
Jones Yearbook. In the Environmental
Category, Hindustan Zinc moved from the
11th to the 3rd place and Vedanta Limited
improved its ranking from 17th to 15th.
1
Reduction expectations are calculated on GHG/tonne
of product to ensure that non-production related factors
such as change in prices do not influence the GHG
numbers and as a result, they are a reflection of actual
efficiency gains in the system
Integrated Report Management Review Statutory Reports Financial Statements 12
Vedanta Limited Integrated Report and Annual Accounts 2017-18
CEO’s Statement continued
Oil & Gas Vision
Zinc Vision
50%
of India’s production
2 mtpa
in medium-term
Rampura Agucha Underground Mine
This year, we also invested
significantly in the next phase
of our growth and have made
delivering on our various
growth opportunities a strategic
priority.
• Zinc: Our current expansion will take us
to over 1.5 mtpa of zinc production with
Zinc India ramping up to 1.2 mt and
Gamsberg to 250 kt in the near-term.
Our expanding reserve and resource
base at both Zinc India and Gamsberg
provides us with an opportunity to
increase production beyond this level to
about 2 mt in the medium-term. With
this in mind, the Zinc India board has
approved the expansion from 1.2 mt to
1.35 mt and corresponding silver
production potential of over 900
tonnes.
• Aluminium: We achieved a record
run-rate of 2 mt as we exited the year
and are now focused on delivering a
steady production of 2 mt. We also
hope to proceed with the expansion of
the Lanjigarh refinery, subject to further
clarity on bauxite supply.
• Copper: We are continuing our Tuticorin
II expansion by 400 ktpa. When
complete (target: FY2020), we will be
one of the world’s largest single-location
copper smelters.
• We moved to acquire Electrosteel
towards the end of the year and this is
now subject to regulatory approvals.
We see favourable market dynamics for
steel in India and, together with
integration efficiencies with our iron ore
business, we regard this acquisition as
value-accretive for Vedanta.
As we deliver on growth across our various
businesses, we continue to maintain
our disciplined approach to investment:
potential projects will be evaluated against
a range of metrics, including operational
and technical factors, pricing and market
considerations and robust return on capital.
Deleveraging and strengthening our
balance sheet
In FY2018, we also delivered on our
strategic priority to deleverage our balance
sheet, with a reduction of gross debt at
Vedanta Limited by ` 8,512 crore as a
result of strong cash flows and productive
utilisation of cash and investment balances.
However, increased shareholder returns
at both Hindustan Zinc and Vedanta
Limited, and the corresponding tax and
dividend outflow, resulted in higher
net debt. This year, a strategic priority
will be to optimise capital allocation
and strengthen our balance sheet
through strong business cash flows.
During the year, we delivered a ROCE
of 17.5% as compared to 15% last year.
Vedanta’s balance sheet is amongst the
strongest amidst global diversified peers
and the best in India, with respect to
ND / EBITDA and gearing. We were
pleased to see our rating outlook improve
from ‘stable’ to ‘positive’ (by CRISIL, an
S&P company) and India Ratings provided
a current rating of ‘AA/Positive’.
Operational excellence
In FY2018, we also delivered on our
strategic priority of asset optimisation. We
focused on debottlenecking our assets,
adopting technology and digitalisation,
strengthening people practices and
enhancing the vendor and customer base
and spend-base optimisation. We are
making concerted efforts to drive all-round
operational excellence, benchmarking
our operations with global leaders to
Vedanta Limited Integrated Report and Annual Accounts 2017-18
13
Commitment to construct
4,000
Nand Ghars
ensure we attain the true potential of our
assets and have made this one of our
strategic priorities. Achieving the lowest
cost, with no compromise on safety
or quality, is our operating philosophy
and there is an ongoing focus on asset
optimisation and process innovation.
For example, in the Oil & Gas business,
we have partnered with large service
providers and have provided our partners
with end-to-end responsibility for project
management, providing incentives on
measurable outcomes of production,
delivery and safety. Digitalisation is opening
up exciting opportunities at several of our
leading mines. At Gamsberg, for example,
the project will have leading-edge systems
that report the state of the mine, the quality
of ore, the conditions of the concentrator
and the quality of the concentrate, all in
real-time to enable minute-by-minute
decisions. We also completed piloting
digital technology at Sindesar Khurd,
transforming it into a fully automated mine
that will reduce costs while elevating safety.
Reaching out to communities
My personal experience of Vedanta
stretches over 15 years and I have always
been proud to work with a company so
focused on contributing to the communities
around it. In FY2018, we invested
and helped to achieve more than ever
before in the areas of childcare, health,
education and development, empowerment
for women and other social programmes.
These activities, in India and Africa both,
are covered in more detail in the
Chairman’s statement on page 8.
In India, the Nand Ghar project, one of
our most focused initiatives, is working
towards building and transforming state-
of-the-art, grassroots day care centres with
multi-media facilities to support education
for children. To date, we have built 154
centres in Rajasthan, Uttar Pradesh and
Madhya Pradesh, and we are perfecting
the pilot. Vedanta has committed
to constructing 4,000 modernised
Anganwadis (child care centres) across
the country and we are working with
resolve towards achieving this goal.
Outlook FY2019
With various growth opportunities in the
pipeline, our performance in FY2019
will be even stronger, with a further
improvement in volumes and reduced
costs. Our focus on efficiency, cost
control and operational excellence will
yield results during the year as we build
a strong foundation for our next phase of
growth. We will also continue to set the bar
higher for ourselves in critical areas such
as safety and in corporate governance.
We believe that the market environment
we enjoyed in FY2018 will also characterise
FY2019, giving us a supportive climate as
we continue to ramp up production and
advance our growth agenda. We expect to
increase investments y-o-y, in a measured
and reasoned way and focus on organic
growth in areas where we have deep
expertise: principally, oil & gas and zinc.
Equally, we continue to monitor markets
and make our decisions with a strong sense
of realism. Our investments are largely self-
funded and are not market-dependent; we
are always ready for cyclical volatility and
meanwhile, we focus on factors within our
control, such as costs and safe expansion.
Our ability to meet these commitments
comes entirely from the effort, skills and
vision of our people and I compliment all
our employees for their dedication and
hard work. Together, we will continue to
benefit from, and contribute to, one of the
fastest growing economies in the world
and add value for our shareholders.
Best Regards
Kuldip Kaura
Chief Executive Officer
May 3, 2018
Integrated Report Management Review Statutory Reports Financial Statements 14
Vedanta Limited Integrated Report and Annual Accounts 2017-18
Channeling growth opportunities
Oil & Gas
Oil for India,
Offshore operations at Ravva
Oil for India, from India
A key priority for any developing nation is
to maximise its self-sufficiency in energy.
As one of the world’s fastest-growing
economies, and with oil-demand growing
exponentially, India is seeking to reduce its
oil imports – which currently account for
around 80% of the nation’s consumption.
At Vedanta, we are not only ready to
reduce this deficit, but are positioning
ourselves to contribute half of the total
oil produced in India. Over the next few
years, we aim to increase production
from 200 kboepd today to 300 kboepd.
This ambitious aim will be aided by a
new business-partnership model (see
below) and lays the foundation for
achieving a production of 500 kboepd
with reserves of three billion barrels.
In the near-term, we are investing gross
capex of US$2.3 billion to increase our
resource and reserve base by around 375
million barrels. Our rich project portfolio
is comprised of enhanced oil recovery
projects, tight oil & gas projects and
exploration prospects. As well as boosting
production, this investment will generate
sustainable employment opportunities,
directly and indirectly and bring cutting-
edge solutions to community needs.
For example, as part of our Jeevan Amrit
Yojana programme, we are also focusing on
recycling water in Rajasthan, a dry area of
India. By installing 330 community reverse-
osmosis plants, we will help to deliver safe
drinking water to one million people.
Our Oil & Gas business
see pages 74-79
Vedanta Limited Integrated Report and Annual Accounts 2017-18
15
from India
Global integrated partnerships:
success, incentivised
Historically, Cairn awarded contracts
in the conventional way, to separate
vendors for specific activities such as
drilling, services and construction.
Steam turbine generators at Mangala Processing Terminal, Barmer
Today, we have fundamentally altered
our strategy, enabling us to execute
multiple projects simultaneously
with greater efficiency and to deploy
innovative technological solutions
across the value chain.
Our new end-to-end integrated
partnership model, developed in
collaboration with our business
partners, is the first of its kind in
India. Partners receive a fixed base
fee, but with the added incentive of
participating in a share of output,
based on speed, efficiency and safety
parameters. In turn, this encourages
those partners to innovate in terms of
technology and operations.
We have started awarding the
integrated development contracts,
for these projects worth c. US$1.8
billion, of which US$1.3 billion has
already been awarded to global oil
field service providers such as
Halliburton, Schlumberger, Petrofac
and Baker Hughes, to be executed
over the next 1-3 years. These
contracts incorporate clearly defined
timelines and a risk-reward matrix
linked to performance.
This new model has already
generated significant value for us: by
consolidating existing contracts, we
have reduced costs by more than
20%. We expect further upside from
operational efficiencies, driven by
best-in-class technology solutions.
Financial StatementsStatutory ReportsManagement ReviewIntegrated Report 16
Vedanta Limited Integrated Report and Annual Accounts 2017-18
Channeling growth opportunities
Zinc International
Gamsberg:
When Zinc International’s Gamsberg
project begins production in mid-2018,
it will supply a market that is both rising
and under-served.
It will also show the efficiencies and
capabilities of a mine that, from the outset,
has been conceived as a smart digital
facility (see below).
As we go to print, the project, located
in South Africa’s Northern Cape, is a
hive of activity. Some 2,700 workers
are fully mobilised on-site, completing
preparations for the launch of Phase I with
a production capacity of 250 kt. Over
time, this will more than double to 600 kt,
once Phases II and III enter production.
Gamsberg’s arrival will be timely, while
the global demand for zinc has seen
steady growth, the supply side hasn’t kept
pace; indeed, the sector has experienced
stock constraints and mine closures.
The new facility will not only set new
standards of production and safety,
but from the blueprint stage onwards,
a biodiversity management plan will
be in place to ensure Gamsberg’s
natural surroundings grow and thrive.
This governs both its construction through
the three phases and also production
over its projected life of 13 years.
Our Zinc business
see pages 84-87
Erection of ball mill at Gamsberg project
Vedanta Limited Integrated Report and Annual Accounts 2017-18
17
The market’s major
new source
of zinc
Zinc International has worked in
close collaboration with specialist
partners GE & MineRP to create
a fully integrated technological
solution. This includes equipping
the development phase of the
mine, rather than retrofitting the
systems once it is operational.
‘SMART Ore’: a world first
The Gamsberg project will combine
our wealth of experience in zinc
production with leading-edge
technology that has never been seen
in a greenfield mining project.
The digital concept is known as
‘SMART Ore’. It is an end-to-end
solution, producing continuous, live
data on the mine’s production status,
quality of ore and quality of
concentrate and mine conditions,
enabling instant decision making. It
will assist the team to monitor and
manage the mining contractor, and
adjust the blending strategy based on
real-time grade reconciliation. This
ensures a constant feed grade to the
plant, making the process more
efficient and reducing waste. In our
pursuit of zero harm, the plant will
also boast of a state-of-the-art
Collision Awareness System.
We expect this project to deliver
substantial savings. We are targeting
an initial 0.5% increase in recovery
from the concentrator plant, but we
also expect improved productivity
across geology, mine planning,
survey and other key mining
disciplines. Indeed, we project
savings of at least four man-hours
per function per week, once the
project is fully operational.
Assembled trucks at West Pit open mine development, Gamsberg
Financial StatementsStatutory ReportsManagement ReviewIntegrated Report 18
Vedanta Limited Integrated Report and Annual Accounts 2017-18
Channeling growth opportunities
Zinc India
Success
beneath
Simulator training for mining equipment at Dariba
One barometer of a country’s move
towards modernisation and rising consumer
demand is its requirement for zinc.
In India, zinc demand is being driven
by a range of needs, including car
manufacturing, consumer electronics
and new urban infrastructure, while
other by-products such as silver for
solar panels and lead for car batteries
are also in strong demand.
This augurs well for Zinc India. The
Company is one of the lowest-cost
producers in the world and is poised to
become a Top 5 global producer of silver.
Central to its growth strategy is the
transition from open-cast to underground
mining, which has been completed this
year. Our vision is to grow our zinc-lead
output to 1.5 million tonnes per annum
and our silver portfolio to 1,500 tonnes.
Phase I of this expansion has been
approved by the Board. This will increase
the mined metal and smelting capacity
from 1.2 mtpa to 1.35 mtpa over a period
of three years. Phase I will be executed
concurrently with the ongoing mining
expansion, which is now in its final stages,
to take capacity to 1.2 mtpa by FY2020.
Zinc India ranked just outside the
Top 10 in the Dow Jones Sustainability
Index for the Metal and Mining sector
and the HZL Mining Academy trained
200 young people in underground
mining skills during the year.
Our Zinc business
see pages 80-83
Vedanta Limited Integrated Report and Annual Accounts 2017-18
19
the surface
Transforming Sindesar Khurd
to a fully digital mine.
The Sindesar Khurd mine is a zinc
mine located in the north-west of
India. Being an underground mine in
expansion mode, there is limited
visibility of the mining processes,
making it difficult to monitor and
improve performance.
The mine is therefore being
transformed from a mechanised
mine to a fully digital one, providing
much greater transparency across
the value chain and enabling us to
maximise efficiency, improve safety
and reduce the cost of operations.
A pilot scheme over 1.5 km of
decline and portals has already
been successfully implemented
and full roll-out across the mine
is now in progress. Once fully
operational, the project will allow
monitoring and optimisation of
assets, traffic management, improved
scheduling and task management,
autonomous fleet operations,
and real time visibility of machine
health and productivity data.
As a result, we expect to see a
wide range of benefits, including:
• Increased utilisation rates across
our fleet and equipment of 15%;
• Timely maintenance checks
improving safety and equipment
availability;
• Ability to activate ventilation on
demand, leading to energy savings
of 15%;
• Ability to increase the fill factor of
loaders to 100%; and
• Increased mine throughput and
volumes over the coming years.
Operations at Sindesar Khurd
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Vedanta Limited Integrated Report and Annual Accounts 2017-18
Materiality matrix
Responding to
material concerns
Last year, Vedanta embarked on an exercise to identify and prioritise those issues that are most material to our business. We sought the
views of a diverse group of stakeholders and their responses were presented to our management group, who then prioritised the most
important issues for our business. The resulting materiality matrix is presented below:
Critical Importance
High Importance
Average Importance
Low Importance
1
2
3
4
5
6
7
8
9
Policies and actions to restrict unethical
business practices
Leadership development and talent
management
Public policy and advocacy
Local hiring and
content
Rights of indigenous peoples and
human rights
Disclosure on slavery and human
trafficking
Diversity and equal
opportunity
Employee health, safety and well-being
Transparency related to reporting
on revenue and production figures
Broader economic benefit to
host country
Community engagement &
development initiatives
Labour rights and industrial relations
Responsible Supply Chain
Management
Ethics and integrity – compliance to
Code of Conduct
Community health and safety
Environmental management (water
management, waste management, air
emissions and quality control,
biodiversity management and
environmental incidents management)
Energy management and climate
change
Mine and site closure plans
Employee retention
Tax transparency and reporting
During the year, we continued our efforts to improve our systems
and their performance in all the key issues identified in the
matrix through our Sustainability Framework. As the year
progressed, the following material areas emerged as the most
significant drivers of our business – commanding either
management or stakeholder attention:
• The safety of our workforce (page 61)
• Environmental management (page 62)
• Retaining our social licence to operate (including community
engagement and development initiatives and human rights)
(page 64)
• Diversity of our workforce and equal opportunities (page 67)
Our sustainability roadmap sets out our targets and performance
during the year on the key material issues and we set out an
overview of our progress during the year against our Sustainability
Framework on page 59.
For a more detailed assessment of our sustainability performance,
please see our separate Sustainable Development Report at
www.vedantalimited.com
Vedanta Limited Integrated Report and Annual Accounts 2017-18
21
During the year, we continued our efforts to improve
our systems and their performance in all the key
issues identified in the matrix through our
Sustainability Framework.
Working at heights
Financial StatementsStatutory ReportsManagement ReviewIntegrated Report 22
Vedanta Limited Integrated Report and Annual Accounts 2017-18
Our Six Capitals and Underlying Values
These are the capitals we draw upon in order to operate and create sustainable value.
Financial capital
We are focused on optimising capital
allocation and maintaining a strong balance
sheet while generating strong FCFs. We
also review all investments, taking into
account the Group’s financial resources
with a view to maximising returns to
shareholders.
Natural capital
India and Africa have favourable geology and
mineral potential and these regions provide
us with world-class mining assets, which are
structurally low cost and have extensive R&R.
Additionally, operating our mines requires a
range of resources, including water and
energy, which we aim to use prudently and
sustainably.
Human capital
We have employees from across the world
and we are committed to providing them
with a safe and healthy work environment.
In addition, by creating a culture that
nurtures innovation, creativity and diversity,
we enable them to grow personally and
professionally while also helping us to meet
our business goals.
Our values
Trust
We actively foster a culture of
mutual trust in our interactions
with our stakeholders and
encourage an open dialogue that
ensures mutual respect.
Integrity
We place utmost importance on
engaging ethically and
transparently with all our
stakeholders, taking
accountability of our actions to
maintain the highest standards
of professionalism and
complying with international
policies and procedures.
Excellence
Our primary focus is delivering
value of the highest standard to
our stakeholders. We are
constantly motivated by
improving our costs and our
quality of production in each of
our businesses through a culture
of best practice benchmarking.
Vedanta Limited Integrated Report and Annual Accounts 2017-18
23
Intellectual capital
As a relatively young company, we are keen
to embrace technological developments.
We are setting up a centre of technological
excellence in South Africa, enabling us to
nurture and implement innovative ideas
across the business, which lead to
operational improvements.
Social and 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 the society in general.
These relationships help maintain and
strengthen our licence to operate.
Manufactured capital
We invest in assets including 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.
Care
As we continue to grow, we are
committed to the triple bottom
line of People, Planet and
Prosperity to create a sustainable
future in a zero-harm environment
for our communities.
Respect
We lay consistent emphasis on
human rights and respect the
principle of free, prior, informed
consent, while our engagements
with stakeholders give local
communities the opportunity to
voice their opinions and concerns.
Innovation
We embrace a conducive
environment for encouraging
innovation that leads to a
zero-harm environment and
exemplifying optimal utilisation
of natural resources, improved
efficiencies and recovery of
by-products.
Entrepreneurship
At Vedanta, our people are our
most important assets. We
actively encourage their
development and support them
in pursuing their goals.
Integrated Report Management Review Statutory Reports Financial Statements 24
Vedanta Limited Integrated Report and Annual Accounts 2017-18
Value Creation Model
Focusing on generating growth, long-term value and
sustainability through our strategic priorities
For more information on Strategic Priorities, please see pages 26-27
Inputs
Financial capital
` 79,465 crore
Net worth
` 36,201 crore
Cash & cash equivalent
investments
Natural Capital
411.3 mt
R&R at Zinc India of 411.3 million
tonnes, containing 35.7 million
tonnes of zinc-lead metal and
1.0 billion ounces of silver
` 58,159 crore
Gross debt
` 822 crore
Capex
303.6 mt
R&R at Zinc International of 303.6
million tonnes, containing 20.5
million tonnes of zinc-lead metal
7,066 mmboe
Gross proved and probable
hydrocarbons initially in place the
Oil & Gas business: 7,066 mmboe
4,090,786 mwh
Electricity used
242 million m3
Water consumed
293 mt
Coal used
Human Capital and Intellectual Capital
c. 65,000
Employees, including contractors
c. 900
HSE employees, including
contractors
890,389 man-hours
Safety training
c. 115
Number of geologists,
including contractors
Technology used
• Energy-efficient ISA SMELT
technology used for copper
smelting at Tuticorin
• Collaborated with GAMI, a
renowned technical consultant
of China for setup of an
aluminium smelter
• Polymer-enhanced oil recovery
and alkaline surfactant polymers
used to boost recovery in the
Oil and Gas segment
Social and Relationship Capital
` 244 crore
Community investment
• Rated by two domestic rating
agencies – CRISIL and India
Ratings
• Strong network of over
29 global and domestic
relationship banks
c. 5,800
Number of suppliers
5
Number of Independent Directors
Manufactured Capital
` 79,330 crore
Property, plant and equipment
` 16,140 crore
Capital WIP
• Debottlenecking of smelters at
Zinc and Aluminium
• Oil & Gas projects in progress
to increase production volumes
• Expansion of mining/smelting
capacities in Zinc, Aluminium
and Copper
Vedanta Limited Integrated Report and Annual Accounts 2017-18
25
We operate across
the mining value chain
focusing on long-life 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.
Outputs
Financial Capital
` 92,923 crore
Turnover
17.5%
ROCE
Natural Capital
30%
Water recycled
52 million TCO2e
GHG emitted
` 25,470 crore
EBITDA (Margin - 36%)
` 7,880 crore
FCF post capex
` 8,025 crore
Attributable PAT
1.3 million m3
Water savings
90%
Fly ash utilisation rate
81%
Waste recycled
Human Capital and Intellectual Capital
` 2,496 crore
Total remuneration,
wages & incentives paid
0.35 per million
man-hours worked
LTIFR
7.3%
Attrition rate
10.6%
Diversity ratio
12,000
Employees covered under
mentoring and support
programmes
Digital solutions at
Gamsberg and SK mine
Social and Relationship Capital
` 7,881 crore
Record interim
dividends paid
` 33,000 crore
Dividends, royalties and taxes
paid to the Government
3.36 million
People impacted by our CSR
programmes in 1,400+
villages
3,500+
Youths provided with
vocational skills to find
employment
154
Nand Ghars (women-child
welfare centres) operational
Manufactured Capital
• Record production at
Zinc India and Aluminium
business
7.6 mt
Sales of Iron Ore
c. 600 tonnes
Production capacity
– Silver
c. 2 mtpa
Production capacity
– Aluminium
10.9 mtpa (ore)
Production capacity
– Zinc
200 kboepd
Production capacity
– Oil (Gross)
Integrated Report Management Review Statutory Reports Financial Statements
26
Vedanta Limited Integrated Report and Annual Accounts 2017-18
Strategic framework and focus areas for short and long-term
Framing our strategy while addressing the material concerns of our stakeholders
Strategic priorities
FY2018 update
Operational excellence
Description: We are focused on all-round
operational excellence to achieve benchmark
performance across our business by
debottlenecking our assets, adopting technology
and digitalisation, strengthening people practices,
enhancing the vendor and customer bases,
optimising the spend base and improving
realisations.
• Oil & Gas
• Debottlenecked facility at Mangala Processing Terminal (MPT) to handle and increase
liquid-handling capacity by ~10%
• Additional 21 wells brought online through a drilling campaign at Mangala and other
satellite fields
• Infill drilling campaign commenced in the Cambay block, leading to substantial increase
in production
• Raageshwari Deep Gas (RDG) Phase 2A commissioned and gas production ramped up to
45 mmscfd (increased capacity by ~33%)
• Zinc India
• Commenced construction of the Fumer project to improve zinc and by-products
recovery
• Zawar mill debottlenecking completed to 2.7 mt
• Reduced cost of coal basket by using lignite and off-spec coal as well as sourcing
domestic coal
• Zinc International
• Skorpion Pit 112 redesigned to reduce waste extracted and increase
contained metal by 15%
• Aluminium
• Lanjigarh refinery debottlenecked to 2 mt nameplate capacity
• Value-added sales improved y-o-y (from 41% to 46%)
• Iron ore
• Goa mining operations shut due to state-wide ban
Preserve our licence
to operate
Description: We operate as a responsible business,
focusing on achieving zero harm, minimising our
environmental impact and promoting social inclusion
across our operations. We put management systems
and processes in place to ensure our operations
create sustainable value for our stakeholders.
• Seven fatalities occurred in the fiscal year. Increased oversight from Group ExCo to prevent
future occurrences
• LTIFR improved from 0.40 to 0.35
• Achieved water savings of 1.3 million cubic metres
• Achieved c. 14% reduction in GHG intensity over baseline of 2012
• ~90% of generated fly ash is being utilised
• 154 Nand Ghars constructed with commitment to construct 4,000 (under Vedanta
Foundation)
• Increased diversity across our businesses: Women represent 10.6% of our total workforce
• Vedanta Medical Research Foundation launched central India’s first world-class cancer
facility in Raipur, Chhattisgarh
Optimise capital
allocation and maintain a
strong balance sheet
Description: Our focus is on generating strong
business cash flows, capital discipline and proactive
liability management and maintaining a strong
balance sheet. We will also review all investments
(organic and in acquisitions) based on our strict
capital allocation framework, with a view to
maximising returns to shareholders.
Deliver on growth
opportunities
Description: We are focused on growing our
operations organically by developing brownfield
opportunities in our existing portfolio and by
acquiring attractive, complementary assets in the
natural resources segment that add value to
our portfolio.
• Total gross debt reduction of ` 8,512 crore during FY2018
• Dividend policy announced at Vedanta Limited
• Net debt increased to ` 21,958 crore from ` 18,269 crore, mainly due to ASI acquisition of
` 1,622 crore and dividends at Vedanta Limited and HZL totalling ` 9,653 crore, and the
corresponding tax outflow
• ` 7,880 crore of FCF post capex generated during the year
• CRISIL and India Ratings improved their outlook to ‘AA/Positive’ from ‘AA/Stable’
• Generate healthy-free cash flow from our operations
• Disciplined capex across projects to generate strong ROCE
• Improve credit ratings
• Proactive liability management
• Reduce working capital
• Achieved record annual production at Zinc India of 960 kt and Aluminium
of 1.7 mt (exit rate c. 2 mt)
• Significant progress at Gamsberg, on track to start production by mid-CY2018
• Oil & Gas
• Ended March 2018 with run-rate of 200 kboepd and announced growth plans
• Commenced Copper India expansion plan to double smelter capacity to 800 kt
• Initiated process to acquire Electrosteel Steel Limited to value add to our iron ore business
Augment our R&R base
Description: We are looking at ways to expand our
R&R base through targeted and disciplined
exploration programmes. Our exploration teams aim
to discover mineral and oil deposits in a safe and
responsible way, to replenish the resources that
support our future growth.
• Completed more than 240 km of brownfield drilling across businesses to add R&R
• Secured greenfield licences for base metals
• 19.5 mt gross additions to Zinc India reserves and resources aggregating prior to depletion
of 12.6 mt, aggregating to 411 mt with 25+ years of mine life
• Engaged global specialists, including Schlumberger, Xodus and Petrotel, to supplement the
efforts of in-house teams to augment exploration portfolio in Rajasthan, Ravva and
Krishna-Godavari (KG) offshore blocks. This led to mapping a portfolio of prospects with 1.7
billion boe of prospective resources: 1.2 billion boe in Rajasthan, 400 million boe in KG and
100 million boe in Ravva
Objectives for FY2019
• Oil & Gas
• Zinc India
• Commission Fumer
• Execute growth projects to deliver 220-250 kboepd
• Progressive ramp-up of underground mines to achieve target run-rate of 1.2 mtpa
• Ramp up silver production to 650-700 tonnes
• Aluminium
• Controllable costs in the aluminium business
• Establish long-term bauxite sourcing in the State of Odisha
• Copper and Iron Ore
• Engage with government and relevant authorities to enable the restart of operations
KPIs
Risks
• EBITDA
• Adjusted EBITDA
Margin
• ROCE
• FCF post capex
• Zero fatal accidents and an LTIFR of 0.30
• Achieve fly ash utilisation of 75%
• Achieve water saving of 1.5 million cubic metres through conservation and efficiency
• LTIFR
• CSR footprint
• Gender diversity
improvement projects
• Achieve energy saving of 2 million GJ
• 250 Nand Ghars to be constructed in FY2019, and planning
for additional 1,000 to be completed
• FCF post capex
• Net debt/EBITDA
(consolidated)
• EPS (before
exceptional items)
• Interest cover
• Dividend
• Revenue
• ROCE
• FCF post capex
• Growth capex
• Oil & Gas
• Zinc India
• Progress on execution on growth projects to deliver 275-320 kboepd in FY2020
• Commence exploration in blocks awarded through first-round auctions under OALP
• Commence work towards expansion to 1.35 mtpa
• Zinc International
• Successful commencement of Gamsberg in FY2019, progress towards
ramp up to Phase I production of 250 kt in FY2020
• Aluminium
• Copper India
• Achieve steady state production of 2 mt in FY2019
• Progress towards expansion to 800 kt production capacity by FY2020
• Complete the Electrosteel Steel acquisition subject to regulatory approval and
integrate with the Iron Ore business
• Continue to build R&R base and generate new greenfield targets for our commodities/
and resources in Oil &
• Metals
metals
• Oil & Gas
• High-ranked prospects are being taken up for well-drilling across our assets
• Total 2P + 2C reserves
Gas
• Total R&R in Zinc India,
Zinc International
R2
R4
R5
R10
R4
R5
R6
R12
R1
R2
R12
R13
R3
R11
R12
R4
R8
R12
Vedanta Limited Integrated Report and Annual Accounts 2017-18
27
Strategic priorities
FY2018 update
Operational excellence
• Oil & Gas
Description: We are focused on all-round
operational excellence to achieve benchmark
performance across our business by
debottlenecking our assets, adopting technology
and digitalisation, strengthening people practices,
enhancing the vendor and customer bases,
optimising the spend base and improving
realisations.
• Debottlenecked facility at Mangala Processing Terminal (MPT) to handle and increase
liquid-handling capacity by ~10%
• Additional 21 wells brought online through a drilling campaign at Mangala and other
• Infill drilling campaign commenced in the Cambay block, leading to substantial increase
• Raageshwari Deep Gas (RDG) Phase 2A commissioned and gas production ramped up to
45 mmscfd (increased capacity by ~33%)
• Commenced construction of the Fumer project to improve zinc and by-products
• Zawar mill debottlenecking completed to 2.7 mt
• Reduced cost of coal basket by using lignite and off-spec coal as well as sourcing
satellite fields
in production
• Zinc India
recovery
domestic coal
• Zinc International
• Skorpion Pit 112 redesigned to reduce waste extracted and increase
contained metal by 15%
• Aluminium
• Iron ore
• Lanjigarh refinery debottlenecked to 2 mt nameplate capacity
• Value-added sales improved y-o-y (from 41% to 46%)
• Goa mining operations shut due to state-wide ban
Objectives for FY2019
• Oil & Gas
• Execute growth projects to deliver 220-250 kboepd
• Zinc India
• Commission Fumer
• Progressive ramp-up of underground mines to achieve target run-rate of 1.2 mtpa
• Ramp up silver production to 650-700 tonnes
• Aluminium
• Controllable costs in the aluminium business
• Establish long-term bauxite sourcing in the State of Odisha
• Copper and Iron Ore
• Engage with government and relevant authorities to enable the restart of operations
KPIs
Risks
• EBITDA
• Adjusted EBITDA
Margin
• ROCE
• FCF post capex
Preserve our licence
to operate
Description: We operate as a responsible business,
focusing on achieving zero harm, minimising our
environmental impact and promoting social inclusion
across our operations. We put management systems
and processes in place to ensure our operations
create sustainable value for our stakeholders.
• Seven fatalities occurred in the fiscal year. Increased oversight from Group ExCo to prevent
future occurrences
• LTIFR improved from 0.40 to 0.35
• Achieved water savings of 1.3 million cubic metres
• Achieved c. 14% reduction in GHG intensity over baseline of 2012
• ~90% of generated fly ash is being utilised
• 154 Nand Ghars constructed with commitment to construct 4,000 (under Vedanta
Foundation)
• Increased diversity across our businesses: Women represent 10.6% of our total workforce
• Vedanta Medical Research Foundation launched central India’s first world-class cancer
facility in Raipur, Chhattisgarh
• Zero fatal accidents and an LTIFR of 0.30
• Achieve fly ash utilisation of 75%
• Achieve water saving of 1.5 million cubic metres through conservation and efficiency
• LTIFR
• CSR footprint
• Gender diversity
improvement projects
• Achieve energy saving of 2 million GJ
• 250 Nand Ghars to be constructed in FY2019, and planning
for additional 1,000 to be completed
Optimise capital
allocation and maintain a
strong balance sheet
Description: Our focus is on generating strong
business cash flows, capital discipline and proactive
liability management and maintaining a strong
balance sheet. We will also review all investments
(organic and in acquisitions) based on our strict
capital allocation framework, with a view to
maximising returns to shareholders.
Deliver on growth
opportunities
Description: We are focused on growing our
operations organically by developing brownfield
opportunities in our existing portfolio and by
acquiring attractive, complementary assets in the
natural resources segment that add value to
our portfolio.
• Total gross debt reduction of ` 8,512 crore during FY2018
• Dividend policy announced at Vedanta Limited
• Net debt increased to ` 21,958 crore from ` 18,269 crore, mainly due to ASI acquisition of
` 1,622 crore and dividends at Vedanta Limited and HZL totalling ` 9,653 crore, and the
corresponding tax outflow
• ` 7,880 crore of FCF post capex generated during the year
• CRISIL and India Ratings improved their outlook to ‘AA/Positive’ from ‘AA/Stable’
• Generate healthy-free cash flow from our operations
• Disciplined capex across projects to generate strong ROCE
• Improve credit ratings
• Proactive liability management
• Reduce working capital
• Achieved record annual production at Zinc India of 960 kt and Aluminium
• Oil & Gas
• Significant progress at Gamsberg, on track to start production by mid-CY2018
of 1.7 mt (exit rate c. 2 mt)
• Oil & Gas
• Ended March 2018 with run-rate of 200 kboepd and announced growth plans
• Commenced Copper India expansion plan to double smelter capacity to 800 kt
• Initiated process to acquire Electrosteel Steel Limited to value add to our iron ore business
• Progress on execution on growth projects to deliver 275-320 kboepd in FY2020
• Commence exploration in blocks awarded through first-round auctions under OALP
• Zinc India
• Commence work towards expansion to 1.35 mtpa
• Zinc International
• Successful commencement of Gamsberg in FY2019, progress towards
ramp up to Phase I production of 250 kt in FY2020
• Aluminium
• Achieve steady state production of 2 mt in FY2019
• Copper India
• Progress towards expansion to 800 kt production capacity by FY2020
• Complete the Electrosteel Steel acquisition subject to regulatory approval and
integrate with the Iron Ore business
Augment our R&R base
Description: We are looking at ways to expand our
R&R base through targeted and disciplined
exploration programmes. Our exploration teams aim
to discover mineral and oil deposits in a safe and
responsible way, to replenish the resources that
support our future growth.
• Secured greenfield licences for base metals
• 19.5 mt gross additions to Zinc India reserves and resources aggregating prior to depletion
of 12.6 mt, aggregating to 411 mt with 25+ years of mine life
• Engaged global specialists, including Schlumberger, Xodus and Petrotel, to supplement the
efforts of in-house teams to augment exploration portfolio in Rajasthan, Ravva and
Krishna-Godavari (KG) offshore blocks. This led to mapping a portfolio of prospects with 1.7
billion boe of prospective resources: 1.2 billion boe in Rajasthan, 400 million boe in KG and
100 million boe in Ravva
• Completed more than 240 km of brownfield drilling across businesses to add R&R
• Metals
• Continue to build R&R base and generate new greenfield targets for our commodities/
metals
• Oil & Gas
• High-ranked prospects are being taken up for well-drilling across our assets
• FCF post capex
• Net debt/EBITDA
(consolidated)
• EPS (before
exceptional items)
• Interest cover
• Dividend
• Revenue
• ROCE
• FCF post capex
• Growth capex
• Total 2P + 2C reserves
and resources in Oil &
Gas
• Total R&R in Zinc India,
Zinc International
R2
R4
R5
R10
R4
R5
R6
R12
R1
R2
R12
R13
R3
R11
R12
R4
R8
R12
For more information
see pages 28-29
For more information
see pages 33-37
Integrated Report Management Review Statutory Reports Financial Statements 28
Vedanta Limited Integrated Report and Annual Accounts 2017-18
Key Performance Indicators
Growth
Revenue
(` crore)
EBITDA
(` crore)
3
2
9
,
2
9
3
9
9
,
7
6
1
7
1
,
6
7
0
7
4
,
5
2
7
3
4
,
1
2
4
8
1
,
5
1
FCF post capex
(` crore)
2
9
1
,
3
1
2
1
3
,
3
1
0
8
8
,
7
2016
2017
2018
2016
2017
2018
2016
2017
2018
Description
Revenue represents the value of goods sold and
services provided to third parties during the year.
Commentary
In FY2018, consolidated revenue was up by 22%
to ` 92,923 crore compared to ` 76,171 crore in
FY2017. The increase was primarily driven by
firmer commodity prices and volume ramp-up.
Description
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 FY2018 was up by 19% at ` 25,470
crore. This was primarily due to volume growth,
coupled with firmer commodity prices.
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 ` 7,880 crore, driven by a
strong operating performance and disciplined
capital expenditure outflow, partially offset by
higher interest expenses and proactive
adjustment to managing the working capital
funding, given the ramp-up of capacities.
Long-term value
Dividend
(`/share)
2
.
1
2
5
.
9
1
Growth capex
(` crore)
9
6
4
,
5
2
7
5
,
4
9
6
8
,
3
EPS (before exceptional items)
(`/share)
2
.
6
2
.
0
4
2
5
.
3
1
.
4
2016
2017
2018
2016
2017
2018
2016
2017
2018
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 dividend of
` 21.2 per share this year compared to ` 19.45
per share in the previous year.
Description
This represents the amount invested in our
organic growth programme during the year.
Commentary
Our stated strategy is of disciplined capital
allocation on high-return, low-risk projects.
Expansion capital expenditure during the year
stood at ` 5,469 crore, with the majority
invested in projects at Zinc India, the Gamsberg
project at our Zinc International business, growth
projects at Oil & Gas and ramping up of our
Aluminium capacities.
Description
This represents the net profit attributable to
equity shareholders and is stated before
exceptional items (net of tax and minority
interest impacts).
Commentary
In FY2018, underlying EPS was at ` 26.2 per
share, higher than the previous year earnings of
` 24 per share. This mainly reflects the impact of
increased EBITDA.
Sustainable development
LTIFR
(million man-hours)
9
4
0
.
0
4
0
.
5
3
.
0
Description
The LTIFR is the number of lost-time
injuries per million man-hours worked.
This includes our employees and
contractors working in our operations
and projects.
Commentary
We reduced the LTIFR to 0.35 this year.
This continuous fall can be attributed to
our efforts in training and coaching our
employees on workplace safety
practices.
Gender diversity
(%)
%
6
.
0
1
%
0
9
.
%
1
.
9
Description
The percentage of women in the total
permanent employee workforce.
Commentary
We provide equal opportunities and a
safe workplace to men and women.
During the year, the ratio of female
employees was at 10.6% of total
employees.
2016
2017
2018
2016
2017
2018
Vedanta Limited Integrated Report and Annual Accounts 2017-18
29
Interest cover
Return on Capital Employed
(ROCE) (%)
Adjusted EBITDA margin
(%)
NET DEBT/EBITDA
(consolidated)
.
8
6
1
4
.
1
1
5
.
1
1
%
5
.
4
%
5
.
7
1
%
0
.
5
1
%
9
3
%
6
3
%
0
3
9
.
0
.
6
0
.
4
0
2016
2017
2018
2016
2017
2018
2016
2017
2018
2016
2017
2018
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)
excluding accretive interest on
convertible bonds, unwinding of
discount on provisions and interest
on defined benefit arrangements
less investment revenue.
Commentary
The interest cover for the Company
is at c. 11.5 times.
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
ROCE improved by 2.5% to 17.5%,
driven by ramp-up of capacities
and firmer commodity prices.
Description
Calculated as EBITDA margin
excluding EBITDA and turnover from
custom smelting of Copper India and
Zinc India businesses.
Description
This ratio represents the level of
leverage of the Company. It
represents the strength of the
balance sheet of Vedanta Limited.
Commentary
Adjusted EBITDA margin for FY2018
was 36% (FY2017 - 39%).
Commentary
Net debt/EBITDA ratio as at March
31, 2018 was at 0.9x, compared to
0.4x as at March 31, 2017.
Reserves and Resources (R&R)
Zinc India (mt)
Zinc International (mt)
Oil & Gas (mmboe)
0
9
3
4
0
4
1
1
4
4
7
2
8
8
2
4
0
3
8
2
3
,
1
3
7
2
,
1
3
6
2
,
1
2016
2017
2018
2016
2017
2018
2016
2017
2018
Description
Reserves and resources are based on specified
guidelines for each commodity and region.
Commentary
During the year, gross additions of 19.5 million
tonnes were made to R&R, prior to depletion of
12.6 million tonnes. Overall mine life continues to
be more than 25 years.
Commentary
During the year, gross additions of 1.3 million
tonnes were made to R&R, prior to depletion.
Overall mine life continues to be more than 25
years
Commentary
During FY2018, the gross proved and probable
R&R were increased by 58 mmboe with a
depletion of 68 mmboe on account of
production during the year.
CSR footprint
(million beneficiaries)
4
.
3
2
.
2
8
.
1
2016
2017
2018
Description
The total number of beneficiaries through our
community development programmes across all
our operations.
Commentary
We benefited around 3.4 million people this year
through our community development projects
comprising community health, nutrition,
education, water and sanitation, sustainable
livelihood, women empowerment and
bio-investment.
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30
Vedanta Limited Integrated Report and Annual Accounts 2017-18
Opportunities and Risks
O P P O R T U N I T I E S
While we constantly monitor and mitigate our risks, we keep track of
our opportunities as well. Our strategic initiatives are directed towards
making the best of these opportunities.
The long-term trends in markets and products that we are present in, our business
operations and our balance sheet provide us many opportunities to create value for our
stakeholders.
Favourable supply-demand
fundamentals
The commodities market has been
on an uptick since 2016, underpinned
by supply-demand deficit in most
commodities backed by bullish global
growth indicators, supply-related reforms
and disruptions and stable-to-growing
demand. This enables our commodity
basket of base metals and oil to benefit
from the favourable price movements.
India’s ease of doing business
The Indian Government is opening up the
mining sector to private players and
amending mining laws to support miners
and introduce transparency into the mining
process, for example, transparent
e-auctioning process for mines,
privatisation of the coal sector, government
incentives such as ‘Make in India’ for
promoting local producers, etc. This is
increasing the ease of doing business and
may also bring down costs for Indian
miners.
India’s growth drives
resource demand
There is significant focus and investment
in India on urbanisation and development of
infrastructure, transportation and power.
Currently, per capita consumption of metals
in India is 70-80% below global averages.
As the country expands its economy,
domestic consumption of key commodities
will increase substantially, both through
demand growth and higher intensity of
consumption. As a company present and
focused on Indian markets, this provides a
huge market for our products.
Portfolio of diversified
low-cost assets
Vedanta has a portfolio of large, diversified,
structurally low-cost assets with significant
opportunities for brownfield expansion,
providing it a strong base for the next
phase of growth.
Underutilised resources in India
with the opportunity to integrate
backwards
India has huge underutilised potential
of rich and diverse resources. As the
regulations and laws around accessing
this vast resource pool ease, it provides
Vedanta with the opportunity to reduce
costs through backward integration and
also opportunities to expand further.
Vedanta is one of the few players in India
spending on exploration.
Availability of cutting-edge
technology and outsourcing
partners in the mining industry
This can optimise costs and increase
efficiency and productivity for Vedanta.
Vedanta Limited Integrated Report and Annual Accounts 2017-18
31
R I S KS
Principal Risks and Uncertainties
Managing our risks
As a global natural resources company, our businesses are exposed to a
variety of risks. It is therefore essential to have in place the necessary
systems and a robust governance framework to manage risk, while
balancing the risk-reward equation expected by stakeholders.
RISK GOVERNANCE FRAMEWORK
BOARD OF
DIRECTORS
AUDIT COMMITTEE
GRMC
EXCO
BUSINESS UNIT MANAGEMENT TEAMS
GROUP RISK MANAGEMENT FRAMEWORK
EXTERNAL
STRATEGIC
E V A L UATE
M
I
T
I
G
A
T
E
Y
F
I
T
N
E
D
I
M O N I
R
O
T
FINANCIAL
OPERATIONAL
Our risk management framework is
designed to be simple and consistent, and
provide clarity on managing and reporting
risks to the Board. Together, our
management systems, organisational
structures, processes, standards and Code
of Conduct and Ethics form the system of
internal control that governs how the Group
conducts its business and manages the
associated risks. The Board has ultimate
responsibility for the management of risks
and for ensuring the effectiveness of
internal control systems. The Board’s
review includes the Audit Committee’s
report on the risk matrix, significant risks
and the mitigating actions we put in place.
Any weaknesses identified by the review
are addressed by enhanced procedures to
strengthen the relevant controls, and these
are reviewed at regular intervals.
The Audit Committee is in turn assisted by
the Group Risk Management Committee
(GRMC) in evaluating the design and
effectiveness of the risk mitigation
programme and control systems. The
GRMC meets every quarter and comprises
the Group Chief Executive Officer, Group
Chief Financial Officer, Director Finance
and Director – Management Assurance.
The Group Head – Health, Safety,
Environment & Sustainability is invited to
attend these meetings. The GRMC
discusses key events impacting the risk
profile, principal risks and uncertainties,
emerging risks and progress against
planned actions.
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32
Vedanta Limited Integrated Report and Annual Accounts 2017-18
Opportunities and Risks continued
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 objectives of the Group. 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 risk lies with
every manager and business leader.
In addition to this structure, other key risk
governance and oversight committees
include:
• Finance Standing Committee, with
oversight of treasury-related risks. This
is a committee of the Board and is
attended by the Group CFO, business
CFOs, Group Treasury Head and the
Treasury Heads at the respective
businesses; and
• The Group Capex Sub-Committee,
which evaluates the risks associated
with any capital investment decisions
and institutes a risk management
framework in expansion projects.
There is also a Vedanta Sustainability
Committee at Group level, which looks at
sustainability-related risks.
At a business level, formal discussions on
risk management occur at review meetings
at least once a quarter. The respective
businesses review their major risks and
changes in their nature and extent since the
last assessment, and discuss the control
measures that are in place and further
action plans. The control measures stated
in the risk matrix are also periodically
reviewed by the business management
teams to verify their continued
effectiveness. These meetings are chaired
by the respective business CEOs and
attended by CXOs, senior management
and appropriate functional heads. Risk
officers have been formally nominated at
each of the operating businesses as well as
at Group level. Their role is to create
awareness of risks at the Senior
Management level and to develop and
nurture a risk management culture. Risk
mitigation plans form an integral part of the
performance management process.
Structured discussions on risk management
also happen at business level with regard to
their respective risk matrix and mitigation
plans. The leadership teams in the
businesses are accountable for governance
of the risk management framework and
they provide regular updates to the GRMC.
Each of the businesses has developed its
own risk matrix and risk register, which is
reviewed by their respective management
committee/ executive committee, chaired
by their CEOs. In addition, each business
has developed its own risk register
depending on the size of its operations and
number of Strategic Business Unites
(SBUs)/ locations. Risks across these risk
registers are aggregated and evaluated and
the Group’s principal risks are identified
based on the frequency, and potential
magnitude and impact of the risks
identified.
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
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 make reference to past audit
experience, financial analysis and the
current economic and business
environment.
Each of the principal subsidiaries has
procedures in place to ensure that
sufficient internal controls are maintained.
These procedures include a monthly
meeting of the relevant management
committee and quarterly meeting of the
Audit Committee of that subsidiary. Any
adverse findings are reported to the Audit
Committee. The Chairman of the Audit
Committee may request MAS and/or the
external auditor to look at certain areas
identified by risk management and the
internal control framework. The findings by
MAS are presented monthly to the
Executive Committee and to the Audit
Committee periodically. Due to the
limitations inherent in any system of internal
control, this system is designed to meet the
Group’s particular needs, and the risks to
which it is exposed, rather than to eliminate
the risk altogether. Therefore, it can only
provide reasonable and not absolute
assurance against material misstatement or
loss.
The order in which these risks appear in the
section below does not necessarily reflect
the likelihood of their occurrence or the
relative magnitude of their impact on our
business. 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 can
be no guarantee that the Group’s risk
management activities will mitigate or
prevent these or other risks from occurring.
Vedanta Limited Integrated Report and Annual Accounts 2017-18
33
The Board, with the assistance of the management, carries out periodic and robust assessments of the principal risks and uncertainties of
the Group and tests the financial plans for each of risks and uncertainties mentioned below.
Financial risks
Impact
Mitigation
Risk direction
R1 Access to capital
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 FCF generation, may
cause stress on the Company’s financing
and covenant compliance and its ability to
raise financing at competitive terms.
Risk has reduced compared to last year,
due to good liquidity and an improved
credit profile.
• A focused team continues to work on refinancing initiatives, reducing
cost of borrowing, extending maturity profile and deleveraging the
balance sheet.
• The Group has a track record of good relations with banks and of
raising borrowings in the last few years.
• The Group holds regular discussions with rating agencies.
Accordingly, ratings have been upgraded.
• With an improved credit profile and a stronger balance sheet, Vedanta
continues to enjoy good access to capital and loan markets and
proactively refinances its near-term debt. No concerns envisaged for
upcoming maturities.
• Group treasury policies such as borrowing, investment, commodity
hedging, banking, forex, etc. have been prepared after elaborate
benchmarking and risk analysis. Business teams ensure continued
compliance with the Group’s treasury policies that govern our financial
risk management practices.
R2 Fluctuation in commodity prices (including oil) and currency exchange rates
Prices and demand for the Group’s
products may remain volatile/uncertain and
could be influenced by global economic
conditions. Volatility in commodity prices
and demand may adversely affect our
earnings, cash flow and reserves.
the commodity price cycle.
• The Group has a well-diversified portfolio that acts as a hedge against
fluctuations in commodities and delivers cash flows through the cycle.
• It pursue low-cost production, allowing profitable supply throughout
Our assets, earnings and cash flows are
influenced by a variety of currencies due to
the diversity of the countries in which we
operate. Fluctuations in exchange rates of
those currencies may have an impact on
our financials.
R3 Major project delivery
Shortfall in achievement of expansion
projects stated objectives leading to
challenges in achieving stated business
milestones – existing and new growth
projects.
• Vedanta considers exposure to commodity price fluctuations to be an
integral part of 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.
• The Group ensures robust controls in forex management to hedge
currency risk liabilities on a back-to-back basis.
• The Finance Committee reviews all forex and commodity-related risks
and suggests necessary courses of action as needed by business
divisions.
• Vedanta seeks to mitigate the impact of short-term movements in
currency 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 give details of
the accounting policy followed in calculating the impact of currency
translation.
• Vedanta enlists internationally renowned engineering and technology
partners on all projects.
• The Company has a focus on the safety aspects in the project.
• Geo-technical audits are being carried out by independent agencies.
• Reputable contractors are engaged to ensure completion of the
project on indicated timelines.
• The Group is a strong and separate empowered organisation working
towards ensuring a smooth transition from open pit to underground
mining.
• Mines are being developed using best-in-class technology and
equipment and ensuring the highest level of productivity and safety.
• Stage gate process is used to review risks and remedy at multiple
stages on the way.
• Robust quality control procedures have also been implemented to
check the safety and quality of services/ design/ actual physical work.
Integrated Report Management Review Statutory Reports Financial Statements 34
Vedanta Limited Integrated Report and Annual Accounts 2017-18
Opportunities and Risks continued
Sustainability risks
Impact
Mitigation
Risk direction
R4 Health, Safety and Environment (HSE)
The resources sector is subject to extensive
HSE 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 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.
R5 Tailings dam stability
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.
The appreciation of risk has improved
further in the group.
• 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.
• Vedanta has a Board-level Sustainability Committee, chaired by a
Non-executive Director and attended by the Group CEO, which
meets periodically to discuss HSE performance.
• 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.
• 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.
• HSE experts have been inducted from reputed Indian and global
organisations to bring in best-in-class practices.
• All businesses have appropriate policies in place for occupational
health-related matters, supported by structured processes, controls
and technology.
• Vedanta levies a strong focus on safety during project planning/
execution, and contract workmen safety.
• The Company builds safety targets into performance management to
incentivise safe behaviour and effective risk management.
• Leadership coaching was rolled out across businesses to make better
risk decisions. Wave 2 of ‘Leadership in action’ has been launched to
identify critical risks, and put in place critical controls and processes to
measure, monitor and report effectiveness.
• Leadership remains focused on a zero-harm culture across the
organisation and consistent application of ‘Life-Saving’ performance
standards.
• Carbon forum with business representation monitors developments
and sets out defensive policies, strategy and actions.
• Vedanta defines targets and implements action plans to reduce the
carbon intensity of its operations. This includes reducing emission
intensity and increasing renewable mix and green cover at locations.
• The Company engages with thgovernment on carbon policies and
innovation technologies.
• Institutionalise systems to manage carbon risks and opportunities
across the business over the lifecycle of its products.
• Engage with stakeholders in creating awareness and developing
climate change solutions.
• 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.
• Full review of tailings dams and water storage facilities are being
carried out in the Group. Follow-up reviews will be conducted based
on the results until the control is verified.
• Management standard developed with business involvement.
• Third-party expert assessment of the dams has been conducted to
identify tailings dams’ related risks by a reputed international firm.
Improvement opportunities/remedial works in line with best practice
are progressing.
• Individuals responsible for dam management have received training
from a reputed agency.
• System of monitoring of the tailings dams has been instituted.
Vedanta Limited Integrated Report and Annual Accounts 2017-18
35
Sustainability risks continued
Impact
Mitigation
Risk direction
R6 Managing relationship with stakeholders
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 SDGs.
• CSR Committees at business-level decide the focus areas of CSR,
budget and their respective programmes.
• Sustainable development programmes are driven by stakeholder
engagement and consultation along with baseline studies and
need-based assessments.
• Periodic meetings with existing and potential Socially Responsible
Investment (SRI) investors, lenders and analysts, as well as hosting a
Sustainable Development Day in London, helps in two-way
engagement and understanding the material issues for stakeholders.
• Every business has a dedicated CSR team. Key focus areas for CSR
are healthcare, children’s wellbeing and education, community
development (infrastructure), skilling of youth, sports and culture,
agriculture and animal husbandry, drinking water and sanitation,
women’s empowerment, environment restoration and protection, and
programmes of national importance. We have a dedicated team of
over 161 CSR personnel.
• Our CSR programmes help communities identify their priorities
through participatory need assessment programmes and work closely
with them to design programmes that seek to make progress towards
improvements in the quality of life of local communities.
• 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.
• The Company integrates its sustainability objectives into long-term
plans.
Operational risks
Impact
Mitigation
Risk direction
R7 Challenges to operationalise investments in the Aluminium and Power business
Some of our projects have been completed
(pending commissioning) and may be
subject to a number of challenges during
the operationalisation phase. These may
also include challenges around sourcing
raw materials and infrastructure-related
aspects.
excellence.
well.
• Global technical experts have been inducted to strengthen operational
• Operationalisation of Jharsuguda facilities is progressing satisfactorily.
• Building of new intermediate facilities/infrastructure is progressing
• There is a continuous focus on plant operating efficiency improvement
programme to achieve design parameters, manpower rationalisation,
logistics infrastructure and cost reduction initiatives.
Risk reduced compared to last year, due to
ramp-up at Jharsuguda progressing
satisfactorily.
• Vedanta continues to pursue developing sources of bauxite.
• There is continuous augmentation of power security and
infrastructure.
• Coal security is being strengthened by pursuing additional coal
linkages.
• Key raw material linkages for alumina/aluminium business:
Infrastructure-related challenges are being addressed.
• Strong management team continues to work towards sustainable low
cost of production, operational excellence and securing key raw
material linkages.
• Talwandi Sabo Power Limited (TSPL) power plant matters are being
addressed in a structured manner by a competent team.
Integrated Report Management Review Statutory Reports Financial Statements 36
Vedanta Limited Integrated Report and Annual Accounts 2017-18
Opportunities and Risks continued
Operational risks continued
Impact
Mitigation
Risk direction
R8 Discovery risk
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.
R9 Breaches in information/IT security
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.
• Vedanta has a dedicated exploration cell with continuous focus on
enhancing exploration capabilities.
• There is appropriate organisation and adequate financial allocation in
place for exploration.
• Our 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 the drilling and exploration programme.
• The Company will continue to work towards long-term supply
contracts with mines to secure sufficient supply where required.
• Exploration-related systems are being strengthened and new
technologies being utilised wherever appropriate.
• International technical experts and agencies are working closely with
our exploration team to build on this target.
• Group-level standards and policies are in place to ensure uniformity in
security stance and assessments.
• Chief Information Security Officer (CISO) at Group-level focuses on
formulating the necessary frameworks, policies and procedures, and
for leading any agreed Group-wide initiatives to mitigate risks.
• Various initiatives have been taken up to strengthen IT/ cyber security
controls in the last few years.
• Cyber security risk is being addressed through increased standards,
ongoing monitoring of threats and awareness initiatives throughout the
organisation.
• IT system is in place to monitor logical access controls.
• The Company will continue to carry out periodic IT security reviews by
experts and improve IT security standards.
R10 Loss of assets or profit due to natural calamities
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.
risk.
• Vedanta has taken appropriate Group insurance cover to mitigate this
• 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.
• An established mechanism of periodic insurance review is in place at
all entities. However, any occurrence not fully covered by insurance
could have an adverse effect on the Group’s business.
• The Company will continue to focus on capability building within the
Group.
R11 Extension of production sharing contract of Cairn beyond 2020 at less favourable terms
Cairn India has 70% participating interest in
Rajasthan Block. The Production Sharing
Contract (PSC) of Rajasthan Block runs till
2020. Extension of the PSC of Cairn
beyond 2020 at less favourable terms may
have implications.
stakeholders.
progress, including plans to meet the timelines, and is continuously
engaging with the stakeholders concerned.
• Carrying value factors additional 10% profit petroleum share, hence
• Cairn Steering Committee is regularly reviewing the updates/
• There is ongoing dialogue with the Government and relevant
The Government of India notified PSC
extension policy, which applies to Rajasthan
Barmer block.
mitigating financial/ balance sheet risk.
Vedanta Limited Integrated Report and Annual Accounts 2017-18
37
Compliance risks
Impact
Mitigation
Risk direction
R12 Regulatory and legal risk
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.
R13 Tax-related matters
Our businesses are in a tax regime and
changes in any tax structure or any
tax-related litigation may impact our
profitability.
• 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.
• The Group will continue to demonstrate its commitment to
sustainability by proactive environmental, safety and CSR practices.
The Group ensures ongoing engagement with local community/
media/ NGOs.
• The Group ensures that its subsidiaries are SOX compliant.
• A common compliance monitoring system is being implemented in
Group companies. Legal requirements and a responsible person for
compliance have been mapped in the system.
• Legal counsel continues to work on strengthening the framework in
the Group and on resolution of matters.
• Group-wide online portal is being rolled out for compliance reporting.
Appropriate escalation and review mechanisms are in place.
• 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.
• Contract management framework has been strengthened with the
issue of boiler plate clauses across the Group, which will form part of
all contracts. All key contract types are standardised.
• Framework for monitoring performance against anti-bribery and
corruption guidelines is also in place.
• The Tax Council reviews all key tax litigations and provides advice to
the Group.
• Robust organisation is in place at business- and Group-level to handle
tax-related matters.
• The Group engages, consults and takes opinion of reputable tax
consulting firms.
• Reliance is placed on appropriate legal opinion and precedence.
• The Group continues to take appropriate legal opinions and actions on
tax matters to mitigate the impact of any actions on the Group and its
subsidiaries.
Integrated Report Management Review Statutory Reports Financial Statements 38
Vedanta Limited Integrated Report and Annual Accounts 2017-18
Stakeholder
engagement
Our approach
At Vedanta, we are committed to
constructive dialogue with our key
stakeholders. We believe that open,
ongoing and systemic dialogue is key to
building successful relationships with our
stakeholders. This also helps us to foresee
emerging risks, opportunities and
challenges.
Our social responsibility performance
standards help ensure effective
engagement with relevant stakeholders
across multiple industries and geographies,
provide adequate grievance mechanisms to
help resolve situations of potential conflict
and develop specialised standards for
vulnerable communities such as indigenous
people. The standards follow five principles
of engagement:
Vedanta Limited Integrated Report and Annual Accounts 2017-18
39
Ask
Answer
Analyse
Align
Act
Our dialogue begins
with questions that
solicit feedback. Our
stakeholders have
access to a number of
platforms to reach out
to Vedanta personnel
and voice concerns.
We disclose not just
because we want to be
heard, but because we
are responsible. We
aim to provide a
constructive response
to feedback received.
We have established a
robust investigation
process for complaints
reporated via the
whistleblowing
mechanism,
sustainability ID and
group communications
ID, involving Senior
Management and
relevant personnel.
We work hand-in-hand
with stakeholders and
align our goals and
actions with their
high-priority areas. The
feedback from all our
engagement becomes
part of our materiality
identification process.
We back up our words
with demonstrable
actions that move the
needle towards
promised outcomes.
We aim to forge strong relationships with our key stakeholders and uphold human
rights wherever we operate to maintain our social licence to operate.
Governments
VEDANTA
Integrated Report Management Review Statutory Reports Financial Statements 40
Vedanta Limited Integrated Report and Annual Accounts 2017-18
Stakeholder Engagement continued
Stakeholder
Types of Engagement
Key Expectations
Initiatives in FY2018
Local Community
Employees
Shareholders,
Investors and Lenders
Community group
meetings, village council
meetings, community
needs/social impact
assessments, public
hearings, grievance
mechanisms, cultural
events, engaging
philanthropically with
communities directly, as
also via civil society
partners and Vedanta
Foundation
• Needs-based
community
development projects
• Increasing reach of
community
development
programmes
• Improved grievance
mechanism for
community
• Began work to
conducting baseline,
need, impact and SWOT
assessments in all
Business Units (BUs)
• ` 244 crore invested in
social investment
• 3.36 million
beneficiaries of
community
development
programmes
• Community grievance
process followed at all
operations
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,
womens’ club, etc.
• Improved training on
• 890,389 man-hours of
safety
training on safety
• Increased opportunities
• 19% of all new hires are
for career growth
• Increasing the gender
diversity of the
workforce
women
• Identification of top
talents and future
leaders through
workshops
• Consistent disclosure on
economic, social and
environmental
performance
Regular updates, investor
meetings, Sustainability
Day for investor interaction,
site visits, Annual General
Meeting and conference,
quarterly results calls,
dedicated contact
channel – ir@vedanta.co.in
and sustainability@vedanta.
co.in
• ` 92,923 crore in
revenue with an interim
dividend of ` 21.2 per
share
• 3rd Sustainability Day
hosted in London
• Sustainability assurance
audits conducted
through Vedanta
Sustainability Assurance
Programme (VSAP)
• Ranked 15th in the Dow
Jones Sustainability
Index in the Metals and
Mining Category
Vedanta Limited Integrated Report and Annual Accounts 2017-18
41
Stakeholder
Types of Engagement
Key Expectations
Initiatives in FY2018
Civil Society
• Aligning with the global
sustainability agenda
• Compliance with human
rights
Partnerships with and
membership of
international organisations;
working relationships with
organisations on specific
projects; engagement with
international, national and
local NGOs; conferences
and workshops and a
dedicated contact channel
– sustainability@vedanta.
co.in
• Membership of
international
organisations, including
the United Nations
Global Compact, TERI,
CII, the World Business
Council for Sustainable
Development (WBCSD),
and Indian Biodiversity
Business Initiative (IBBI)
• Focus towards
implementing
sustainable
development goals
• Compliance with the
Modern Slavery Act
Customer satisfaction
surveys, scorecards,
in-person visits to
customers, suppliers and
vendor meetings
• Consistent
implementation of the
Code of Business
Conduct & Ethics
• Ensuring contractual
integrity
• Hotline service and
email ID to receive
whistleblower
complaints
Participation in
Government consultation
programmes, engagement
with national, state and
regional government
bodies at business and
operational level
• Compliance with laws
• Contributing towards
the economic
development of the
nation
• ` 244 crore invested in
community
development
• ` 33,000 crore in
payments to the
exchequer
Industry
(Suppliers, Customers, Peers,
Media)
Governments
Integrated Report Management Review Statutory Reports Financial Statements 42
Vedanta Limited Integrated Report and Annual Accounts 2017-18
Board of Directors
L-R (Front row): K. Venkataramanan, Navin Agarwal, Aman Mehta (Back row): Arun Kumar, Ravi Kant, Priya Agarwal, Tarun Jain, Lalita Gupte, U. K. Sinha
Mr. Navin Agarwal
Designation: Executive
Chairman 2 6 +
Mr. Aman Mehta
Designation: Independent
Director 1 2 + 4
Mr. K. Venkataramanan
Designation: Independent
Director 3 4
Ms. Lalita D. Gupte
Designation: Independent
Director 1 + 2 3 +
Mr. Agarwal has been associated
with the Group since its
inception and has over 35 years
of strategic executive
experience. He has been
instrumental in leading the
growth of the Group through
organic projects and
acquisitions. He plays a pivotal
role in providing direction for
development of the top
leadership talent at the Group.
He is credited with creating
a culture of business excellence
and delivering superior
benchmark performance
through application of advanced
technology and global best
practices. He has led Vedanta’s
evolution to the highest
standards of corporate
governance and enhanced
transparent engagement with
key stakeholders.
He is currently the Executive Vice
Chairman of Vedanta Resources
Plc.
Mr. Mehta has over 35 years of
experience in various positions
with the HSBC Group from
where he retired in January
2004 as CEO Asia Pacific.
Mr. Mehta occupies himself
primarily with corporate
governance, with Board and
advisory roles in a range of
companies and institutions in
India and abroad. Formerly,
he was a Supervisory Board
member of the ING Group
NV and a Director of Raffles
Holdings, Singapore.
He is a member of the
Governing Board of the Indian
School of Business, Hyderabad
and a member of the
International Advisory Board of
Prudential of America.
Mr. Mehta is an Economics
graduate from Delhi University.
Mr. Venkataramanan brings with
him four decades of experience.
He has served as the CEO &
Managing Director, Larsen &
Toubro Limited (L&T) from April,
2012 and also served on the L&T
Board. He has spearheaded L&T
in the world of Engineering and
Construction (E&C), where he
strengthened every aspect of
Engineering, Procurement and
Construction (EPC) value chain
and transformed L&T to one of
the most respected names in the
global EPC fraternity.
Mr. Venkataramanan graduated
in Chemical Engineering from
the Indian Institute of
Technology, Delhi, of which he is
a distinguished alumnus.
Ms. Gupte has more than three
decades of experience in the
financial sector and has held
various leadership positions in
the areas of project finance,
leasing, treasury, planning and
resources, corporate banking
and international banking. She
is the former Joint Managing
Director of ICICI Bank and was
the Chairperson of ICICI Venture
Funds Management Company
Limited. She has served as an
Independent Director on the
Boards of several Indian and
multinational companies.
Ms. Gupte holds a Bachelor’s
degree in Economics (Hons) and
a master’s degree in
Management Studies. She has
also completed her advanced
management programme from
INSEAD.
Vedanta Limited Integrated Report and Annual Accounts 2017-18
43
Mr. G. R. Arun Kumar
Designation: Whole-time
Director and Chief Financial
Officer 3 5 6 7
Mr. Kumar has over 23 years
of experience in serving global
multinationals such as Hindustan
Unilever and General Electric.
Prior to joining Vedanta, he
was the CFO for General
Electric’s Asia-Pacific Lighting
& Appliances businesses
based out of Shanghai. He
is responsible for the overall
health of balance sheet, driving
performance in profit and cash,
treasury, investor relations,
credit ratings, tax, secretarial,
controllership, recording &
reporting and other key strategic
matters from time to time.
Mr. Ravi Kant
Designation: Independent
Director 1 2 4 +
Mr. U. K. Sinha
Designation: Independent
Director 1 3 4
Ms. Priya Agarwal
Designation: Non-executive
Director 4
Ms. Agarwal brings with her
experience in public relations
with Ogilvy & Mather and in
human resources with Korn
Ferry International, Vedanta
Resources and HDFC Bank and
in strategic planning with
Rediffusion Young & Rubicam.
She has completed her B.Sc. in
Psychology with Business
Management from the
University of Warwick.
Mr. Kant has served as the
Managing Director and Vice
Chairman of Tata Motors,
and Director of Electronics at
Philips. He has worked with
Titan Company, LML, Kinetic
Engineering, Hawkins and
Hindustan Aluminium. He has
been the chairman/member of
several reputed organisations
such as Voltas, Tata Industries,
Tata Advanced Materials, Jaguar
Land Rover, Tata Daewoo
Korea, Tata Thailand, etc.
Currently he is on the Boards
of Vedanta Limited, Hawkins
India and Kone Finland.
He is currently the Chairman of
IIIT Allahabad. He is on the
advisory board of Accenture
India and of China Europe
International Business School,
Shanghai, and business schools
at IIT Bombay and Kharagpur.
He also served as Chairman,
Advisory Board at Akhandhyoti
Eye Hospital.
Mr. Sinha has over three
decades of experience and
has served as the Chairman of
Securities and Exchange Board
of India (SEBI) from February
2011 to March 2017. He was
instrumental in bringing about
key capital market reforms.
Under his leadership, SEBI
introduced significant regulatory
amendments to the various
acts enhancing corporate
governance and disclosure
norms. Prior to joining SEBI, he
was the Chairman & MD of UTI
Asset Management Company
Pvt. Ltd. Mr. Sinha has also
worked for the Department
of Economic Affairs under
the Ministry of Finance.
Mr. Tarun Jain
Designation: Whole-time
Director 3 4 5 6 7
Mr. Jain has over 35 years of
diversified experience in
strategic financial matters
including, corporate finance,
corporate strategy, business
development, and mergers and
acquisitions.
Mr. Jain is a graduate of the
Institute of Cost and Works
Accountants of India, a fellow
member of the Institute of
Chartered Accountants of India
and the Institute of Company
Secretaries of India.
Key to committees
1 Audit Committee
2 Nomination and
Remuneration Committee
3 Stakeholder Relationship Committee
4 Corporate Social Responsibility
Committee
5 Risk Management Committee
6 Committee of Directors
7 Financial Standing Committee
+ Chairperson of the Committee
Integrated Report Management Review Statutory Reports Financial Statements 44
Vedanta Limited Integrated Report and Annual Accounts 2017-18
Executive Committee
Arun Kumar
Chief Financial Officer
Kuldip Kaura
Interim Chief Executive Officer
M Siddiqi
Group Director, Projects
Mr. Kumar was appointed as Vedanta’s Chief
Financial Officer on September 30, 2016.
Prior to this, he was Executive Vice President,
Finance and Deputy Chief Financial Officer of
the organisation. Mr. Kumar joined the Group
in 2013 as Chief Financial Officer of Vedanta’s
Aluminium & Power business. He has over 23
years of senior executive experience in
finance, having worked in companies such as
Hindustan Unilever Limited and General
Electric. He is a Bachelor of Commerce
graduate from Loyola University, Chennai and
is a fellow member of the Institute of
Chartered Accountants of India.
Mr. Kaura was appointed as Interim Chief
Executive Officer effective September 1, 2017.
Prior to this, he was President, Chairman’s
Office and rejoined the Group in May 2016.
He has over four decades of experience
across engineering and mining roles.
Mr. Kaura has served at senior levels in various
reputed companies, including Vedanta
Resources as Chief Executive Officer,
Managing Director at ABB India and Managing
Director and Chief Executive Officer of ACC
Limited (LafargeHolcim). Mr. Kaura holds a
bachelor’s degree in Mechanical Engineering
from the Birla Institute of Technology and
Science (BITS), Pilani and has also completed
his Executive Education at London Business
School and Swedish Institute of Management
Stockholm, Sweden.
Mr. Siddiqi joined the Group in 1991 and
possesses 42 years of rich industry
experience. He was formerly Chief Executive
Officer, Aluminium and led the setting up of
the Group’s large aluminium and power
projects, including BALCO smelters and
captive power plants. He also played a key role
in setting up the Group’s copper smelter at
Tuticorin and copper refinery at Silvassa. Prior
to joining the Group, Mr. Siddiqi held senior
positions in Hindustan Copper Limited.
Mr. Siddiqi has a Mechanical Engineering
Degree from the Indian Institute of
Technology, Delhi and a Post Graduate
Diploma in Management from AIMA,
New Delhi.
Phillip Turner
Head–Group Health, Safety,
Environment and Sustainability
Dilip Golani
Director,
Management Assurance
Deshnee Naidoo
Chief Executive Officer,
Zinc International and CMT
Mr. Turner joined the Group in September
2014 as Head of Group Health and Safety. He
currently heads the Group HSE and
Sustainability function. Mr. Turner has over 36
years of experience within mining, heavy
engineering and manufacturing organisations.
He was previously General Manager Risk &
Sustainability of JK Tech, a wholly owned
subsidiary of the University of Queensland. He
has also previously held a number of senior
corporate and operational roles at Rio Tinto in
Australia, Canada and the UK, including
responsibility for HSE and sustainability
assurance. Mr. Turner has held senior roles at
North Limited and at BHP Petroleum’s
offshore operations. Mr. Turner has a Master
of Applied Science degree in Risk Engineering
from Ballarat University, Bachelor of Science
degree in Chemistry/Physics from Deakin
University, Graduate Diploma in Occupational
Hygiene from Deakin University and Graduate
Diploma in Occupational Hazard
Management from Ballarat C.A.E.
Mr. Golani joined the Group in April 2000 and
currently heads the Group’s Management
Assurance function. He has over 26 years of
operational experience and previously headed
the Sales and Marketing function at Hindustan
Zinc Limited and the Group Performance
Management function. Prior to joining the
Group, Mr. Golani was a member of Unilever’s
corporate audit team responsible for auditing
the Unilever group companies in Central Asia,
Middle East and Africa regions. He was also
formerly responsible for managing the
operations and marketing functions for one of
the export businesses at Unilever India and
has worked at Union Carbide India Limited
and Ranbaxy Laboratories. Mr. Golani has a
bachelor’s degree in Mechanical Engineering
and a postgraduate degree in Industrial
Engineering and Management from NITIE.
Ms. Naidoo joined the Group in 2014 as Chief
Executive Officer designate of Zinc
International and Copper Mines of Tasmania
(CMT) and was appointed Chief Executive
Officer of Zinc International and CMT in
February 2015. Ms. Naidoo has over 21 years
of experience in the natural resources
industry, including platinum, thermal coal,
manganese and zinc. Prior to joining the
Group, Ms. Naidoo held various senior and
executive roles at Anglo American such as the
Strategic Long-Term Planning Manager,
Corporate Finance Manager and Deputy
Head of the CEO’s Office. She was appointed
as the CFO of Anglo American Thermal Coal
in 2011, where she managed thermal coal and
manganese across South Africa, South
America and Australia. Ms. Naidoo holds a
bachelor’s degree in Chemical Engineering
from the University of Natal and Certification
in Finance and Accounting from the University
of Witwatersrand, Johannesburg.
Vedanta Limited Integrated Report and Annual Accounts 2017-18
45
Rajagopal Kishore Kumar
Director, Strategy & Business
Development
Samir Cairae
Chief Executive Officer, Diversified
Metals (India)
Sudhir Mathur
Chief Executive Officer, Oil and Gas
Business
Mr. Kumar has assumed the vital responsibility
to lead the Group’s overall policy advocacy
framework and external stakeholder
management along with strategising new
business and growth opportunities since
February 2018. Prior to this, he played a pivotal
role in the revival of the Group’s iron ore mining
operations in India as the Chief Executive
Officer of Vedanta Sesa Goa since 2015 and
has also handled the Group’s Port business.
He joined the Group in April 2003 and has
over 33 years of experience covering finance,
commerce, marketing, supply chain
management, mergers and acquisitions, human
capital development, business turnaround and
policy advocacy with remarkable multi-
commodity experience across the globe.
Mr. Kumar has previously held various
executive roles in the Group, including Chief
Executive Officer of Sterlite Copper from
2007 to 2008, Chief Executive Officer of
KCM from 2008 to 2011, Chief Executive
Officer of Zinc International from 2011-2013
and Chief Executive Officer, Africa (Base
Metals) from 2013 to 2015. Prior to joining the
Group, he worked with Hindustan Unilever
Limited (then Hindustan Lever Limited) for
12 years. Mr. Kumar is a Chartered Accountant
by profession and he is a fellow of the Institute
of Chartered Accountants of India.
Mr. Cairae was appointed as CEO Diversified
Metals in January 2016. He provides
operational and strategic leadership for the
Group’s Aluminium, Copper India, Power and
Iron Ore divisions in addition to the
commercial and asset optimisation functions.
He has extensive and varied experience in a
number of corporate roles in India, China,
Philippines and France including strategy,
M&A, industrial operations and managing
industrial operations in both growth and
turnaround situations. Prior to joining Vedanta,
Mr. Cairae headed the global industrial
function for Lafarge’s 150 cement operations
in over 45 countries. He has previously also
held various senior leadership positions at
Lafarge and Schlumberger. He holds a
graduate degree in Electrical Engineering
from Indian Institute of Technology (IIT),
Kanpur, and a master’s degree in
Management from the Hautes Etudes
Commerciales (HEC) School of Management,
Paris.
Mr. Mathur is currently the Chief Executive
Officer of the Oil and Gas business. Prior to this,
he was the acting Chief Executive Officer since
June 2016 until the merger of Cairn India
Limited with Vedanta Limited and joined the
Group in September 2012 as Chief Financial
Officer of Cairn India Limited. He has over 32
years of experience working in various industries
such as telecommunications, manufacturing,
infrastructure and consulting. Mr. Mathur began
his career with PricewaterhouseCoopers in
1986. Prior to joining the Group, he was the
Chief Financial Officer of Aircel Cellular Ltd and
was responsible for strategy, finance, supply
chain management, regulatory affairs and
telecom network. He has substantial expertise,
knowledge and experience in several key areas
of finance and strategic planning, with a proven
track record in deploying significant capital to
enable value creation and is leading the effort to
increase Cairn’s contribution in India’s domestic
Oil & Gas production to 50%. He has also held
senior executive positions in Delhi International
Airport Ltd., Idea Cellular, Ballarpur Industries
Limited and PricewaterhouseCoopers India.
Mr. Mathur has a bachelor’s degree in
Economics from Delhi University and has
completed his Masters of Business
Administration from Cornell University.
Integrated Report Management Review Statutory Reports Financial Statements 46
Vedanta Limited Integrated Report and Annual Accounts 2017-18
Executive Committee continued
Sunil Duggal
Chief Executive Officer, Hindustan Zinc
Limited and Lead, Base Metals Group
Tarun Jain
Director, Finance and Director,
Vedanta Limited
Scott Caithness
Director, Exploration
Mr. Duggal joined the Group in August 2010
and has been a significant driver of Hindustan
Zinc‘s growth. His dedication to sustainability
has enhanced safety awareness and helped to
embed a culture of safety at HZL. He has led
the value-adding adoption of best-in-class
mining and smelting techniques, machineries,
state-of-the-art environment-friendly
technologies, mechanisation and automation
of operational activities. Mr. Duggal has over
21 years of prior experience in leading high
performance teams and working in leadership
positions, nurturing business, evaluating
opportunities and risks and successfully
improving efficiency and productivity whilst
reducing costs and inefficiencies. He is an
Electrical Engineering graduate from Thapar
Institute of Engineering & Technology, Patiala
and is an Alumnus of IMD, Lausanne and IIM
Calcutta.
Mr. Jain is a Whole-time Director of Vedanta
Limited. He joined the Group in 1984 and has
over 35 years of executive experience in
finance, audit, accounting, taxation, mergers
and acquisitions and company secretarial
functions. He is responsible for the Group’s
strategic financial matters, including
corporate finance, corporate strategy,
business development and M&A. Mr. Jain
also serves on the Board of Bharat Aluminium
Company Limited, Sterlite (US) Inc. and was a
director of Cairn India Limited until its merger
with Vedanta Limited. Mr. Jain is a graduate of
the Institute of Cost and Works Accountants
of India and a fellow of the Institute of
Chartered Accountants of India and the
Institute of Company Secretaries of India.
Mr. Caithness was appointed Head of
Exploration for Hindustan Zinc Limited in
November 2015 before moving into the role
of Director – Exploration (Group-wide) in
October 2017. Mr. Caithness has over 30
years of experience within the exploration
industry. Prior to joining the Group, he
co-founded and was Managing Director of an
unlisted Australian exploration company,
Indian Pacific Resources Limited. He spent
18 years with Rio Tinto Exploration where he
held a number of senior corporate and
operational roles in Australia, Papua New
Guinea and India, including establishing Rio
Tinto Exploration’s first exploration office in
India. In addition, Mr. Caithness held senior
roles at Indophil Resources and the Australian
Trade Commission. He was also associated
with Vedanta, as Head of Exploration in the
year 2005-06. Mr. Caithness has a Bachelor
of Applied Science degree in Geology from
RMIT University in Melbourne, Australia.
Suresh Bose
Head, Group Human Resources
P. Ramnath
Chief Executive Officer,
Sterlite Copper
Mr. Bose joined Vedanta in February 2002
and following a long career within various HR
specialist roles at several of the Group’s
businesses including Aluminium, Copper and
corporate, was appointed as Head – Group
Human Resources in September 2015.
Mr. Bose has over 25 years of experience in
the HR function and has formerly held key HR
roles at HMT, Larsen & Toubro, Ford,
Mahindra & Mahindra and AGRC Armenia. He
has a dual Masters in Personnel Management
& Industrial Relations from Tata Institute of
Social Sciences, Mumbai and Institute of
Social Studies at The Hague, Netherlands.
Mr. Ramnath joined the Company in
September 2011 and is the Chief Executive
Officer of Vedanta’s Copper business in
Tuticorin, Silvassa and Fujairah Gold, UAE. He
is also a Board member for MALCO Energy
Limited, a subsidiary company of Vedanta
Limited. Prior to joining the Company, he was
the Chief Operating Officer of JK Paper Ltd.
He has over 34 years of experience across
many varied sectors, which include chemicals,
specialty chemicals and paper industries at
Jubilant Life Sciences Ltd., Praxair India, SNF
Ion Exchange Ltd., Bakelite Hylam Limited and
Reliance Industries Limited. Mr. Ramnath
holds a bachelor’s degree in Chemical
Engineering from Osmania University,
Hyderabad and has a Post Graduate Diploma
from the IIM Bangalore.
Vedanta Limited Integrated Report and Annual Accounts 2017-18
47
Naveen Singhal
Chief Executive Officer, Sesa Goa - Iron
Ore Business
Arun Arora
Head, Corporate Communications
Ajay Kumar Dixit
Chief Executive Officer, Alumina and
Power
Mr. Arora joined Vedanta Group in 2014, as
Chief Communications Officer, Cairn Oil &
Gas. He assumed charge of Group
Communications in September, 2017. He has
over 30 years of experience in various facets
of communications, including branding,
advertising, media, social & digital media,
publications, crisis communication and
internal communication with employees and
various stakeholders. Mr. Arora has a degree
in Mechanical Engineering and has pursued
his MBA in marketing, along with additional
qualification in Journalism and Mass
Communications. Prior to joining Vedanta
group, he headed communication functions
for organisations such as Escorts, Maruti
Suzuki, GMR DIAL, Jindal Steel & Power and
GVK, encompassing sectors such as
automobiles, airports, infrastructure, power,
roads, steel, mining and oil & gas.
Mr. Dixit joined the Company in 2015 and is
currently operating as CEO Alumina effective
February 2017, prior to which he was
operating as CEO, Power for Vedanta Limited
since May 2015. Prior to joining the Company,
Mr. Dixit worked at Siemens for nearly 36
years, in various profiles in the industry and
energy sectors before taking over as CEO –
Energy sector for South Asia. At Vedanta, he
is leading the power plant units vertical with a
capacity of over 9 GW and driving strategies
to achieve the full potential of the business.
Mr. Dixit is an electrical engineer from Delhi
College of Engineering.
Mr. Singhal is the Chief Executive Officer of
Vedanta Sesa Goa Iron Ore, the Iron Ore
business vertical of Vedanta Limited.
Mr. Singhal comes with over three decades of
experience, of which 22 years has been in the
natural resources arena, having handled
various portfolios in metals & mining and
cement industry. Mr. Singhal joined Vedanta in
2003 and was instrumental in driving the
growth projects in Hindustan Zinc from
conceptualisation to commissioning through
best-in-class mining and smelting
technologies, mechanisation and automation
alongside effective stakeholder management.
He has been a key pillar to bring about
strategic alignment in business with his strong
techno-commercial mind set. Prior to joining
Vedanta, he served in leadership roles at
Swaraj Mazda, Shri Ram and Dunkan Goenka
Group and played a pivotal role in the areas of
supply chain management, assets acquisition,
business turnaround strategy, general
management and project management.
Mr. Singhal has a bachelor’s degree in
Mechanical and Industrial Engineering from
IIT, Roorkee and has a post graduate diploma
in Industrial Engineering and Management
from NITIE, Mumbai.
Abhijit Pati
Chief Executive Officer, Aluminium,
Jharsuguda
Vikas Sharma
Chief Executive Officer, BALCO
Mr. Pati joined the Group in 2008 and is
currently operating as CEO Aluminium,
Jharsuguda, effective from December 2016.
Prior to this, he was handling the Group’s
Aluminium business since March 2015, with
his wealth of knowledge gained in over 28
years in the industry. He has been a significant
driver of the Company’s aluminium growth.
Mr. Pati is a two-times gold medal holder and
an honours graduate in Chemical Engineering
from the prestigious Calcutta University and
holds an MBA from IMI Delhi.
Mr. Sharma joined the Company in 2012 and
is currently the Chief Executive Officer of
BALCO effective March 2017, prior to which
he was associated with HZL as COO
Smelters, HZL. Mr. Sharma is known as a
result-driven individual in the industry, with
experience of over 29 years in various national
and multinational companies. He holds the
experience of serving HMT, Praxair, JSW and
AMP in various key positions. He has done his
B.E. (Mechanical) Honours from Engineering
College, Kota and MBA (Marketing) from
Sikkim Manipal University.
Integrated Report Management Review Statutory Reports Financial Statements 48
Vedanta Limited Integrated Report and Annual Accounts 2017-18
Awards and Accolades
Sl. No.Name of Awards
Category/Recognition
Recipient
Operational Excellence
1
2
3
4
5
Frost & Sullivan and FICCI’s ‘India
Manufacturing Excellence Award’
Future Ready Factory Award – Metals
Sector, Large Business
BALCO
Frost & Sullivan and FICCI’s India
Manufacturing Excellence Award’
Future Ready Factory Award – Metals
Sector, Large Business
Sterlite Copper
India Today’s Safaigiri Award
Best Public Private Partnership (PPP)
Model for Sewage Treatment Plant
HZL
CII-SR-EHS Excellence Award
‘5-Star’ for Excellence in EHS Practices
Cairn Oil & Gas
Par Excellence Award in 5th National
Conclave of Quality Circle Forum of India
5S & Kaizen
HZL
Sustainable Development & CSR
6
7
8
9
10
11
12
13
Innov Award
Golden Peacock Occupational Health &
Safety Award
Gold for CSR
Oil-Production
Nand Ghar, Vedanta Limited
Cairn Oil & Gas
BT CSR Excellence Award
Promotion of Education
Sterlite Copper
India CSR Community Initiative Award
Sustainable Livelihood category
Vedanta Limited – Lanjigarh
Greentech Safety Gold Award
Mines & Metal Sector
Vedanta Limited – Lanjigarh
The ET 2 Good 4 Good Certificate
Excellent management of various
Community Development
Best Risk Management Practices Award by
ECGC
Contribution by Indian exporters in
building Brand India
CNBC TV18 and ICICI Lombard – India Risk
Management Award
Best Risk Management Framework and
Systems - Sustainability
BALCO
HZL
HZL
14
FAME Excellence Award
Platinum Category, ‘Women
Empowerment’ project
Vedanta Limited – Lanjigarh
15
16
17
18
19
GreenTech Safety Gold Award
Power Thermal Sector
TSPL
ET Now CSR Award
Health, Water & Water Management
Cairn Oil & Gas
FICCI Road Safety Awards
Safe Vehicles Category
Cairn Oil & Gas
ET Now CSR Leadership Award
Best CSR Practices
HZL
Kalinga Safety Gold Award
Excellence in Safety
Vedanta Limited – Lanjigarh
20
CII-IGBC Green Building Platinum Award
Existing Green Building
HZL
Human Resources
21
22
CII National HR Excellence Award
Significant achievement in HR Excellence
Vedanta Limited – Jharsuguda
Golden Peacock HR Excellence Award
Mining & Metallurgy
Sterlite Copper
Innovation & Technology
23
IPPAI Innovation Award
Energy Conservation in the category of
best sustained innovations amongst the
innovations
Vedanta Limited - Jharsuguda
24
FICCI Safety Systems Excellence Award
Large Size category Mining Sector
Cairn Oil & Gas
Vedanta Limited Integrated Report and Annual Accounts 2017-18
49
Sl. No.Name of Awards
Category/Recognition
Recipient
Energy Conservation
25
26
35
36
‘Excellent Energy Efficient Unit’ Award by CII
Excellence in Energy Management
Sterlite Copper
CII National Award for Excellence in Water
Management
Water Management
27
D.L. Shah Gold Award
Project Implementation in reduction of
Specific Coal Consumption (SCC) in
540 MW Power Plant.
Sesa Goa
BALCO
28
Rajasthan Energy Conservation Award
Best energy conservation practices
HZL
Industry Achiever/National Contributor
29
Overall Diamond Arrow Award
Mining Companies in Operations in
Namibia
Zinc International
30
Future Women Leader & Summit Awards
• Business Woman of the Year
• Social Leader of the Year
• Woman Leader of the Year
• Science & Technology Leader of
the Year
Sesa Goa
Business Awards
31
Leaders Award 2017
Corporate Awards
32
Corporate Treasurer Awards
33
FTI’s India Disclosure Index – Corporate
Disclosure Champion
34
CT Awards
Institutional Investor Magazine’s Asia
Rankings
Excellent management in the area of
Sustainability, Environmental
Management, HSE Practices, Legal
Compliance and Stakeholder and
Community Engagement
BALCO
Best Financial Planning and Analysis
Strategy
Vedanta Limited
Metals & Mining Category
Vedanta Limited
Asia’s Best Treasury and Finance
Strategies of 2017 – Best Financial
Planning & Analysis Strategy
Basic Materials Category
(Best CEO by Sell-side – First
Best Investor Relations – Third)
Vedanta Limited
Vedanta Limited
The Asset Triple A Treasury, Trade, Supply
Chain and Risk Management Awards
Best Structured Trade Finance Solution:
Structured trade finance deal to meet
working capital demands
Vedanta Limited
37
LACP 2017 Vision Awards
Annual Report Competition
- Top 5 Indian Reports of 2017
- Silver Award (for excellence within
industry on development of
organisation’s annual report for past
fiscal year)
Vedanta Limited
Integrated Report Management Review Statutory Reports Financial Statements 50
Vedanta Limited Integrated Report and Annual Accounts 2017-18
Market review
Realising opportunities
for growth
India is now projected to
grow by 7.4% in 2018 and
7.8% in 2019, maintaining its
status as one of the fastest-
growing major economies
in the world.
Opportunities for Vedanta
Global growth
Global growth is expected to strengthen
to 3.9 % in both 2018 and 2019, a 0.2%
upgrade for both years compared to the
IMF’s October 2017 forecast. While growth
prospects for advanced economies are
likely to remain somewhat subdued going
forward, growth in emerging markets
and developing economies is expected
to continue to increase, from 4.8% in
2017 to 4.9% in 2018 and 5.1% in 2019.
This global growth will lead to higher
demand for metals and oil. Vedanta’s
diversified portfolio and attractive basket
of commodities positions us well to take
advantage of this projected uplift.
Tight mine supply
Market balance for certain commodities,
in particular zinc and copper, is expected
to remain tight due to limited investments
in new projects, mine closures and higher
than expected levels of demand.
Vedanta is well-positioned to take
advantage of these supply and demand
factors, given the ramp-ups across
businesses and the various growth projects
underway.
Indian economy
India is a key market for Vedanta and
one that we believe has huge growth
potential. According to the IMF’s WEO
of April 2018, the Indian economy grew
at 6.7% in 2017, accelerating from a
relatively slower growth in the first half
of the year due to the transitory effects
of the currency exchange initiative.
Global economy and
commodity markets
The global economy strengthened in 2017,
registering a 3.8% growth according to
the International Monetary Fund’s (IMF’s)
World Economic Outlook (WEO). This
was a 0.5% increase over the previous
year and the fastest growth rate since
2011. This global uptick was driven by
resilient growth in advanced economies
combined with a continued pick-up in
growth in emerging markets. Key drivers
included an increase in investment spend,
supported by an improved outlook
and a rise in private consumption.
China’s economy grew at 6.9% in 2017,
defying expectations of a slowdown,
due to strong global demand and
sustained state infrastructure spending.
While the IMF expects a softening in
growth in 2018, China will continue to
play a key role in global metals markets
given that it accounts for more than
50% of world metal consumption.
Commodity prices strengthened in
2017 and this continued into the first
quarter of 2018. Both demand and
supply factors supported the broad-
based price increases. The acceleration
in global growth led to an increase in
demand for commodities, while supply
rationalisation due to Chinese production
cuts supported stronger commodity
prices. Key risks to commodities in the
short-term include enactment of additional
tariffs, production cuts and sanctions.
Vedanta Limited Integrated Report and Annual Accounts 2017-18
51
in the infrastructure, transportation and
power sectors. We also anticipate changes
in Government policy to incentivise
domestic metal and energy production
and to reduce dependence on imports.
These initiatives will lead to an increasing
demand for domestically produced metals.
Vedanta, as the only diversified natural
resources company in India, is uniquely
positioned to leverage India’s growth
potential by catering to that demand. With
such a vast domestic market, everything
we produce in India, we aim to sell in India.
A number of major reforms were
undertaken in 2017. On July 1, 2017,
India launched its biggest tax reform,
the Goods and Services Tax (GST). The
implementation of the GST will help
reduce internal barriers to trade and
increase efficiency and tax compliance.
The GST eliminates cascading of
taxes and encourages ‘Make in India’,
thus driving growth momentum. In a
separate reform, major stressed assets
were marked for resolution under the
Insolvency and Bankruptcy Code 2016,
to ensure a time-bound insolvency
resolution, helping corporates clean
balance sheets and reduce debt.
These policy measures have improved
external confidence in the Indian
economy and are set to provide a boost
to economic growth. More importantly,
they have enabled India to jump 30
places in the World Bank’s Ease of Doing
Business rankings and resulted in the
first upgrade in its sovereign debt ratings
for 14 years – to ‘Baa2’ from ‘Baa3’.
Opportunities for Vedanta
An India-focused growth agenda
India is now projected to grow by 7.4% in
2018 and 7.8% in 2019, maintaining its
status as one of the fastest-growing major
economies in the world, according to the
IMF’s WEO. In the medium-term, growth is
expected to rise gradually as structural
reforms continue to be implemented,
raising productivity and incentivising
private investment. An amended MMDRA
(Mines and Mineral Development and
Regulation Act) in 2015 has brought
increased clarity on the licencing around
mining. Key regulatory reforms around
opening commercial coal mining to the
private sector and the launch of Open
Acreage Licensing (OAL) in the Oil & Gas
sector to improve exploration are some of
steps in the past year towards creating a
more favourable mining environment.
Positive demographic factors such as an
increasing workforce and urbanisation are
driving a greater need for infrastructure
development. The Indian Government
continues to invest in the infrastructure
sector, having increased its spending in the
Union Budget 2018-19. In September 2017,
the Government launched ‘Saubhagya’,
a new scheme to ensure electrification
of all remaining willing households
in the country. In October 2017, the
Government launched ‘Bharatmala’, a new
programme to optimise efficiency of road
traffic by bridging critical infrastructure
gaps. Initiatives like these would be a
major driver for economic growth.
Looking ahead, we expect to see a
continued focus and further investments
Integrated ReportManagement ReviewStatutory ReportsFinancial Statements 52
Vedanta Limited Integrated Report and Annual Accounts 2017-18
Market review continued
Zinc
Supply-side will hold the key
Zinc was the leading performer on London
Metal Exchange (LME)last year, with
prices up 38%. The year was marked by
a sharp decline in finished goods stocks,
which fell to record lows that were the
equivalent of around six days of global
consumption in 2017. This reduced zinc
supply from China for most of the year.
The combination of scheduled mine
closures, strategic production cuts and
the impact of environmental inspections
in China depleted global stocks of
zinc concentrate. The consequent
constraints on refined production
ensured that the rally in zinc prices that
started in 2016 was sustained in 2017.
Mine supply is expected to increase in 2018
as projects, including the Century Tailings
project, Glencore’s Lady Loretta, MMG’s
Dugald river and Vedanta’s Gamsberg
mines, are expected to add approximately
400-500 kt of refined zinc this year,
totalling about 13.7 million tonnes. However,
Zinc market fundamentals remain robust
with global zinc consumption expected
to grow by 2.5% to 14.8 million tonnes in
2018. This implies that the concentrate
market will remain tight and refined metal
stocks could further reduce significantly.
Products and customers
Vedanta is the largest zinc producer in
India, with a 78% market share.
Approximately 68-75% of the refined zinc
produced is sold in the Indian market,
primarily to steel companies, with the rest
being exported to countries in Asia and the
Middle East. Over 70% of Indian zinc
consumption is used for galvanising steel,
predominantly in the construction and
infrastructure sectors. We also produce
zinc for use in die-casting alloys, brass and
oxides and chemicals. Vedanta’s Zinc
International operations comprise Namzinc
Pty Ltd in Namibia, which is the largest
integrated zinc producer in Africa, as well
as Black Mountain Mining (BMM) in South
Africa. Namzinc produces refined zinc,
which is sold within Africa and exported to
Europe and China, while concentrate from
BMM is exported to traders and refiners
internationally.
Silver
Industrial uses driving demand
In 2017, global economic growth and
positive industrial sentiments underpinned
the strong demand for industrial silver
in solar panels, electrical components,
brazing and alloys and other applications.
Supply of silver remained constrained
in 2017 as silver production is primarily
a by-product of copper, zinc and lead
extraction processes, which were impacted
by subdued mine supply in the year. The
silver market, therefore, continued to
be in deficit for the fifth year in a row.
Positive economic development is an
argument in favour of silver because it
means that industrial demand is likely to
become even more dynamic – it accounts
for more than half of total silver demand.
India’s silver imports doubled y-o-y, while
China’s rebounded strongly, primarily
driven by rising industrial demand for the
metal, which is expected to pick up at an
even better pace this year in Asia.
Products and customers
Hindustan Zinc holds the position of being
India’s only primary silver producer – 558
tonnes in the last financial year – and ranks
10th globally in terms of the top silver-
producing companies. A major proportion
of the Indian market’s appetite is satisfied
through imports, with the balance coming
from secondary manufacturers and
recyclers. With the latest accreditation
of ‘London Good Delivered Bars’ in
April 2018, HZL’s silver is on par with
international standards. In India, the
highest usage of silver is in jewellery (38%),
followed by coins & bars (22%), silverware
(20%) and industrial fabrication (20%),
according to the World Silver Institute. We
cater to markets including the industrial
sector (electrical contacts, solder and alloys
and pharmaceuticals), and the jewellery
and silverware manufacturing segment.
Market drivers and opportunities
Last year saw a healthy increase in
zinc consumption in the three major
consuming regions – Asia, Europe and
North America. Demand growth in China
from the real estate and automotive
sectors, and the ‘One Belt One Road’
initiatives, was partly offset by the
impact of pollution control measures.
Europe recorded a surprising revival in
growth in industrial activity in Germany and
France, driven by an uptick in domestic
consumption along with a major push
for technology and engineering product
exports. With falling unemployment, rising
Fed rates and changing trade policies
in the US, we are already witnessing
higher consumption, along with fresh
investments targeted at promoting exports.
In India, zinc consumption in the
near-term will benefit from the ongoing
restructuring of the steel industry and
adherence to newly established IS277
coating standards. The alloys and die
casting sector also witnessed robust
growth, led by zinc-magnesium alloys.
Demand from the automotive sector
remains robust due to the rising penetration
of galvanised steel in domestic cars.
Over the next five years, zinc demand
in India will be a beneficiary of higher
construction spending, which is expected
to increase at around 10% CAGR with
projects under the metro rail, Smart Cities
Mission and Swachh Bharat (Clean India)
driving investments in urban infrastructure.
African zinc consumption is also
significantly driven by the galvanising
industry, with end-use in the mining
and construction sectors, and this
represents a key market for us.
Production ramp-up at Zinc India and the
Gamsberg project this year will enable
us to benefit from the rising demand
globally, particularly in India and Africa.
Vedanta Limited Integrated Report and Annual Accounts 2017-18
53
Market drivers and opportunities
Silver investment demand, along with gold,
is likely to face headwinds from higher
interest rates, but rising inflationary
expectations as well as any geopolitical
tensions may see investors’ interest in silver
recover as the metal is considered to be a
safe-haven asset. Industrial demand for
silver will be driven by a strong solar PV
sector and increased vehicle electronics
applications, while jewellery demand is
expected to grow with rising income levels
in Asia.
Zinc India produced a record level of silver
in the past year. Vedanta is well positioned
to capture the growth in demand as
production rises significantly in the coming
years with the ramp-up of the
silver-rich Sindesar Khurd mine.
In 2017, we saw the launch of OALP
in the Indian Oil & Gas sector, giving
companies the option to carve out their
own exploration blocks without a formal
bid round from the Government, and
providing the opportunity for acreage
acquisition for the first time in eight
years. This process will help fast-track
exploration and production in India.
India is under-explored, with only
seven of the 26 sedimentary basins
currently producing oil and gas. Further,
reassessment of India’s resource
base has highlighted an increase in
India’s total hydrocarbon resources
(in place) by close to 50%, providing
significant growth opportunities.
Vedanta, a strong believer in India’s
resource potential, has recently bid for
all 55 blocks on offer in the first round of
oil and gas auctions under the OALP.
As the largest private sector producer
of crude oil in India, and with a strong
track record and growth pipeline in
exploration and development, Vedanta
is well positioned to benefit from the
Government’s desire to boost domestic
production and to leverage India’s
oil and gas resource potential.
Oil & Gas
Boosting Indian oil & gas production
will drive future growth
Robust global demand and curtailed
production by members of the
Organisation of the Petroleum Exporting
Countries (OPEC) supported crude oil
price increases in 2017, outweighing
relatively high US crude oil production.
As a result, crude oil prices ended 2017 at
US$65/bbl, the highest level since 2015.
Both OPEC and non-OPEC countries
have agreed to continue limiting output
until the end of 2018. With the US
pulling out of the Iran nuclear pact and
triggering renewed sanctions on a key
oil-producing country, oil prices reached
levels above US$75/bbl in May 2018.
Products and customers
Vedanta’s operations produce crude oil,
which is sold to hydrocarbon refineries, and
natural gas, which is used primarily by the
fertiliser industry and power generation
sector in India.
Market drivers and opportunities
US crude oil production continues to rise:
the US Energy Information Administration
(EIA) projects average US crude oil
production of 10.7 million b/d in 2018 and
11.4 million b/d in 2019, surpassing the
previous record of 9.6 million b/d set in
1970. Resilient US production will have an
impact on oil prices going forward.
In India, 83% of oil consumption and 45%
of gas consumption is met by imports.
However, the Indian Government
recognises the need to boost domestic
production to achieve greater energy
security. To this end, they are targeting a
10% reduction in India’s imports of oil and
gas by 2022 and have introduced a number
of new policies aimed at attracting
investment and boosting production.
Integrated ReportManagement ReviewStatutory ReportsFinancial Statements 54
Vedanta Limited Integrated Report and Annual Accounts 2017-18
Market review continued
In the short-term, globally, steel demand is
projected to grow by 1.6%4 by 2019, while
Indian steel demand is projected to grow
by 6.6% to reach 115 million tonnes in 2019,
driven by investment in infrastructure and
construction. India is one of the lowest
per capita steel consumers globally and
produces only c. 10% of China’s steel
production. However, India is on track to
become the second-largest steel-
producing country over the next two years,
surpassing Japan. The ongoing
restructuring and consolidation of the steel
industry in India is expected to further
support the demand-growth going forward.
However, mining at Vedanta’s Goa
operations has ceased, effective from
March 16, 2018, pursuant to the Supreme
Court order dated February 7, 2018. We
continue to engage with the Government
to provide clarity around restarting of
mining operations at Goa. Until such time,
our ability to capitalise on the global
demand remains muted.
This growth in Indian steel production
represents an opportunity for us to grow
our domestic iron ore sales. Vedanta’s
permitted mining capacity at Karnataka has
been recently enhanced to 4.5 million
tonnes (from 2.29 million tonnes
previously).
Aluminium
Construction and transportation
segments continue to drive demand
Aluminium demand, excluding China, grew
by 4% y-o-y in 2017, while Chinese demand
grew by 6% supported by the strong
economic growth across most of the world
economies.
The year 2017 turned out to be good for
aluminium prices as a late-year rally lifted
prices by 33%, up US$558/t from January
levels and the second largest annual price
increase this century. Aluminium LME
prices rose by 21% compared to FY2017
owing to increases in raw material prices,
expectations around supply reform in China
and the implementation of trade tariffs in
the US.
Products and customers
Vedanta has the largest integrated smelter
in India, with 2.3 mtpa proposed capacity,
and is the market leader in primary
aluminium with 40% market share. Our
product range includes ingots, primary
foundry alloys, wire rods, billets and rolled
products.
In FY2018, 40% of our sales were to the
Indian market, specifically for use in the
construction, electrical and transportation
industries where Government policies
aimed at providing affordable housing were
a significant driver of demand growth.
International sales to our established
customer base in other key Asian, European
and American markets grew by 64% to
c. 1 million tonnes, compared to FY2017.
Iron ore
Growing steel consumption driving iron
ore demand
Iron ore prices averaged US$72/dmt in
2017, a rise of over 21% y-o-y, due to high
steel margins and robust demand in China.
Given high margins and low inventories,
there is likely to be a growth in steel
production and iron ore demand in the
near-term, as the winter production
restrictions are lifted.
The iron ore price is, however, expected
to experience volatility in 2018, due to
uncertainty regarding the lifting of winter
production restrictions in China (which
have been slow untill now), the increase in
low-cost supply from Australia and Brazil
and lower y-o-y demand growth from
China. China’s steel production is sensitive
to a range of economic, monetary and
environmental policies, which could impact
market dynamics and future iron ore prices.
Products and customers
Vedanta was India’s largest private sector
exporter of iron ore in FY2018. Iron ore
is a key ingredient in steel production,
which ultimately serves the construction,
infrastructure and automotive sectors. In
2017, approximately 53% of Vedanta’s
production, from Karnataka and Goa, was
sold domestically to Indian steel producers
and 47%, comprising low-grade ore from
Goa, was exported, primarily to Chinese
steel mills.
Market drivers and opportunities
The pace of global steel production is
forecast to slow in 2018 and 2019, as
the supply cuts resulting from stringent
environmental regulations in China
outweigh a pick-up in growth elsewhere
in the world.
3 Platts daily, Refers to 62% Fe fines China CFR
4 2% Fe fines China CFR Quarterly
Vedanta Limited Integrated Report and Annual Accounts 2017-18
55
Market drivers and opportunities
Globally, aluminium demand is forecast
to increase by 4% next year, driven mainly
by ongoing demand in the construction
and transportation segments. The advent
of electric vehicles will further start to
provide a new demand stream. In India,
initiatives to increase investment and
develop infrastructure continue to drive
demand. India is also one of the world’s
largest electrical applications market
for aluminium and the electrification
programmes driven by the Government will
drive the growth in aluminium consumption
by 7% next year. The next wave of light
weighting in the Indian railways combined
with the ‘Make in India’ campaign will
herald new growth opportunities for new
investments in the aluminium downstream.
Uncertainty from trade wars and geo
political events, including sanctions on
Russia, have the potential to impact the
aluminium and alumina markets globally.
Vedanta continues to ramp up its
Jharsuguda smelter and grow its
production in order to take advantage of
these opportunities. Vedanta’s wire rod
facility, which is one of the largest globally,
is positioned to leverage the aluminium
demand from electrification trends.
Power
Copper
Growth in Indian demand is driving
capacity increases
Vedanta operates a 9 GW diversified
power portfolio in India consisting of 96%
thermal power and 4% from renewable
energy sources.
India has the fifth largest power generation
capacity in the world. Between FY2010-
FY2017, electricity production grew at a
CAGR of 7.03%, driven by Government
initiatives and schemes to increase
electrification across rural India. A target to
connect 18,452 villages to the power grid
was achieved in April 2018.
Products and customers
Of Vedanta’s power portfolio, 40% is used
for commercial power while 60% is for
captive use. Nearly 92% of the power
generated for commercial purposes is
backed by long-term power purchase
agreements with local Indian distribution
companies.
Market drivers and opportunities
Demand for power in India is expected to
grow rapidly from 1160.1 TWh in 2016 to
1894.7 TWh by FY2022, mainly driven by
the expansion in industrial activity, a
growing population and increasing
electricity penetration. The Government
has also been supportive of growth in the
power sector, de-licencing the electrical
machinery industry and allowing 100%
foreign direct investment. In addition, in
February 2018, the Government permitted
commercial mining for thermal coal, which
will improve India’s self-sufficiency and
reduce coal and logistics costs.
As of February 2018, India had a total
installed capacity of 334 GW, of which
thermal constituted 220 GW, nuclear
7 GW, hydro 45 GW and renewables
63 GW. Total captive power installed
capacity stood at 41 GW.
India currently has a power deficit and is
targeting an additional total of 100 GW
under the Indian Government’s 13th Five
Year Plan (FY2017-FY2022). The target for
renewable energy has also been increased
to 17 5GW by 2022. Vedanta’s power
portfolio is well positioned to capitalise on
India’s growing demand for power.
Consumption in India and China is
fuelling demand
Refined copper consumption grew by 2.0%
in 2017, while demand in China, the largest
consumer of copper, grew by 3.2%. Copper
prices firmed up on the prospects of the US’s
infrastructure plans and increased demand in
China for appliances and consumer goods. In
India, the refined copper market experienced
some volatility during the year but is
expected to continue growing on par with
growth in the Indian economy.
On the supply side, after five consecutive
years of growth, 2017 did not see any
significant changes in supply. However,
disruptions to production at Escondida,
Cerro Verde and Grasberg, and further
environmental cutbacks at smaller Chinese
mines, led to 995 kt of identified supply
disruptions in 2017.
Products and customers
Refined copper is predominantly used in
manufacturing cables, transformers and
motors as well as castings and alloy-based
products.
Vedanta, with its 400 ktpa custom smelter
in Southern India, is the market leader in
India with a market share for refined copper
of approximately 33%. Copper India’s
exports accounted for 49% of overall sales
in FY2018 and were mainly to China and
South East Asia.
Market drivers and opportunities
We expect to see continued demand
growth in India and China in the coming
years, driven by population growth,
urbanisation, the rise of the middle class
and support from Government measures
and initiatives. Additionally, demand for
copper products feeding the electronics
and automotive industries will support solid
growth in the short to medium-term in
Japan, South Korea and Taiwan.
There is the potential for further industrial
action at Latin American mines during 2018
as labour contracts are negotiated at Chilean
and Peruvian copper mines, possibly leading
to a fall in production.
Our smelter capacity expansion projects in
Tuticorin will enable us to take advantage of
these opportunities and respond to the
increased demand.
Integrated ReportManagement ReviewStatutory ReportsFinancial Statements 56
Vedanta Limited Integrated Report and Annual Accounts 2017-18
Creating
Energy Savings (GJ)
2.44 mn
280% of our FY2018 target
Case study: Fugitive emissions
reduction at Cairn Oil & Gas
In the Oil & Gas industry, fugitive emissions
can often constitute a significant proportion
of the Company’s GHG emissions. These
invisible and accounted-for emissions are
not only a waste of resources, but also have
a high Global Warming Potential (GWP),
because they are primarily comprised of
methane emissions (methane is 23 times
more potent than carbon dioxide in terms
of GWP). Excessive, unchecked fugitive
emissions can also be a drain on resources
and a fire-safety threat to the assets.
To check the quantum of its fugitive
emissions, Cairn Oil & Gas, along with an
independent external expert, conducted
a fugitive emissions study for its Rajasthan
operations based on the US EPA Method
21 approach. A Leak Detection and Repair
(LDAR) programme was carried out to
check for gas emission leaks from process
equipment. Process components covering
all joints such as valves, connectors, pumps,
sampling connections, compressors,
pressure relief devices and open-ended
lines were monitored under the ‘fugitive
emission monitoring’ programme in
the process plant and well pads.
The findings from the study were
surprisingly positive. Fugitive emissions
accounted for only 0.011% of the total
GHG emissions of the process and well
pad areas, significantly lower than the
13% correction factor that was being
applied to account for the unmeasured
emissions. These numbers also compared
favourably with the fugitive emission
ranges found in the North American oil &
gas installations. This study highlights the
excellent asset management and upkeep
of the facilities of our Oil & Gas business.
Project Jeevan Amrit, Cairn Oil & Gas
Vedanta Limited Integrated Report and Annual Accounts 2017-18
57
a sustainable
future
Fugitive emissions accounted for
only 0.011% of the total GHG
emissions of the process and well
pad areas, significantly lower than
the 13% correction factor that was
being applied to account for the
unmeasured emissions.
Livelihood Promotion through Vedanta promoted Subhalaxmi Women Cooperative Society
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Vedanta Limited Integrated Report and Annual Accounts 2017-18
Sustainability & CSR
Skill development initiative at Cairn Enterprise Centre by Cairn Oil & Gas
Key statistics
• 3.36 million community beneficiaries
(2017: 2.2 million).
• Carbon footprint: 52m mt
• LTIFR: 0.35 (2017: 0.40)
• Water recycling rate: 30% (2017: 27%)
• 1.3 million m3 of water saved (target: 0.9
million m3)
• 2.4 million GJ of energy conserved
(target: 0.9 million GJ)
• Community investment: ` 244 crore
(2017: ` 144 crore)
Over the years, Vedanta has grown to
become the sixth largest diversified natural
resources company globally through a
combination of organic growth – as can be
seen at our copper business – and
acquisition of complementary business
including Hindustan Zinc, Cairn India,
BALCO, Sesa Goa, Skorpion Zinc and Black
Mountain Mines . These companies are
mature, high-performing businesses in their
own right with well-developed governance,
HSE and community relations management
systems.
As a Group we have sought to embed a
standardised, high-performance
sustainability culture across all our
businesses while allowing each to make its
day-to-day decisions without interference
from any central body. It is in this context
that we introduced the Vedanta
Sustainability Framework (VSF) in 2011. The
goal of the framework is to ensure that all
our businesses integrate sustainability
principles into their business practices in a
consistent and systemic manner. The VSF
has enabled them all to understand and
integrate sustainability into their operational
and decision-making structures.
We use our central oversight bodies,
including the Board and Group executive
committees, to set performance
expectations (especially on sustainability)
and to ensure that our governance
standards remain compliant with
Environmental Social Governance (ESG)
considerations. The individual businesses
set their own strategy, technology
deliverables, production outcomes,
sustainability measures and other goals.
Finally, preserving our licence to operate is
one of our strategic priorities, ensuring
sustainability issues are incorporated at
Group level into management
considerations and decision making.
During the year, we have continued to
make progress against our priorities,
achieving excellent results in some areas,
while reviewing how we operate in others
and taking steps to improve outcomes for
our stakeholders.
We continue to push forward on our sustainability agenda,
knowing it is a key driver for our business performance.
– Phillip Turner, Group Head – HSE & Sustainability
Vedanta Limited Integrated Report and Annual Accounts 2017-18
59
Objectives and targets FY2018
Status Performance FY2018
Objectives and targets FY2019
The safety of our workforce
Achieve score >75% in six safety
performance standards
Extend baseline health assessment
across businesses
Zero fatal incidents and 33% reduction in LTIFR
Environment management
3 of 10 businesses achieved 75% or above
Achieve score >75% in six safety performance
standards
Hindustan Zinc, Sterlite Copper, Cairn Oil & Gas and
BALCO have completed their initial exposure survey
7 fatalities occurred in the fiscal year. LTIFR
improved from 0.40 to 0.35 – a reduction of ~13%
Zero fatal accidents and LTIFR of 0.30
– Standardise water risk assessment approach for
business
– Water risk assessment tool developed in
collaboration with Antea Group, US.
– Undertake water risk assessment for significant
– Water risk assessment studies conducted for 25
Achieve water saving of 1.5 million m3
businesses with water as a material issue
– Water savings target: 0.93 million m3
Compliance with environmental and social
management plan for new projects across
the business
significant business units across the Group
– Water savings of 1.3 million m3 achieved
Work-in-progress
Complete Biodiversity Management Plan (BMP) at
our Oil & Gas business
BMP study complete
Achieve 50% of fly ash utilisation rate
90% of the generated fly ash utilised
Achieve fly ash utilisation of 75%
We are considering formal GHG reduction targets
and we expect to achieve a 16% reduction in
carbon intensity by 2020 from a 2012 baseline,
which was the first year of audited data
c. 14% reduction achieved in GHG intensity over
baseline of 2012
Formalise our 2020 GHG reduction target
Energy saving: 0.87 million GJ
Energy saving of 2.44 million GJ achieved
Achieve 2 million GJ energy saving
Complete the dam break analysis of the identified
facilities across businesses
In FY2017, two dams across our businesses had been
identified for the analysis. Analysis completed at both
Develop capability and facilitate strengthening of
tailing management practices across the Group
Initiate the capacity-building of selected
professionals on biodiversity
Retaining our social licence to operate
Social impact studies to be continued for
remaining sites
Increase the implementation and utilisation rate of
the SAP system
We have taken a serious note of the dam-failure
incidents at VAL-Jharsuguda and BALCO and have
taken appropriate actions to ensure this is not a
recurring issue for our business (ref: page 63)
Not initiated
Partnered with TARU Leading Edge to conduct
baseline, need, impact and SWOT assessments in
all businesses. Work is under way
The development of a unified reporting system to
record the aggregated impact of CSR initiatives and
to the manage entire CSR cycle is in process.
Institute for Financial Management and Research
(IFMR) has been commissioned to develop unified
indicators and Goodera (under process) has been
identified for providing the software platform
Complete the baseline and social impact
assessments in all businesses
Expand the Company's flagship Nand Ghar CSR
programme to all our businesses
Nand Ghars constructed: 54 in FY2017-18; 154 till
date. 250 under construction
250 Nand Ghars to be constructed in FY2018-19
and planning for additional 1,000 to be completed
Embed and encourage employee volunteering for
social initiatives
Employee engagement initiatives have been
undertaken in businesses including HZL, Sterlite
Copper and BALCO. These initiatives included
Khushi Baatiye, audio description movie for
visually impaired children, and mentoring
programme by employee families, among other
activities
Develop employee engagement standard policy
for the Group
People and diversity
Employee scorecard coverage to be extended to
100% of the professional employees
Ensure 100% coverage of Code of Conduct
training for all new professional employees
Target completed
Target completed
Continue to focus on Code of Conduct training
for all professional employees, including new
hires
Increase gender diversity by hiring 20% women
this financial year
19% of all new full-time hires in FY2018 have been
women
-
Achieve 33% female representation at Vedanta
Board-level by 2020
We have 22% female representation on the Vedanta
Limited Board. We continue to focus on our target
of achieving 33% representation
Achieve 33% female representation at Vedanta
Board-level by 2020
–
–
–
–
Focus on anchoring and engagement of
high-potential employees through our flagship
programme V-Connect
Focus on Right Management in Place in each SBU
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Vedanta Limited Integrated Report and Annual Accounts 2017-18
Sustainability & CSR continued
LTIFR reduction to
0.35 from 0.4
Achieved
In progress/Partially
achieved
Not achieved
A unified approach to sustainability
Our Sustainability Framework is central to
our sustainability agenda, focusing on our
four strategic pillars:
1. Responsible stewardship –
We are committed to safeguarding our
resources by monitoring, managing and
improving the Group’s health, safety and
environmental performance. Our vision
for ‘Zero Harm, Zero Waste, Zero
Discharge’ is an outcome of this
approach.
Focus areas: Code of Conduct; ethics;
health, safety & environment
2. Building strong relationships –
We are committed to maintaining an
open, ongoing and systematic dialogue
with our stakeholders. Our goal is to
ensure that we align our business
planning, community relations and CSR
programmes with stakeholders’ needs in
order to maintain and strengthen our
social licence to operate.
Focus areas: Stakeholder engagement
and management, human rights,
neighbourhood dialogue
3. Adding and sharing value –
We are committed to driving economic
empowerment and generating shared
value through significant and relevant
investment in local communities and
national economies.
Focus areas: Employees, communities,
business investments
4. Strategic communications –
We are committed to transparent
and timely disclosure that builds trust.
We believe that clear and regular
communication and dialogue with
all our stakeholders helps create an
environment that facilitates
our operations.
Vedanta Limited Integrated Report and Annual Accounts 2017-18
61
Safety training amounting to
890,389 man-hours
Project Unnati, Cairn Oil & Gas
1. Responsible stewardship
It is of critical importance to us that we
take care of the health and safety of our
workforce and minimise our
environmental impacts to protect our
natural resources and those who live
around our operations.
a) The safety of our workforce
This year has seen significant leadership
attention on health & safety and the
message from our Board and senior
leadership is very clear: we cannot
continue to operate in a manner that
puts the lives of individuals at risk. In
order to drive the safety agenda further
in our organisation, we have
implemented a phased programme of
new safety systems. This includes fresh
approaches to identifying risk areas for
accidents and fatalities, developing
standards to establish minimum
performance requirements, monitoring
progress on their adoption and
reviewing performance with senior
leadership. This systemic approach has
begun to yield results. Safety incidents
have reduced over a six-year period, as
seen in LTIFR, which has reduced from a
high of 0.89 in FY2012 to 0.35 in
FY2018.
LTIFR
9
8
0
.
2
5
.
0
1
4
0
.
3
4
0
.
9
4
0
.
0
4
0
.
5
3
.
0
2012
2013
2014
2015 2016 2017 2018
FATALITIES
6
1
9
7
5
5
2014
2015
2016
2017
2018
However, of deep concern is that the
number of fatalities increased in FY2018
to seven, despite a previous downward
trend. Two-thirds of these fatalities
occurred in areas that were outside of
the focus of our ‘fatal risk campaign’.
We have introduced additional safety
standards in the light of these tragic
events, and we are also conducting
training and programmes for our
workforce so that they can identify,
prevent and manage safety risks, even if a
specific standard is not in place. ‘Making
Better Risk Decisions’ (MBRD) training
and the Critical Risk Identification training
programmes have been developed
to impart this kind of awareness and
preparedness. Collectively, we have
imparted over 890,389 hours of safety
training to our employees, contractors
and third-party vendors. We also
regularly send out updates on learnings
from the investigations into ‘high
potential’ and ’fatal’ safety incidents.
(i) Good housekeeping leads to safe
workplaces
In FY2018, we launched the
international ‘5S Housekeeping
Programme’, which provides a process
to measure and monitor housekeeping
effectiveness. Our goal was to achieve a
score of 90% across all of our assets.
The thinking was very clear: bad
housekeeping is one of the primary
reasons why accidents take place. If we
can systematically improve it, we are
likely to see a drop in safety incidents.
So far, we have been able to drive up the
score from an average of 65% to 74%.
We hope to close FY2019 at 90%.
(ii) Measure, monitor, report
This year, we supplemented our existing
standards with additional rules covering
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Vedanta Limited Integrated Report and Annual Accounts 2017-18
Sustainability & CSR continued
Our businesses have made significant progress
on our GHG reduction commitment to date.
Companies such as Hindustan Zinc and Cairn
Oil & Gas have committed to increase their
investment in solar power.
Employee at operational site, Cairn Oil & Gas
machine guarding; cranes and lifting;
molten metals and pit, dump and
stockpile safety. All sites are required to
adhere strictly to the provisions in these
standards and their compliance will be
audited in our annual Vedanta
Sustainability Assurance Protocol
(VSAP).
To ensure that every site adheres to all
safety principles, we have appointed
‘zone-wise’ managers who are
accountable for the overall safety of
their areas. We have mandated that the
managers should be chosen from inside
the business, people who staff the
shop-floor on a daily basis. Combined
with an active and engaged leadership, a
vigilant ExCo and the strict application
of standard safety procedures, we are
confident that we will be able to turn
around our safety performance.
To further drive up safety performance,
we began redesigning the HSE function
to ensure that each business has
adequate leadership to influence and
drive a safety culture. The newly
appointed Chief Health & Safety
Officers and Chief Environment
Managers have been mandated to
increase their engagement with
business and site-based line leaders to
implement effective safety controls. We
have also appointed experienced
employees at regional levels to drive
safety performance and ensure that
knowledge sharing and lessons-learnt
are adequately implemented at our sites.
We also recruited ten globally-
experienced HSE experts (with three
more planned) to fill roles at a unit and
regional level. These experts will be
tasked with bringing international best
practices in safety to our business units
and to build organisational capabilities
through coaching our business leaders
and specialists.
Finally, FY2018 saw the introduction of
‘HSE competency’ as a performance
metric for each employee to help us
track safe behaviour and awareness of
safe work practices. We envisage that
this indicator will sit alongside other
indicators of individual performance and
promote those employees who value
safety in all their actions.
(iii) Statistics for health & safety
• 890,389 man-hours of HSE training
• 100% periodical medical examination
• 63 Lost Time Injuries (LTIs) and seven
fatalities in FY2018
• Sterlite Copper received the British
Safety Council’s ‘Sword of Honour’
and Cairn Oil & Gas received the
British Safety Council five-star rating
b) Managing our environmental
performance
Vedanta is committed to minimising its
environmental footprint. To do this, we
have instituted measures across the
organisation that help us minimise our
air emissions, reduce our waste and
effluent volumes, and improve the
energy and water utilisation efficiency of
our operations. We have also taken
measures to protect the biodiversity of
the regions where we operate.
Our VSF comprises comprehensive
policies and standards on water, energy
and carbon, waste and biodiversity. The
framework, combined with objectives
and targets on energy, GHG, waste and
water management ensures that each of
our businesses follows the same high
standards of environmental
management.
This year, we undertook a water risk
assessment exercise at 25 of our most
significant business locations. This
determined water risk is based on water-
stress information available in global,
public databases and in site-specific
measurements. The approach evaluated
physical, social/regulatory, economic
and business risks related to water. In
addition to understanding the water risk
at each of these locations, our goal is to
standardise our water risk assessment
approach for Group companies.
Findings from the study informed us
that some of our operations in the high
water-stress regions of India (Rajasthan,
Punjab and Tamil Nadu) had a greater
risk of shortages over a period of time
than our businesses in other locations.
This is because of competitive pressures
for water usage in those regions. Based
on the findings of the study, each of
our businesses has been mandated
to put in place appropriate mitigation
measures to counter these risks.
To further support our water
management, we have rolled out a
water management performance
standard, along with a guidance
note for the uniform implementation
of the performance standard.
Our overall water consumption
has shown a marginal increase of
0.04%, indicating the improved water
efficiency across our businesses.
Water Recycled
2017-18
2016-17
(i) Water management
Effective management of water is
critical – both for our operations and
for the communities who live in close
proximity to us – and the availability
of water ☺is a key business risk for our
operations. By understanding how
we source and use this resource,
businesses can de-risk their operations
from unplanned stoppages due
to the non-availability of water.
Total water
consumption
(million m3)
Water
recycled/
reused
(million m3)
Water
recycled (%)
241.66
241.56
71.70
64.65
29.67%
26.76%
Vedanta Limited Integrated Report and Annual Accounts 2017-18
63
Water recycled
30%
Fly ash utilisation rate
90%
Trainees at Cairn Enterprise Centre, Barmer
We have initiated several water
conservation projects related to
operational efficiency and water
recovery that have helped achieved a
saving of 1.3 million m3 of water
compared to our target of 0.93 million
m3.
(ii) Energy and carbon management
Our energy & carbon management
adopts a two-pronged approach:
improving energy and process
efficiency and diversifying our energy
portfolio to include renewable
energy. We are committed to invest
in newer technologies and processes
to enhance our energy efficiency.
Last year, we defined our energy and
carbon management performance
standard and we are in the process
of releasing accompanying guidance
to adopt a uniform management
approach across the business.
Energy consumption
(million GJ)
Direct energy
consumption
Indirect energy
consumption
Total energy
consumption
2017-18
2016-17
424.94
411.95
14.34
9.07
439.28
421.02
Our total energy consumption increased
by 3.2% over the previous year, driven
by increased production volumes across
our businesses.
This year, we achieved our annual
energy saving target and more: through
operational efficiency and energy-saving
projects, we saved about 2.44 million
GJ of energy, against the target of 0.87
million GJ.
• Climate-related business risk
Climate change continues to pose an
ever-present risk to the planet. India,
which has set ambitious targets of
reducing its carbon intensity by 33-35%
by 2030 and sourcing 40% of its
electric power from non-fossil sources,
continues to push ahead to meet those
targets.
Vedanta also continues to remain
committed to decrease its climate
change impact. Last year, we stated our
expectation to reduce our GHG
intensity by about 16% from a 2012
baseline by 2020.
Our businesses have made significant
progress on our GHG reduction
commitment to date. Companies such
as Hindustan Zinc and Cairn Oil & Gas
have committed to increase their
investment in solar power, while other
businesses have made significant
improvements in their process
efficiencies, thereby reducing their GHG
emissions. As at March 31, 2018, we
have been able to achieve a 14%
reduction in our GHG intensity from our
baseline number. This is good news and
we are confident of achieving our target
by 2020. A ~2% decline in our absolute
GHG emissions from last year is also
testament to this commitment.
GHG emissions
(million TCO2e)
Scope 1
(direct)
Scope 2
(indirect)
Total
2017-18
2016-17
50.99
1.19
52.18
51.74
1.42
53.16
We are also committed to developing an
internal carbon price mechanism to
manage our climate-related financial
risk.
(iii) Tailings dam management
Tailings dams are considered a
significant HSE risk and have been part
of the Group Risk Register since
FY2016. A breach in the dam would
result in the spillage of accumulated
wastes that can pollute the soil and
damage property due to a ‘flood’ event.
It is therefore imperative that their
integrity is maintained.
Last year, we conducted tailings dam
risk assessment studies at nine dams
across our businesses, which had been
internally classified as high-risk. In two
out of these nine dams, an additional
dam-break analysis was conducted to
quantify the impact of dam failure.
However, as the findings from the
analysis were being studied, one of the
dams – located at our Aluminium &
Power business in Jharsuguda –
experienced a breach in the wall of the
ash dyke. This resulted in a spillage of
the contained fly ash onto an adjacent
plot of land, which is majority-owned by
Vedanta. In anticipation of a lack of
storage space for newly produced
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Vedanta Limited Integrated Report and Annual Accounts 2017-18
Sustainability & CSR continued
Employees at Export Tank, Mangala Processing Terminal, Barmer
We have recycled 81% of our overall High Volume and Low Effect
waste in sustainable applications and are continuing to develop
innovative ways to increase the proportion of waste we recycle.
fly ash, the regulator (Odisha State
Pollution Control Board) imposed partial
restrictions on the operation of our
power plants. This restriction was
progressively lifted as storage space
became available. Remedial measures
have been taken at these dams.
We also experienced a minor overflow
of the ash dyke at BALCO. However, the
incident did not result in significant
environmental, health and safety or
social impacts.
These incidents have raised the issue of
potential failures in the future and a
comprehensive plan to eliminate this risk
has been undertaken. A crucial first step
is the review of our dams and we have
extended the earlier review of nine dams
to cover every dam globally to ensure
that they are all designed, constructed
and managed consistently, in line with
global practices. We have engaged an
experienced third-party to conduct this
evaluation. For those already reviewed,
the consultant has taken the review to
the next level of detail in terms of
management approaches and
implementation. The results and
progress of interventions are overseen
by both our Executive and Risk
Management Committees. We have
also rolled out the ‘Vedanta Tailing
Management Standard’ to ensure that
we have consistent dam management
practices across all Group companies.
The assessment was completed in
March 2018 and the findings have been
shared with our Group Executive
Committee and Risk Committee. The
businesses are in the process of
addressing issues reported from the
assessment. We are also appointing a
global expert for regular inspections of
all our tailings dams and ash dykes. This
expert will also provide advice on
improving the tailing management
system, which will cover the design,
construction and operation of these
storage dams.
We fully anticipate better management
of these structures in the future.
(iv) Air quality
We are committed to identifying and
managing our emissions to the air. As
part of our ambient air quality
monitoring process, we monitor
Particulate Matter (PM) and SOx. We
also monitor lead and fluoride emissions
from our operations, as applicable.
Stack emissions (in mt)
Particulate matter
2017-18
8,426
2016-17
9,296
SOx
189,823
174,340
(v) Waste
According to our Resource Use and
Waste Management technical standard,
we follow the principle of first reducing
the waste, in quantity as well as quality
(reducing the toxicity), and then
recovering and recycling where possible
(either in-house or through authorised
recyclers). The last stage is disposal in
landfill or by incineration, using
authorised, licenced and secured
landfills. We aim to remain
environmentally friendly across all the
stages.
Major wastes generated from our
operations are non-hazardous, high-
volume and low-effect waste.
Hazardous waste includes used/spent
oil, waste refractories, aluminium dross,
spent pot lining and residual sludge from
smelters, while the high-volume and
low-effect waste include fly ash, red
mud and phospho gypsum.
We have recycled 81% of our overall
high-volume and low-effect waste in
sustainable applications and are
continuing to develop innovative ways
to increase the proportion of waste we
recycle.
(vi) Environmental statistics
• We recycled 81% of high-volume and
low-effect waste in sustainable
applications.
• GHG intensity reduction from a 2012
baseline is on-track (14% achieved
against expectation of 16% reduction
by 2020).
• We saved 1.3 million m3 of water against
the targeted savings of 0.93 million m3.
• We conserved 2.44 million GJ of energy
against the targeted savings of 0.87
million GJ.
• Two incidents related to the partial
collapse of our tailings dam and
ash-dyke walls at VAL-Jharsuguda
and BALCO.
2. Building strong relationships
Please refer to Stakeholder Engagement
for more details on page 38.
a) Human rights
For Vedanta, upholding human rights is a
fundamental responsibility and of
particular importance since the majority
of our operations are in developing
countries. It is a material consideration
across all our business decisions.
Vedanta Limited Integrated Report and Annual Accounts 2017-18
65
Our Human Rights Policy is aligned to
the UN Guiding Principles on business
and human rights and includes strict
prohibition of child or forced labour –
either directly or through contract
labour.
Additionally, our Code of Business
Conduct and Ethics underpins our
approach to protect the fundamental
rights of all our direct and indirect
employees, communities and immediate
supply chain.
We uphold our workers’ right to
freedom of association at all our
operations. The collective bargaining
agreements are based on transparent
and fair discussions between the
management and union representatives.
Our Suppliers’ Code of Conduct is
implemented as part of the terms and
conditions of supplier contracts across
the Group and all new suppliers are
required to sign, endorse and practice
this Code. We also have a Supplier &
Contractor Sustainability Management
Policy. Both the Code and the Policy
clearly communicate our expectations
of our suppliers: to operate in
compliance with all relevant legislation
and follow our policies while executing
work for us, or on our behalf.
(i) A note on our operations in Tuticorin
This year, our social licence to operate
was challenged by communities living
around our Sterlite Copper plant in
Tuticorin. The protests, while
widespread, are based on
misinformation around the perceived
pollution caused by the plant. The fears
stem from historic incidents, for which
the Company received legal sanctions in
2013. However, it has since taken
corrective measures to ensure that
incidents of pollution are not repeated
and the plant now operates well within
regulatory limits for air emissions. It is
also a zero liquid discharge operation,
which means that there is no possibility
of effluents polluting local water
sources.
We are working with the communities
as well as the regulatory bodies to arrive
at a solution to the questions raised. We
are mindful that pollution will remain a
key issue in the region, which is an
industry cluster with more than 60
manufacturing units (including thermal
power plants, dyeing units and other
large-, medium- and small-scale
industries), and we would like to play a
key role in reaching long-term solutions
that incorporate the views of all
stakeholders. We are committed to
running our operations responsibly and
our door remains open for dialogue.
(ii) Modern Slavery Act, 2015
In accordance with the UK’s Modern
Slavery Act, (MSA) 2015, we have
updated our Supplier Code of Conduct
and Contract Conditions and our Code
of Business Conduct and Ethics to
ensure the prevention of modern slavery
and human trafficking in our operations
and supply chain.
We have also introduced the MSA
framework at all our business units.
Under this framework, we have a system
in place for training of vendors/
suppliers, due-diligence and self-
declaration. We perform audits
periodically to make sure that all
business units follow this framework
rigorously.
Implementation of the compliance
framework for MSA rests with our
Group Commercial team. They have
been tasked with ensuring that all our
vendors meet the stringent
requirements of the Act.
3. Adding and sharing value
Our operations are predominantly
located in the developing economies of
India and Africa. We believe that we
have an important role to play in
developing the societies and
communities where we operate,
enabling them to share in the value we
create.
a) Our approach
We are committed to giving back to the
stakeholders who play a vital role in
powering our growth. Reducing the
social and economic divide by
generating economic value, distributing
wealth, investing in employees and
enhancing standards of living are all key
elements of our sustainability
framework. We not only drive economic
growth through taxes, royalties, wages
and supplier contracts, but our
operations also help to provide the
products these communities need to
further their development, for example,
through infrastructure and housing.
b) Communities
Proactive engagement with
communities helps to resolve concerns
they may have about our operations. It
also allows us to understand their
expectations from the Company,
thereby helping us develop a
comprehensive engagement strategy.
This strategy includes creating
opportunities for employment, using the
services of local vendors, and
implementing focused CSR and
community development activities.
Collectively, these actions allow us to
create a positive social impact.
The majority of our initiatives are
identified, developed and carried out in
collaboration with local government
bodies and community organisations.
This ‘4Ps’ (public-private-people-
partnership) model has inspired us to
participate in ambitious long-term
projects such as the Nand Ghar
initiative.
In FY2018, Vedanta spent ` 244 crore
on social investments and CSR
activities. This is an increase of 69%
over the previous year, when we spent
` 144 crore on social investment. This
money is spent across 1,400-plus
villages, benefiting nearly 3.36 million
people.
c) Project updates
(i) Project Nand Ghar
The Nand Ghar Project is our
commitment to transform the lives of 85
million children and 20 million women
across 1.37 million Anganwadis in India,
by building a world-class model of
pre-school education, healthcare,
nutrition and women’s empowerment.
The Nand Ghars provide a best-in-class
curriculum through e-learning,
healthcare with a doctor at the
doorstep, hygienic pre-packed meals for
nutrition and customised skills training
for empowering women economically
across India. Today, there are 154 Nand
Ghars across Rajasthan, Uttar Pradesh,
Madhya Pradesh, Goa and Uttarakhand
and our commitment is to construct
4,000 centres across 11 states in India.
Their impact is paving the way for the
Anganwadis model across the country.
(ii) Children’s well-being and education
Our focus is on building the capacity of
the next generation to create a long-
term sustainable impact. Educational
programmes include a wide range of
activities covering pre-school through to
higher education. The total reach of all
our education projects extends to some
21 million children. ‘Khushi’ is one of the
largest collaborative projects with the
Government, which aims to strengthen
the functioning of 3,089 Anganwadis
across five districts of Rajasthan. This
programme alone impacts nearly
64,000 children. Other programmes in
the education space are focusing on
creating better teaching and learning
environment.
(iii) Healthcare
Good health is the cornerstone of
community well-being. While we have
always invested in healthcare (through
mobile health vans, camps and so forth),
we are now focusing on creating
world-class healthcare facilities,
especially in areas where these do not
exist. This year saw the opening of the
Integrated ReportManagement ReviewStatutory ReportsFinancial Statements 66
Vedanta Limited Integrated Report and Annual Accounts 2017-18
Sustainability & CSR continued
Benefiting 3.36 mn people across
1,400+ villages
BALCO Medical Centre, a 350-bed
cancer hospital in Naya Raipur. The
hospital brings modern, comprehensive
and high-quality medical care within the
reach of the population of Chhattisgarh
in particular and Central India in general.
Another step in the same direction is the
signing of an MoU between the
Government of Odisha and Vedanta
Limited, to establish a 500-bed hospital
and medical college at Bhawanipatna, in
Kalahandi District. Vedanta will spend
about ` 100 crore on the construction of
the hospital, which will be run by the
State Government. In FY2018, nearly
2.46 million people benefited through
various health initiatives of the
Company.
(iv) Women’s empowerment
At Vedanta, we believe that women’s
empowerment is a fundamental building
block of a strong and fair society. The
Subhalaxmi Cooperative Society was
started in 2008 with this objective.
What began with ten women is today
among the largest women’s cooperative
in western Odisha with 3,324 members
and 280 Self-Help Groups (SHGs),
across 64 villages of 3 blocks of
Jharsuguda. It started with ` 1,000 as
working capital and today, it has an
earmarked corpus fund of more than
` 2.23 crore with an average net profit
of ` 6-7 lakh/per annum. Around ` 49.2
million has been distributed to female
entrepreneurs to set up micro
enterprises in FY2018. It has now
established a special ‘Udyami Fund’ to
support emerging and aspiring micro-
enterprises in Jharsuguda. At Vedanta,
we work with almost 28,000 women
who are members of such SHGs and
during the year nearly, 1,900 women set
up or expanded their own enterprises.
we helped 3,500+ youths to acquire
diverse skills and find employment.
(v) Drinking water and sanitation
(viii) Sports
We focus on drinking water and
sanitation, since both are basic
requirements for healthy lives and
societies. The Jeevan Amrit Project is
one of the largest drinking water
programmes undertaken by any
company in Rajasthan. Cairn’s MoU with
the Government of Rajasthan is about
setting up 330 Reverse Osmosis (RO)
water plants for communities in the
water-stressed district of Barmer in
Rajasthan. Already, 115 plants have been
installed; during the year, they dispensed
over 4 million litres of clean water,
benefiting nearly 100,000 people.
(vi) Agriculture and animal husbandry
Because we operate in remote rural
locations, agriculture is the backbone of
the economy in our surrounding villages.
Project Unnati was set up by Cairn to
support the farmers of Barmer in
enhancing incomes through sustainable
farming. As part of an MoU with the
Central Arid Zone Research Institute
(CAZRI), Jodhpur, 700 farmers were
trained in improved farming techniques.
This was supported by the installation of
irrigation drips for 60,000 horticulture
plants across 120 acres. As a result, this
year, the farmers in Barmer have
harvested over 60 tonnes of Ber, Gunda
and Anar.
Sport is one of the most powerful
means of connecting with young
people. Our Sesa Football Academy
(SFA) (an IOB CSR initiative) was
established in 1999 on a reclaimed
mine at Sanquelim, with a vision to
become a premier academy in India.
Over the years, it has directly trained
around 175 aspiring footballers at
residential academies and reached over
500 youth players. Many of them are
today realising their dream of pursuing
a footballing career with major clubs.
Seven alumni of SFA have played for
the Indian national team and eight are
playing in the elite Indian Super League
2017-18 season. We have now
expanded the football programme to
Rajasthan, with Hindustan Zinc setting
up a world-class technology based
football academy. This will use science
and technology as a differentiator in its
approach and is also setting up a
network of community feeder
academies. 56 such community
academies are currently active,
training-up nearly 2,000 talented
under-14s.
(ix) Statistics for Community
• ` 244 crore has been invested in social
investment programmes.
• 1,400+ villages are benefiting from our
CSR programmes.
(vii) Skilling young people
• There are 3.36 million beneficiaries of
Our skills programmes are focused on
helping young people to learn a trade
and gain hands-on experience that
equips them to secure a job. In FY2018,
our community development
programmes.
Vedanta Limited Integrated Report and Annual Accounts 2017-18
67
taking steps to ensure they are achieving
Vedanta’s overall business plan and targets.
To enhance our safety performance in the
workplace and achieve our ultimate vision
of zero harm, a safety competency
assessment process has also been initiated
as part of V-Perform to strengthen our
existing safety management system.
Employee Stock Option Scheme
(ESOS) 2017
To reward our employees and enable them
to share in the financial success of the
Company, we have launched an ESOS,
following statutory and shareholder
approval.
ESOS 2017 covers the Company’s 2,832
employees and aims at rewarding them
with wealth creation opportunities,
encouraging high-growth performance and
reinforcing employee pride. The scheme
was launched after obtaining statutory
approvals, including shareholders’ approval
in 2016.
One Vedanta network
As an international company employing
thousands of people working across a
range of remote and diverse geographic
locations, we recognise the importance of
fostering a culture of transparency,
collaboration and knowledge-sharing
across the organisation to keep employees
informed and engaged. As social
networking platforms continue to grow in
popularity, we have developed One
Vedanta – a platform on Workplace by
Facebook – which enables all Vedanta
employees to share content with their
peers using a range of interactive tools
such as live videos, news feeds, posts and
media upload options.
The platform was launched in early 2017
and currently, more than 13,000 employees
are signed up to this employee engagement
tool with 4,000 active conversations per
week. On November 29, 2017, a new
‘Chairman Connect’ bot application was
launched on One Vedanta by our Chairman,
Anil Agarwal. This application aims to give
every employee direct access to the
Chairman and leadership team to share
ideas and feedback and to post questions.
Mr. Agarwal’s vision is to tap into the rich
pool of ideas and experiences shared by
employees and to make Vedanta an open
and connected organisation.
People and Culture
Vedanta has always aspired to build a
culture that demonstrates world-class
standards in safety, environment and
sustainability. People are our most valuable
asset and we are committed to providing all
our employees with a safe and healthy
work environment.
Our culture exemplifies our core values and
nurtures innovation, creativity and diversity.
We align our business goals with individual
goals and enable our employees to grow
both personally and professionally.
Diversity
Diversity remains a strong focus. We are
committed to providing equal opportunities
to our employees regardless of their race,
nationality, religion, gender or age. We are
pleased with our progress to date on
gender diversity and women now represent
10.6% of our total workforce and 22% of
our Board. We have set ourselves a target
to reach over 33% women at senior levels
by 2020 and aim to achieve 20% female
diversity amongst our employees.
Since most of our operations are in remote
areas, we place a strong emphasis on
recruiting employees from among the local
population. A significant percentage of the
Senior Management and our employees
are recruited from the country in which our
operations are located.
Recruitment
We have put a range of initiatives in place
to support us in hiring skilled professionals.
Global Internship Programme (GIP)
We initiated the programme in FY2017 with
the objective of attracting best talent from
the world’s leading universities. We select
candidates from first-year MBA students
from premier B-schools, including Harvard,
INSEAD, London Business School and
Indian Institute of Management
(Ahmedabad and Bangalore) with the goal
of creating lasting business value by
onboarding world-class talent. Internships
provide these candidates with an
opportunity to work with top management,
especially the C-suite, on live projects that
directly impact the business. They work in a
dynamic, fast-paced team environment and
conclude their internship having gained
broad experience in several facets of the
natural resources industry.
Vedanta Leadership Development
Programme (VLDP)
In FY2017, we also launched the Vedanta
Leadership Development Programme
(VLPD) for full-time hires. The programme
aims to build organisational capability for
the future by onboarding best-in-class
young talent from top management and
technology institutes as full-time
employees. We nurture them to be our
leaders of tomorrow by providing them
with a tailored programme including
induction, job rotation and a range of roles,
opportunities, job rotations and anchoring.
During the first year, 19 students joined the
programme and in the second year, 28
students have been recruited.
Right Management in Place (RMIP) -
Strategic hiring
We introduced a recruitment drive to fill
several leadership positions, including
expat/specialist positions to realign the
organisation structure and strengthen our
management teams across the business.
Hiring for these positions focused on
recruitment from best-practice companies.
Talent Management and Development
We focus on retaining and developing
talent from within the Company to take on
future leadership roles.
Internal growth workshops
We have always aimed to be an
organisation headed by ‘leaders from
within.’ Recognising internal talent and
promoting them to leadership roles has
been a driving factor in our rapid growth.
Aligned with this philosophy, the Group
conducts ‘Chairman’s Internal Growth
Workshops’ to identify potential candidates
across the Group. These workshops have
resulted in the identification of 500+
cross-functional, high-potential new leaders
in the Group’s businesses to date, who have
taken up significantly enhanced roles and
responsibilities. Our Internal Growth
Workshops have also enabled us to reduce
our lateral hiring significantly for critical
roles across the Group in the past two
years.
‘V Connect’ initiative
This initiative was launched across the
Group in association with AON as an
anchoring/mentoring and training
programme covering all 12,000
professionals. The key output has been to
derive enhanced engagement levels from
employees. To facilitate the programme, a
dedicated app – Aon Lead – was
introduced. The app allows participants to
schedule their ‘connects’ with their mentor,
get the latest business updates from
around the globe, access articles and
videos that focus on effective leadership
and skill-building and participate in quizzes
and learning challenges. To date, more than
5,000 conversations have been completed
using the app.
Performance Management and
Total Rewards
We ensure that we monitor and reward
performance.
V-Perform: One performance system for
one Vedanta
V-Perform is a pan-Vedanta initiative to
standardise our Performance Management
System (PMS) and processes by leveraging
technology. This assists the functions,
teams and individuals in tracking
performance, generating analytics and
Integrated ReportManagement ReviewStatutory ReportsFinancial Statements 68
Vedanta Limited Integrated Report and Annual Accounts 2017-18
Management
Discussion & Analysis
Vedanta Limited is a diversified natural
resource company with portfolio of large,
world-class, low-cost, scalable assets,
located in proximity to high growth
markets. The Company operates in the Oil
& Gas, Zinc, Lead, Silver, Copper, Iron Ore,
Aluminium and Commercial Power sectors.
The Company’s zinc business in India is
owned and operated by Hindustan Zinc
Limited (HZL) in which the Company has a
64.9% interest and 29.54% is owned by
Government of India. HZL’s operations
include five zinc-lead mines, four zinc
smelters, two lead smelters, one zinc-lead
smelter, seven sulphuric acid plants, one
silver refinery plant and six captive power
plants in the state of Rajasthan. It also has
zinc, lead, silver processing and refining
facilities in the State of Uttarakhand. The
Company has wind power plants in the
States of Rajasthan, Gujarat, Karnataka,
Tamil Nadu and Maharashtra.
The Company’s international zinc business
comprises of Skorpion mine and refinery in
Namibia operated through THL Zinc
Namibia Holdings (Proprietary) Limited
(Skorpion). It also has Black Mountain
Mining (Proprietary) Limited (BMM), whose
assets include the Black Mountain mine
and the Gamsberg mine project located in
South Africa. The Company has 100%
ownership in Skorpion and 74% ownership
in BMM. Our Zinc project in Gamsberg is
progressing well and on track for first
production by mid CY2018.
The Company’s oil & gas business is owned
and operated by Vedanta Limited, one of
the largest independent oil and gas
exploration and production companies and
the largest private producer of crude oil in
India. It has a world-class resource base,
with interest in five blocks in India and one
in South Africa. Cairn India’s resource base
is located in four strategically focused areas
namely one block in Rajasthan, one on the
west coast of India, three on the east coast
of India and one in South Africa.
The Company’s iron ore business is wholly
owned by Vedanta Limited and Sesa
Resources Limited and consists of
exploration, mining and processing of iron
ore, pig iron and metallurgical coke and
power generation. The mining operations
are carried out in the State of Goa and
Karnataka. On February 7, 2018, the
Supreme Court of India passed its final
order wherein it set aside the second
renewal of the mining leases granted by the
State of Goa. The Court directed all lease
holders under the second renewal to stop
all mining operations with effect from
March 16, 2018 until fresh mining leases
(not fresh renewals or other renewals) and
fresh environment clearances are granted.
The Company’s copper business is owned
and operated by Vedanta Limited, Copper
mines of Tasmania Pty. Ltd. (‘CMT‘),
Australia, and Fujairah Gold FZE in the UAE.
Its custom smelting assets includes a
copper smelter, a refinery, a phosphoric
acid plant, a sulphuric acid plant, a copper
rod plant and two captive power plants at
Tuticorin in Southern India, and a refinery
and two copper rod plants at Silvassa in
Western India. In addition, the Company
owns and operates the Mt. Lyell copper
Vedanta Limited Integrated Report and Annual Accounts 2017-18
69
In December 2017, Vedanta Limited’s
wholly owned subsidiary, Cairn India
Holdings Limited acquired a 51% stake in
AvanStrate Inc. (ASI), a Japanese
manufacturer of LCD glass substrate for
US$158 million.
Vedanta Limited was declared successful
resolution applicant by the Committee of
Creditors for Electrosteel Steels Limited
under the Corporate Insolvency Resolution
Process of the insolvency and Bankruptcy
Code, 2016 (IBC). Subsequently, The
National Company Law Tribunal, Kolkata
Bench, has approved the terms of the
Resolution Plan submitted by the Company,
to acquire Electrosteel Steels Limited
(‘Electrosteel’) on April 17, 2018.
mine in Tasmania, Australia through its
subsidiary, CMT, which is currently
suspended and is under care &
maintenance since July 2014, and a
precious metal refinery and copper rod
plant in Fujairah through its subsidiary
Fujairah Gold FZE.
The Company’s aluminium business is
owned and operated by Vedanta Limited
and Bharat Aluminium Company Limited
(BALCO) in which Vedanta Limited has a
51% interest and balance is owned by the
Government of India. Vedanta Limited’s
Aluminium operations include an Alumina
refinery and a 90 MW captive power plant
(CPP) at Lanjigarh, two smelters (500 kt &
1,250 kt) and two CPPs (1,215 MW &
1,800 MW) at Jharsuguda, both at Odisha
in Eastern India. BALCO’s operations
include two bauxite mines, three CPPs
(270 MW, 540 MW and 600 MW), and
two smelters (570 kt) and fabrication
facilities at Chattisgarh in central India.
The Company’s power business includes
Talwandi Sabo Power Limited (TSPL), a
wholly owned subsidiary of the Vedanta
Limited TSPL had signed a power purchase
agreement with the Punjab State Power
Corporation Limited (PSPCL) for the
establishment of 1,980 MW (three units of
660 MW each) thermal coal-based
commercial power facilities.
The other power operations include
Vedanta Limited’s 600 MW thermal
coal-based commercial power facility at
Jharsuguda, a 600 MW thermal coal-
based commercial power facility at
BALCO, 274 MW of wind power plants
commissioned by HZL and 100 MW power
plant at MALCO Energy Limited (MEL)
situated at Mettur Dam in Tamil Nadu in
Southern India. 100 MW MEL power plant
has been put under care and maintenance
effective from May 26, 2017.
The Company’s other activities include
operation of its Vizag General Cargo Berth
Private Limited (‘VGCB’) in which the
Company owns a 100% interest. The Vizag
port business includes coal handling
facilities and general cargo berth at the
outer harbor of Visakhapatnam port on
India’s east coast.
Integrated ReportManagement ReviewStatutory ReportsFinancial Statements 70
Vedanta Limited Integrated Report and Annual Accounts 2017-18
Finance review
Delivering
growth year
over year
Arun Kumar
Whole Time Director and Chief Financial Officer
Market factors resulted in net incremental
EBITDA of ` 2,277 crore compared to
FY2017. The increase was driven by
improved commodity prices, but partially
offset by an increase in input raw material
inflation and unfavourable foreign exchange
impacts.
Gross debt as on March 31, 2018 was
` 58,159 crore, a reduction of ` 8,512 crore
since March 31, 2017 (excluding repayment
of temporary borrowings at Zinc India and
preference shares issued pursuant to the
Cairn India merger in April 2017). Net debt
increased to ` 21,958 crore at March 31,
2018 from ` 8,099 crore at March 31, 2017,
driven by significant dividend payments
from Zinc India and Vedanta Limited, in
April 2017 and March 2018, and the
acquisition of AvanStrate Inc. The balance
sheet of Vedanta Limited continues to
remain strong with cash and liquid
investments of ` 36,201 crore and Net
Debt to EBITDA ratio at 0.9x.
Consolidated EBITDA
EBITDA increased by ` 4,033 crore to
` 25,470 crore in FY2018. This was driven
by a strong operating performance and
firm commodity prices, but partially offset
by input raw material inflation and
unfavourable foreign exchange impacts.
(`crore, unless stated)
FY2018
FY2017
%change
13,683
12,258
1,415
5,429
460
1,308
2,904
1,669
27
25,470
10,456
9,530
927
4,013
1,322
1,693
2,306
1,642
4
21,437
31%
29%
53%
35%
(65%)
(23%)
26%
2%
-
19%
21,437
7,955
(4,073)
(1,718)
247
(134)
2,161
(403)
(2)
25,470
We recorded a strong
operational and financial
performance in FY2018.
Executive summary:
A strong operational performance
complemented by firm commodity prices.
Favourable price environment coupled with
volume growth resulted in EBITDA of
` 25,470 crore, up 19% y-o-y with a robust
margin of 36%. (FY2017: ` 21,437 crore,
margin 39%).
A strong volume performance contributed
to an incremental EBITDA of ` 2,161 crore,
primarily driven by record volumes at our
Zinc India and Aluminium businesses,
following a ramp-up of capacities.
Consolidated EBITDA
Zinc
– India
– International
Oil & Gas
Iron Ore
Copper India
Aluminium
Power
Others
Total EBITDA
Consolidated EBITDA Bridge - EBITDA for FY2017
Market and regulatory: ` 2,277 crore
Prices, Premium/Discount
Direct raw material inflation
Foreign exchange movement
Profit petroleum to GOI at Oil & Gas
Regulatory changes
Operational: ` 1,756 crore
Volume
Cost and Marketing
Others
EBITDA for FY2018
Vedanta Limited Integrated Report and Annual Accounts 2017-18
71
Adverse currency movements decreased EBITDA by ` 1,718 crore compared to FY2017.
Information regarding key exchange rates against the US dollar
Average
year ended
March 31, 2018
Average
year ended
March 31, 2017
% change
As at
March 31, 2018
As at
March 31, 2017
Indian Rupee
South African Rand
64.45
13.00
67.09
14.07
(4%)
(8%)
65.04
11.83
64.84
13.41
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),
decreased by ` 247 crore. The reduction
was primarily due to the higher capital
expenditure over the previous year.
e) Regulatory
During FY2018, the Group encountered
increased regulatory headwinds, with an
additional entry tax provision created at
BALCO for ` 64 crore, pursuant to a
Supreme Court order, and higher electricity
duty (ED) in our Aluminium business. This
had an adverse impact on operating profit
of ` 134 crore.
f) Volumes
Higher volumes contributed to the
increased operating profit of ` 2,161 crore,
generated by these key Group businesses:
• Zinc India (positive ` 1,488 crore).
FY2018 was a year of records, with an
all-time high in integrated metal
production of 960 kt in FY2018, an
increase of 18% over FY2017, and record
silver volumes of 558 tonnes, up 23% on
the previous year.
• Aluminium (positive ` 1,216 crore)
Our Aluminium business achieved
record production of 1.7 mt and exited
the year with a run-rate of c. 2 mtpa,
driven by the steady ramp-up of
capacities at Jharsuguda and Balco.
• Iron Ore (negative ` 431 crore)
Sales were down due to a low pricing
environment and a state-wide ban on
Goa mining operations with effect from
March 16, 2018.
g) Cost and marketing
Higher cost and lower premia adversely
impacted EBITDA by ` 403 crore over
FY2017, primarily due to lower ore grade at
Zinc India and incremental aluminium
production being sold in export markets,
which realise lower premiums than the
domestic Indian market. This was partially
offset by volume-led absorption, mainly at
HZL.
Employee at operational site, Cairn Oil & Gas
a) Prices
Commodity price fluctuations have a
significant impact on the Group’s business.
During FY2018, we saw a positive impact
on EBITDA of ` 7,955 crore.
Zinc, lead and silver: Average zinc LME
prices during FY2018 increased to
US$3,057 per tonne, up 29% y-o-y; lead
LME prices increased to US$2,379 per
tonne, up 19% y-o-y; and silver prices
decreased to US$16.9 per ounce, down 5%
y-o-y. The collective impact of these price
fluctuations and premium increased
EBITDA by ` 3,705 crore.
Aluminium: Average aluminium LME
prices increased to US$2,046 per tonne in
FY2018, up 21% y-o-y and higher premium,
positively impacting operating profit by
` 3,857 crore.
Oil & Gas: The average Brent price for the
year was US$58 per barrel, higher by 18%
compared with US$49 per barrel during
FY2017, but partially offset by a higher
discount to Brent during the year (FY2018:
12.3%; FY2017: 10.8%). This positively
impacted EBITDA by ` 907 crore.
Iron Ore: Iron Ore Goa’s price realisation
for FY2018 was lower 33% y-o-y, mainly
due to the widening discount for our 56%
Fe grade material, compared to the
benchmark price of 62% Fe iron grade. This
was partially offset by higher realisation at
our Iron Ore business in Karnataka, which
primarily caters for the domestic steel
industry in the state. The collective impact
resulted in a decrease in EBITDA of ` 472
crore.
Our usual policy is to sell products at
prevailing market prices and not to enter
into price hedging arrangements. However,
during the period, Zinc India entered into a
forward contract to sell 220,000 tonnes of
zinc and 30,000 tonnes of lead at average
prices of US$3,084 per tonne and
US$2,418 per tonne respectively, for the
period from January 2018 to June 2018. As
at March 31, 2018, open quantities stood at
70,000 tonnes of Zinc and 15,000 of lead,
at average prices of US$3,075 per tonne
and US$ 2,374 per tonne respectively for
the period from April 2018 to June 2018.
b) Direct raw material inflation
Prices of key raw materials such as alumina,
thermal coal, carbon and metallurgical coke
increased significantly in FY2018, with an
adverse impact on EBITDA of ` 4,073
crore.
c) Foreign exchange fluctuation
Our operating currencies, both Indian
Rupee and South African Rand, appreciated
against the US dollar during FY2018.
Stronger currencies are unfavourable to the
Group, given the local cost base and
predominantly US dollar-linked pricing.
Integrated ReportManagement ReviewStatutory ReportsFinancial Statements 72
Vedanta Limited Integrated Report and Annual Accounts 2017-18
Income statement
(`crore, unless stated)
Net Sales/Income from Operations
EBITDA
EBITDA Margin1 (%)
Finance Cost
Other Income
Profit before Depreciation and Taxes
Depreciation and Amortisation
Profit before Exceptional Items
Exceptional Items2
Taxes3
Profit After Taxes
Profit After Taxes (before Exceptional Items)
Profit After Taxes (before Exceptional Items & DDT)
Minority Interest
Attributable PAT after Exceptional Items
Attributable PAT (before Exceptional Items)
Attributable PAT (before Exceptional Items & DDT)
Basic Earnings per share (`/share)
Basic EPS before Exceptional Items (`/share)
Basic EPS before Exceptional Items & DDT (`/share)
Exchange Rate (`/$) – Average
Exchange Rate (`/$) – Closing
FY2018
FY2017
%change
92,923
25,470
36%
5,783
3,574
22,955
6,283
76,171
21,437
39%
5,855
4,581
20,058
6,292
16,672
13,766
(2,897)
5,877
13,692
12,869
11,333
3,350
10,342
9,561
8,025
28.30
26.17
21.96
64.45
65.04
114
2,333
11,319
11,467
11,663
4,358
6,958
7,127
7,323
23.47
24.04
24.70
67.09
64.84
22%
19%
–
(1%)
(22%)
14%
–
21%
–
–
21%
12%
(3%)
(23%)
49%
34%
10%
21%
9%
(11%)
(4%)
0%
1) Excludes custom smelting at Copper India and Zinc India Operations.
2) Exceptional Items gross of tax
3) Tax includes tax charge on Exceptional Items of ` 2,074 crore in FY2018 (FY2017: charge of ` 34 crore); DDT included in Tax Expense in FY2018 is credit of ` 1,536 crore
(FY2017: charge of ` 196 crore)
4) Previous period figures have been regrouped/rearranged wherever necessary to conform to current period presentation.
Vedanta Limited Integrated Report and Annual Accounts 2017-18
73
shareholders of Cairn India pursuant to the
merger with the Company in April, interest
cost on temporary borrowings at Zinc India
and capitalisation of pots at Aluminium
business.
Earnings per Share
Earnings per share before exceptional items
& DDT for FY2018 were ` 21.96 per share
as compared to ` 24.70 per share in
FY2017.
Dividend
Considering the record interim dividend of
`21.20 per share, the Board has decided
not to declare a final dividend in FY2018.
The total dividend for FY2018 is `21.20 per
share which will be `7,881 crore.
Shareholders Fund
Total Shareholders fund as on March 31,
2018 aggregated ` 63,508 crore as
compared to ` 60,500 crore as at
March 31, 2017. The increase was primarily
on account of profit during the year
partially offset by special dividend payout.
Net Fixed Assets
The net fixed assets as on March 31, 2018
were ` 112,334 crore. This comprises of
` 16,140 crore as Capital work-in-progress
as on March 31, 2018.
Balance Sheet
We continue to have a strong balance sheet
with cash and liquid investments of
` 36,201 crore as on March 31, 2018 which
is mostly invested in debt related mutual
funds, bank deposits and bonds.
Gross debt as on March 31, 2018 was
` 58,159 crore, a reduction of ` 8,512 crore
since March 31, 2017 (excluding repayment
of temporary borrowings at Zinc India and
preference shares issued pursuant to the
Cairn India merger in April 2017). Gross debt
comprises term debt of c. ` 33,200 crore
and short-term working capital loans
(including preference shares) of c. ` 25,000
crore. The loan in ` currency is 93% and
balance 7% in foreign currency. Average
debt maturity is c.2 years as at
March 31, 2018.
In April 2017, Crisil upgraded the credit
rating of the Company to AA/Stable and
further improved the same to AA/Positive
in March 2018.
Revenue
Revenue for the year was ` 92,923 crore,
up 22% y-o-y. The increase was mainly on
account of ramp-up of capacities at
Aluminium, record production from Zinc
India and improved commodity prices
partly offset by unfavourable foreign
exchange movements and lower sales at
Iron ore.
EBITDA and EBITDA Margin
EBITDA for the year was ` 25,470 crore, up
19% y-o-y on account of record production
from Zinc India and Aluminium and
improved commodity prices. This was
partially offset by raw material inflation,
unfavourable foreign exchange movements,
and, lower sales at Iron ore Goa. We
maintained industry leading robust EBITDA
margin of 36% for the year (FY2017: 39%)
Depreciation and Amortisation
Depreciation for the year was ` 6,283
crore compared to ` 6,292 crore in FY2017
on account of lower depreciation charge at
oil & gas business. This was due to the
change in method of calculation of Unit of
Production (UOP) charge to ‘Proved and
Developed Oil and Gas Reserves’ (1P) in
accordance with the Guidance Note on
Accounting for Oil and Gas Producing
Activities, which was effective April 1, 2017,
compared to the earlier approach of
‘Proved and Probable Reserves’ (2P). This
was mostly offset by increase in
depreciation at Aluminium business on
account of capitalisation of aluminium pots
and relining expenses, higher depreciation
at Zinc India driven by higher production.
Net Interest
The blended cost of borrowings was 7.8%
for FY2018 as compared to with 8.3% in
FY2017.
Other Income for FY2018 was at `3,574
crore lower by `1,007 crore primarily owing
to lower investment corpus due to special
dividend payments by Zinc India and
Vedanta Limited and deleveraging during
the year, lower return on investments due
to sharp rise in G-Sec yields resulting in
mark-to-market losses on investments.
Exceptional Items
The exceptional gains during the year was
`2,897 crore mainly on account of reversal
of previously recorded impairment of
`7,016 crore at our Oil & Gas business
following the progress on the key growth
projects which are expected to result in
enhanced recovery of resources; partially
offset by impairment of Iron Ore Goa
assets of ` 2,329 crore due to suspension
of mining operations from March 16, 2018
pursuant to Supreme Court Order dated
February 7, 2018 and reclassification of
foreign currency translation reserve of
` 1,485 crore relating to subsidiary
investment companies under liquidation.
Taxation
Tax expense (before exceptional items and
DDT) for the year FY2018 was at ` 5,339
crore, implying tax rate of 32% compared
to ` 2,103 crore and a tax rate of 15% in
FY2017.
Effective tax rate was higher on account of
phasing out of investment allowance
claims, change in cess rate from 3% to 4%
as per Finance Act, 2018 and change in
profit mix.
Finance cost for FY2018 was `5,783 crore
was marginally lower compared to ` 5,855
crore in FY2017 on account of
de-leveraging during the year and lower
interest rates, partially offset by dividends
on preference shares issued to the
Attributable Profit after Tax (before
Exceptional Items and DDT)
Attributable PAT before exceptional items
& DDT was ` 8,025 crore in FY2018
compared to ` 7,323 in FY2017 (up 10%
y-o-y).
Employees at Raageshwari Gas Terminal, Barmer, Cairn Oil & Gas
Integrated ReportManagement ReviewStatutory ReportsFinancial Statements 74
Vedanta Limited Integrated Report and Annual Accounts 2017-18
Operational review/Oil & Gas
Vision to contribute
50% of India’s domestic
oil production
1
3
2
4
5
1 Rajasthan block
2 Ravva (PKGM-1) block
3 Cambay (CB/052) block
4 KG-ONN-2003/1 block
5 KG-OSN-2009/3 block
6 South Africa Block 1
6
Note: Map not to scale
Note: PR-OSN-2004/1 block in the Palar-Pennar basin was
relinquished during the year
We exited FY2018
with a gross
production run-rate of
over 200 kboepd
which, along with the
upside from growth
projects, will trigger
significant volume
growth for FY2019.
Sudhir Mathur
CEO, Oil & Gas Business
The year in summary
During FY2018, we delivered a strong
operational and financial performance
alongside the award of key contracts to
reactivate the capital expenditure cycle.
Vedanta Limited Integrated Report and Annual Accounts 2017-18
75
Mangala Processing Terminal, Barmer
• The Ravva offshore asset received first
prize in the CII-SR-EHS Excellence
Award 2017, as well as a 5 Star award
and the Golden Peacock Occupational
Health & Safety Award for the year 2017.
• The Mangala field in the Rajasthan asset
received the Oil Industry Safety Award
2015-16 from OISD, MOPNG in the Oil
& Gas Onshore asset category.
Environment
We have initiated co-processing for all
types of non-recyclable hazardous waste,
which can be used in cement industries as
an alternative fuel and raw material. This
completely eliminates the need for
incineration and ensures that zero-waste is
Production – Average Daily Gross
Operated Production (boepd)
1
5
6
,
8
1
2
1
7
6
,
1
1
2
3
0
7
,
3
0
2
6
2
9
,
9
8
1
7
8
5
,
5
8
1
2014 2015 2016 2017 2018
EBITDA
(` cr)
7
7
8
,
3
1
9
5
6
,
8
9
2
4
,
5
9
7
5
,
3
3
1
0
,
4
2014 2015 2016 2017 2018
In pursuit of our vision to contribute 50% of
India’s domestic crude oil production, we
have targeted investments in a high-
potential set of projects comprising
enhanced oil recovery, tight oil and tight
gas and exploration prospects.
We exited FY2018 with a gross production
run-rate of over 200,000 boepd in March
which, along with the upside from these
growth projects, will trigger significant
volume growth for FY2019.
Safety
We made significant progress towards the
goal of zero harm by reducing our lost time
injuries (LTIs) to five, from the previous
year’s seven. The LTI frequency rate stood
at 0.19 (against 0.30 in FY2017).
Building on several safety improvement
initiatives, the Oil & Gas business received
recognitions for excellence in our safety
management systems:
• Vedanta Limited: Cairn Oil & Gas
received the Golden Peacock Award for
Sustainability for the year 2017.
• Mangala, Bhagyam, Aishwariya and
pipeline operations each achieved a Five
Star Rating in the OHSMS Audit by the
British Safety Council (BSC).
Integrated ReportManagement ReviewStatutory ReportsFinancial Statements
76
Vedanta Limited Integrated Report and Annual Accounts 2017-18
Production performance
Gross production
Rajasthan
Ravva
Cambay
Oil
Gas
Net production – working interest
Oil
Gas
Gross production
Working interest production
Prices
Average Brent prices – US$/barrel
Financial performance
(`crore, unless stated)
Revenue
EBITDA
EBITDA margin
Unit
FY2018
FY2017
% change
boepd
boepd
boepd
boepd
bopd
mmscfd
boepd
bopd
mmscfd
mmboe
mmboe
185,587
157,983
17,195
10,408
177,678
47.4
118,620
114,774
23.1
67.7
43.3
189,926
161,571
18,602
9,753
184,734
31.2
121,186
118,976
13.3
69.3
44.2
(2%)
(2%)
(8%)
7%
(4%)
52%
(2%)
(4%)
74%
(2%)
(2%)
FY2018
FY2017
% change
57.5
48.6
18%
FY2018
9,536
5,429
57%
FY2017
% change
8,204
4,013
49%
16%
35%
–
sent to landfill. To date, around 4,592 mt of
non-recyclable hazardous waste has been
safely and sustainably handled using the
co-processing route.
The Oil & Gas business has also carried out
a fugitive emission monitoring study for all
its operating assets. This revealed that
there has been no significant leakage of
fugitive emissions to the atmosphere, and
that we are succeeding in minimising our
greenhouse gas emissions.
Operations
Average gross production for FY2018 was
185,587 barrels of oil equivalent per day
(boepd), 2% lower y-o-y primarily due to
natural field decline, partially offset by
volume ramp-up from infill wells in Mangala
and Cambay and continued effective
reservoir management practices across
assets. All three blocks – Rajasthan, Ravva
and Cambay – continued to record a plant
uptime of over 99% (FY2017: 99%).
Production details by block are summarised
below.
Rajasthan block
Rajasthan block production was 2% lower
at an average rate of 157,983 boepd. This
reduction was due to natural decline in the
field. However, the decline was partially
offset by encouraging results from the
new wells added as part of the Mangala
infill activity, the ramp-up of Raageshwari
Deep Gas (RDG) Phase I and the
continuing efficacy of our reservoir
management practices.
At Rajasthan, the drilling programme of 15
infill wells at the Mangala field started
during Q2 FY2018. Of these, 13 wells have
been brought online with the remaining two
wells to be completed in Q1 FY2019.
In order to boost volumes from satellite
fields, we began an eight-well drilling
campaign. Four wells in NI and NE have
been brought online and the remainder are
expected to be completed in Q1 FY2019.
Raageshwari Deep Gas (RDG) in Rajasthan
increased to an average of 37 mmscfd in
FY2018 (44 mmscfd in Q4), with gas sales
post-captive consumption of 22 mmscfd
from an average production of 26 mmscfd
in FY2017, with gas sales post-captive
consumption at 10 mmscfd.
Ravva block
Production from the Ravva block was down
by 8% at an average rate of 17,195 boepd,
owing to natural decline. Closing of the
water-producing zones in two wells, and
gas lift optimisation, has helped to enhance
production rates from the field, partially
offsetting the natural decline.
Cambay block
Production from the Cambay block was up
by 7% at an average rate of 10,408 boepd.
This was primarily due to the start of the
infill drilling campaign, together with
effective reservoir management practices.
RDG Phase I ramped up fully to 45 million
standard cubic feet per day (mmscfd)
during FY2018. Gas production from
At Cambay, we began the four-well infill
campaign in January 2018 to enhance
production volumes. Drilling of the first well
Open Acreage Licencing Policy provides an opportunity to acquire
acreages from all open sedimentary basins of India. We have
submitted bids for all the 55 blocks on offer.
Vedanta Limited Integrated Report and Annual Accounts 2017-18
77
was completed successfully and
production began in February 2018. Drilling
and completion of the remaining three
wells also completed till date.
Prices
The latter half of FY2018 saw a substantial
recovery in crude oil prices, with Brent
peaking at US$71 per barrel in January for
the first time since December 2014. The
increase was supported by healthy crude
demand during the winter season and
consistency in OPEC-led output cuts. Brent
crude oil averaged US$58 per barrel, with a
closing rate of US$67 per barrel as at
March 29, 2018. The year ended on a
positive note as OPEC looked set to
continue withholding output for the rest of
the year.
Financial Performance
Revenue for FY2018 was 16% higher y-o-y
at `9,536 crore (after profit and royalty
sharing with the Government of India),
supported by a recovery in oil price
realisation. EBITDA for FY2018 was higher
at `5,429 crore, up 35% y-o-y, due to
higher revenue. The Rajasthan water flood
operating cost was US$4.6 per barrel in
FY2018 compared to US$4.3 per barrel in
the previous year, primarily driven by
increased interventions and production
enhancement initiatives. Overall, the
blended Rajasthan operating costs
increased to US$6.6 per barrel during
FY2018 compared with US$6.2 per barrel
in the previous year, due to the ramp-up in
polymer injection volumes.
We have awarded an integrated contract
for a drilling campaign of 7-18 exploration
and appraisal wells to build on the resource
portfolio, and well spud is expected by Q2
FY2019.
MBA Polymer unit, Cairn Oil & Gas
In Q4 FY2018, reversal of previously
recorded non-cash impairment charge of
` 7,016 crore (` 4,257 crore net of taxes)
was taken, following the progress on the
key growth projects which are expected to
result in enhanced recovery of resources in
a commercially viable manner leading to a
higher forecast in oil production and
savings in the cost.
In FY2018 capital expenditure was US$127
million, which was primarily focused on
growth projects including the Mangala
infill, the liquid handling upgrade, and the
RDG and CB infill campaigns.
Exploration and development
Exploration
Rajasthan – (BLOCK RJ-ON-90/1)
The Group is reactivating its Oil & Gas
exploration efforts in the prolific
Barmer Basin. The basin provides
access to multiple play types, with oil in
high permeability reservoirs, tight oil and
tight gas. We have engaged global
partners to reveal the full potential of the
basin and establish >1 billion boe of
prospective resources.
Krishna-Godavari Basin Offshore –
(BLOCK KG-OSN-2009/3)
A two-well exploratory drilling campaign
commenced in April 2018 to establish the
potential of the block.
Open Acreage Licensing Policy (OALP)
Open Acreage Licensing Policy (OALP)
provides an opportunity to acquire
acreages from all open sedimentary basins
of India. The GOI had invited bids for
55 blocks based on receipt of expression of
interest. Cairn Oil & Gas submitted bids for
all the 55 blocks on offer. These blocks
were assessed based on the resource
potential, chance of success and proximity
to infrastructure in prioritised sedimentary
basins of India viz. Barmer, Cambay, Assam
and Krishna-Godavari offshore. The
Government is expected to award the
blocks by June 2018. We intend to increase
our exploration portfolio significantly to
continue building the resources base.
Integrated ReportManagement ReviewStatutory ReportsFinancial Statements 78
Vedanta Limited Integrated Report and Annual Accounts 2017-18
Development
The Oil & Gas business has a robust
portfolio of development opportunities
with the potential to deliver incremental
volumes. In order to execute these projects
on time and within budget, we have
decided on a fundamental change to our
project execution strategy. We have
devised an ‘integrated project
development’ strategy, with an in-built risk
and reward mechanism to drive
incremental value from the schedule and
recoveries. This new model is being
delivered in partnership with leading global
oil field service companies.
Mangala infill – 45 wells
We are embarking on a significant drilling
programme of an additional 45 infill wells in
the prolific Mangala field, with an estimated
ultimate recovery of 18 million barrels. The
contract for the project has been awarded,
with first oil expected in Q1 FY2019.
Enhanced oil recovery (EOR) projects
The valuable learning we gained from the
successful implementation of the Mangala
polymer EOR project, is being leveraged to
enhance production from the Bhagyam and
Aishwariya fields. The contracts for these
EOR projects have been awarded and
preparations are on track with first oil
expected in Q1 FY2019. We are targeting
incremental recovery of 40 million barrels.
MBA alkaline surfactant polymer (ASP)
Following a successful pilot test at the
Mangala field, the way is now clear to
implement the world’s largest alkaline
surfactant polymer (ASP) project. The work,
which will enable incremental recovery
from this prolific field, entails drilling wells
and developing infrastructure facilities at
the Mangala Processing Terminal.
The drilling contract for the ASP
implementation has been awarded, and
the contract for facilities will be awarded
in due course.
With full-field implementation of ASP in the
MBA fields, we estimate potential
incremental recovery of around 200 million
barrels of oil, with first oil expected in Q3
FY2019.
Tight Oil & Gas projects
Tight oil: Aishwariya Barmer Hill (ABH)
The Aishwariya Barmer Hill (ABH) stage I
production from seven existing wells began
during Q2 FY2018. ABH stage II consists of
drilling and fracking 39 new wells, creating
new surface facilities including well
hook-ups, pipeline augmentation and
installing a de-gassing facility. The contract
for tight oil wells and facilities has been
awarded, and work is ongoing on the
surface facility for ABH. We expect to start
drilling in Q1 FY2019 with first oil expected
in Q3 FY2019.
Raageshwari Deep Gas (RDG) development
Gas development in the RDG field in
Rajasthan continues to be a strategic
priority. Phase I of the project, to ramp up
production to 45 mmscfd, was completed
in December 2017. Phase II is being
executed through an integrated
development approach to ramp up overall
Rajasthan gas production to ~150 mmscfd,
and condensate production of 5 kboepd.
We have awarded contracts, both for the
drilling of wells and the gas terminal. Drilling
will begin in Q1 FY2019.
Tight oil appraisal fields
We had made 38 discoveries in the
Rajasthan Block, with some comprising
complex tight oil reservoirs. In order to
monetise them, we will carry out appraisal
activities through global technology
partnerships over the next 12-15 months,
prior to conceptualising and developing a
full-field development plan. Contract for
appraisal of 4 fields targeting 190 mmboe
of resources has been awarded.
Other projects
Surface facility upgrade
In order to maximise production at the
Mangala Processing Terminal (MPT), we
are focusing on increasing liquid handling
capacity to handle additional volumes. We
are planning a series of measures to
increase the liquid handling and water
injection capacities in a phased manner.
Outlook
The Oil & Gas business has reactivated its
capital expenditure programme with the
objectives of enhancing the exploration
portfolio, executing development projects
to add incremental volumes and
maintaining robust operations to generate
free cash flow post-capex.
For FY2019, we expect to achieve a
significant growth in production volume,
with total volumes in the range of 220-250
kboepd through executing our growth
projects, with opex of sub-$7/boe. We
estimate the net capex commitment at
US$600-800 million.
Strategic priorities
Our focus and priorities will be to:
• evaluate further opportunities to expand
the exploration portfolio through OALP
and other opportunities;
• execute growth projects within schedule
and cost;
• further progress on execution on growth
projects to deliver 275-320 kboepd in
FY2020;
• continue to progress towards zero harm,
zero waste and zero discharge; and
• continue to operate at a low cost-base
and generate free cash flow post-capex.
Vedanta Limited Integrated Report and Annual Accounts 2017-18
79
Employees at operational site, Cairn Oil & Gas
Financial StatementsStatutory ReportsManagement ReviewIntegrated Report 80
Vedanta Limited Integrated Report and Annual Accounts 2017-18
Operational review/Zinc India
Vision of 1.5 mtpa
production capacity
6
4 3
1
5
2
1 Debari smelter
2 Chanderiya smelters
3 Rampura Agucha mine
4 Rajpura Dariba mine and
smelters and Sindesar
Khurd mine
5 Zawar mine
6 Pantnagar Silver refinery
Note: Map not to scale
During FY2018, we
continued our robust
performance with
record production,
while also maintaining
our first quartile cost
position.
Sunil Duggal
CEO, Hindustan Zinc Ltd and
Lead, Base Metals Group
EBITDA
(` cr)
8
5
2
,
2
1
0
3
5
,
9
4
0
8
,
6
5
8
2
,
7
5
9
4
,
6
2014 2015 2016 2017 2018
Vedanta Limited Integrated Report and Annual Accounts 2017-18
81
Sindesar Khurd mine, HZL
thoroughly investigated, and the resulting
learnings were shared and implemented
across the businesses to prevent such
tragedies in the future.
These incidents ran counter to an
otherwise continuing improvement in injury
reduction, which has fallen by
approximately 69% over the last five years.
During FY2018, lost time injuries (LTIs) fell
to 0.27 (FY2017: 0.30). In particular, senior
leadership undertook a special drive to
increase ‘line of fire’ awareness.
Hindustan Zinc was awarded the Safety
Innovation Award 2017 by the Institution of
Engineers (India) for its safety performance
and efforts to strengthen safety culture.
The year in summary
During FY2018, we continued our robust
performance with record production from
our mines and smelters, while also
maintaining our first quartile position in the
global cost curve. The journey that started
in 2013, towards a goal of 1.2 million tonnes
of production in FY2020, continues apace
with a quarterly sustainable production
run-rate of 0.3 million tonnes in sight. In
parallel, we are focusing on silver and
targeting a production of 800+ tonnes, in
addition to the 1.2 million tonnes target.
We have now successfully transitioned to
fully underground mining operations and
are looking for another record year of
production in FY2019, on our way to the
FY2020 goal.
Safety
We were deeply saddened to report two
fatalities at the Rampura Agucha
underground project site and Fumer project
site during the year. Both incidents were
Production
Refined Zinc/Lead (kt)
2
7
8
1
6
8
4
0
9
0
6
9
1
1
8
2014 2015 2016 2017 2018
Production
Saleable Silver (tonnes)
8
5
5
3
5
4
5
2
4
0
5
3
8
2
3
2014 2015 2016 2017 2018
Integrated ReportManagement ReviewStatutory ReportsFinancial Statements
82
Vedanta Limited Integrated Report and Annual Accounts 2017-18
Production performance
Production (kt)
Total mined metal
Refinery metal production
Refined zinc – integrated
Refined lead – integrated1
Production – silver (tonnes)2
FY2018
FY2017
% change
947
960
791
168
558
907
811*
672*
139
453
4%
18%
18%
21%
23%
1. Excluding captive consumption of 6,946 tonnes in FY2018 vs. 5,285 tonnes in FY2017.
2. Excluding captive consumption of 36.438 tonnes in FY2018 vs. 27.396 tonnes in FY2017.
*
Including custom production of 2 kt.
Prices
Average zinc LME cash settlement prices US$/t
Average lead LME cash settlement prices US$/t
Average silver prices US$/ounce
Unit costs
Unit costs (US$ per tonne)
Zinc (including royalty)
Zinc (excluding royalty)
Financial performance
(` crore, unless stated)
Revenue
EBITDA
EBITDA margin (%)
FY2018
FY2017
% change
3,057
2,379
16.9
2,368
2,005
17.8
29%
19%
(5)%
FY2018
FY2017
% change
1,365
976
1,154
830
18%
18%
FY2018
FY2017
% change
22,147
12,258
55%
18,465
9,530
52%
20%
29%
-
Environment
The business improved its performance in
conservation and maintained recycling
performance. During the reporting year,
waste recycling rose to 95% compared to
93% in FY2017, and our water recycling
rate was 32% (FY2017: 33%).
With the success of the 20 million litres per
day (MLD) Sewage Treatment Plant (STP),
Phase II of 25 MLD STP is under
construction and Phase III is in the pipeline.
On completion, it will reduce our fresh
water intake at the Rajpura Dariba complex
to negligible levels.
The Company is also committed to the
Science Based Target initiative, with the
goal of reducing GHG emissions by ~23 %
by 2030, against a 2016 baseline.
Our sustainability activities received several
endorsements during the year, including
the Sustainable Plus Platinum Label award
by the Confederation of Indian Industries
(CII), as well as awards for Best
Sustainability Practices, Best Carbon
Foot-printing and Best Sustainability Report
from the World CSR Day. Zinc India’s
sustainability performance was ranked No.
11 in the Dow Jones Sustainability Index
(Metal and Mining) globally, and No. 3
globally in the Environment category.
Operations
In FY2018, mined metal production stood
at a record 947,000 tonnes, in line with the
mine plan.
Ore production was 12.6 million tonnes for
FY2018, an increase of 6% compared to
FY2017. Although this was impacted by
lower production at the Rampura Agucha
open cast mine (1.76 mt, down by 47%
against 3.30 mt in FY2017), this was more
than offset by a 27% y-o-y increase from
underground mines in FY2018.
Cumulative MIC production was up by 4%
due to higher ore production and
treatment, partly offset by lower grades.
Performance from underground mines
remained robust with Q4 FY2018
underground production setting a record
and attaining best-ever ore and MIC
production. MIC production from
underground mines was up by 52% in
FY2018.
Integrated metal production increased by
18% to 960 kt from 811 kt a year ago, due
to consistent availability of MIC throughout
the year and higher smelter efficiency.
Integrated saleable silver production grew
by 23% to a record 558 tonnes, compared
to 453 tonnes a year ago, in line with higher
production from the Sindesar Khurd Mine.
We closed the fourth quarter of the year
with the highest-ever quarterly production
of lead and silver. Integrated lead metal
production attained a record 50,000
tonnes, 11% higher y-o-y. Integrated silver
production also attained a record 170
tonnes, 22% higher y-o-y. These increases
were in line with the availability of mined
metal and enhanced smelter efficiencies.
In Q2 FY2018, the Group sold 220,000
tonnes of zinc and 30,000 tonnes of lead,
forward at a price of US$3,084 per tonne
and US$2,418 per tonne respectively. Of
this, 165,000 tonnes were for the period
January to March 2018 with the remainder
for April to June 2018.
Prices
Zinc and lead were the leading LME
performers in FY2018 with zinc prices up
29% and lead up 19%. The year was
marked by a sharp decline in finished goods
stocks and a reduced zinc supply from
China for part of the year. The combination
of scheduled mine closures, strategic
production cuts and the impact of
environmental inspections in China
depleted global stocks of zinc concentrate/
mined metal. The consequent constraints
on refined production, together with global
demand growth of ~2.5%, depleted stocks
of refined zinc and ensured that the price
rally that started in 2016 was sustained
during the year. Similarly, the refined lead
Based on a long-term evaluation of assets and in consultation with
global experts, the Company is evaluating plans to increase its
mined metal capacity from 1.2 mtpa to 1.5 mtpa.
Vedanta Limited Integrated Report and Annual Accounts 2017-18
83
Sindesar Khurd
Our Sindesar Khurd mine achieved its
target capacity of 5 million tonnes towards
the end of the year and is gearing up for
higher production. The main shaft was
equipped during the year and winder
installation work has begun. Production
from the shaft is expected to start as
scheduled in Q3 FY2019. Civil and
structure erection for the new mill is
ongoing and expected to be commissioned
in Q2 FY2019.
Next phase of expansion announced
Based on a long-term evaluation of assets
and in consultation with global experts, the
Company is evaluating plans to increase its
mined metal capacity from 1.2 mtpa to 1.5
mtpa. The Board has in principle approved
Phase I of this expansion, which will
increase mined metal and smelting
capacity from 1.2 mtpa to 1.35 mtpa,
through brownfield expansion of existing
mines at an estimated capital expenditure
of around US$700 million.
Phase I includes incremental ore
production capacity of 0.5 mtpa each at
the Rampura Agucha, Sindesar Khurd and
Rajpura Dariba mines, bringing the total
capacity to 5.0 mtpa, 6.5 mtpa and 2.0
mtpa respectively. The capacity of Zawar
mines will be increased by 1.2 mtpa to 5.7
mtpa. These projects will take total ore
production capacity to 20.4 mtpa and
mined metal capacity from 1.2 mtpa to 1.35
mtpa. Phase I will be completed in three
years and will be executed concurrently
with the ongoing expansion, which is now
in its final stages.
Strategic priorities
Our focus and priorities will be to:
• progressively ramp-up underground
mines to achieve target run-rate of
1.2 mtpa;
• commence work towards expansion to
1.35 mtpa;
• successfully commission Fumer;
• continue our focus on adding more
reserves and resources than we deplete,
through exploration;
• bring down the cost to top decile with
the focus on operational and
commercial efficiencies; and
• improve silver recovery and production
through Fumer plants and tailings
retreatment.
Towards the end of the year, orders were
placed for paste fill plants for both the
Rampura Agucha and Sindesar Khurd mines.
Zawar mine
Our Zawar mine achieved record ore
production of 2.2 million tonnes during the
year and production capacity has been
ramped up to 3.0 mtpa. The existing mill
capacity was debottlenecked to 2.7 mtpa.
Civil construction work for the new mill is
progressing well, with commissioning
expected by Q4 FY2019.
The Ministry of Environment, Forest and
Climate Change (MoEF) has given
environmental clearance for the expansion
of ore production at the Kayad mine from
1.0 to 1.2 mtpa. The Kayad project is now
operating at its rated capacity of 1.2 mtpa.
The Fumer project at Chanderiya is
progressing as scheduled and expected to
commission in mid-FY2019.
Exploration
During the year, gross additions of 19.5
million tonnes were made to reserves and
resources (R&R), prior to depletion of 12.6
million tonnes. As at March 31, 2018, Zinc
India’s combined mineral resources and ore
reserves were estimated to be 411 million
tonnes, containing 35.7 million tonnes of
zinc-lead metal and 1.0 billion ounces of
silver. Overall mine-life continues to be
more than 25 years.
Outlook
Mined metal and refined zinc-lead
production in FY2019 is expected to be
higher than in FY2018, filling the gap
caused by completion of open-cast
production. Silver production will be
around 650-700 metric tonnes .
Cost of production (CoP), before royalty for
FY2019, is likely to be in the range of
US$950–975 per tonne.
The project capex for the year will be
around US$400 million.
market was in deficit during the year, driven
by a shortage in mine supply.
Silver experienced a 60% uptrend in
CY2017 in industrial demand while supply
remained constrained; 70% of annual silver
production is as a by-product of copper,
zinc and lead extraction processes, for
which the mine supply remained subdued
in 2017.
Unit costs
The unit cost of zinc production (excluding
royalties) increased to US$976 per tonne,
up 18% y-o-y. The increase was due to
higher input raw material prices (primarily
imported coal, diesel and metallurgical
coke), lower overall grades due to mine mix
and Indian rupee appreciation. This was
partially offset by higher production.
Including royalties, the cost of zinc
production increased to US$1,365 per
tonne, 18% higher y-o-y.
Of the total cost of production of US$1,365
per tonne, government levies amounted to
US$423 per tonne (FY2017: US$339 per
tonne), comprising mainly of royalty
payments, the Clean Energy Cess,
electricity duty and other taxes.
Financial performance
Revenue for the year was ` 22,147 crore, up
20% y-o-y, primarily due to higher metal
volumes, and increased commodity prices,
partially offset by rupee appreciation.
EBITDA in FY2018 increased to `12,258
crore, up 29% y-o-y. The increase was
primarily driven by higher volumes,
improved zinc and lead prices, but was
partially offset by the higher cost of
production.
Projects
The mining projects we have announced
are progressing in line with the expectation
of reaching 1.2 million tonnes per annum of
mined metal capacity in FY2020. Capital
mine development was 38,501 metres
during the year, an increase of 65% y-o-y.
Rampura Agucha
Rampura Agucha underground reached an
ore production run-rate of 3.0 mtpa
towards the end of the year. The main shaft
hoisting and south ventilation shaft systems
were commissioned during the year, while
off-shaft development is on track.
Production from the main shaft is expected
to start as planned from Q3 FY2019.
Integrated ReportManagement ReviewStatutory ReportsFinancial Statements 84
Vedanta Limited Integrated Report and Annual Accounts 2017-18
Operational review/Zinc International
Gamsberg Phase I
(250 kt) on track
With full ramp-up of
Gamsberg Phase I and
the Skorpion Pit 112
expansion, volumes
will restore to over
400 kt over the next
two years.
Deshnee Naidoo
CEO, Zinc International
and CMT
EBITDA
(` cr)
2
8
2
,
1
2
8
0
,
1
5
1
4
,
1
7
2
9
1
4
4
2014 2015 2016 2017 2018
2
1
3
1
Gamsberg, South Africa
(under development)
2 Skorpion mine, Namibia
3 Black Mountain mine,
South Africa
Note: Map not to scale
Note: Lisheen had safe, detailed and fully costed closure after 17
years of operations in November 2015
Vedanta Limited Integrated Report and Annual Accounts 2017-18
85
Gamsberg mine, South Africa
The year in summary
FY2018 was a strong year, in terms of
stable production and good progress made
at our Gamsberg project and Pit 112
extension at Skorpion. The performance
was further supported by an improvement
in zinc and lead prices due to supply
constraints, making these major
investments particularly well-timed.
The Gamsberg project represents one of the
largest zinc deposits in the world with
reserves and resources of 215 mt (16 mt zinc)
and the potential to ramp up to 600 ktpa of
zinc production. Indeed, Phase I of the project
only exploits a quarter of the full resource
potential. The first production from Gamsberg
is expected to commence by mid-CY2018.
With full ramp-up of Gamsberg Phase I to
250 ktpa and the Skorpion Pit 112
expansion, Zinc International will restore
volumes to over 400,000 tonnes per
annum (tpa) over the next two years.
Safety
With deep regret we reported a fatality
at Skorpion Zinc during the year,
which occurred during a dewatering
drilling operation. The lessons learned,
following a thorough investigation, have
been shared across the business. This
incident ran counter to an otherwise
improving trend at Zinc International:
lost time injuries decreased to 16 from
the previous year’s 18, and the frequency
Production
Refined Zinc (MT)
5
2
1
2
0
1
2
8
5
8
4
8
2014 2015 2016 2017 2018
Production
Zinc-Lead Mined Metal (DMT)
9
3
2
9
0
2
4
4
1
0
7
2
7
2014 2015 2016 2017 2018
Integrated ReportManagement ReviewStatutory ReportsFinancial Statements
86
Vedanta Limited Integrated Report and Annual Accounts 2017-18
Production performance
Total production (kt)
Production – mined metal (kt)
BMM
Refined metal Skorpion
Unit costs
Zinc (US$ per tonne) unit cost
Financial performance
(` crore, unless stated)
Revenue
EBITDA
EBITDA margin
FY2018
FY2017
% Change
157
72
84
156
70
85
–
3%
(1)%
FY2018
1,603
FY2017
% Change
1,417
13%
FY2018
3,446
1,415
41%
FY2017
% Change
2,230
927
42%
55%
53%
–
rate showed a significant decline to 1.36
(FY2017: 2.24), despite the increased
activities of the Gamsberg project.
Zinc International has further strengthened
its efforts in managing risk across its
operations with emphasis on business
partner selection, on-boarding and
management, robust risk management
systems and safety culture programmes
aimed at achieving our goal of ‘zero
harm, zero waste and zero discharge’.
We achieved a significant improvement
in dust control and monitoring, as
well as a reduction in lead in blood
levels – indeed, zero cases above legal
limits were reported for the year.
Environment
There were no Level 3 and Level 4
incidents reported. The water recycling
rate improved to 38% compared to 22% in
FY2017. A total of four properties (21,900
ha against a compliance target of 12,900
ha) were purchased in accordance with the
Gamsberg biodiversity offset agreement.
Operations
Production for FY2018 stood at 157,000
tonnes, in line with the previous year.
Higher production at BMM, due to higher
grades and improved recoveries from
process improvements were partially offset
by the planned maintenance shutdown at
Skorpion’s acid plant in Q1 FY2018, and
lower levels of ex-pit ore.
Skorpion’s production was slightly down on
FY2017, impacted by a combination of the
planned maintenance shutdown of the acid
plant in Q1 FY2018; early closure of Pit 103
for geotechnical reasons; and blending
challenges to make up the required plant
feed grade (from lower zinc grade
stockpiles and high calcium ore).
At BMM, production was 3% higher than
the previous year. The increase was due to
higher grades from mine plan
resequencing, improved drilling accuracy,
and higher than planned recoveries from
plant flotation optimisation.
Unit costs
The unit cost of production increased by 13%
to US$1,603 per tonne, up from US$1,417 in
the previous year. This was mainly driven by
a combination of reallocation of capitalised
stripping costs of Pit 112 at Skorpion due to
early ore production, unfavourable local
currency appreciation, higher usage of
purchased oxides and sulphur at Skorpion,
As at March 31, 2018, Zinc International’s
combined mineral resources and ore reserves
were estimated at 304 MT.
higher maintenance costs at BMM and lower
than planned Copper credits at BMM. This
was partly offset by the improvements in
energy cost and TCRC savings.
Financial performance
During the year, revenue increased by 55%
to ` 3,446 crore, driven by higher sales
volumes and improved price realisations,
partially offset by rupee appreciation.
The same factors lifted EBITDA to ` 1,415
crore, up 53% from ` 927 crore in FY2017.
This was partially offset by a higher cost
of production.
Projects
At Gamsberg, we are on track for the cold
commissioning of the concentrator plant in
Q1 FY2019. The ore extraction from the
South Pit is also on schedule, till March
2018 we completed 80% of pre-stripping
and excavated 56 million tonnes of waste.
Completion works of mechanical
equipment erection, and infrastructure for
power and water pipelines for the
concentrator, are in progress. We are
targeting 500 kt of ore stockpile ahead of
the first feed to the concentrator plant.
The first phase of the project is expected to
have a mine life of 13 years, replacing the
production lost by the closure of the
Lisheen mine and restoring volumes to over
400,000 tpa at Zinc International. First
production is on track for commencement
in mid-CY2018, with 9-12 months for
ramp-up to full production of 250,000 tpa.
Cost of production is estimated at
$1000-1150 per tonne of MIC. Indeed,
Phase 1 of the project only exploits a
quarter of the full resource potential. We
see Gamsberg reaching a potential of 600
ktpa through modular expansion in future
through Phase 2 and Phase 3 projects.
Gamsberg Phase 2 can start immediately
after completion of Phase 1 and will have
some synergies with Phase 1. The mine
plans have been developed and an
expanded mega pit design has been
completed to enable a faster and efficient
Phase 2 execution. In terms of output, we
can expect to add another 200 to 250 ktpa
metal in concentrate in 2-3 years.
At Skorpion, the Pit 112 extension project is
progressing well, and waste stripping has
ramped up to its peak run-rate. ~45% of
waste stripping was completed by the end
Vedanta Limited Integrated Report and Annual Accounts 2017-18
87
Skimming of final metal ingot production
of Q4 FY2018 and is expected to be fully
complete by Q4 FY2019, on schedule. To
execute Pit 112 and ensure no interruption
in ore treatment, Skorpion Zinc
restructured the business by outsourcing
mining to a Tier I mining contractor. This
also resulted in the successful secondment
of some owner-employees into the
contract. Further optimisation of Pit 112 is in
progress to reduce waste stripping by ~8
million tonnes and optimise the project
cost. This project has increased Skorpion’s
mine life by another 2.5 years and will
contribute 250,000 tonnes of metal over
this period.
Exploration
During the year, we made gross additions
of 1.3 million metal tonnes to reserves and
resources (R&R), prior to depletion. As at
March 31, 2018, Zinc International’s
combined mineral resources and ore
reserves were estimated at 304 million
tonnes, containing 20.5 million tonnes of
zinc-lead metal.
Outlook
In FY2019, we expect production volumes
to be around 250 kt. The cost of production
excluding Gamsberg is expected to be
around US$1,850-1950 per tonne, with
Skorpion’s CoP expected to be higher due
to reallocation of pre-stripping costs at
Pit 112, lower grades coupled with higher
royalties at BMM, and input price inflation.
Strategic priorities
Our focus and priorities will be to:
• successfully commence Gamsberg in
FY2019, with targeted first production
by mid-CY2018 and progress towards
ramp up to Phase I production of 250 kt
in FY2020;
• carry out a project study for Swartberg
Phase II and Gamsberg Phase II to
extend the life of the Black Mountain
complex; and
• complete the feasibility study for an
integrated smelter-refinery with 250
ktpa metal production.
Integrated ReportManagement ReviewStatutory ReportsFinancial Statements 88
Vedanta Limited Integrated Report and Annual Accounts 2017-18
Operational review/Iron ore
Electrosteel to
complement Iron
Ore business through
vertical integration
We continue to
engage with the
Govt. for potential
restart of our Goa
operations.
Naveen Singhal
CEO, Sesa Goa -
Iron Ore Business
1
2
1
Iron Ore operations
– Goa
2 Iron Ore operations
– Karnataka
The year in summary
FY2018 was a challenging year for our Goa
operations, due to a low pricing
environment and the cancellation of mining
leases by the Supreme Court of India.
During the year we successfully revisited
our product strategy for high-grade
Note: Map not to scale
Vedanta Limited Integrated Report and Annual Accounts 2017-18
89
Pig iron plant, Amona, Goa
as ‘zero discharge operations’, with the
exception of the blow-down of the power
plant’s cooling tower, which is treated and
discharged according to the consent’s
conditions. During the period, waste
recycling stood at 117% (FY2017: 90%) due
to the additional recycling of waste
previously stored at the site.
Operations
Production at Goa stood at 4.9 million tonnes
and sales were 5.4 million tonnes during
FY2018. However, production and sales were
impacted by a low pricing environment.
During the year, we revisited our product
strategy and produced a higher quality ore
through beneficiation and blending to
improve our realisations per tonne.
Production (MT)
.
9
0
1
1
.
7
2
.
5
5
.
1
.
6
0
2014 2015 2016 2017 2018
EBITDA
(` cr)
2
2
3
,
1
3
3
4
0
6
4
5
3
1
)
0
3
2
(
2014 2015 2016 2017 2018
production from Goa to improve
realisations, but the full benefit will only
accrue if mining resumes. Significant
uncertainty over the resumption of mining
at Goa under the current leases led to
non-cash impairment charge in March
2018. We continue to engage with
Government for the potential restart of
mining operations at Goa.
At Karnataka we achieved our full
permitted allocations of 2.3 mt in FY2018,
and with the increase in the mining cap for
the state of Karnataka, allocation has
increased from 2.3 to 4.5 mt in May 2018.
Safety
With deep regret we reported two fatalities
during the year at our Goa operations.
These were thoroughly investigated, and
learnings are being implemented towards
our journey of zero harm. We continue to
invest time, effort and resources to make
our business and behaviours safer.
Separately, we are pleased to report a
further decline in lost time injuries to 0.13 in
FY2018 (FY2017: 0.41).
Environment
We recycle all of the wastewater generated
at our operations in Goa. They are classified
Integrated ReportManagement ReviewStatutory ReportsFinancial Statements
90
Vedanta Limited Integrated Report and Annual Accounts 2017-18
Production performance
Production (dmt)
Saleable ore
Goa
Karnataka
Pig iron (kt)
Sales (dmt)
Iron ore
Goa
Karnataka
Pig iron (kt)
Financial performance
(` crore, unless stated)
Revenue
EBITDA
EBITDA margin
Outlook
The Company continues to explore all legal
avenues to secure the reinstatement of
mining operations in Goa.
At Karnataka, the production is expected to
be 4.5 mt.
Strategic priorities
Our focus and priorities will be to:
• enhance environmental clearance limits in
Karnataka, and ramp up to full capacity;
• bring about a resumption of mining
operations in Goa through continuous
engagement with the Government and
the judiciary; and
• increase our footprint in iron ore by
continuing to participate in auctions
across the country, including Jharkhand.
FY2018
FY2017
% Change
7.1
4.9
2.2
646
7.6
5.4
2.2
645
10.9
8.8
2.1
708
10.2
7.4
2.7
714
(35%)
(44%)
2%
(9%)
(26)%
(26%)
(21%)
(10%)
FY2018
FY2017
% Change
3,174
460
14%
4,291
1,322
31%
(26%)
(65%)
However, on 7 February, the Honourable
Supreme Court of India issued a judgement
directing that all mining operations in the
state of Goa were to cease with effect from
March 16, 2018. Pursuant to this order, we
halted our mining activities. We have an
inventory of 0.9 million tonnes, which will
be sold in Q1 FY2019.
At Karnataka, we produced and sold 2.2
million tonnes during FY2018, in line with
the allocated environmental clearance (EC)
limits. The Honourable Supreme Court has
increased the cap on production of iron ore
for the state from 30 to 35 million tonnes,
and accordingly increase in our allocation
for Karnataka from 2.3 to 4.5 million tonnes
in May 2018.
During the year, pig iron production was 9%
lower y-o-y at 646,000 tonnes. This was
due to lower metallurgical coke availability,
caused by weather-related supply
disruptions in Australia in Q1 FY2018 and a
local contractors’ strike in Q2 FY2018.
Prices
Prices for 62% Fe grade averaged
US$68.43 per tonne on a CFR basis, which
was flat compared to the previous year.
The net realisation for our grades at Goa
was 33% lower y-o-y, primarily driven by
the widening of the discount.
Our Iron Ore business in Karnataka, which
primarily caters to the domestic steel
industry in the state, saw a 49% increase in
net realisations where the prices are
discovered through e-auctions.
Financial performance
In FY2018, EBITDA decreased to `460
crore compared with `1,322 crore in
FY2017. This was mainly due to lower
volume and realisations at Goa, partly
offset by higher realisations at Karnataka.
In light of the Supreme Court of India
judgement above, the Company has taken
an impairment (non-cash item) of `1,726
crore net of taxes (`2,329 crore gross of
taxes).
Production from Karnataka is expected
to be 4.5 mt in FY2019.
Vedanta Limited Integrated Report and Annual Accounts 2017-18
91
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a
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p
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Management Review
92
Vedanta Limited Integrated Report and Annual Accounts 2017-18
Operational review/Copper – India
Government and
community engagement
to restart operations
FY2018 was the
third successive
year of record-
breaking output.
P Ramnath
CEO, Sterlite Copper
The year in summary
The reporting year was another strong one
for Copper India, achieving an all-time-high
production of copper cathodes. Indeed,
this was the third successive year of
record-breaking output.
1
1 Silvassa refinery
2 Tuticorin smelter
2
Note: Mt Lyell mine in Australia is under care and maintenance
Note: Map not to scale
Vedanta Limited Integrated Report and Annual Accounts 2017-18
93
Copper smelting, Tuticorin
Production (kt)
4
8
3
2
0
4
3
0
4
2
6
3
4
9
2
2014 2015 2016 2017 2018
EBITDA
(` cr)
8
0
2
,
2
6
3
6
,
1
6
7
1
,
1
3
9
6
,
1
8
0
3
,
1
2014 2015 2016 2017 2018
eliminating the need for scaffolding), and by
using drones to measure the thickness of
the stacks, we have achieved the lowest
injury frequency rate for five years.
Our progress was recognised when Sterlite
Copper-Tuticorin received the British
Safety Council’s Five Star Rating and also
secured its Sword of Honour recognition.
Additionally, implementing ‘bow tie’
software analysis to risk-assess critical
activities, and training employees on
making better risk decisions, have also
contributed to putting our safety
performance on a firmer footing.
The year also marked the next phase of
growth at Copper India with the expansion
of the copper smelter capacity from 400
ktpa to 800 ktpa. On completion, this
project will rank Tuticorin as one of the
world’s largest single-location copper
smelting complexes.
Smelting operations at Tuticorin are halted,
pending renewal of consent to operate
(CTO) and we continue to evaluate our next
course of action.
Safety
With deep regret, we recorded a fatality in
the course of our operations during the
year. As a result, and following an
investigation, we instituted changes in
operating procedures.
This incident ran counter to a significant
underlying improvement in our safety
performance. Our lost time injuries fell to 1
(FY2017: 4) and our frequency rate dropped
to 0.08 (FY2017: 0.37).
A number of safety initiatives, following a
practice of single point accountability, have
made a significant contribution to
enhancing our safety performance. By
using a robotic crawler for measuring the
thickness of the storage tanks (thereby
Integrated ReportManagement ReviewStatutory ReportsFinancial Statements
94
Vedanta Limited Integrated Report and Annual Accounts 2017-18
Production performance
Production (kt)
India – cathode
Prices
FY2018
FY2017
% Change
403
402
0%
Average LME cash settlement prices (US$ per tonne)
Realised TC/RCs (US cents per lb)
6,451
21.3
5,152
22.4
25%
(5%)
FY2018
FY2017
% Change
Unit costs
Unit conversion costs (CoP) – (US cents per lb)
5.7
5.0
15%
FY2018
FY2017
% Change
Financial performance
(` crore, unless stated)
Revenue
EBITDA
EBITDA margin
Environment
During the period, our water recycling rate
decreased from 16% to 12% y-o-y. The
overall disposal of copper slag and
gypsum for sustainable applications stood
at 104%, due to the additional use of
waste stored previously on the site.
Sterlite Copper-Tuticorin received the
highest CII-EHS Five Star Rating award for
excellence in EHS practices.
Operations
In FY2018, we achieved a record 403,000
tonnes of copper cathode production
through in-house technological upgrades
and debottlenecking, albeit with a few
unplanned outages spread over the year.
This represents consistent improvement in
operational efficiencies and record
production year after year. Our plant
achieved average utilisation of 95%
throughout the year with overall equipment
effectiveness (OEE) of 85%.
The installation of bag houses before the
scrubbers led to a significant reduction in
hazardous cake generation, which also
extends the life of the secured land fill
(SLF). Further, we continued to remain
focused on improving our safety and
environmental performance, with
encouraging results. During the year, there
were zero liquid discharges, and we
recorded our lowest-ever lost time injury
frequency rate (LTIFR).
FY2018
FY2017
% change
24,975
1,308
5%
22,129
1,693
8%
13%
(23%)
The 160 MW power plant at Tuticorin
operated at a plant load factor (PLF) of
43% in FY2018, compared with 56% in
FY2017. This was mainly the result of a
lower offtake due to weaker demand in
Southern India. The Group continues to
explore viable supply options to enter into a
power purchase agreement.
Smelting operations at Tuticorin were halted
as part of a planned maintenance shutdown
for approximately 15 days, with effect from
March 25, 2018. At the same time, we made
an application to renew the consent to
operate (CTO) for the smelter. However, this
was rejected pending further clarifications
and the shutdown was therefore extended
as we evaluate our next course of action.
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 current favourable
government support and prices.
We received the highest CII-EHS Five Star Rating
award for excellence in EHS practices.
Prices
In CY2018, copper LME touched a
four-year high of US$7,216 amid global
growth in demand. Data from the
International Copper Study Group showed
that there was deficit of 150,000 tonnes in
CY2017, driven mainly by the Chinese
property market.
Wood Mackenzie also reported that the
world mined production of copper is
estimated to have risen by 0.6% to 20.22
million tonnes, while refinery production is
estimated to have increased by 1.9% to
23.49 million tonnes, compared to projected
demand of 23.47 million tonnes in CY2018.
Average LME copper prices increased by
25% and treatment and refining charges
(TC/RCs) were down by 5.3%, compared
with FY2017.
TC/RC for CY2018 will be lower at 82/8.2.
This would be approximately 11% down
y-o-y, mainly due to mine disruptions
resulting in a decline in concentrate
availability. Global mine supply is expected
to grow slowly, but by enough to keep the
market in balance. The potential for labour
disruption in 2018 was again thrown into
focus with the recent (brief) strike action at
Escondida and Southern Copper’s mines,
as well as violence at Grasberg.
Unit costs
At the Tuticorin smelter, the cost of
production increased from US cents 5.0
per lb to US cents 5.7 per lb, mainly due to
higher coal and fuel prices, and currency
appreciation, but this was partially offset by
higher by-product credit. Sulphuric acid
realisation was influenced significantly with
Abu Dhabi National Oil Company (ADNOC)
increasing prices from US$84 per tonne to
US$124 per tonne y-o-y.
During the year, EBITDA was ` 1,308 crore,
a decrease of 23% on the previous year’s
`1,693 crore. The reduction was mainly due
to lower TCs/RCs, lower premia, higher
cost of production and local currency
appreciation, but partially offset by
favourable macro factors.
Vedanta Limited Integrated Report and Annual Accounts 2017-18
95
Outlook
Production is expected to remain at around
100,000 tonnes per quarter.
Strategic priorities
Our focus and priorities will be to:
• progress towards expansion to 800 kt
production capacity by FY2020;
• engage with government and relevant
authorities to enable the restart of
operations at Copper India;
• sustain operating efficiencies, reducing
our cost profile; and
• continuously upgrade technology to
ensure high-quality products and
services that sustain market leadership
and surpass customer expectations.
Employees at operational site, Sterlite Copper
Projects
In Q3 FY2018, the Board approved the
expansion of the copper smelter at Tuticorin
from 400 ktpa to 800 ktpa. All the required
statutory approvals have been obtained and
we envisage the project being executed on
an EPC basis; this includes engineering,
procurement, supply, construction,
commissioning and demonstration of
complete performance guarantees.
In November 2017, we awarded the EPC
contract for three packages – the smelter,
refinery and sulphuric acid plant. The site
mobilisation and civil works began in
January 2018. In the case of the oxygen
plant, 60% of the major civil foundations
had been completed by March 2018, as
scheduled. An EPC contract for the
phosphoric acid plant has also been
awarded and mobilisation will start shortly.
Contracts for other packages such as the
effluent treatment plant and sewage
treatment plant/desalination plant are
expected to be awarded by May 2018.
Total capex commitment at March 31, 2018
was US$424 million, against the approved
capex of US$717 million. The expansion
project is expected to be completed by Q3
FY2020.
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Vedanta Limited Integrated Report and Annual Accounts 2017-18
Operational review/Aluminium
Ramp-up on track;
Focus on costs
3
1
2
Note: Map not to scale
Lanjigarh alumina refinery
1
2 Jharsuguda smelter
3 Korba smelter
Samir Cairae
CEO,
Diversified Metals (India)
Abhijit Pati
CEO,
Aluminium Jharsuguda
FY2018 was a milestone year as we achieved
record production of 1.7 mt and exited with a
production rate 2 mt as ramp-up at Aluminium
nears completion
Samir Cairae
CEO,
Diversified Metals (India)
Vikas Sharma
CEO,
BALCO
Ajay Kumar Dixit
CEO,
Alumina and Power
Vedanta Limited Integrated Report and Annual Accounts 2017-18
97
Production (kt)
5
7
6
,
1
3
1
2
,
1
7
7
8
3
2
9
4
9
7
2014 2015 2016 2017 2018
EBITDA
(` cr)
7
1
5
,
2
6
1
7
,
1
4
0
9
,
2
6
0
3
,
2
4
5
6
2014 2015 2016 2017 2018
Jharsuguda smelter and power operations
Safety
The business faced safety challenges
during the year and, with deep regret,
we recorded a fatality due to a vehicle
accident. After a thorough investigation,
the lessons learned were shared for
implementation across all our businesses.
Lost time injuries rose to 22 (FY2017: 15),
and the frequency rate increased to
0.39 compared to 0.32 in the previous
year. We do not regard the year’s safety
performance as acceptable and are
targeting measurable improvements
as the result of enhanced safety
programmes that we have put in place.
These include equipping site safety leaders
with tools for more robust risk analysis,
such as ‘bow tie’ software and experience
based quantification (EBQ), to help them
identify the need for critical controls. We
have also delivered specialist skill and
competency training in areas such as crane
and forklift operation, rigging and rescue.
The year in summary
FY2018 was a milestone year for our
Aluminium business, as we achieved record
aluminium production of 1.7 million tonnes,
with ramp-up at BALCO complete and
ramp-up at Jharsuguda nearly complete,
despite a pot outage at Jharsuguda I at the
beginning of the year. We now have a
strong base to target production of 2
million tonnes in FY2019; indeed, our
annualised exit run-rate in March 2018 was
already broadly equivalent to that figure.
There were headwinds in terms of the cost
of production (CoP), primarily due to input
commodity inflation and temporary coal
shortages in the domestic market. Input
commodity prices continue to be volatile.
Therefore, as a strategy, we have looked at
ways to optimise our controllable costs,
while also increasing the price realisation in
order to improve profitability in a
sustainable way going forward.
We continue to explore the feasibility
of expanding our alumina refinery
capacity. Our vision is to expand from
2 to 4 million and then up to 6 million
tonnes per annum, subject to bauxite
availability and regulatory approvals.
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98
Vedanta Limited Integrated Report and Annual Accounts 2017-18
Production performance
Production (kt)
Alumina – Lanjigarh
Total aluminium production
Jharsuguda I
Jharsuguda II1
BALCO I
BALCO II2
Jharsuguda 1,800 MW (surplus power sales in
million units)3
FY2018
FY2017
% change
1,209
1,675
440
666
259
310
1,208
1,213
525
261
256
171
38%
(16)%
–
1%
81%
–
511
–
(1)
Including trial run production of 61.8 kt in FY2018 vs. 95 kt in FY2017
(2) Including trial run production of 16.1 kt in FY2018 vs. 47 kt in FY2017
(3) Jharsuguda 1,800 MW and BALCO 270 MW have been moved from the Power to the Aluminium segment since
April 1, 2016.
Prices
Average LME cash settlement prices (US$ per tonne)
2,046
1,688
21%
FY2018
FY2017
% Change
Unit costs
(US$ per tonne)
Alumina cost (ex-Lanjigarh)
Aluminium hot metal production cost
Jharsuguda CoP
BALCO CoP
Financial performance
(` crore, unless stated)
Revenue
EBITDA
EBITDA margin
On a positive note, the Lanjigarh refinery
achieved zero-LTIs for the second
consecutive year, and we seek replicate its
success across the business.
Environment
We recycled 11% of the water we used in
FY2018. In Lanjigarh, as part of waste
management, a total of 2,226.3 mt of
vanadium sludge, and 100% of fly ash and
lime grit, has been recycled. Red Mud
utilisation for FY2018 stood at 246.3 kt.
FY2018
FY2017
% Change
326
1,887
1,867
1,923
282
1,463
1,440
1,506
16%
29%
30%
28%
FY2018
FY2017
% Change
23,434
2,904
12%
14,835
2,306
16%
58%
26%
In August 2017, a partial collapse of a
section of the ash dyke wall at Jharsuguda
resulted in the State Pollution Control
Board (SPCB) directing temporary closure
of five power units in Jharsuguda
(3x135 MW, 2x600 MW). Orders to restart
three of the power plants were issued on
September 20, 2017, followed by an order
to restart the remaining two units on
November 13, 2017.
Alumina refinery: Lanjigarh
At Lanjigarh, production was flat y-o-y at
1,209,000 tonnes. We had expected to
achieve a higher production, but lower
bauxite availability from our mines at
Chhattisgarh, as well as temporary issues
with rail logistics, meant constraints on
bauxite supply from other sources. We
continue to evaluate the possible Lanjigarh
refinery expansion, subject to bauxite
availability.
Aluminium smelters
We ended the year with record production
of 1.7 million tonnes (including trial run) and
exited it with a run-rate of around 2 million
tonnes per annum. Production excluding
the trial run totalled 1.6 million tonnes.
Jharsuguda I smelter
Production from this smelter was 16%
lower y-o-y; this followed a pot outage
incident in April 2017 that affected 228
pots of the Jharsuguda I smelter. However,
these pots were fully restored by Q3
FY2018.
Jharsuguda II smelter
Jharsuguda II smelter continued its
ramp-up during the year. Line 1 was
completed during Q3 FY2018. Line 2 was
completed in Q4 FY2017, which delivered
steady operations throughout the year. At
Line 3, 220 pots were powered on as of
March 31, 2018, and the full ramp-up was
We secured 4 mtpa of coal through linkage auctions
during FY2018, ending the year with total coal linkage of
10 mtpa.
Vedanta Limited Integrated Report and Annual Accounts 2017-18
99
Employee transporting aluminium wire rods
delayed due to infrastructure development
works undertaken by the railway authorities
for capacity enhancement. It is expected to
be fully ramped up by H1 FY2019. We
continue to evaluate Line 4.
BALCO I & II smelters
The BALCO I smelter continued to show
consistent production, delivering 259,000
tonnes during the year; this comfortably
exceeded its rated capacity of 245,000
tonnes.
Ramp-up of the BALCO II smelter was
completed in Q1 FY2018 and the plant
continues to operate consistently with
production of 310,000 tonnes – an
increase of 81% y-o-y.
Coal linkages
We continue to focus on ensuring the
long-term security of our coal supply, and
at competitive prices. We secured 4 mtpa
of coal through linkage auctions during
FY2018, ending the year with total coal
linkage of 10 mtpa.
During the year we experienced temporary
disruptions in the domestic coal supply
from Coal India. The disruption, both in
terms of quality and quantity, resulted in an
increase in the cost of captive power.
Prices
Average LME prices for aluminium in
FY2018 stood at US$2,046 per tonne, an
increase of 21% y-o-y. It also reached a
six-year high of US$2,266 per tonne before
moderating back towards the end of the
year. Prices were driven by the anti-
pollution supply reforms in China, increases
in raw material prices and trade tariff
announcements by the US.
The cost of production at BALCO
increased to US$1,923 per tonne from
US$1,506 in FY2017, up 28% y-o-y. This
was primarily due to input commodity
inflation (imported alumina and carbon),
higher power cost due to coal shortages
and rupee appreciation.
Unit costs
During FY2018, the cost of alumina
production was 16% up y-o-y at US$ 326
per tonne, mainly due to input commodity
inflation (principally caustic soda), and
currency appreciation.
Financial performance
EBITDA was higher at `2,904 crore
(FY2017: `2,306 crore), driven mainly by
volume ramp-up and increased LME prices.
This was partially offset by the increase in
the cost of production.
In FY2018, the total bauxite requirement of
about 3.8 million tonnes was met from
three sources: captive mines (29%),
domestic sources (41%) and imports (30%).
In the previous year, the bauxite mix was
captive mines (31%), domestic sources
(23%) and imports (46%).
The CoP of hot metal at Jharsuguda was
US$1,867 per tonne, up from US$1,440 in
FY2017. The increase was primarily due to
input commodity inflation (imported
alumina and carbon), higher power cost and
currency appreciation. The power cost was
higher due to disruptions in domestic coal
supply from Coal India resulting in
procurement of coal and power from
alternative sources at higher prices. We
also incurred one-off costs related to pot
outages in April 2017, and temporary power
imports as a result of the ash dyke incident.
Outlook
Volume and cost
In FY2019, aided by the full ramp-up of the
third line of Jharsuguda II, we anticipate
aluminium volume of 2 million tonnes.
As input commodity prices continue to be
volatile, we have looked at ways to optimise
our controllable costs, while also increasing
the price realisation in order to improve
profitability in a sustainable way.
Alumina and Bauxite
During FY2019, we expect production of
around 1.5-1.6 million tonnes. We are
working towards a step change in local
bauxite sourcing to feed the alumina
refinery. We have entered into a long-term
contract with Odisha Mining Corporation
(OMC) for supply of bauxite.
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Vedanta Limited Integrated Report and Annual Accounts 2017-18
Strategic priorities
Our focus and priorities will be to:
• achieve steady state production of 2 mt
in FY2019;
• reduce controllable costs in the
aluminium business;
• firm up bauxite sourcing and the
supply chain, and diversify imported
alumina sourcing;
• improve coal linkage realisation (10 mtpa)
and further increase coal linkage;
• improve power plant operating
parameters and reduction in non-coal
cost; and
• improve realisations through gaining
a higher domestic market share, and
by increasing our value-added
product (VAP).
We expect a reduction in COP by c. US$120-170/t in
FY2019 by optimising controllable costs and through
elimination of one-offs.
Power
In FY2019, we aim to improve the
realisations from the 10 mtpa of coal
linkages already in place, and increase
linkages further. We are also hopeful that
the disruption in coal supply experienced in
FY2018 will not continue into the next
reporting year.
We are also working towards reduction in
GCV losses as well as improvement in plant
operating parameters which should deliver
higher PLFs and reduction in non-coal costs.
Marketing
We are targeting an increase in value-added
production in FY2019 to 1.0 million tonnes.
We will also be focusing on increasing the
domestic and OEM sales further.
Cost of production
We expect a reduction in
COP by c.US$120-170/t in FY2019 by
optimising controllable costs and through
elimination of one-offs. This will imply a
COP of US$1,725-1,775/t, assuming costs
of imported alumina, coal e-auctions and
carbon at average FY2018 levels. We are
targeting a medium-term COP target of
US$1,500/t with continued focus on
sourcing of low cost bauxite, alternate
sourcing of alumina, improved plant
operating parameters, an increase in
linkage coal mix and strategic partnerships
with carbon suppliers.
Vedanta Limited Integrated Report and Annual Accounts 2017-18
101
SRS-NCRM Area, BALCO
Financial StatementsStatutory ReportsManagement ReviewIntegrated Report 102
Vedanta Limited Integrated Report and Annual Accounts 2017-18
Operational review/Power
3.6 GW of commercial
power generation
capacity
3
2
1
We achieved
consistent
availability of
over 85% at TSPL
post Q1
Ajay Kumar Dixit
CEO, Alumina and
Power
Jharsuguda power plant
1
2 Korba power plant
3 Talwandi Sabo power plant
Captive thermal power plant
The year in summary
FY2018 was an important year for the
Talwandi Sabo Power plant (TSPL), where
we achieved a consistent availability of over
85% from Q2 onwards. The entire
operational and maintenance activities
Note: MALCO is under care and maintenance since May 26, 2017
Note: Map not to scale
Vedanta Limited Integrated Report and Annual Accounts 2017-18
103
BALCO power plant
Sales
(mn KWH)
6
1
9
,
2
1
1
2
1
,
2
1
1
4
0
,
1
1
4
7
3
,
9
9
5
8
,
9
2014 2015 2016 2017 2018
EBITDA
(` cr)
5
2
0
,
1
3
7
8
9
6
6
,
1
2
4
6
,
1
4
9
2
,
1
2014 2015 2016 2017 2018
Water reuse and recycling rates remained
broadly consistent at 10% in FY2018,
compared to 11% in the previous year.
Operations
TSPL achieved significantly higher power
sales in FY2018, due to full operation of the
1,980 MW power plants. However, this was
partially offset by the fire incident mentioned
above, which resulted in 65 days of
shutdown in Q1 FY2018. The power
purchase agreement with the Punjab state
compensates us based on the availability of
the plant. Average availability for the full year
was 74%, in line with previous guidance.
were transferred to a single contractor in
order to enhance operational efficiencies.
However, the plant load factors for the
Jharsuguda and BALCO IPP were impacted,
primarily by domestic coal shortages.
Safety
We recorded one lost time injury during the
year (FY2017: 1). The frequency rate of 0.20
compared to 0.25 previously.
Separately, in April 2017, TSPL experienced
a fire incident in the conveyor belt of the
coal handling plant (CHP). This was due to
the spontaneous ignition of coal dust,
impacting our operations in Q1 FY2018. Full
operation was restored, and is now
protected by comprehensive fire detection,
protection and suppression systems,
complete with dust extraction and dust
suppression capabilities.
Environment
One of the main environmental
challenges for power plants is the
management and recycling of fly ash.
We recorded an improvement in our
overall waste recycling rate, from 55% in
FY2017 to 67% in this reporting year.
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104
Vedanta Limited Integrated Report and Annual Accounts 2017-18
Production performance
Total power sales (MU)
Jharsuguda 600 MW
BALCO 600 MW
MALCO
HZL wind power
TSPL
TSPL – availability
Unit sales and costs
Sales realisation (`/unit)1
Cost of production (`/unit)1
TSPL sales realisation (`/unit)2
TSPL cost of production (`/unit)2
FY2018
11,041
1,172
1,536
4
414
7,915
74%
FY2017
% Change
12,916
3,328
2,609
190
448
6,339
79%
(15%)
(65%)
(41%)
(98%)
(8%)
25%
FY2018
FY2017
% Change
2.88
2.36
3.49
2.54
2.83
2.10
3.27
2.28
2%
12%
7%
11%
(1) Power generation excluding TSPL
(2) TSPL sales realisation and cost of production is considered above based on availability declared during the respective period
Financial performance
(` crore, unless stated)
Revenue
EBITDA
EBITDA margin
*
Excluding one-offs
The Jharsuguda 600 MW power plant
operated at a lower plant load factor (PLF)
of 25% in FY2018 (FY2017: 68%), due to
disruptions in coal supply in the domestic
market.
The 600 MW BALCO IPP operated at a
PLF of 44% in FY2018 (FY2017: 58%), due
to the temporary coal shortages and weak
external power demand.
The MALCO plant has been placed under
care and maintenance, effective from
May 26, 2017, due to low demand in
Southern India.
Unit costs and sales
Average power sales prices, excluding TSPL,
remained flat in FY2018 due to continued
weaker prices in the open access market.
During the year, the average generation
cost was higher at `2.36 per unit (FY2017:
`2.10 per unit) due to temporary disruptions
in the coal supply.
TSPL’s average sales price was higher at
`3.49 per unit compared with `3.27 per
unit in FY2017, and power generation cost
was higher at `2.54 per unit compared with
`2.28 per unit in the previous year, driven
mainly by increased coal prices.
FY2018
5,652
1,669
25%*
FY2017
% change
5,608
1,642
29%
1%
2%
–
Financial performance
EBITDA for the year was 2% higher y-o-y at
`1,669 crore. This includes a one-off
revenue recognition of `226 crore and
`139 crore at BALCO and at Jharsuguda
IPP respectively.
Outlook
During FY2019, we will remain focused on
increasing the plant availability of TSPL
(80%) and achieving higher plant load
factors at the BALCO and Jharsuguda IPP.
Strategic priorities
Our focus and priorities will be to:
• resolve pending legal issues and recover
aged power debtors;
• tie-up for the balance capacity under
open access for BALCO;
• achieve high plant load factors for the
Jharsuguda and BALCO IPP; and
• improve power plant operating
parameters to deliver higher PLFs/
availability and reduce the non-coal cost.
We recorded an improvement
in our overall waste recycling
rate, from 55% in FY2017 to
67% in FY2018.
Others
Port business
Vizag General Cargo Berth (VGCB)
During FY2018, VGCB operations
showed an increase of 31% in discharge
and 22% in dispatch compared to
FY2017. This was mainly driven by
an increase in zonal imports volume
in the second half of FY2018. This
was partially offset by restrictions in
handling road-bound cargo, imposed
by a High Court order in April 2017.
However, these restrictions were
removed in September 2017.
Vedanta Limited Integrated Report and Annual Accounts 2017-18
105
Export tank, Mangala Processing Terminal, Barmer, Cairn Oil & Gas
Financial StatementsStatutory ReportsManagement ReviewIntegrated Report 106
Vedanta Limited Integrated Report and Annual Accounts 2017-18
Business responsibility report
Employee at operational site, Cairn Oil & Gas
India is a key market for
Vedanta and one which we
believe has huge growth
potential. Sustained
economic growth will lead
to development, greater
prosperity and an overall
increase in per-capita
spending.
The resources that we mine contribute to
the growth of our communities and nations.
The natural resource sector has the
potential to generate millions of jobs and
that is the key to accelerate the growth and
development of India.
us conduct our business in line with our
values of Trust, Entrepreneurship,
Innovation, Excellence, Integrity, Respect
and Care. The details related to our
framework are available in the sustainability
section of the report.
Our business strategy is about ensuring
that growth is maximised in a way that is
both sustainable and responsive. The four
core pillars - Responsible stewardship,
Building Strong Relationships, Adding &
Sharing Values and Strategic
Communication are designed to support
the long-term development, ensuring long
lasting relationship and providing superior
returns to all our stakeholders.
Alongside delivering high-quality assets
and low-cost operations, our Sustainable
Development Framework is integral to
Vedanta’s core business strategy and helps
In pursuance of its commitment to
responsible business, the Company has
prepared this Business Responsibility
Report for its standalone divisions- Copper,
Aluminium, Iron Ore, Oil & Gas and Power.
These include obligations on business to
respect the environment, promote the
well-being of employees and to respect the
interests of all stakeholders, particularly the
disadvantaged and vulnerable. The report
complements the work we are already
undertaking across the Group and should
be read in conjunction with the Vedanta
Sustainability report.
Section A: General Information About the Company
1
2
3
Corporate Identity Number (CIN) of the
Company
L13209MH1965PLC291394
Name of the Company
Vedanta Limited
Registered address
1st Floor, ‘C’ wing, Unit 103,
Corporate Avenue,
Atul Projects, Chakala, Andheri (East),
Mumbai – 400 093
http://www.vedantalimited.com/
4
Website
Vedanta Limited Integrated Report and Annual Accounts 2017-18
107
5
6
E-mail id
ir@vedanta.co.in
Financial Year reported
April 1, 2017 – March 31, 2018
1 Sector(s) that the Company is
engaged
in (industrial activity code-wise)
24201:Producer of Copper from ore, and
Other copper products and alloys.
24202: Producer of Aluminum from
alumina and by other methods and
products of aluminum and alloys.
07100: Mining of iron ores
24101: Producer of pig iron and
spiegeleisen in pigs, blocks or other
primary forms
35102: Electrical power generation by coal
based thermal power plants
Division 06 – Extraction of crude
petroleum and natural gas
Solar panel installed in comprehensive building, BALCO
Employees of Cairn Oil & Gas in community development
programme
2 List three key products/services that
the Company manufactures/provides
(as in balance sheet)
Copper, Aluminum, Iron Ore, Power, Crude
Oil & Natural gas
3 Total number of locations where
business activity is undertaken by the
Company
a) Number of International Locations a) 2– South Africa
b) Number of National Location
b) 6 (Goa, Tamil Nadu, Odisha, Rajasthan,
Andhra Pradesh, Gujarat)
4 Markets served by the Company
- Local/ State/National/International/
Our products are sold in both National and
International market.
Section B: Financial Details of the Company (based on Standalone Financials)
1
2
3
4
6
Paid up Capital (`)
Total Turnover (`)
Total profit after taxes (`)
Total Spending on Corporate Social
Responsibility (CSR) as percentage of
profit after tax (%)
List of activities in which expenditure in
4 above has been incurred:-
3,382 Crore
45,974 Crore
7,256 Crore
` 45.1 Crore; ~1%
Our CSR programmes cover the following
areas:
• Children’s Well-being & Education
• Healthcare
• Drinking Water & Sanitation
• Women’s Empowerment
• Skilling the Youth for New Opportunities
• Sports & Culture
• Agriculture & Animal Husbandry
• Community Infrastructure
• Environment Protection & Restoration
Integrated ReportFinancial StatementsManagement ReviewStatutory Reports 108
Vedanta Limited Integrated Report and Annual Accounts 2017-18
Business responsibility report continued
Employees at Mangala Processing Terminal, Barmer, Cairn Oil & Gas
Section C: Other Details
1. Details of Director/Directors responsible for BR
India is a key market for
Vedanta and one which we
believe has huge growth
potential. Sustained
economic growth will lead
to development, greater
prosperity and an overall
increase in per-capita
spending.
1
2
3
Yes
Does the Company have any Subsidiary
Company/ Companies?
Do the Subsidiary Company/Companies
participate in the BR Initiatives of the
parent company? If yes, then indicate
the number of such subsidiary
company(s)
Do any other entity/entities (e.g.
suppliers, distributors, etc.) that the
Company does business with participate
in the BR initiatives of the Company? If
yes, then indicate the percentage of
such entity/entities. [Less than 30%,
30-60%, More than 60%]
Vedanta Limited has 8 subsidiaries – HZL,
BALCO, MEL, Cairn India, Western
Clusters, Zinc International and CMT.
All these subsidiaries contribute towards
Business Responsibility initiatives however
their financials and non-financial numbers
are reported separately and are not part of
Vedanta Limited Business Responsibility
Report.
Our suppliers are not directly involved with
the ‘Responsible Business’ initiatives.
However, our contracts address areas like
HSE, Ethics, and Human Rights that our
suppliers are obliged to adhere to strictly.
Section D: Br Information
1. Details of Director/Directors responsible for BR
S. No. Particulars
Details
1
2
3
4
5
DIN Number (If applicable)
Name
Designation
Telephone Number
Email ID
AFVPK8712R
Mr. Kuldip K Kaura
Chief Executive Officer
+91 22 664 61000
ir@vedanta.co.in
Vedanta Limited Integrated Report and Annual Accounts 2017-18
109
2a.Principle-wise (as per NVGs) BR Policy/policies (Reply in Y/N)
Name of principles:
P1 –
Businesses should conduct and govern themselves with Ethics, Transparency and
Accountability
P2 –
Businesses should provide goods and services that are safe and contribute to
sustainability throughout their lifecycle
P3 –
Businesses should promote the well-being of all employees
P4 –
Businesses should respect the interests of, and be responsive towards all
stakeholders, especially those who are disadvantaged, vulnerable and marginalised
P5 –
Businesses should respect and promote human rights
P6 –
Businesses should respect, protect, and make efforts to restore the environment
P7 –
Businesses, when engaged in influencing public and regulatory policy, should do
so in a responsible manner
P8 –
Businesses should support inclusive growth and equitable development
P9 –
Businesses should engage with and provide value to their customers and
consumers in a responsible manner
S. No.
Questions
P1
P2
P3
P4
P5
P6
P7
P8
P9
1
2
3
4
5
6
7
8
9
Do you have a policy/policies for:
Has the policy been formulated in consultation with
the relevant stakeholders?
Does the policy conform to any national/
international standards? If yes, specify. (50 words)
Has the policy been approved by the Board?
Has it been signed by MD/Owner/CEO/
Appropriate Board Director?
Does the Company have a specified committee of
the Board/ Director/Official to oversee the
implementation of the policy?
Y
Y
Y
Y
Y
Y
Y
Y
Y
Y
Y
Y
Y
Y
Y
Y
Y
Y
Y
Y
Y
Y
Y
Y
Y
Y
Y
Y
Y
Y
Y
Y
Y
Y
Y
Y
Indicate the link for the policy to be viewed online? http://www.vedantalimited.com/investor-relations/corporate-governance.
Has the policy been formally communicated to all
relevant internal and external stakeholders?
Does the Company have in-house structure
to implement the policy/policies?
aspx
Y
Y
Does the Company have a grievance redressal
mechanism related to the policy/ policies to address
stakeholders’ grievances related to the policy/
policies?
Y
Y
Y
Y
Y
Y
Y
Y
Y
Y
Y
Y
Y
Y
Y
Y
Y
Y
Y
Y
Y
Y
Y
Y
Y
Has the Company carried out independent
audit/evaluation of the working of this policy by an
internal or external agency?
Each year, the Company undertakes an audit exercise, conducted by an
external agency to evaluate the workings of these policies. This audit is
known as the Vedanta Sustainability Assurance Protocol (VSAP) audit. The
VSAP audit is conducted across all of our significant sites.
The elements of all the above referred nine National Voluntary Guideline Principles are either enshrined in our
Business Code of Conduct and Ethics or we also have separate Sustainability policies for them. Our Business Code of Conduct and
Ethics is aligned to the UK Bribery Act.
All the sustainability policies of the Company are based on the Vedanta Sustainable Development Framework, which are aligned with
the IFC guidelines, ICMM, OECD and UNGC principles. Further both Business Code of Conduct and Ethics and Sustainability Policies
are available online for both internal and external stakeholders and have been approved by Board.
Integrated ReportFinancial StatementsManagement ReviewStatutory Reports 110
Vedanta Limited Integrated Report and Annual Accounts 2017-18
Business responsibility report continued
3. Governance related to BR
(a) Indicate the frequency with which
the Board of Directors, Committee
of the Board or CEO meet to assess
the BR performance of the
Company: Within 3 months, 3-6
months, Annually, More than 1 year)
The CSR committee of the board
meets every three months to assess
all aspects of the BR performance.
Additionally, the Sustainability
Committee of Vedanta Resources
meets every quarter and is
responsible on all aspects of
sustainable development across the
Group. Both committees are chaired
by Senior Independent Directors.
(b) Does the Company publish a BR or a
Sustainability Report? What is the
hyperlink for viewing this report?
How frequently it is published?
Sustainability and BRR performance
is detailed out in the Vedanta Limited
Annual Report. We also publish an
annual Sustainability Report based on
GRI Standards. Our sustainability
reports can be found at: http://www.
vedantaresources.com/
Section – E
Principle 1 - Conduct, Governance,
Ethics, Transparency and Accountability
At Vedanta we have an established Code of
Conduct and Business Ethics, Whistle
Blower Policy, and Supplier Code of
Conduct. These documents are
underpinned by a Vedanta Sustainable
Development Framework – policies,
management and technical standards. The
Code, policies and standards communicate
our zero tolerance approach to ethical
violations, and communicate our
commitment and requirement for legal
compliance and ethical good practice.
To ensure that all employees are well-
versed with our Code, a mandatory training
is provided for new recruits, and refresher
workshops on anti-corruption policies and
procedures are conducted for all the
employees at various levels.
1. Does the policy relating to ethics,
bribery and corruption cover only the
Company? Yes/No. Does it extend to
the Group/Joint Ventures/Suppliers/
Contractors/NGOs/Others?
Our Business Code of Conduct and
Ethics informs our approach to
sustainability and how we conduct
ourselves day to day – with each other,
our customers, our shareholders, our
competitors, our employees, our
neighbouring communities, our host
government and our suppliers and
contractors.
The Code applies to all directors,
officers and employees of the Company
and its subsidiaries.
Empowering women by providing them
skill based training
Children at Nand Ghar
The Code provides guidelines for our
business to be consistent with the
highest standards of business ethics and
is intended to assist all employees in
meeting the high standards of personal
and professional integrity that the Group
requires of them. It covers: Legal
Compliance (including Human Rights),
Health, Safety and Environment, Insider
Trading, Competition & Fair Dealing,
Conflicts of Interest, Gifts &
Entertainment, Protection & Use of
Company Assets, Information
Management, External Communications
and Corporate Social Responsibility.
2. How many stakeholder complaints
have been received in the past financial
year and what percentage was
satisfactorily resolved by the
management? If so, provide details
thereof, in about 50 words or so.
We have a well-designed mechanism for
all our stakeholders to communicate us
of any inappropriate behaviour. Our
exclusive Whistle-blower Policy, has
provisioned for a toll free number, email
id and a reporting portal, which both our
internal as well as external stakeholders
can make use of to report anonymously
to the management. During the reporting
period, a total of 38 whistle-blower cases
were reported. Of the reported cases, 10
were upheld and found correct, leading
to appropriate disciplinary actions
including warning, counselling , transfer
and separation, against our employees,
contract workforce and vendors. About
53 requests and correspondences
(including complaints) were received
from our shareholders and all of these
have been successfully resolved or
responded.
Principle 2 - Safety and Optimal
Resource Utilisation across Product
Lifecycle
As primary producers, we have limited
oversight and involvement in the full
lifecycle of base metal products, and the
way in which downstream value-added
products are produced and disposed.
Our operations have carried out significant
tests on the physical and chemical
characteristics of their products to ensure
we understand their properties and potential
impacts. Potential impacts on humans and
the environment are considered when
preparing MSDS updates. The MSDS
information is made readily available to our
customers enabling them to have a full,
detailed understanding of our products and
their composition. To ensure the safe
handling of our products during operations
and transportation, we use Material Safety
Data Sheets which include information on
physical and chemical aspects, health
effects, and storage and disposal.
With reference to our customers, the
marketing team maintains a forward-looking
approach in tandem with the global
commodity pricing trends and customer
demand assessment. Subsequently, the ISO
9001 guideline based feedback schedule is
followed for obtaining feedback on a
periodic basis. This feedback is accumulated
for sharing in management review based
approach on which response is generated.
Customer satisfaction survey is conducted
at periodic interval to understand customer
feedback. The feedback accumulated
through surveys is shared in management
review meetings based on which
appropriate response is generated to take
appropriate corrective actions and to
address the requirements of customers.
1. List up to 3 of your products or services
whose design has incorporated social
or environmental concerns, risks and/
or opportunities.
We make all efforts to ensure that we
produce, in a safe and environmental
friendly responsible manner. Over the
years, we have constantly improved our
recoveries, reduced hazardous waste
generation, recycling and reuse of waste,
improved specific water and energy
consumption and reduced our tailings to
optimally use available natural resources.
At Hindustan Zinc, we have introduced
the following programmes to ensure
that our final products are produced in a
sustainable manner:
• Resource Recovery: The Rampura
Agucha Mines having a high-feed
grade of ore, which results in some
mineral losses in tailings.
Vedanta Limited Integrated Report and Annual Accounts 2017-18
111
Reprocessing these mineral losses
from the tailing allows us to produce
Bulk Concentrate, which contains
Lead, Zinc & Silver. This bulk
concentrate is fed to the Fumer
Furnace/ ISF to extract Lead, Zinc &
Silver from it.
• Smelter effluent is treated in
conventional Effluent treatment plant
(ETP) to precipitate out heavy metals
and generate wastewater, which is
fed to RO process followed by
Multiple Effect Evaporator (MEE)
process to recover water values. An
initiative was taken to recover sodium
sulphate values from this MEE reject
and convert it into a usable chemical
for zinc plant.
At our Oil & Gas business, we produce
only processed Crude Oil and Natural
Gas. While there is a limitation in being
able to incorporate environmental and
social design concerns in the
composition of our products, we ensure
that best-in-class practices are followed
while designing and operating our
processing facilities and transportation
infrastructure. Some of these best
practices include:
• Recycling and reusing most of our
produced water, thereby significantly
reducing the amount of saline ground
water that we extract for our
operations.
• Recycling and reusing 100% of our
treated domestic sewage water for
horticulture purposes.
• Designing a crude oil transportation
pipeline that is thermally insulated
and heated with an electrical wire,
thereby preventing the use of large
amounts to energy to heat our waxy
crude oil and transport it to our
customers. Both these measures also
help minimise the generation of
greenhouse gas emissions that would
have resulted because of the
deployment of road transportation to
move our product from source to
destination and the use a large
energy infrastructure to heat the
pipeline.
• To our commitment for management
of waste in sustainable manner,
initiated first of its kind initiative for
disposal of hazardous waste through
Co-processing in Cement Kiln. The
co-processing of hazardous waste
(oil soaked waste with higher calorific
value) has led to reductions in our
GHG emission due to equivalent
replacement of coal in cement kiln.
Finally, in our power operations, we have
been able to utilise ~90% of the
generated fly ash using it as road
construction material and by selling
them to local brick kilns
2. For each such product, provide the
following details in respect of resource
use (energy, water, raw material etc.)
per unit of product(optional):
i. Reduction during sourcing/
production/ distribution achieved
since the previous year throughout
the value chain?
Being a natural resource company,
there is intensive need for resources
– water, energy and raw materials, in
our operations. We therefore
recognise the impact of our
operations on the environment and
adopt strategies to minimise our
resource use in all our processes. To
further channelise our endeavours,
we consciously track usage of these
resources – water, energy and raw
materials, throughout our operations.
We are also in continuous need for
fuel and electricity, which places us
amongst the energy intensive
Energy and Water Consumption
industries. Conforming to the global
challenge of combatting Climate
Change and Global Warming, we
strengthen our Carbon Management
processes and adopt efficient
technologies. Through our Carbon
Forum, we have developed our
exclusive Vedanta Carbon Policy and
Carbon Strategy. We expect to
decrease our GHG intensity by 16%
by 2020 from a 2012 baseline.
India is a key market for
Vedanta and one which we
believe has huge growth
potential. Sustained
economic growth will lead
to development, greater
prosperity and an overall
increase in per-capita
spending.
Specific Water Consumption
(Cubic Metre/ tonne of
Production)
Specific Energy Consumption
(Giga Joules/ tonne of
Production)
Company Name
FY2017-18
FY2016-17
FY2017-18
FY2016-17
Sterlite Copper
Sesa Value Added Business
Aluminium- Lanjigarh
Aluminium – Jharsuguda
Oil & Gas
6.57
2.12
2.22
0.47
1.13
6.63
1.79
2.03
0.49
1.38
8.33
0.88
8.15
54.18
1.87
8.35
0.84
7.87
53.9
2.13
Material Consumption (in Million MT)
Company Name
Raw Materials
Associated Raw materials
Semi-manufactured raw materials
(This table excludes Oil & Gas business)
ii. Reduction during usage by
consumers (energy, water) has been
achieved since the previous year?
As primary producers, we have
limited control of the full lifecycle and
the way in which products are
produced and disposed. We are
committed to ensure that the
beginning of the lifecycle adheres to
appropriate international commodity
trading standards but the reduction
and initiatives drive taken by our
consumer is not tracked.
3. Does the Company have procedures in
place for sustainable sourcing
(including transportation)?
i.
If yes, what percentage of your
inputs was sourced sustainably?
Materials consumption in
mn MT
FY2017-18
FY2016-17
7.89
1.96
9.50
1.89
Also, provide details thereof, in about
50 words or so.
Yes. At Vedanta, our business
partners and suppliers play a key role
in our performance footprint. To
retain a relationship with them in the
long-term, we have established a
dedicated accountability mechanism
through our Supplier Code of
Conduct, Supplier and Contractor
Management Policies, and Supplier
Screening Checklist that encourage
business partners and suppliers to
adopt principles and practices
comparable to our own. Regular
engagements with Suppliers/vendors
and contractors are also encouraged
to ensure conformance to the
policies.
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Vedanta Limited Integrated Report and Annual Accounts 2017-18
Business responsibility report continued
Besides the environmental impacts
during sourcing, transportation
activities have also been assessed
and adequate measures are taken to
prevent dust emission during transit.
Ore transport from the mines to the
loading point is carried out through
trucks covered with tarpaulin to
ensure no spillage and dust
generation. At material handling
areas for coal and bauxite, dry fog
systems are installed with proper
water sprinklers, while bag filters
installed are at alumina handling
division.
4. Has the Company taken any steps to
procure goods and services from local
& small producers, including
communities surrounding their place of
work? If yes, what steps have been
taken to improve their capacity and
capability of local and small vendors?
In view of retaining quality, the
Company sources its major inputs from
OEMs and large national and
international manufacturers. Goods and
services are procured by businesses
locally is of consumable nature where
feasible.
5. Does the Company have a mechanism
to recycle products and waste? If yes
what is the percentage of recycling of
products and waste (separately as <5%,
5-10%, >10%). Also, provide details
thereof, in about 50 words or so.
Yes, we have an exclusive Resource use
and Waste Management Technical
Standard and supporting guidance
notes, which directs us to mitigate the
environmental impacts of our products
and process. Due to our recycling
efforts, the waste generated in our
various operational units is innovatively
converted to resource material and we
use these new products to further
extend the supply chain. In total, 93% of
high volume and low potential waste
generated was recycled / reused into
gainful applications.
At Vedanta Limited- Sterlite Copper,
Copper Slag – a by-product from our
pyro metallurgical smelting operations is
used in road construction, land levelling
and in the abrasive and cement
industries. During 2017-18, 107% of the
slag was successfully used rather than
being deposited in landfill. Gypsum,
from the same operation is also utilised
in fertiliser industry and brick
manufacturing. At Lanjigarh and
Jhasuguda, 111% of fly ash from our
operations is recycled.
At our Oil and Gas business all the by
products resulting from our operations
are recycled. The well-fluid from the
sub-surface reservoir comprises of
Community Medical Centre, Amona, Goa
crude oil, water (produced water) and
natural gas (associated gas).The
produced water is the most significant
liquid waste from Cairn’s operations. It is
treated and recycled back into the
hydrocarbon reservoir to maintain the
reservoir pressure.
Principle 3: Employee Well-being
Our employees are our key assets and our
growth and success are attributable to
them. Our people strategy is founded on
this belief and is designed to recruit,
develop and retain the talented workforce
that run our businesses.
We are committed to providing our
employees with a safe and healthy work
environment. Through a high degree of
engagement and empowerment we enable
them to realise their full potential, creating a
high performance work culture.
We continue to attract talent from top
engineering institutes, business schools and
graduate colleges. This is an important step
in sourcing a strong talent pipeline for the
future. We also focus on effectively utilising
and grooming talent by appropriately
rotating them across businesses for
experience in new roles and to prepare
them to take up various key positions in the
future.
1
2
Please indicate the total number of
employees
Please indicate the total number of
employees hired on temporary/
contractual/casual basis
3 Please indicate the number of
permanent women employees
• Full time Employees: 9,430
• Contract: 22,800
• Total: 32,230
• Full time Employees Hired: 2,825
• Full time Women Employees: 1,055
4 Please indicate the Number of
• NIL
permanent employees with disabilities
5 Do you have an employee association
that is recognised by management?
• Yes
6 What percentage of your permanent
• We have recognised employee association
employees is members of this
recognised employee association?
at Sesa Iron business only. 69%, the
employees are a part of association..
7
Please indicate the Number of
complaints relating to child labour,
forced labour, involuntary labour, sexual
harassment in the last financial year and
pending, as on the end of the financial
year.
8 What number of your under mentioned
employees were given safety & skill
up-gradation training in the last year?
• Child labour / forced labour/involuntary
labour – Nil
• Sexual harassment cases – 11; All cases are
closed.
The total safety & skills-up gradation training
given to employees, contract workers and
third party visitors is given as below:
• Employees: 244,287 hours
• Contract employees - 257,495 hours
• Third party: 8,741 hours
Vedanta Limited Integrated Report and Annual Accounts 2017-18
113
Principle 4: Engaging Stakeholders -
Sustaining Value
Ours is an inclusive model where the opinion
of every stakeholder matters to us. We
believe in transparent dialogue where
anyone should be able to voice their
opinions; that they should be listened to; and
that they can expect a considered and
constructive response. The approach we
take to connect with different stakeholders
is guided by our Stakeholder Engagement
Technical Standard. All of our operations run
their own stakeholder identification and
analysis process. As part of this, they identify
potential stakeholder representatives who
act as a channel for the receipt and
dissemination of information.
In addition, our sites identify individuals and
groups who may be additionally affected by
operations due to their disadvantaged or
otherwise vulnerable status. Ways in which
stakeholders may be affected and the
extent of both actual and perceived
impacts are identified and recorded against
each group. Using the information
gathered, we then determine with the
stakeholders themselves the level of
communication and consultation that is
appropriate. From this, Stakeholder
Engagement Plans (SEPs) are developed
and continuously updated as circumstances
develop on-site.
1. Has the Company mapped its internal
and external stakeholders? Yes/No
Across the country, the Self Help Group
movement has successfully and
systematically empowered marginalised
and grass-root level women through
awareness raising, capacity building,
economic empowerment and solidarity.
At Vedanta too, we are working with
women’s Self Help Groups across
several of our locations. Collectively,
across the group we have reached over
28,000 women through SHG &
skill-development initiatives. Of these,
more than1,900 women have gone on
to set up their own enterprises. Key
initiatives across some of our group
companies include: Project Sakhi
(Sterlite Copper), Project Shakti
(Lanjigarh), and Subhalaxmi Cooperative
Society (Jharsuguda)
Principle 5: Promoting Human Rights
Our Human Rights Policy is aligned to the
UN Guiding Principles on business and
human rights and includes strict prohibition
of child or forced labour – either directly or
through contract labour. Additionally, our
Code of Business Conduct and Ethics
(Code) commits us to comply with all
relevant national laws and regulations,
underpinning our approach to protecting
the fundamental rights of all our direct and
indirect employees. Human rights training is
an integral part of our Sustainable
Development Framework implementation
and is covered through training on Code of
Business Conduct and Ethics.
Yes. The Company has conducted a
1. Does the policy of the Company on
mapping exercise, from which we have
classified our stakeholders into the
following categories (Employees,
Shareholders, Lenders, Host
Governments, Communities (including
vulnerable groups such as indigenous
communities, women and persons with
disabilities), Civil society (including
Non-Governmental Organisations) and
Industry.
2. Out of the above, has the Company
identified the disadvantaged, vulnerable
& marginalised stakeholders?
Identification of the disadvantaged,
vulnerable and marginalised stakeholders
is an on-going process. However, we
have emphasis on development of
women in our nearby communities. We
have initiated several programmes for
women’s education, skill development
and providing entrepreneurial
opportunities for women.
3. Are there any special initiatives taken by
the Company to engage with the
disadvantaged, vulnerable and
marginalised stakeholders. If so, provide
details thereof, in about 50 words or so.
Yes. We engage with the disadvantaged,
vulnerable and marginalised
stakeholders through our CSR projects.
human rights cover only the Company
or extend to the Group/Joint Ventures/
Suppliers/Contractors/NGOs/Others?
Human Rights policy is aligned to the
UN Guiding Principles on Business and
Human Rights and is a mandate for all of
its group company’s employee’s. Further
it also encompasses all its suppliers,
contractors and NGOs etc. We have
rolled out the implementation of UK
Modern Slavery Act, 2015 across our
suppliers and vendors in order to
mitigate risk of slavery (subset of Human
Rights) across the supply chain.
2. How many stakeholder complaints have
been received in the past financial year
and what percent was satisfactorily
resolved by the management?
No complaints with respect to Human
Rights were reported.
Principle 6: Nurturing the Environment
We are conscious of negative
environmental impacts, from gas and
particulate emissions and hazardous waste
to waste water generation and landscape
modification. To this end, we manage our
footprint in the most stringent global
standards throughout the project lifecycle.
Our businesses have made
significant progress on our
GHG reduction commitment to
date. Companies such as
Hindustan Zinc and Cairn Oil &
Gas have committed to
increase their investment in
solar power.
Our Sustainable Development Framework,
includes a HSE Policy, Environmental
Management Standard, and a number of
topic specific policies and standards
addressing key environmental aspects e.g.
biodiversity, water, energy and carbon,
waste and resources. All our operating sites
are ISO 14001 certified.
ISO 14001 system implementation helps us
to regularly review the environmental
aspects and potential impact of our
operation, contractors and suppliers
(present at our site), and setting
environment target, monitoring and
communicating performance, conduct
internal audit and develop corrective action
plan, capability development and
management review.
1. Does the policy related to Principle 6
cover only the Company or extends to
the Group/Joint Ventures/Suppliers/
Contractors/NGOs/others.
All our sustainability policies (HSE,
Biodiversity, Energy & Carbon and Water
Management) are applicable to Vedanta
subsidiaries, operations and managed
sites, including new acquisitions,
corporate offices and research facilities
and to all new and existing employees
and contractor employees.
2. Does the Company have strategies/
initiatives to address global
environmental issues such as climate
change, global warming, etc? Y/N. If yes,
please give hyperlink for webpage etc.
As a natural resources industry, we have
a profound responsibility to address the
planet’s undisputed warming and adapt
to the future impacts.
At Vedanta, we understand the
implications of energy consumption,
both in terms of its cost to our
operations and the price environment
pays for it. We are committed to invest
in newer technologies and processes to
enhance our energy efficiency.
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Business responsibility report continued
11 of our operational sites are ISO 50001
certified.
Our energy management approach
hinges on a two-pronged strategy:
improving energy and process
efficiency, while diversifying our energy
portfolio at all locations. We already
have our Sustainable Development
Framework in place, which includes an
Energy and Carbon Policy, and an
Energy and Carbon Management
Standard.
The energy and carbon scenario is a
continuously emerging one. We are
aware that regulatory changes,
introduction of carbon taxes and the
evolving behaviour of the
environmentally aware consumer are
some of the factors that can affect our
business operations - positively as well
as detrimentally.
Vedanta continues to remain committed
to decrease our carbon footprint. We
expect to reduce our GHG intensity by
16% from a 2012 baseline by 2020. The
company’s Carbon Forum (a Chief
Operating Officer led body), has been
constituted to strategize about and
provide governance on the risk to
business from climate change.
Our businesses have made significant
progress on our GHG reduction
commitment. Companies like Hindustan
Zinc and Cairn Oil & Gas business have
committed to increase their investment
in solar power, while other businesses
have made significant improvements in
their process efficiencies, thereby
reducing their GHG emissions. As of
March 31, 2018, we had been able to
achieve a 14% reduction in our GHG
intensity from our baseline number. This
is good news and we are confident of
achieving our target by 2020.
3. Does the Company have any project
related to Clean Development
Mechanism? If so, provide details
thereof, in about 50 words or so. Also,
if Yes, whether any environmental
compliance report is filed?
Currently CDM mechanism, as defined
under Kyoto Protocol, is no more
operational therefore CER monitoring
and verification is not relevant in today’s
context. However in view of COP-21
ratification and INDC commitments of
India we are working on carbon policy
and carbon strategy. A dedicated Carbon
Forum with representation from group
businesses is working on carbon
emission reduction and energy efficiency
projects at a group level.
environment. Being a major contributor in
the social and economic development of
the communities in which we operate, we
advocate policies that promote
sustainability and value creation for all
stakeholders.
Our engagement with host governments is
multifaceted and incorporates all aspects
of our business, from resource licencing
rounds, contributions to debates around
the mining and resources industry and
development planning. We look to leverage
and contribute our understanding of
current business dynamics to anticipate the
future needs of our stakeholders, and
actively seek out measures that further
interest the sector. Our Senior Leadership
Team regularly contributes and
communicates with their experience,
perspectives, outlook and good practice
expectations for the sector and sustainable
development.
We have clearly established the good
practice objectives that guide our
collaboration and approach to policy
advocacy. Those objectives include:
building enduring and collaborative
relationships with government to support
shaping public policies for growth and
sustainable development of natural
resources, in particular for those in which
we operate – iron-ore, copper, oil & gas,
aluminium & commercial power.
1. Is your company a member of any trade
and chamber or association? If Yes,
Name only those major ones that your
business deals with:
We are a member of the TERI, WBCSD,
CII, IBBI, ASSOCHAM and others with
whom we are working on various
sustainable development programmes/
frameworks. Some of our business and
subsidiary companies are members of
trade and industry bodies like the
Federation of Indian Mining Industries,
Confederation of Indian Industries,
Indian Institute of Metal, Federation of
Indian Chambers of Commerce &
Industry and The Energy Resources
Institute, India, where they actively
participate in their Management
Committees.
2. Have you advocated/ lobbied through
above associations for the advancement
or improvement of public good? Yes/
No; if yes specify the broad areas (drop
box: Governance and Administration,
Economic Reforms, Inclusive
Development Policies, Energy security,
Water, Food Security, Sustainable
Business Principles, Others)
Vedanta Limited believes in promoting
public policies and regulatory
framework that serve the common good
of the society.
Livelihood Promotion through Vedanta-promoted
Subhalaxmi Women Cooperative Society, Jharsuguda
4. Has the Company undertaken any
other initiatives on - clean technology,
energy efficiency, renewable energy,
etc. Y/N. If yes, please give hyperlink
for web page etc.
In addition to optimising our
consumption, we are also looking at
diversifying our energy portfolio. Mindful
of the long-term impact of traditional
grid-energy, we are evaluating renewable
energies like solar and wind.
At our Oil & Gas exploration and
production company, we have
implemented the first plant based on this
pioneering initiative and India’s largest
solar operated community based RO
Plant, has been installed at Sewniwala in
Baytu Tehsil. The plant has MNRE
certified panels and generating a power
of 5KW and storing the same in
batteries, which can be used for 8-10
hrs of plant operations. The water from
this plant will be sold at 25 paise per litre
to the local community.
5. Are the Emissions/Waste generated by
the Company within the permissible
limits given by CPCB/SPCB for the
financial year being reported?
Yes, emissions/waste generated by the
Company is monitored on monthly basis
and are within the limits prescribed by
CPCB/SPCB. All sites are regularly
monitored for emission. Ambient air
quality including noise is monitored
monthly and meets the National
Ambient Air Quality standards, Nov
2009.
6. Number of show cause/ legal notices
received from CPCB/SPCB which are
pending (i.e. not resolved to
satisfaction) as on end of Financial year.
3 show cause/legal notices were issued
to the group companies all of these
show cause are resolved.
Principle 7: Responsible Policy Advocacy
At Vedanta, we believe we should
proactively promote the development,
public policies and regulatory frameworks
that support a fair and competitive
Vedanta Limited Integrated Report and Annual Accounts 2017-18
115
More specifically, in India, we believe
the phenomenal geology, skilled
workforce, simple and transparent
progressive policies create significant
opportunities for poverty eradication
and employment creation, should
relevant stakeholders be willing to
explore the full potential of the natural
resources sector and open up the sector
to attract investment. We are therefore
working to directly and indirectly
support government authorities to
catalyse sustainable development of the
sector. For example, in recent years, we
have worked with the national
authorities on various campaigns like
“Make In India”, Resumption of Mining in
Goa, Reduction of Iron Ore and Export
duty among others.
Principle 8: Support Inclusive
Development
Our philosophy is that wherever we
operate we add value to the local
stakeholders. This may be through
employment, trade development,
enhanced infrastructure, or greater
well-being and empowerment.
Our community investment strategy
focuses on health, education, livelihoods
and environment. In 2017-18, we invested
INR 45.19 crore to supporting
neighbourhood communities through
various social development initiatives.
Education, skilling, women’s
empowerment, water, health and
agriculture/livestock continue to be our
priority areas.
Consistent with our Sustainable
Development Model of drawing on global
best practice, our community investment
approach is being aligned to the UN
Sustainable Development Goals. We firmly
believe in the power of partnerships and
follow a Public-Private-People-Partnership
(4P’s) model. This is in keeping with our
commitment towards co-creation, inclusion
and community ownership of social
initiatives
1. Does the Company have specified
programmes/initiatives/projects in
pursuit of the policy related to Principle
8? If yes details thereof.
As a responsible corporate citizen, the
Company focuses on ethical and
transparent business practices, with
inclusive community development lying
at the core of its social initiatives. The
focus of our community investment
initiatives is on poverty alleviation
programmes, especially integrated
development, which impacts the overall
socio-economic growth and
empowerment of people, in keeping
with the national and international
development agendas.
India is a key market for
Vedanta and one which we
believe has huge growth
potential. Sustained
economic growth will lead
to development, greater
prosperity and an overall
increase in per-capita
spending.
Agriculture development under Project Samadhan, Zinc India
Children’s Well-being & Education
Our focus is on building capacities of
the next generation to create a long-
term sustainable impact. Educational
programmes include wide range of
activities covering preschool to higher
education. The total outreach of all our
education projects is about 2.1 lakh
children. “Khushi” is one of the largest
collaborative projects with the
government, which aims to strengthen
the functioning of 3,089 Anganwadis
across 5 districts of Rajasthan. This
programme alone impacts nearly
64,000 children. Other programmes in
the education space focus on science,
math and English learning in secondary
schools.
Women’s Empowerment
At Vedanta, we believe that women’s
empowerment is the most fundamental
building block of a strong society. The
Subhalaxmi Cooperative Society was
started in 2008 with this objective.
What started with 10 women, is today
among the largest women’s cooperative
in western Odisha with 3,324 members
and 280 SHGs (across 64 villages of 3
blocks of Jharsuguda). It started with
INR 1,000 as working capital and today
it has an earmarked corpus fund of more
than INR 22.3 million with an average
net profit of INR 0.6-0.7 million/annum.
Around INR 49.2 million has been
distributed to women entrepreneurs for
setting up of micro enterprises in FY’18.
Integrated ReportFinancial StatementsManagement ReviewStatutory Reports 116
Vedanta Limited Integrated Report and Annual Accounts 2017-18
Business responsibility report continued
Our businesses have made significant progress
on our GHG reduction commitment to date.
Companies such as Hindustan Zinc and Cairn
Oil & Gas have committed to increase their
investment in solar power.
It has now set up a special fund called
“UDYAMI FUND” to support emerging &
aspiring microenterprises in Jharsuguda.
We work with almost 28,000 women
who are members of such Self-Help
Groups (SHGs), and during the year,
nearly 1,900 women set up/expanded
their own enterprises.
Drinking Water and Sanitation
We focus on drinking water and
sanitation considering both as basic
requirement of healthy life. Jeevan
Amrit Project is among the largest
drinking water programmes undertaken
by any company in Rajasthan. Cairn’s
Memorandum of Understanding (MoU)
with the Government of Rajasthan is
about setting up 330 community
Reverse Osmosis (RO) water plants in
the water stressed district of Barmer in
Rajasthan. As part of the MoU, 115 RO
plants have already been installed.
During the year, these plants dispensed
over 4 million litres of clean water,
benefitting nearly 100,000 people.
Agriculture and Animal Husbandry
Agriculture is the backbone of the
economy in all of our surrounding
villages as we mainly operate in remote,
rural locations. Project Unnati of Cairn
was set up to support the farmers of
Barmer in enhancing incomes through
sustainable farming. As part of an MoU
with Central Arid Zone Research
Institute (CAZRI), Jodhpur – a unit of
Indian Council for Agriculture Research
(ICAR), 700 framers were trained in
improved farming techniques. This was
supported with the installation of drips
for 60,000 horticulture plants in 120
acres. As a result, this year, the farmers
in Barmer have harvested over 60
tonnes of Ber, Gunda, and Anar.
Skilling the Youth
Our skills programmes are focused on
helping young people learn a trade and
gain “hands on” experience and
subsequently find a job. In FY2017-18,
3500+ youths acquired diverse skills
and were placed.
Sports
Sports is the most powerful means to
connect with the youth. Our Sesa
Football Academy (an IOB CSR
initiative) was established in 1999 on a
reclaimed mine at Sanquelim, with a
vision to become a premier academy in
India. Over the years, Sesa Football
Academy has directly trained around
123 trainees at the residential academies
and impacted over 500 youth players.
Many of them are today pursuing their
football career with major clubs. Seven
alumni of SFA have played for the Indian
national team and eight are playing in
the elite Indian Super League 2017-18
season. We have now expanded the
football programmes to Rajasthan, with
Hindustan Zinc setting up a world-class
technology based Football Academy.
This Academy will use science and
technology as a differentiator in its
approach, and is also setting up a
network of community feeder
academies. 56 such community
academies are currently active,
grooming close to 2000 under-14
talented players.
2. Are the programmes/projects
undertaken through in-house team/
own foundation/external NGO/
government structures/any other
organisation?
We implement our programmes through
all the following modes – directly
through our Corporate Social
Responsibility team and in partnership
with government and civil society
organisations. We also actively
encourage our own employees to
contribute towards these social
initiatives.
3. Have you done any impact assessment
of your initiative?
Yes, we assess the impact created by
our projects by engaging external
agencies at periodic intervals.
4. What is your company’s direct
contribution to community development
projects- Amount in INR and the details
of the projects undertaken.
The total amount spent on all CSR
activities and projects during the
FY2017-18 was ` 45.19 crore. The major
thrust areas for our programmes are –
a. Children’s Well-being & Education
b. Women’s Empowerment
c. Health Programmes for the
Community
d. Drinking Water & Sanitation
e. Agriculture & Animal Husbandry
f. Skilling the Youth for new
opportunities
g. Environment Protection &
Restoration
h. Sports & Culture
i. Development of Community
Infrastructure
j. Participate in programmes of national
importance including but not limited
to disaster mitigation, rescue, relief
and rehabilitation
5. Have you taken steps to ensure that this
community development initiative is
successfully adopted by the community?
Please explain in 50 words, or so.
Most of our programmes emerge from a
community needs assessment and are
delivered in close partnership with them.
Several of our initiatives, such as
women’s self-help groups, are now
completely run and managed by the
community members themselves. Our
role is chiefly that of a catalyst in the
whole process.
Principle 9: Providing Customer Value
Our growth and success are directly linked
to and co-dependent on the success of our
customers, who are predominantly large
industrial downstream producers with
whom we deal directly. We understand that
meeting customer expectations is crucial to
the growth of our business, particularly
when we have such a significant presence
in the market. We are therefore committed
to ensuring that our raw materials meet the
required London Metal Exchange (LME)
standards for entering the commodity
market.
Vedanta Limited Integrated Report and Annual Accounts 2017-18
117
India is a key market for
Vedanta and one which we
believe has huge growth
potential. Sustained
economic growth will lead
to development, greater
prosperity and an overall
increase in per-capita
spending.
Our subsidiaries have defined systems and
practices in place to understand and meet
customer expectations. We constantly
engage with customers through our
marketing and customer service personnel.
All our activities are focused on ensuring
our customers’ needs are met in an
appropriate and timely manner.
Honouring our contract obligations on
price, quality and quantity is crucial to
building the business’ credibility with
customers. We sell our commodities on
price circulars that are linked to the
commodity index, ensuring a clear and
transparent process. Alongside the timely
delivery of our products, their quality must
be assured and in compliance with agreed
technical standards, with the certification
of all deliveries vital for ensuring that
customers trust the product and that its
quality has been verified. Assistance is also
provided to customers both by our internal
experts and by international consultant
visits, together with workshops and
seminars on technical issues and product
development for first use.
1. What percentage of customer
complaints/consumer cases are
pending as on the end of financial year.
NIL complaints pending at the end of
FY2017-18.
Exchange). LME standards signify highest
product quality, uniform physical
characteristics and consistency of
products. Our products meet all
necessary and benchmark national and
global regulations, standards and
guidelines. This re-emphasizes our
capability and commitment to meet
world-class standards. For continuous
quality improvement, Quality
Management Systems are in place,
which comply with the ISO 9001:2008
standard requirements.
3. Is there any case filed by any
stakeholder against the Company
regarding unfair trade practices,
irresponsible advertising and/or
anti-competitive behaviour during the
last five years and pending as on end of
financial year. If so, provide details
thereof, in about 50 words or so
NIL
4. Did your company carry out any
consumer survey/ consumer
satisfaction trends?
Feedback is a continuous process at our
operations and we leverage feedback for
continual improvement in product and
service quality, for benchmarking
ourselves with industry standards and
identifying scope and future
opportunities to increase customer value.
2. Does the Company display product
Various approaches are used for
information on the product label, over
and above what is mandated as per
local laws? Yes/No/N.A. /Remarks
(additional information)
Yes. Our copper cathodes, aluminium are
all internationally known brands
registered with the LME (London Metal
feedback process which include frequent
meets, online feedback system and
customers surveys. A robust customer
complaint tracking system ensures quick
resolution and undisrupted operations for
customers. As such no major concerns
were raised by any of our customer
Integrated ReportFinancial StatementsManagement ReviewStatutory Reports 118
Vedanta Limited Integrated Report and Annual Accounts 2017-18
Directors’ Report
Dear Shareholders,
The Board of Directors presents the Company’s Annual Report,
together with the audited financial statements for the financial year
ended March 31, 2018.
During the year, your company focused on generating cash flows
across all businesses, deleveraging the balance sheet and delivering
superior shareholder return through disciplined capital allocation.
The profitability improvement has been driven by production
ramp-up and complemented by the strong commodity market.
There was record production at Zinc India, aluminium and copper
business.
We expect FY 2019 to be another productive year for your
company with ramp-ups across Zinc, Oil & Gas and Aluminium
businesses continuing. The next phase of growth projects
announced during the year, set a strong base for the future. With a
strong balance sheet and a clear capital allocation strategy, we are
confident about Vedanta’s prospects for the coming years and are
optimistic about the long-term outlook for the global resources
sector.
Financial Highlights for FY 2017-18
• Revenue increased by 22% to ` 92,922 crore (FY 2017: ` 76,168
crore) driven by firm commodity prices and volume ramp up
• EBITDA increased by 19% to ` 25,470 crore (FY 2017: EBITDA:
` 21,437 crore)
• Robust EBITDA margin1 of 36% (FY 2017 39%)
• Free cash flow (FCF) post capex for the year at ` 7,870 crore
(FY 2017: ` 13,312 crore)
• Gross debt at ` 58,159 crore, reduced by ` 13,410 crore during
the last 12 months (including repayment of ` 7,908 crore of
temporary borrowing at Zinc India offset by issuance of
preference shares)
• Net debt at ` 21,958 crore (FY 2017: ` 8,099 crore) higher on
account of special dividends paid and acquisition of AvanStrate
Inc. (ASI)
• Attributable PAT (before exceptional items and DDT) increased
by 10 % to ` 8,026 crore (FY 2017: ` 7,323 crore)
• Crisil upgraded the Company’s Rating from AA/Stable to AA/
Positive
• Contribution of Exchequer of ` 33,000 crore including
dividends.
• Strong financial position with cash and liquid investments of
` 36,201 crore
• Record interim dividend of ` 7,881 billion by Vedanta Ltd in
March 2018
Financial Performance Summary
Your Company’s financial highlights in accordance with IND AS are provided below:
Particulars
Net Sales/Income from Operations
Profit from operations before other income, finance costs and exceptional items
Other Income
Finance costs
Net exceptional items gain/(loss)
Profit /(loss) before tax
Tax expense/(credit)
Net Profit/(loss) after tax
Share of profit/(loss) of associate
Minority Interest
Net Profit after taxes, minority interest and consolidated share in profit/(loss) of associate
and before other comprehensive income
Paid-up equity share capital (Face value of `1 each)
Reserves excluding revaluation reserves as per balance sheet
Basic EPS after exceptional items
Transferred to General Reserve
Interim Dividend
Standalone
(` in Crore)
Consolidated
Year Ended
March 31,
2018
Year Ended
March 31,
2017
Year Ended
March 31,
2018
Year Ended
March 31,
2017
45,974
3,851
3,866
3,900
5,407
9,224
1,968
7,256
NA
NA
7,256
372
78,941
19.47
Nil
7,881
38,540
3,665
9,705
3,896
1,324
10,798
(271)
11,069
NA
NA
11,069
297
79,396
29.04
NIL
7,099
92,923
18,881
3,574
5,783
2,897
19,569
5,877
13,692
0
3,350
10,342
372
63,136
28.3
NIL
7,881
76,171
15,040
4,581
5,855
(114)
13,652
2,333
11,316
(3)
4,358
6,958
297
60,128
23.47
NIL
7,099
Consolidated Financial Statement
The Company announces its Consolidated Financial Results on a
quarterly basis. As required under the Securities and Exchange
Board of India (Listing Obligations and Disclosure Requirements)
Regulations 2015 (SEBI Listing Regulations), the Consolidated
Financial Statement of the Company and its subsidiaries, prepared
in accordance with Ind AS 110 issued by the Institute of Chartered
Accountants of India, form part of the Annual Report and are
reflected in the Consolidated Financial Statement of the Company.
Pursuant to Section 129(3) of the Companies Act 2013 (the Act), a
statement containing the salient features of the financial statement
of the subsidiary companies is attached to the financial statement
in Form AOC-1.
Pursuant to the provisions of Section 136 of the Act, the Standalone
and Consolidated financial statements of the Company along with
relevant notes and separate audited accounts of subsidiaries are
available on the website of the Company. A copy of the financial
statements of the Company and of the subsidiary companies shall
be made available upon request by any member of the Company.
Additionally these financial statements shall be available for
inspection by members at the Registered Office of the Company.
Operational Highlights for FY 2017-18
In line with Vedanta’s stated strategic priority of production growth
through continued ramp up at Aluminium and Zinc India business,
we delivered strong operational performance driven by record
production at Aluminium (exit capacity c.2.0 MT), Zinc India and
Copper India. During the year, we also announced next phase of
growth projects in Oil & Gas and Copper India and continued to
work on the Gamsberg project for commencement of production
in mid CY2018.
Vedanta Limited Integrated Report and Annual Accounts 2017-18
119
Some of the key operational highlights for FY 2018 are:
• Record annual production at Zinc India and Aluminium business
• Oil & Gas: Mar 18 Exit run rate of 200,000 boepd; Growth
projects on track to enable significant volume growth in FY 19
• Zinc International : Gamsberg project on track with production
the steel assets up for auction. The companies under consideration
own state of the art and technologically advanced steel plants.
These acquisitions will provide your Company ready operating
capacities instead of investing time and effort in a greenfield
project.
expected by mid CY 2018
• Aluminum: Record annual production at 1.7mt; with an exit run
rate of c.2.0 mtpa
• Iron Ore: Increase in company-wise mining cap allocation in
Karnataka expected in Q1 FY2019
• Power: 1,980 MW Talwandi Sabo Power Plant operating at 93%
availability in Q4FY 18
Capital Expenditure
We continue to take a disciplined approach to growth through
prudent capital allocation. During the year FY 2018, we
commenced the next phase of growth in our Oil & Gas business
with a near term target of about 300kboepd. With positive
fundamentals in place, we have also commenced the expansion of
the 400kt copper smelter at Tuticorin in Southern India to 800kt.
Completion of this project will place Tuticorin as one of the largest
single-location copper smelting complexes in the world. Both these
projects are having robust returns. The Zinc projects both at Zinc
India & Zinc International are progressing well. We are geared up
for commencement of production at the Gamsberg project from
Mid Calendar Year 2018 (CY 2018).
During FY 2018, we have spent ` 5,306 Cr on Growth projects and
it is likely to be higher around ` 9,700 Cr in FY 2019 primarily driven
by higher capex at Oil & Gas.
Dividend
The Board of Directors approved the payment of 1st interim
dividend @2120% of INR 21.20 per equity share of ` 1 each on
March 13, 2018. In view of the record interim dividend declared in
March, 2018, no final dividend is recommended.
The Board of Directors further approved a Dividend @7.5% p.a. on
the Redeemable Non-Convertible Preference Shares (Preference
Shares) of face value ` 10/- each as per the terms of issuance.
These preference shares were issued and allotted on April 28, 2017
pursuant to the Scheme of Arrangement between shareholders and
creditors of Vedanta Limited and Cairn India Limited (“Scheme”)
and the dividend was payable uptil the end of the Financial Year
March 31, 2018.
Transfer to General Reserve
The Company proposes NIL transfer to General Reserve out of its
total profit of ` 7256 Crore for the financial year.
Share Capital
The Authorised Share Capital of the Company is ` 74,12,01,00,000
divided into 44,020,100,000 (Four Thousand Four Hundred and
Two Crores and One Lakh only) number of equity shares of
` 1/- (Rupee One) each and 3,010,000,000 (Three Hundred and
One Crore) Preference Shares of ` 10/- (Rupees Ten) each.
Bidding under Insolvency and Bankruptcy Code 2016
Under the Insolvency and Bankruptcy Code 2016, the Reserve Bank
of India (RBI) mandated banks to refer their defaulting customers/
NPA accounts to National Company Law Tribunal (NCLT). The
companies referred to the NCLT for initiating insolvency
proceedings, included few steel companies with significant
production capacity.
Whilst globally, following two decades of significant steel expansion
in China, global steel capacity is high, India remains a significant
exception to this. Given India’s size of economy, population and
existing steel capacity it is expected that the steel sector in India
will grow rapidly over the coming few years. In view of this and the
synergies from its Iron ore business, your Company bid for two of
On March 31, 2018, your Company was declared as the successful
resolution applicant by the Committee of Creditors for Electrosteel
Steels Limited (“ESL”) under the Corporate Insolvency Resolution
Process of the Bankruptcy Code, and received a letter of intent
from the Committee of Creditors. The Company has accepted the
terms of the letter of intent and the closing of the transaction will be
subject to compliance with applicable regulatory requirements and
the final terms approved by the NCLT.
The Company’s other bid is for a steel asset in Gujarat, India. The
auction process and evaluation of bids for this asset is on-going.
Credit Rating
Your Company is rated by CRISIL Limited (CRISIL) and India
Ratings and Research Private Limited (India Rating) for its banking
facilities in line with Basel II norms.
During the year, CRISIL changed the outlook on Company’s
long-term bank facilities and its Non-Convertible Debentures
(NCDs) programme to CRISIL AA / Positive Outlook from CRISIL
AA / Stable. The Company has the highest short-term rating on its
working capital and Commercial Paper programme at CRISIL A1+.
The agency expects that the structural improvement in cost
structure along with continued focus on deleveraging shall help
improve the credit profile of your Company. The agency shall be
guided by extent of gross debt and structural improvements in
business driving the lower leverage levels for further positive rating
action.
India Ratings changed the Company’s ratings on long-term scale to
IND AA / Positive from IND AA / Negative during the year and
short-term rating are maintained at IND A1+. The agency is
monitoring the improvement in leverage along with ramp-up of
operations to upgrade the ratings while resolving the outlook.
Sustainability
Your Company’s Sustainable Development is integral to the core
business strategy. We continue to be a transparent and responsible
corporate citizen; committed to a ‘social license to operate’ and
partner with communities, local governments and academic
institutions to help catalyse socio-economic development in the
areas where we operate.
The Company reaffirms its Core Values of Trust, Entrepreneurship,
Innovation, Excellence, Integrity, Respect and Care, which are the
basis of Company’s Sustainable Development Model. The model
continues to be centered on the four strategic pillars: Responsible
Stewardship; Building Strong Relationships; Adding and Sharing
Value; and Strategic Communications.
With the Sustainable Development model, we built the Sustainable
Development framework, which is aligned to global best practices
and standards, including the United Nations Global Compact’s
(UNGC) 10 principles; the International Finance Corporation (IFC)
performance standards; the International Council on Mining and
Metals (ICMM) principles; UN Sustainable Development Goals
(SDGs); and the Organisation for Economic Cooperation and
Development (OECD) promoted Multinational Guidelines.
This robust framework provides the business and the leadership
teams the parameters on which to assess, monitor, review key
sustainability priorities, such as safety, health, environment,
stakeholder engagement and community development activities, as
per the Company’s approach on ‘social license to operate’.
Integrated Report Management Review Statutory Reports Financial Statements 120
Vedanta Limited Integrated Report and Annual Accounts 2017-18
Directors’ Report continued
The Vedanta Sustainability Assurance Programme (VSAP) has been
the bedrock in promoting transparency and compliance of all our
businesses with the Group’s Sustainable Development Framework.
In continuation with last year, the big focus areas have been on
implementation of six key safety performance standards across the
Group; VSAP process has categorically focused on compliance
level to these standards and highlighted areas of improvement.
During the year, we focused heavily on safety performance of your
businesses under the overarching umbrella of Health, Safety and
Environment (HSE) best practices. Community engagement and
development programmes were geared with emphasis on need
assessments and longevity of the project and related outcomes/
benefits.
Our resolve is strong and we continue to work towards achieving
zero harm.
Vedanta’s teams across businesses are driving various capacity-
building and behavioural programmes. Our awareness campaigns
aim to entrench a culture of safety and risk awareness. Training
programmes on ‘Making Better Risk decisions’ is one such
programme rolled out across the businesses to improve safety
decision making of leaders at all levels, particularly those on the
front line. Similarly, ‘Experience Based Quantification’ (EBQ) using
Bow Tie Risk Assessment methodologies were utilised to identify
critical risks from safety and environmental perspective for key
businesses. In FY 2017-18, over 874,296 hours of safety training
were delivered to employees and contractors.
After an encouraging COP21 conference in Paris, which resulted in
more than 174 countries ratify the agreement, the global climate
agenda continues to push ahead, despite the United States
withdrawing from the agreement. India, which had set ambitious
targets of reducing its carbon intensity by 33-35% by 2030 and to
source 40% of its electric power from non-fossil fuel based
sources, continues to move forward to meet those targets.
Our Company remains committed to decreasing its carbon
footprint. Last year we stated our expectation to reduce our GHG
intensity by 16% from a 2012 baseline by 2020. This expectation
emerged from the Carbon Forum that was constituted to develop
our carbon strategy and provide governance on the risk to business
from climate change.
Our businesses have made significant progress on our GHG
reduction commitment. Hindustan Zinc Limited and Oil & Gas
business have committed to increase their investment in solar
power, while other businesses have made significant improvements
in their process efficiencies, thereby reducing their GHG intensity
emissions. As of March 31, 2018, we had been able to achieve
about 14% reduction in our GHG intensity from our baseline
number. We are confident of achieving our target by 2020.
We are also committed to develop an internal carbon price
mechanism to manage our climate related financial risk. We believe
that climate resilience is the best approach we can take to safe-
guard our climate related business risks and we are committed to
work with all our stakeholders in achieving this goal.
We ensure that our Biodiversity Management Plans are in place,
and our environmental footprint follows the most rigorous global
standards. We have developed specific objectives and targets,
particularly with regards to water and energy management.
Finding innovative ways to reduce waste is a priority for us. We
remain committed to our agenda of “Zero Harm, Zero Waste, Zero
Discharge”. This year we are able to recycle more than 90% of the
fly ash that was generated at our power plants. Large volumes of
our high-calorific hazardous wastes are also sent to the cement
industry to be used as clinker fuel, thereby preventing them from
being sent to secure landfills. This year, we have recycled 83% of
our overall High Volume and Low Effect waste in sustainable
applications and are continuing to develop new and innovative ways
to increase the proportion of waste we recycle.
We are present in some of the world’s most unique, remote and
underdeveloped regions. We are committed to respect, learn from
and create a shared understanding with our communities.
Connecting with our communities is not just the right thing to do; it
is a fundamental imperative of our ‘license to operate’.
Our spend on our social investment and CSR programmes thereby
reaffirm our commitment to ensuring the well-being of the
communities who live in proximity to our operations.
Periodic meetings with Socially Responsible Investors (SRI) and
lenders were undertaken and an update was provided in the Group
Sustainability Committee meeting.
This year, we encountered strong opposition from the local
community to our plant in Tuticorin. We are working with the
communities as well as the regulatory bodies to arrive at a solution
to the questions raised. We are committed to responsibly run our
operations.
We remain positive that our overall sustainability journey is headed
in the right direction. Our sustainability framework is robust and in
line with global practices on engaging with civil society,
communicating performance on community development, human
rights as well as addressing legacy issues. We are confident that it
will help us achieve higher levels of performance in the years to
come.
A separate detailed report on Company’s Sustainability
Development also forms part of the Annual Report.
Digitalization & Technology
The technology landscape is continuously changing at a rapid pace.
This dynamic change creates an opportunity to adopt and develop
competitive advantage. Adapting cutting edge technology to
create incremental value is in Company’s DNA. The agility to
inculcate technology as part of business has been demonstrated
over the years in each sphere of business.
In the current environment, Company recognises the need to develop
a comprehensive digital strategy and drive transformational change
across the organisation that instils digital expertise in all facets of the
business and creates value proposition for all its stakeholders.
In order to manage the complex digital transformations across
business units, the Company has taken on board resources for the
position of ‘Chief Digital Officer’ (CDO) in each of its key business
unit. These resources have brought global expertise in digital
transformation initiatives. This position is an integral part of the
Business Executive Committee. These positions are part of the top
thought leadership and shall have the critical responsibility for
developing and implementing Company’s digital strategy.
Your Company is committed to adopt digital technology in the
organization to make data driven decisions, to generate efficiencies,
improve planning, lower risk, create safer working environments
while unlocking more value from the resources.
The Company is also institutionalizing ‘new ways of working’
through these digital-led business transformation programmes
including:
• Adopting agile approaches accelerating time to business value;
• Taking a more persona-centric and design-thinking led approach
on new digital business solutions design;
• Driving a Minimum Viable Product (MVP) based approach in
progressively industrializing digital business solutions;
Vedanta Limited Integrated Report and Annual Accounts 2017-18
121
• Re-skilling and cross-skilling teams for new age technologies
and skills.
A series of measures have been put in place to drive the digital
transformation across business units. Some of these key initiatives
include:
• Use of Drones for Pipeline monitoring & Mining Stockpile
Measurement;
• Digitalization of underground mining operations at HZL (SKM &
RAUG);
• Integrated Operations thru Connected Assets at Oil & Gas;
• Big Data Analytics & Decision Support for Predictive
Maintenance at Oil & Gas;
• Asset Optimization using Predictive Maintenance at Sterlite
Copper;
• Smart Ore Digitalization Project at Gamsberg in Zinc
International;
• Integrated Mine Operations Management System at Iron Ore;
• Asset Optimization using Machine Learning at Iron Ore;
• Coal Supply Chain Digitalization at Aluminium business,
Jharsuguda.
The focus for FY2019 shall be scale up the transformation efforts
and reap the benefits of technology adaption.
Corporate Social Responsibility
Your Company works towards a larger goal of creating enduring
value for the communities it works in. Towards that end, we
undertake various need based community programmes as part of
our Corporate Social Responsibility (CSR). Putting the last as first
being the top most priority, the Company has committed to align its
CSR activities to the evolving and dynamic priorities of Nation and
State besides local needs.
For almost all our programmes, a bottom up community
engagement approach is a non-negotiable. This collaborative
approach ensures community ownership, suitable project design,
effective delivery and post-project sustainability. Apart from
communities, we also strongly believe in partnering with
government agencies, development organizations, corporates, civil
society organisations & community based organizations to carry
our durable and meaningful initiatives.
All our CSR programmes are governed by the Vedanta CSR Policy,
the Technical Standard 19, and each entity specific Standard
Operating Procedures for CSR. The documents are periodically
revised. Further, in order to benefit from diverse perspectives, and
in keeping with a culture of collective leadership, Vedanta has
formed a CSR Council. The council comprises of business leaders
and CSR executives from the different Business Units. The Council
is responsible for governance, synergy and cross-learning across
the Group CSR efforts. It meets every month and reviews the
performance, spends and outcome of CSR programmes for all
Business Units. The council is instrumental in implementing
improvement projects to create a seamless enabling eco-system
for Business Units to carry out best-in-class community
development programmes.
We have a CSR Committee comprising majority of Independent
Directors. The Committee provides strategic direction for CSR
activities, and approves its plans and budgets. It also reviews the
programmes and guides the CSR Teams towards running well-
governed and impactful community programmes.
Brief Overview on Community Development Programmes for
2017-18 is as under:
1. Nand Ghar and Children’s Well-being Projects – The Nand
Ghar Project is the company’s flagship national initiative, which
aims to build new-age Anganwadis for ensuring the health and
learning of young children in rural areas, and also as a platform
for women’s empowerment and skilling. The Project ultimately
aims to impact 85 million children and 20 million women across
1.37 million Anganwadis in the country. As on date, 101
Greenfield and 53 Brownfield Nand Ghars are operational
across – states of the country. Construction is on-going at
another 72 Greenfield and 200 Brownfield Nand Ghars.
Khushi is a Hindustan Zinc initiative, focusing on strengthening
the functioning of the Integrated Child Development Services
(ICDS) programme in 3089 Anganwadi centres of 5 Districts of
Rajasthan. The programme is the largest such Public–Private–
People initiative in the ICDS space covering 64,000 children in
the age group of 3-6 years and aims to improve children’s
attendance, retention, learning levels, health status and
community engagement. Children’s attendance at these centres
has gone up from 44% last year to 59% this year. A unique
Anganwadi Grading Tool was developed and used to rate each
one of the 3089 Anganwadis. 25,000 community meetings
were held during the year, and community contributions
equivalent to INR 5.43 million were mobilized.
2. Women’s empowerment – Vedanta is endeavouring to provide
equal opportunities to women through multiple initiatives.
Subhalaxmi Cooperative Society at Jharsuguda is one such
flagship initiative of Vedanta Limited, Jharsuguda. Subhalaxmi,
which started in 2008 with 10 women, has now emerged as one
of the largest women’s cooperative in western Odisha with
3324 members and 280 Self Help Groups across 64 villages of
3 blocks of Jharsuguda. It started with INR 1000 as working
capital and today it has accumulated corpus fund of more than
INR 22 million with an average net profit of INR 6-7 lacs/annum.
Loans of around INR 49.2 million were provided to women
entrepreneurs for setting up their own micro enterprises in
FY’18. Subhalaxmi now has a special fund called “UDYAMI
FUND (Start-up Fund)” to support emerging & aspiring micro-
entrepreneurs in Jharsuguda.
On similar lines, the Sakhi programme at HZL now has 1299
SHGs (Self-help groups) reaching to nearly 16,620 women.
During the year, 9397 women took loans amounting to INR 79
million. The main purposes for which the loans were taken were
household consumption, agriculture, health & sanitation, animal
husbandry, including 280 women who used the loans to
become entrepreneurs (either by setting up new or expanding
existing enterprises).
3. Health Care – Health is another critical area of engagement for
us, and we work to bring affordable healthcare within reach of
our communities. Aarogya, a healthcare Initiative of the
Company at Lanjigarh, is a commitment to improve the health
status of less privileged community in Kalahandi region. Vedanta
Hospital is a 20 bedded state of art medical facility well-
equipped with doctors, physiotherapist and visiting specialists
providing 24X7 ambulance service for referrals with a daily
footfall of more than 150 patients. The hospital services are
recognized for sickle cell detection, Rashtriya Bima Suraksha
Yojana, Institutional delivery under Janani Suraksha Yojana, Cleft
& Palate Surgery and Antenatal check-up under Pradhan Mantri
Surakshit Matrutwa Abhiyan.
VMRF
Vedanta Medical Research Foundation (VMRF), a voluntary,
non-profit organisation, has been initiated by Bharat Aluminium
Company Limited, subsidiary company (BALCO), to contribute
to the prevention, control and eradication of cancer and its
related illnesses. VMRF’s first flagship initiative has been the
establishment of ‘Balco Medical Centre’ - a 170-bed, state-of-
the-art tertiary care oncology facility in Naya Raipur, in close
proximity of our Aluminium plants at Korba, Lanjigarh and
Jharsuguda. The proposed hospital envisages bringing modern,
comprehensive and high quality medical care within the reach of
the population of Central India in general and Chhattisgarh in
particular.
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Vedanta Limited Integrated Report and Annual Accounts 2017-18
Directors’ Report continued
Hospital at Kalahandi
With a commitment of ‘Giving back to Society’, Vedanta Limited
has signed a Memorandum of Understanding (MoU) with
Government of Odisha to establish a 500 bed hospital for
Government Medical College at Bhawanipatna with an
investment of ` 100 crores. The MoU was signed on March 27,
2018 at Odisha State Secretariat. The Hon’ble Chief Minister of
Odisha congratulated Vedanta for coming forward to set up the
hospital for Medical College and partner the Government in
crucial areas of development for the people of Kalahandi.
4. Agriculture and Animal Husbandry – Given that most of our
neighbourhood communities still depend on agriculture and
animal husbandry, we follow a livelihood development approach
of integrating agriculture, dairy, water management, technology,
farmer’s organizations and market outreach. Project Unnati, a
Cairn CSR initiative, was set up to support the farmers of Barmer
in enhancing their incomes through sustainable farming. As part
of a MoU with Central Arid Zone Research Institute (CAZRI),
Jodhpur – a unit of Indian Council for Agriculture Research
(ICAR), 700 framers were trained in high tech farming
techniques. This was supported by the installation of drips for
60,000 horticulture plants in 120 acres. As a result, this year, the
farmers in Barmer have harvested over 60 tonnes of Ber, Gunda,
and Anar.
5. Skilling the youth – Skill development is the need of the hour,
and can have a huge impact on creating livelihoods
opportunities for millions of families. Our aim is to channelize the
untapped potential of youth and help them become employable
in the growing economy. Vedanta IL&FS Institute of Skills at
BALCO, Korba imparts ‘hands-on’ training to youth in five
different trades – Industrial Stitching, Fitter Fabrication, Welding
Assistant, Electrician and Hospitality. The Institute has provided
assured placements to more than 6,700 students since
operationalisation. Sterlite Copper’s Tamira Muthukkal project
has provided skills training and employability to some 2,000
youth from the Thoothukudi district since its inception.
6. Environment protection & restoration – We understand the
interdependency between our operations and the natural
environment. As a natural resource company, our prime focus is
on protecting and restoring nature. At Talwandi Sabo Power
Limited, wholly owned subsidiary (TSPL), Mansa, Punjab,
individual household level soak pits were constructed in
partnership with MGNREGA and Gram Panchayat in 2 villages.
Looking to the success of the project, Department of Rural
Development, Punjab directed all 22 districts to replicate the
same model on a pilot basis.
development and over all nation building. Company is
supporting operational villages in developing basic infrastructure
in villages, such as school toilets, drinking water projects, sports
infra, local drains, community centres etc. as per local needs.
During the year, the Company’s divisions spent INR 45.19 Crore on
CSR activities, while on a consolidated basis it spent about INR
244.33 Crore on CSR.
A brief overview of CSR initiatives forms part of this Directors
Report and is annexed hereto as Annexure A’.
Your Company’s CSR Policy addresses the Company’s
commitment to conduct its business in a socially responsible,
ethical and environmentally friendly manner; and to continuously
work towards improving the quality of life of the communities in the
areas where it operates.
The policy may be viewed here:
http://www.vedantalimited.com/media/85867/csr_policy_final.pdf
Business Responsibility Report
A detailed Business Responsibility Report in terms of the provisions
of Regulation 34 of the SEBI Listing Regulations is available as a
separate section in this annual report.
Human Resources (HR)
Human resources play a significant role in your Company’s growth
strategy. Your Company emphasised on talent nurturing, retention
and engaging in a constructive relationship with employees with a
focus on productivity and efficiency and underlining safe working
practices. The significant focus areas during the year comprised the
following:
V – Perform:
One Performance System for One Vedanta
V-Perform is a pan-Vedanta initiative to standardize the
Performance Management System (PMS) system and process
across all Vedanta Group companies by leveraging technology. This
would enable the functions, teams and individuals in tracking
performance, generating analytics and taking proactive decisions
towards achieving Company’s overall business plan and targets.
The online V-perform portal delivers a consistent user experience
for all ~12k professionals across Vedanta, starting from goal setting
to the quarterly / mid-year appraisal and finally the year-end
assessment. In addition to this, the portal facilitates open dialogue
and feedback discussion between the managers and the team
members to ensure transparency and efficiency in all PMS related
activities.
7. Sports & Culture – Sports and culture have the ability to attract
and mobilize youth as well as foster stronger community
bonding. Sesa Football Academy (SFA), an Iron Ore Business’s
CSR initiative, was established in 1999 on a reclaimed mine at
Sanquelim with a vision to become a premier academy in India.
Until now, the Academy at Sanquelim has passed out 123 boys,
some of whom have represented India internationally and many
are pursuing their football career with major clubs. Seven alumni
of SFA have played for the Indian national team and 8 are playing
in the elite Indian Super League 2017-18 seasons. Taking forward
the commitment and passion to nurture girl child through sports,
SFA launched the ‘Vedanta Women’s Football League’ on
November 6, 2017 with the support of Goa Football Association
(GFA). Vedanta created history through this first of its kind
league by providing women footballers a prominent platform to
showcase their talent and skills. 137 women footballers hailing
from all over Goa participated in this league through 6 teams
and made it a grand success.
8. Community Infrastructure – While human development is the
key, but infrastructure also plays an important role. Developing
and maintaining social infrastructure are critical for rural
As a next step toward enhancing our Safety performance at
workplace and achieving our ultimate vision of “Zero Harm”, Safety
Competency Assessment process was initiated as part of
V-Perform to strengthen our existing Safety Management System
by means of training, skills, experience and knowledge that an
employee’s possess and their ability to apply them to perform a
task safely which will enable to mitigate the risk and ensure that
employees are well organized and safe all the time at Workplace.
Leadership Development and Talent Management
Internal Growth Workshops: Vedanta has always aspired to design
an organization which is led by our “Leaders from Within”.
Identifying internal talent and elevating them to enhanced
leadership roles has been the driving factor in our journey of rapid
growth. In line with this philosophy, the Group conducts
‘Chairman’s Internal Growth Workshops’ through which we have
identified 500+ high potential New Leaders till date across various
functions in the Group’s businesses who have taken up significantly
elevated roles and responsibilities. Meeting Growth Aspirations of
the employees and ensuring Internal Mobility of High Quality Talent
has been the highlight of this endeavor. The New Leaders have
been empowered through various key strategic initiatives across
Vedanta Limited Integrated Report and Annual Accounts 2017-18
123
the Group and regular feedback sessions which have ensured they
are in the right track of being the “Leaders of Tomorrow”. Our
Internal Growth Workshops have also enabled us to reduce our
lateral hiring significantly for critical roles across the Group in past
two years.
‘V Connect’ Initiative: The V – Connect programme was launched
across Vedanta Group as one of a kind anchoring/ mentoring
programme covering all 12,000 professionals with regular talent
stories and anchoring conversations across all the businesses. It
was launched in association with AON and the key output from this
initiative has been to derive enhanced engagement levels from the
employees. This initiative has also ensured transparent
communication of organizational growth vision and key priorities in
our roadmap for being the best in class employer in the industry. To
facilitate smooth functioning of the programme, a specialized app
– “Aon Lead” was introduced. The App allows participants to
schedule their connects; get latest business updates from around
the globe; access to articles and videos that focus on effective
leadership, skill-building; and participate in quizzes/learning
challenges. Till date, more than 5000 conversations have been
completed for the employees across Vedanta.
Right Management in Place (RMIP) - Strategic Hiring
In our endeavour to strengthen management teams across business,
realigning the organisation structure and bridging the critical gaps in
each of the business, we initiated recruitment drive along with the
business for various leadership positions including Expats /
Specialist Positions. Hiring for these positions was initiated with
focus on recruitment from best practices companies / diversity.
During the year, we focused on building and strengthening HSE
function and technical capability in the organization. We hired
around 28 technical experts across businesses which include 10
global HSE experts to head the HSE function at each of our
businesses in India and Africa and these individuals bring onboard
rich and diverse experience from their past global organizations like
BHP, Rio Tinto, BP, Sheel, Chevron, GE, DuPont, Alcoa, Anglo etc.
Global Internship Programme (GIP)
The Programme was introduced in FY 2016-17 with the aim to hire
bright students from premier global university. Vedanta attracts first
year MBA students from premier B-schools with the aim to create
lasting business value by bringing on board world class talent. The
B-Schools include Harvard, Wharton, INSEAD & London Business
School among the international campuses and the top three IIM’s-
Ahmedabad, Bangalore & Calcutta among the national campuses.
The interns work with top management, especially the C-suite on
real-time projects impacting business directly. They work in a
fast-paced dynamic team environment, and finish the internship
having gained broad experience in various aspects of the natural
resources industry.
The programme would help us in the following ways:
1. The Young Talent will bring in fresh insights and global benchmark
practices to our business.
2. Add value by driving projects which leverage their analytical skills.
3. This Young Talent can potentially become Brand Ambassadors
for Vedanta globally and help in building our Employer Brand.
Approximately 39 students have been a part of the programme:
Last year we also launched a similar programme for full time hires
VLDP- Vedanta Leadership Development Programme. In VLDP our
focus is to hire full time employees from the top management and
technology institutes which include IIM Ahmedabad, Bangalore,
Calcutta and IIT Bombay, Kharagpur, Madras. The aim of VLDP is to
build organizational capability for the future by bringing on board
best-in-class young talent from premier institutes and developing
them to be the future Leaders of Vedanta by providing them with
the right induction, roles, opportunities, job rotations and anchoring.
During the first year 19 students joined and in the second year 28
students will be joining us for the programme.
“Vedanta’s unprecedented growth over the years is owing to its
entrepreneurial culture and strong focus on continuous
benchmarking and innovation. As part of this continuous
improvement journey, Manpower Analytics forms an integral piece
in the strategic decision making to embark on the next level of
growth. The recent study conducted by a reputed firm on
Manpower Analytics brought out some interesting facts –
• Vedanta believes in growth from within and giving enhanced
roles to the High potential employees within the organization
thereby maintaining the Value Systems and Culture fabric intact.
The Pay for performance Culture emerged clearly during the
study as the Mid Layer in the organizational pyramid came out to
be higher than benchmark owing to early career growth and
higher responsibilities at relatively younger experience level.
• Although Executive Diversity at Vedanta is one of the leading in
the industry, the company has taken stringent targets to further
bridge the gap and move upto 33% at Board & 20% at the
professional employee population level. When looked at providing
avenues for growth and higher compensation, the study also
showcased that Vedanta is an equal opportunity employer.
• The Benchmarking exercise of comparing to the Global Best in
the industry we operate in highlighted improvement Potential in
Manpower Productivity.
During the year, Company has received recognitions at Forums like
CII, Golden Peacock, Ek Kaam Desh Ke Naam (NGO) in fields of HR
excellence, HR Tech and HR Innovation. The Company is
committed to provide equal opportunities to all its employees,
irrespective of gender, nationality and background.
Your Company’s, Jharsuguda unit has received special recognition
towards their Commitment to Engagement. Aon Hewitt has
acknowledged the efforts your organization is putting in, to be an
Employer of Choice and its continued efforts on your journey
towards being a Best Employer.
Employee Information and Related Disclosures
The statement of Disclosure of Remuneration under Section 197 of
the Act and Rule 5(1) of the Companies (Appointment and
Remuneration of Managerial Personnel) Rules, 2014 (“Rules”) is
appended as Annexure B to the Report.
The information, as per Rule 5(2) of the Rules, forms part of this
Report. However, as per provision of Section 136 of the Act and
Rule 5(2), the Report and the Financial Statements are being sent to
the Members of the Company excluding the statement of
particulars of employees under Rule 5(2) of the Rules. The
statement shall be available for inspection at the Company’s
Registered Office and any Member interested in obtaining a copy
of the said statement may write to the Company Secretary.
Employees Stock Option Plan
In order to motivate, incentivize and reward employees, your
Company introduced ‘Vedanta Limited Employee Stock Option
Scheme 2016’ (“the Scheme”) to provide equity based incentives to
the permanent employees of the Company including holding/
subsidiary companies. The Scheme is a conditional share plan for
rewarding performance on pre-determined performance criteria
and continued employment with the Company. The pre-
determined performance criteria shall focus on rewarding
employees for Company performance vis a vis competition and
also for achievement of internal operational metrics. The Scheme is
currently administered through Vedanta Limited ESOS Trust (ESOS
Trust) which is authorized by the Shareholders to acquire the
Company’s shares from secondary market from time to time, for
implementation of the Scheme.
Integrated Report Management Review Statutory Reports Financial Statements 124
Vedanta Limited Integrated Report and Annual Accounts 2017-18
Directors’ Report continued
The Company’s shareholders by way of postal ballot on December
12, 2016 have approved the Scheme.
During the year under review 10,088,960 options were granted to
2806 employees including Whole Time Director and Key
Managerial Personnel.
Pursuant to the provisions of SEBI (Share Based Employee Benefits),
Regulations, 2014 (“Employee Benefits Regulations”), disclosure
with respect to the ESOS Scheme of the Company as on March 31,
2018 is annexed as Annexure C to this report and has also been
uploaded on the Company’s website at www.Vedantalimited.com.
The stock option Scheme is in compliance with Employee Benefits
Regulations and there have been no material changes to the plan
during the financial year.
A certificate from M/s S.R. Batliboi & Co. LLP, Chartered
Accountants, Statutory Auditors, with respect to the
implementation of the Company’s ESOS schemes, would be placed
before the shareholders at the ensuing AGM. A copy of the same
will also be available for inspection at the Company’s Registered
Office.
Vigil Mechanism
The Company has in place a robust vigil mechanism for reporting
genuine concerns through the Company’s Whistle Blower Policy. As
per the Policy adopted by various businesses in the Group, all
complaints are reported to the Director – Management Assurance,
who is independent of operating management and the businesses.
In line with global practices, dedicated email IDs, a centralised
database, a 24X7 whistle blower hotline and a web-based portal
have been created to facilitate receipt of complaints. All employees
and stakeholders can register their integrity related concerns either
by calling the toll free number or by writing on the web-based
portal which is managed by an independent third party. The hotline
provides multiple local language options. All cases reported as part
of whistle blower mechanism are taken to their logical conclusion
within a reasonable timeframe. After the investigation, established
cases are brought to the Group Ethics Committee for decision-
making. All Whistle Blower cases are periodically presented and
reported to the Company’s Audit Committee. The details of this
process are also provided in the Corporate Governance Report and
the Whistle Blower Policy is posted on the Company’s website.
Prevention of Sexual Harassment at Workplace
The Company has zero tolerance for sexual harassment at
workplace and has adopted a Policy on prevention, prohibition and
redressal of sexual harassment at workplace in line with the
provisions of the Sexual Harassment of Women at Workplace
(Prevention, Prohibition and Redressal) Act, 2013 and the Rules
thereunder for prevention and redressal of complaints of sexual
harassment at workplace.
As part of Vedanta Group, your Company is an equal opportunity
employer and believes in providing opportunity and key positions to
women professionals. The Group has endeavoured to encourage
women professionals by creating proper policies to tackle issues
relating to safe and proper working conditions, and create and
maintain a healthy and conducive work environment that is free
from discrimination. This includes discrimination on any basis,
including gender, as well as any form of sexual harassment. During
the period under review, 11 complaints were received and resolved.
Seven employees were separated on account of complaints. Your
Company has constituted Internal Complaints Committee (ICC) for
various business divisions and offices, as per the requirements of
the Sexual Harassment of Women at Workplace (Prevention,
Prohibition and Redressal) Act, 2013.
requirements set out by the SEBI. The Company has also
implemented several best Corporate Governance practices as
prevalent globally. The report on Corporate Governance as
stipulated under the SEBI Listing Regulations forms an integral part
of this Report
The requisite certificate from the Auditors of the Company
confirming compliance with the conditions of Corporate
Governance is attached to the report on Corporate Governance.
Internal Financial Controls
Your Board has devised systems, policies and procedures /
frameworks, which are currently operational within your Company
for ensuring the orderly and efficient conduct of its business, which
includes adherence to policies, safeguarding its assets, prevention
and detection of frauds and errors, accuracy and completeness of
the accounting records and timely preparation of reliable financial
information. In line with best practices, the Audit Committee and
the Board reviews these internal control systems to ensure they
remain effective and are achieving their intended purpose. Where
weaknesses, if any, are identified as a result of the reviews, new
procedures are put in place to strengthen controls. These controls
are in turn reviewed at regular intervals.
The systems/frameworks include proper delegation of authority,
operating philosophies, policies and procedures, effective IT
systems aligned to business requirements, an internal audit
framework, an ethics framework, a risk management framework
and adequate segregation of duties to ensure an acceptable level of
risk. Documented controls are in place for business processes and
IT general controls. Key controls are tested by entities to assure that
these are operating effectively. Besides, the Company has also
adopted an SAP GRC (Governance, Risk and Compliance)
framework to strengthen the internal control and segregation of
duties/access. It also follows a half-yearly process of management
certification through the Control Self-Assessment framework,
which includes financial controls/exposures.
The Company has documented Standard Operating Procedures
(SOP) for procurement, project / expansion management capital
expenditure, human resources, sales and marketing, finance,
treasury, compliance, safety, health, and environment (SHE), and
manufacturing.
The Group’s internal audit activity is managed through the
Management Assurance Services (‘MAS’) function. It is an
important element of the overall process by which the Audit
Committee and the Board obtains the assurance on the
effectiveness of relevant internal controls.
The scope of work, authority, and resources of MAS are regularly
reviewed by the Audit Committee. Besides, its work is supported
by the services of leading international accountancy firms.
The Company’s system of internal audit includes: covering monthly
physical verification of inventory, a monthly review of accounts and
a quarterly review of critical business processes. To enhance
internal controls, the internal audit follows a stringent grading
mechanism, focusing on the implementation of recommendations
of internal auditors. The internal auditors make periodic
presentations on audit observations, including the status of
follow-up to the Audit Committee.
The Company is also required to comply with the Sarbanes Oxley
Act Sec 404, which pertains to Internal Controls over Financial
Reporting (ICOFR). Through the SOX 404 compliance programme,
which is aligned to the COSO framework, the Audit Committee
and the Board also gains assurance from the management on the
adequacy and effectiveness of ICOFR.
Corporate Governance Report
The Company is committed to maintain the highest standards of
Corporate Governance and adhere to the Corporate Governance
In addition, as part of their role, the Board and its Committees
routinely monitor the Group’s material business risks. Due to the
Vedanta Limited Integrated Report and Annual Accounts 2017-18
125
limitations inherent in any risk management system, the process for
identifying, evaluating, and managing the material business risks is
designed to manage, rather than eliminate risk. Besides it created to
provide reasonable, but not absolute assurance against material
misstatement or loss.
Major risks identified by businesses and functions are
systematically addressed through mitigating actions. Risk officers
have also been formally nominated at operating businesses, as well
as at Group level, to develop the risk-management culture within
the businesses.
Since the Company has strong internal control systems which are
further strengthened by periodic reviews as required under the
SEBI Listing Regulations and SOX compliance by the Statutory
Auditors, the CEO and CFO recommend to the Board continued
strong internal financial controls.
Based on the information provided, nothing has come to the
attention of the Directors to indicate that any material breakdown in
the function of these controls, procedures or systems occurred
during the year under review. There have been no significant
changes in the Company’s internal financial controls during the year
that have materially affected, or are reasonably likely to materially
affect its internal financial controls.
There are inherent limitations to the effectiveness of any system of
disclosure controls and procedures, including the possibility of
human error and the circumvention or overriding of the controls and
procedures. Accordingly, even effective disclosure controls and
procedures can only provide reasonable assurance of achieving
their objectives. Moreover, in the design and evaluation of the
Company’s disclosure controls and procedures, the management
was required to apply its judgment in evaluating the cost-benefit
relationship of possible controls and procedures.
Further, the Audit Committee annually evaluates the internal
financial controls for ensuring that the Company has implemented
robust systems/ framework of internal financial controls viz. the
policies and procedures adopted by the company for ensuring the
orderly and efficient conduct of its business, including adherence to
companys policies, the safeguarding of its assets, the prevention
and detection of frauds and errors, the accuracy and completeness
of the accounting records, and the timely preparation of reliable
financial information.
Risk Management
Your businesses are exposed to a variety of risks, which are inherent
to a global mining and resources organisation. The effective
management of risk is critical to support the delivery of the Group’s
strategic objectives. Risk management is embedded in the
organization’s processes and the risk framework helps the
organisation meet its objectives by aligning operating controls with
the mission and vision of the Group set by the Board.
As part of our governance philosophy, the Board has a Risk
Management Committee to ensure a robust risk management
system. The details of Committee and its terms of reference are set
out in the Corporate Governance Report, which is part of the Board’s
Report and is available as a separate section in this Annual Report.
Our risk-management framework is designed to be simple,
consistent and clear for managing and reporting risks from the
Group’s businesses to the Board. Our management systems,
organisational structures, processes, standards and code of
conduct together form the system of internal controls that govern
how we conduct business and manage associated risks. We have a
multi-layered risk management framework to effectively mitigate
the various risks, which our businesses are exposed to in the course
of their operations.
The Risk Management Committee supports the Audit Committee
and the Board in developing the group-wide risk-management
framework. Risks are identified through a consistently applied
methodology. The Company has put in place a mechanism to
identify, assess, monitor and mitigate various risks to key business
objectives.
For a detailed risk analysis, you may like to refer to the risk section
in the Management Discussion Analysis Report which forms part of
this Annual Report.
Management Discussion and Analysis
A detailed report on the Management Discussion and Analysis in
terms of the provisions of Regulation 34 of the SEBI Listing
Regulations is provided as a separate chapter in this Annual Report.
Significant & Material Orders passed by the Regulators or
Courts or Tribunals
Provided below are the significant and material orders which have
been passed by any regulators or courts or tribunals against the
Company impacting the going concern status and Company’s
operations in future:
1. Iron-Ore Division – Goa Operations
Supreme Court in the Goa Mining matter in 2014 declared that the
deemed mining leases of the lessees in Goa expired on 22.11.1987
and the maximum of 20 years renewal period of the deemed
mining leases in Goa under the MMDR Act had also expired on
22.11.2007 and directed state to grant fresh mining leases.
Thereafter, various mining leases were renewed by the state
government before and on the date the MMDR Amendment
Ordinance 2015 came into effect (i.e. January 12, 2015).
These renewal of mining leases were challenged before the SC by
Goa Foundation and others in 2015 as being arbitrary and against
the judgment of the SC in the earlier Goa mining matter. The
Supreme Court passed the judgment in the matters on February 7,
2018 wherein it set aside the second renewal of the mining leases
granted by the State of Goa. The court directed all lease holders
operating under a second renewal to stop all mining operations
with effect from March 16, 2018 until fresh mining leases (not fresh
renewals or other renewals) in accordance with the provisions of
the MMDR Act, 1957 and fresh environmental clearances are
granted. For further course of action we are in the process of
evaluation and are awaiting clarity from the government.
2. Copper Division
Copper division of Vedanta Limited has received an order from
Tamil Nadu Pollution Control Board on 09.04.2018 whereby they
have rejected the Company’s application for renewal of Consent to
Operate (CTO) for the 400,000 Metric Tonnes Per Annum(MTPA)
Copper Smelter plant in Tuticorin. In furtherance to the order of
TNPCB rejecting the Company’s application, the Company decided
to shut its Copper smelting operations at Tuticorin and has filed an
appeal with TNPCB Appellate authority against the order. During
the pendency of the appeal the TNPCB vide its order dated
May 23, 2018 ordered disconnection of electricity supply and
closure of the Company’s Copper Smelter plant. Post this the Govt
of Tamil Nadu on May 28, 2018 ordered the permanent closure of
the plant. The Company is taking all the necessary steps to restart
its operations in Tuticorin.
In a separate proceeding, the Madurai Bench of the Madras High
Court in a PIL filed against the company, has stated that the
application for renewal for Environmental Clearance for Copper
Smelter Plant 2 project, shall be processed after conduct of
mandatory public hearing and the application shall be decided by
the competent authority on or before September 23, 2018. In the
interim, High Court ordered the company to cease construction
and all other activities onsite for the proposed project. The
company is taking all necessary steps to restart the project.
Integrated Report Management Review Statutory Reports Financial Statements 126
Vedanta Limited Integrated Report and Annual Accounts 2017-18
Directors’ Report continued
Board of Directors
Appointment(s)
The Board on the recommendation of the Nomination &
Remuneration Committee (NRC) at its meeting held on March 13,
2018, approved the appointment of Mr. UK Sinha (DIN: 00010336),
as an Additional Non Executive Independent Director w.e.f. March
13, 2018 to August 10, 2021. The appointment is subject to the
approval of the Members at the ensuing Annual General Meeting
(AGM).
Mr. Sinha has served as the Chairman of SEBI from February 2011
to March 2017. He was instrumental in bringing about key capital
market reforms. Under his leadership, SEBI introduced significant
regulatory amendments to the various acts enhancing corporate
governance and disclosure norms.
Mr. K. Venkataramanan and Mr. Aman Mehta were appointed as
Independent Non Executive Directors w.e.f April 01, 2017 and
May 17, 2017 respectively and Ms. Priya Agarwal was appointed as
a Non Executive Director w.e.f. May 17, 2017. The said
appointments were confirmed by the Members at the 52nd AGM on
July 14, 2017.
Mr. Kuldip Kumar Kaura was appointed as an Interim CEO of the
Company w.e.f September 01, 2017. In his over four decades of
experience across engineering and mining roles, Mr. Kaura has
served at senior levels in various reputable companies, including
Vedanta Resources Plc as Chief Executive Officer, Managing
Director at ABB, India and Managing Director and Chief Executive
Officer of a cement major in India, ACC Limited (LafargeHolcim).
Re-appointment(s)
In accordance with the provisions of Act and the Articles of
Association of the Company, Mr. GR Arun Kumar (DIN:01874769),
Whole Time Director & CFO, is retiring by rotation and has offered
himself for re-appointment.
Further, on the recommendation of the Nomination &
Remuneration and based on the performance evaluation, the Board
through circular resolution dated January 20, 2018 reappointed
Mr. Ravi Kant & Ms. Lalita D Gupte as Independent Directors for a
second and final term from January 29, 2018 till August 10, 2021.
The reappointment is subject to the shareholder’s approval at the
forthcoming AGM.
The Board on the recommendation of the NRC reappointed
Mr. Tarun Jain as the Company’s Whole Time Director for a further
period from April 01, 2018 till March 31, 2019. The appointment is
subject to the shareholder’s approval.
Brief profiles of Mr. UK Sinha, Mr. Ravi Kant, Ms. Lalita D Gupte,
Mr. Tarun Jain and Mr. GR Arun Kumar along with the disclosures
required pursuant to SEBI Listing Regulations and the Act are given
in the Notice of the AGM.
Attention of the Members is invited to the relevant items in the
Notice of the AGM and the Explanatory Statement thereto.
All Independent Directors have provided declarations that they
meet the criteria of independence as laid out under Section 149(6)
of Act and the SEBI Listing Regulations.
Cessation(s)
We express our profound grief and sorrow over the sad demise of
Mr. Naresh Chandra on July 09, 2017 who served as an
Independent Director of your Company. Mr. Chandra was a
statesman and a visionary, and was instrumental in the industrial
reforms and progressive policies. The Board places its deep
sympathy and condolences to his family.
Mr. Thomas Albanese superannuated as the Whole Time Director
and CEO of the Company w.e.f. August 31, 2017.
The Board places on record its appreciation for the valuable
services and significant contribution rendered by Mr. Albanese
during his tenure.
The details of training and familiarization programmes and Annual
Board Evaluation process for Directors have been provided under
the Corporate Governance Report.
The policy on Director’s appointment and remuneration including
criteria for determining qualifications, positive attributes,
independence of Director, and also remuneration for Key
Managerial Personnel and other employees forms part of
Corporate Governance Report of this Annual Report.
Key Managerial Personnel
The following Directors/Executives are KMPs of the Company
during Fiscal 2018:
Mr. Navin Agarwal, Executive Chairman
Mr. Tarun Jain, Whole Time Director
Mr. GR Arun Kumar, Whole Time Director & Chief Financial Officer
Ms. Bhumika Sood, Company Secretary & Compliance Officer
Number of Board Meetings
The Board of Directors met nine times during the year. The details
of Board Meetings are laid out in Corporate Governance report,
which forms a part of this annual report.
Audit Committee
The composition of the Audit Committee is in compliance with the
provisions of Section 177 of the Act and Regulation 18 of the SEBI
Listing Regulations. As on March 31, 2018, the Audit Committee of
the Board comprises of four (4) Non-Executive Directors all of
whom are Independent. The Chairperson of the Audit Committee
is a Non-Executive Independent Director.
The Board has accepted all recommendations made by the Audit
Committee during the year.
Auditors
• Statutory Auditors
M/s S.R. Batliboi & Co. LLP, Chartered Accountants (FRN:
301003E) were appointed as Statutory Auditors of your Company
at the AGM held on June 29, 2016 for a term of five consecutive
years i.e., until the conclusion of the 56th AGM. M/s S.R. Batliboi &
Co. LLP have confirmed their independence and eligibility under
the provisions of the Act & SEBI Listing Regulations.
The report of the Statutory Auditors along with notes to Schedules
is enclosed to this Report. The observations made in the Auditors’
Report are self-explanatory and therefore do not call for any further
comments.
During the year under review, the Auditors have not reported any
matter under Section 143 (12) of the Act, therefore no detail is
required to be disclosed under Section 134 (3)(ca) of the Act.
• Cost Auditor
As per Section 148 of the Act, the Company is required to have the
audit of its cost records conducted by a Cost Accountant in practice.
The Board of your Company has on the recommendation of the
Audit Committee, approved the appointment of M/s Shome and
Banerjee as Cost Auditors for its oil & gas Business and M/s Ramnath
Iyer & Co as Cost Auditors for its copper, aluminium, iron ore and
electricity Business to conduct cost audits pertaining to relevant
products prescribed under the Companies (Cost Records and Audit)
Rules, 2014 as amended from time to time for the year ending March
31, 2018 at a remuneration of ` 5,00,000 p.a and ` 14,00,000/-p.a
(plus applicable taxes and reimbursement of out of pocket expenses,
if any), respectively. Further M/s Ramnath Iyer & Co have been
appointed as the Lead Cost Auditors of the Company.
Vedanta Limited Integrated Report and Annual Accounts 2017-18
127
• Secretarial Auditor
Pursuant to the provisions of Section 204 of the Act and the
Companies (Appointment and Remuneration of managerial
Personnel) Rules, 2014, the Company has appointed M/s
Chandrasekaran & Associates, a firm of Company Secretaries in
practice to undertake the Secretarial Audit of the Company for FY
2018. The Report of the Secretarial Audit in Form MR-3 is annexed
herewith as Annexure D. The Secretarial Audit Report does not
contain any qualifications, reservation, adverse remarks or
disclaimer.
Subsidiaries/Joint Ventures/Associate Companies
The Company has 52 subsidiaries (15 direct and 37 indirect) as at
March 31, 2018, as disclosed in the accounts.
During the year and till date the following changes have taken place
in subsidiary companies:
Subsidiary companies formed/acquired:
• Avanstrate (Japan) Inc. (ASI) acquired on December 28, 2017
• Avanstrate (Korea) Inc. acquired on December 28, 2017
• Avanstrate (Taiwan) Inc. acquired on December 28, 2017
• Vedanta Star Limited incorporated on April 23, 2018
As at March 31, 2018, the Company has 5 associate companies and
joint ventures.
Associate Companies and Joint Ventures:
• RoshSkor Township (Pty) Ltd
• Gaurav Overseas Private Limited
• Goa Maritime Private Limited
• Madanpur South Coal Company Limited
• Rampia Coal Mines and Energy Private Limited
Details of Loans/Guarantees/Investment made by the
Company
Particulars of loans given, investments made, guarantees given and
securities provided along with the purpose for which the loan or
guarantee or security is proposed to be utilised as per the
provisions of Section 186 of the Act are provided in the standalone
financial statement (Please refer to Notes to the standalone
financial statement).
As per the SEBI Listing Regulations, a policy on material subsidiaries
as approved by the Board of Directors, may be accessed on the
Company’s website: www.vedantalimited.com.
Transfer of Unpaid and Unclaimed amounts to Investor
Education and Protection Fund (IEPF)
The Company sends letters to all shareholders, whose dividends
are unclaimed so as to ensure that they receive their rightful dues.
During the year, the Company has transferred a sum of `
1,49,03,948/- to Investor Education & Protection Fund (IEPF), the
amount which was due & payable and remained unclaimed and
unpaid for a period of seven (7) years as provided in Section 125 of
the Act and the rules made thereunder. Despite the reminder letters
sent to each shareholder, this amount remained unclaimed and
hence was transferred.
In accordance with the provisions of the Section 124(6) of the Act
and Rule 6(3)(a) of the Investor Education and Protection Fund
Authority (Accounting, Audit, Transfer and Refund) Rules, 2016,
(IEPF Rules), the Company is required to Transfer 10,60,879 equity
shares of Re.1 each held by 986 shareholders to IEPF. The said
shares correspond to the dividend which has remained unclaimed
for a period of seven consecutive years from the financial year
2009-10. The equity shares wherein, disputes are pending and
Court Order(s) are Nil. All the remaining shares, as mentioned
above, have been transferred to IEPF. Subsequent to the transfer,
the concerned shareholders can claim the said shares along with
the dividend(s) from IEPF in accordance with the prescribed
procedure and on submission of such documents as prescribed
under the IEPF Rules.
The Company has already sent a specific communication to the
concerned shareholders at their address registered with the
Company and also published notice in The Free Press Journal and
Navshakti providing the details of the shares due for transfer and to
enable shareholders to take appropriate action.
Fixed Deposits
As reported last year, the Company has discontinued the renewal
of its fixed deposits on maturity. As at March 31, 2018, all fixed
deposits had matured, while deposits amounting to ` 54,000
remained unclaimed. Since the matter is sub judice, the Company is
maintaining status quo.
Extract of Annual Return
The details forming part of the extract of the Annual Return in form
MGT 9 is annexed hereto as ‘Annexure E’
Related Party Transactions
In line with the requirements of the Act and SEBI Listing
Regulations, your Company has formulated a Policy on Related
Party Transaction (RPT) which is also available on Company’s
website (http://www.vedantalimited.com/investor-relations/
corporate-governance.aspx). The Policy intends to ensure that
proper reporting, approval and disclosure processes are in place for
all transactions between the Company and Related Parties.
The Company presents a detailed landscape of all RPTs to the
Audit Committee, specifying the nature, value, and terms and
conditions of the transaction. The Company has developed a
Related Party Transactions Manual-Standard Operating Procedures
to identify and monitor all such transactions.
All contracts/arrangements/transactions entered by the Company
during the financial year with related parties were on an arm’s
length basis, in the ordinary course of business and were in
compliance with the applicable provisions of the Act and SEBI
Listing Regulations.
During the Fiscal 2018, there have been no materially significant
RPTs between the Company and Directors, management,
subsidiaries or relatives, as defined under Section 188 of the Act
and Regulations 23 the SEBI Listing Regulations.
Accordingly, the disclosure required u/s 134(3)(h) of the Act in
Form AOC-2 is not applicable to your Company.
Material Changes & Commitment affecting the Financial
Position of the Company
There are no material changes affecting the financial position of the
Company subsequent to the close of the Fiscal 2018 till the date of
this Report.
Energy Conservation, Technology Absorption, Foreign
Exchange Earnings And Outgo
The information on conservation of energy, technology absorption
stipulated under Section 134(3)(m) of the Act read with Rule, 8 of
The Companies (Accounts) Rules, 2014, is annexed herewith as
‘Annexure F’
Integrated Report Management Review Statutory Reports Financial Statements 128
Vedanta Limited Integrated Report and Annual Accounts 2017-18
Directors’ Report continued
Acknowledgement
Your Directors place on record their deep appreciation to
employees at all levels for their hard work, dedication and
commitment. The enthusiasm and unstinting efforts of the
employees have enabled the Company to remain as industry leader.
The Board also extends its appreciation for the support and
co-operation your Company has been receiving from its customers,
vendors, dealers, investors, suppliers, business associates and
others associated with the Company. Your Company looks upon
them as partners in its progress and has shared with them the
rewards of growth. It will be the Company’s endeavour to build and
nurture relationships with all its stakeholders.
The Directors also take this opportunity to acknowledge the
support and assistance extended to us by the Government of India,
various State Governments and government departments, financial
institutions, bankers, stock exchanges, communities, shareholders
and investors at large for their continued support.
For and on behalf of the Board of Directors
Place: Mumbai
Dated: May 03, 2018
Navin Agarwal
Executive Chairman
The details of the Foreign Exchange Earnings and Outgo are as
follows:
Particulars
Expenditure in foreign currency
Earnings in foreign currency
CIF Value of Imports
Year Ended
31 March,
2018
1,551
28,394
28,900
(` Crores)
Year Ended
31 March,
2017
1,282
21,138
19,322
Directors Responsibility Statement
Pursuant to section 134 of the Act, with respect to Directors’
Responsibility Statement it is hereby confirmed that:
a. in the preparation of the annual accounts, the applicable
accounting standards has been followed and there is no
material departures from the same;
b. your Directors selected such accounting policies and applied
them consistently and made judgments and estimates that
are reasonable and prudent so as to give a true and fair view
of the state of affairs of the Company at the end of the
financial year, i.e., 31 March, 2018 and of the profit and loss of
the Company for that period;
c. your Directors have taken proper and sufficient care for the
maintenance of adequate accounting records in accordance
with the provisions of the Companies Act, 2013 for
safeguarding the Company’s assets and for preventing and
detecting fraud and other irregularities;
d. your Directors have prepared the annual accounts on a going
concern basis;
e. your Directors have laid down internal financial controls to be
followed by the Company and that such internal financial
controls are adequate and are operating effectively; and
f. your Directors have devised proper systems to ensure
compliance with the provisions of all applicable laws and that
such systems were adequate and operating effectively.
Vedanta Limited Integrated Report and Annual Accounts 2017-18
129
Annexure A
Annual Report on Corporate Social Responsibility Activities
As prescribed under Section 135 of the Companies Act, 2013 read
with Companies (Corporate Social Responsibility Policy) Rules,
2014
1. A brief outline of the Company’s CSR policy, including
overview of projects or programmes proposed to be
undertaken and a reference to the web- link to the CSR
policy and projects or programmes:
Vedanta Limited upholds the belief of coexistence of business
and communities and has relentlessly attempted to engineer a
seamless eco-system of prosperity in the society around
operations.
As a responsible corporate citizen, we believe that those who
reside in our operational areas are our partners and we seek to
foster a mutually benefitting relationship with all our
stakeholders. It is this integration of business and CSR which
provides us the social licence to operate and ushers in a different
developmental paradigm towards sustainable change in society.
As part of our CSR policy, we believe in partnering with
government agencies, development organizations, corporates,
civil societies & community based organizations to carry our
durable and meaningful initiatives.
We also believe that our employees have the potential to
contribute towards building strong communities through sharing
their knowledge and expertise. Hence, we proactively create
opportunities whereby employees can also connect and
contribute.
The Company complies with Section 135 of the Act and the
approach is focused on long- term programmes aligned with
community needs. There are ten broader thematic areas under
which the Company undertakes its community development
projects. The Nand Ghar Project is the Company’s flagship
national initiative, which aims to build new-age Anganwadis for
ensuring the health and learning of young children in rural areas,
and also for becoming a platform of women’s empowerment
and skilling.
2. The Composition of the CSR Committee:
The Company’s Corporate Social Responsibility (CSR)
Committee comprises of six (6) members including four (4)
Independent Directors viz. Mr. Ravi Kant (Chairman),
Mr. K Venkataramanan, Mr. Aman Mehta, Mr. UK Sinha;
one Whole-Time Director viz. Mr. Tarun Jain and one
Non-Executive Director viz. Ms. Priya Agarwal.
3. Average net profit of the Company for the three financial
years
The average net profit of the Company for the last three
financial years is ` 471 crores.
4. Prescribed CSR Expenditure (two percent of the amount
shown as in item 3 above):
Based on the average net profit of the Company for the last
three financial years, the Company is required to spend ` 9.42
crores on its CSR activities. The Company as a good corporate
citizen has spent ` 45 crores in FY 2017-18 on its CSR activities.
5 & 6. Details of CSR spent during the financial year and in case
the Company has failed to spend the two per cent of the
average net profit of the last three financial years or any part
thereof, the Company shall provide the reasons for not
spending the amount in its Board report.
The Company has invested ` 45 Crore in the year 2017-18 under
different projects across its operations. This reaffirms the
commitment of Company to ensure sustainable development of
its business and community together. The detailed business unit
wise CSR spend has been given below in the required format.
On a consolidated basis, the detailed CSR spend for FY 2017-18
has been given below:-
Vedanta Limited
Vedanta Aluminium – Lanjigarh
Vedanta Aluminium – Jharsuguda
Sesa Iron Ore (including Jharkhand)
Sterlite Copper (including expansion)
Cairn Oil & Gas
Total (A)
Vedanta Subsidiaries (India)
TSPL
HZL
MEL
BALCO
BALCO Hospital
Sesa Resources Limited (SRL)
Sesa Mining Corporation Limited (SMCL)
Vedanta Subsidiaries (Global)
SZ
BMM + Gamsberg project
Total (C)
Total (A+B+C)
(` Crores)
Year Ended
31 March,
2018
10.38
4.58
2.24
4.50
23.49
45.19
(` Crores)
Year Ended
31 March,
2018
0.60
92.18
0
3.56
83.32
5.37
0.18
185.21
(` Crores)
Year Ended
31 March,
2018
13.62
13.62
244.33
Expenditure on standalone CSR 2017-18
(All figs in ` Crores)
Amount Outlay
Amount Spent (Direct)
Amount Spent (Overheads)
Cumulative Spending till reporting period
49.59
43.86
1.38
45.19
More on Vedanta’s CSR policy may be seen at: http://www.
vedantalimited.com/investor-relations/corporate-governance.
aspx.
Total (B)
Integrated Report Management Review Statutory Reports Financial Statements 2. Specify the district
(Budget)
Amount Spent (in Crore)
(in Crore)
130
Vedanta Limited Integrated Report and Annual Accounts 2017-18
Annexure A continued
Vedanta Limited, Lanjigarh
Project or Programme
1. Local area or otherwise
Amount
Outlay in
Crore
Sl.
No. CSR Project or Activity Identified
Sector in which the
project is covered
Area
1
Eradicating malnutrition
through Mid-Day Meal
programme
Education &
Nutrition
2 Promoting education
Education
through Khushi Child Care
Centre
3 Village Computer literacy
Education
Programme
Lanjigarh Block
& Behrampur
block
Lanjigarh &
Muniguda
Block
Lanjigarh,
Bissamcuttack
& Muniguda
Block
Name of District/
State
Kalahandi &
Ganjam
Kalahandi &
Rayagada
Kalahandi &
Rayagada
4 Support to schools
Education
Lanjigarh
Kalahandi
0.25
0.1332
programme
5 Scholarship
Education
Lanjigarh &
Muniguda
Block
Kalahandi &
Rayagada
0.06
0.0279
Lanjigarh
Kalahandi
2.95
2.7198
Direct Overhead
2
3.83
0
3.83 Manna
Trust
0.6
0.3588
0
0.3588 Sadhana
0
0
Cumulative
Spend till
reporting
period Amount
Spent, Direct
or
implementing
agency
Rural Trust
0 Vedanta
Foundation
0.1332 Direct
0.0279 Direct
2.7198 PVO
0 PVO
0
0
0
0
0
6 Promoting Preventive health
through Vedanta Hospital
Health
7 Promote Preventive health
through instituting Mobile
Health Unit
Health
8 Maa Santoshi Jankalyan
Hospital, Bankakundru
Health
9 Conducting Health and
Health
awareness camps & Health
Events
10 Providing Safe Drinking
Health
Water & Water Supply at
Kesinga
11 Making 6 Panchayats of
Lanjigarh Block Open
Defecation Free
Health
12 Promotion sustainable
Agriculture practices - SRI,
Sunflower, farmers Club,
Farm activity
Sustainable
Livelihood
13 Promoting Animal
Husbandry project - Poultry
& Goatry, Pisciculture
Sustainable
Livelihood
14 Women SHG Promotion &
Strengthening
Women
Empowerment
15 Employment Centre - Yuva
Pragati Kendra
Sustainable
Livelihood
16 Rural BPO
Sustainable
Livelihood
Lanjigarh &
Muniguda
Block
Lanjigarh
Block
Lanjigarh &
Muniguda
Block
Lanjigarh &
Muniguda
Block
Lanjigarh
Block
Lanjigarh &
Muniguda
Block
Lanjigarh &
Muniguda
Block
Lanjigarh &
Muniguda
Block
Lanjigarh &
Muniguda
Block
Lanjigarh &
Muniguda
Block
Kalahandi &
Rayagada
0
0
Kalahandi
0.25
0.0882
0
0.0882 Maa
Santoshi
Jankalyan
Foundation
Hospital
Kalahandi &
Rayagada
Kalahandi &
Rayagada
0.03
0.0052
0
0.0052 PVO
0.1
0.0774
0
0.0774 RWSS &
Direct
through
contractor
Kalahandi
0.05
0.03
0
0.03 Feedback
0.05
0.0026
0
0.0026 Agriculture
Foundation
Charitable
Trust
0.01
0
0.35
0.24
0
0
Department,
Sadhna
Rural trust
0 Mahashakti
Foundation
0.24 Mahashakti
Foundation
0.12
0.0422
0
0.0422 FIDR
0.1
0.0322
0
0.0322 FIDR
Kalahandi &
Rayagada
Kalahandi &
Rayagada
Kalahandi &
Rayagada
Kalahandi &
Rayagada
Kalahandi &
Rayagada
17 Rehabilitation Colony (NVN)
Infrastructure
NVN
Kalahandi
0.35
0.2979
0
0.2979 Direct
Maintenance
Vedanta Limited Integrated Report and Annual Accounts 2017-18
131
Vedanta Limited, Lanjigarh
Project or Programme
1. Local area or otherwise
Amount
Outlay in
Crore
Cumulative
Spend till
reporting
period Amount
Spent, Direct
or
implementing
agency
through
contractor
0
0
0.0706 Community
participation
0.0333 My Heart
Sl.
No. CSR Project or Activity Identified
Sector in which the
project is covered
Area
Name of District/
State
Direct Overhead
2. Specify the district
(Budget)
Amount Spent (in Crore)
(in Crore)
18 Need based infrastructure
Infrastructure
dev projects
Peripheral
villages
Kalahandi
0.5
0.6234
0
0.6234 Direct
19 Sports & Culture
Stakeholder
Engagament
Peripheral
villages
Kalahandi &
Rayagada
0.12
0.0706
20 Project studies (Impact
studies, Base line studies,
etc
Monitoring &
Documentation
Peripheral
villages
Kalahandi
0.08
0.0333
21 Admin Expenses - Tour &
Admin Expenses Lanjigarh
Kalahandi
1.42
0
1.3774
1.3774 NA
Travel, Coordinator, Salary,
Programme Coordination
22 Trilochanpur Health Outlet Health
Trilochanpur
Kalahandi
0.1
0.025
23 Leaf Plate Making Unit
Livelihood &
Health
Mines villages
in Rayagada
Rayagada
0.15
0.1406
24 Retrospective Study
Programme
Coordination
- Study
Niyamgiri
Mines area
Kalahandi &
Rayagada
0.36
0.2258
0
0
0
0.025 SVS &
Shanti
Maitree
0.1406 Sadhana
Rural Trust
0.2258 FIDR
Total
10
9.0041
1.3774
10.3815
Sl.
No. CSR Project or Activity Identified
Sector in which the
project is covered
Area
Name of District/
State
2. Specify the district
(Budget)
Amount Spent (in Crore)
(in Crore)
Sesa Iron Ore
Project or Programme
1. Local area or otherwise
Amount
Outlay in
Crore
Karnataka, Goa
& Jharkhand
Dharwad
Direct Overhead
1.4638
0.145
Chitradurga
0.04
0.0391
Cumulative
Spend till
reporting
period Amount
Spent, Direct
or
implementing
agency
0
0
0.145 Direct
0.0391 Direct
25 Nand Ghar
26 Evening Study centers
27 Vedanta Computer training
centers
Education
(promoting
education)
Education
(promoting
education)
Education
(employment
enhancing
vocation skills)
28 Support towards
educational needs and
scholarship
Education
(promoting
education)
Megalahalli,
Bommav-
vanagthihalli,
Konanuru
Sanquelim,
Navelim &
Sanvordem
North Goa,
South Goa &
Chitradurga
Megalahalli,
Bommav-
vanagthihalli,
Konanuru,
Amona,
Navelim, Ponda
North Goa &
South Goa
0.0366
0.0275
0
0.0275 Direct as
well as
through
Vedanta
Foundation
0.347
0.2257
0
0.2257 Direct
29 Community Medical
Centers (CMC), Mobile
Health Vans
Health
(promoting
preventive health
care)
Amona,
Navelim,
Sanvordem,
Kirlpal-dabal,
Solye &
Meghanhalli
South Goa &
Chitradurga
0.518
0.2379
0
0.2379 Matruchaya,
SPEECH &
VHAG
Integrated Report Management Review Statutory Reports Financial Statements 132
Vedanta Limited Integrated Report and Annual Accounts 2017-18
Annexure A continued
Sesa Iron Ore
Project or Programme
1. Local area or otherwise
Amount
Outlay in
Crore
Cumulative
Spend till
reporting
period Amount
Spent, Direct
or
implementing
agency
Sl.
No. CSR Project or Activity Identified
Sector in which the
project is covered
Area
Name of District/
State
Direct Overhead
2. Specify the district
(Budget)
Amount Spent (in Crore)
(in Crore)
30 Drinking water project
Health (making
available safe
drinking water)
Malappanahatti
& Konanur,
Sonshi
Chitradurga, &
North Goa
0.55
0.4539
0
0.4539 Direct
31 Sanitation units
Health
(Sanitation)
Medikeripura ,
Manoharpura
Chitradurga,
Manohapur
0.108
0.1068
0.064
0.0132
0
0
0.1068 Direct
0.0132 Direct
32 Health check-up and
Awareness camps(cataract
camp, Pediatric camps,
breasts feeding and
awareness camp)
Health
(promoting
preventive health
care)
Amona,
Navelim,
Sanvordem,
Kirlpal-dabal,
Solye &
Meghanhalli
33 Agriculture rejuvenation and
dairy farming project
Sustainable
livelihood
(livelihood
enhancement
34 Skill development
Non-Farm
35 Women SHG formation &
training
Empowering
Women
36 Branding & Communication Branding &
Communication
37 Baseline & CSR impact
assessment
Baseline & CSR
impact
assessment
Amona,
Navelim,
Meghanhalli,
Madikaripura
Kirlpal - dabal
South Goa
Megalahalli,
Bommav-
vanagthihalli,
Konanuru,
Across
operational
areas in Goa &
Chitradurga
Across
operational
areas in Goa &
Chitradurga
38 Sports & cultural activities at
Promotion of
sport and culture
activity
Megalahalli,
Bommav-
vanagthihalli,
Konanuru,
Kirlpal, Amona,
Navelim,
local level
Total
North Goa,
South Goa &
Chitradurga
North Goa &
Chitradurga
0.976
0.7317
0
0.7317 Direct
South Goa
0.01
0
Chitradurga
0.0725
0.0566
0
0
0 -
0.0566 Direct &
through
MYRADA
North Goa,
South Goa &
Chitradurga
North Goa,
South Goa &
Chitradurga
North Goa,
South Goa &
Chitradurga
0.063
0.0124
0
0.0124 Direct
0.27
0.0993
0
0.0993 Direct
0.15
0.0937
0
0.0937 Direct
4.6689
2.2428
0
2.2428
Vedanta Limited – Jharsuguda
Project or Programme
1. Local area or otherwise
Amount
Outlay in
Crore
2. Specify the district
(Budget)
Amount Spent (in Crore)
(in Crore)
Sl.
No. CSR Project or Activity Identified
Sector in which the
project is covered
Area
Name of District/
State
Direct Overhead
39 MHU
Health, Water &
Sanitation
Jharsuguda
Jharsuguda
0.36
0.39
40 Project Jagruti: Prevention
of HIV/ AIDS
Health, Water &
Sanitation
Jharsuguda
Jharsuguda
0.05
0.02
Cumulative
Spend till
reporting
period Amount
Spent, Direct
or
implementing
agency
0
0
0.39 Wockhardt
Foundation/
Dist. Health
Dept.
0.02 SARC/
Health
Institution
Vedanta Limited Integrated Report and Annual Accounts 2017-18
133
Vedanta Limited – Jharsuguda
Project or Programme
1. Local area or otherwise
Amount
Outlay in
Crore
2. Specify the district
(Budget)
Amount Spent (in Crore)
(in Crore)
Sl.
No. CSR Project or Activity Identified
Sector in which the
project is covered
Area
Name of District/
State
Direct Overhead
41 Health & Awareness Camp Health, Water &
Jharsuguda
Jharsuguda
0.2
0.05
Sanitation
Health, Water &
Sanitation
Health, Water &
Sanitation
42 Sanitation Initiative:
Awareness camps and
Construction of toilets
43 Drinking water - Pond
Reno., Drain renov.
initiatives
Jharsuguda
Jharsuguda
0.1
.0018
Jharsuguda
Jharsuguda
0.1
0.06
44 Village cleaning
Health, Water &
Sanitation
Jharsuguda
Jharsuguda
0.22
0.24
45 Ophthalmic Centre
Health, Water &
Sanitation
46 Vedanta Village Computer
Literacy Programme
Quality
Education
Jharsuguda
Jharsuguda
0.25
0.00
Jharsuguda
Jharsuguda
0.03
0.04
47 Vedanta DAV Scholarship
Programme
48 Project Vedanta Vidyarthi
Vikas Yojana (VVVY) and
other educational initiative
Quality
Education
Quality
Education
Jharsuguda
Jharsuguda
0.50
0.59
Jharsuguda
Jharsuguda
0.15
0.21
49 Women Empowerment:
Subhalaxmi Co-op,
Capacity Building, Micro
Enterprises
50 Farm Activity: Project
Jeevika Samridhhi & other
initiative
Sustainable
Livelihood &
Promotion of
agriculture
Sustainable
Livelihood &
Promotion of
agriculture
Jharsuguda
Jharsuguda
0.52
0.06
Jharsuguda
Jharsuguda
0.3
0.03
51 Supporting Sports & Culture
Jharsuguda
Jharsuguda
0.08
0.06
events
Sports, Culture &
Social Events
52 Plantation & Maintenance Bio Investment Jharsuguda
Jharsuguda
0.18
0.21
53 Initiative at R & R Colony : O
Jharsuguda
Jharsuguda
0.81
1.50
& M, Health, Water,
Education, Sanitation, Infra,
Sports & Culture
Development
Initiatives in
Resettlement &
Rehabilitation
Colony
Cumulative
Spend till
reporting
period Amount
Spent, Direct
or
implementing
agency
0
0
0
0
0
0
0
0
0
0
0
0
0
0.05 Health
Institution/
Community
member
.0018 RWSS/
Community
Member
0.06 Direct
through
Community
Member
0.24 Direct
through
Contractor
&
Community
Member
0.00 NGO
Partner
0.04 Vedanta
Foundation,
Village
Panchayat,
School
Authority
0.59 DAV
institution
0.21 AJKA/
Govt.
Education
Department,
Village
Education
Department
0.06 Subhalaxmi
Co-op and
NGO
partners
0.03 SEWA,
NABARD,
Agriculture
Dept,
Horticulture
Dept
0.06 Direct
through
Community
Member
0.21 NGO
Partner &
Govt. dept
1.50 Direct
through
Contractor
Integrated Report Management Review Statutory Reports Financial Statements 134
Vedanta Limited Integrated Report and Annual Accounts 2017-18
Annexure A continued
Vedanta Limited – Jharsuguda
Project or Programme
1. Local area or otherwise
Amount
Outlay in
Crore
Sl.
No. CSR Project or Activity Identified
Sector in which the
project is covered
Area
Name of District/
State
Direct Overhead
2. Specify the district
(Budget)
Amount Spent (in Crore)
(in Crore)
54 Basic and Social
Infrastructure Projects
Community
Infrastructure
Jharsuguda
Jharsuguda
0.59
0.91
0
0.91 Direct
55 Nand Ghar
Key Signature
Project "Nand
Ghar"
Jharsuguda
Jharsuguda
1.25
0.01
56 Programme Coordination
exp, EVP, Study,
Coordinator, Tour & Travel
etc.
Jharsuguda
Admin Expenses:
Other
programme
coordination
expenses Need
Assessment and
Impact
Assessment study
Jharsuguda
0.25
0.22
Total
5.94
4.58
0
4.58
SIIL – Tuticorin
Project or Programme
1. Local area or otherwise
Amount
Outlay in
Crore
Sl.
No. CSR Project or Activity Identified
Sector in which the
project is covered
Area
Name of District/
State
Direct Overhead
57 Project Ilam Mottukal
Education
Thoothukudi
Thoothukudi
1.80
1.869
0.00
2. Specify the district
(Budget)
Amount Spent (in Crore)
(in Crore)
Cumulative
Spend till
reporting
period Amount
Spent, Direct
or
implementing
agency
through
Contractor
&
Community
Member
0.01 PAN India
Project
- MoW&C
0.22 NGO
Partner,
Community,
Own
0
0
Cumulative
Spend till
reporting
period Amount
Spent, Direct
or
implementing
agency
1.869 Humana
people to
people
India
58 Teach Them Young
Education
Thoothukudi
Thoothukudi
0.15
0.2611
0.00
0.2611 Direct
Educational Scholarship
59 Blood Donation Camp
60 Health care on wheels
Health
Health
Thoothukudi
Thoothukudi
0.0025
0.0014
Thoothukudi
Thoothukudi
0.30
0.05
0.05
0.05
0.00
0.00
0.00
0.0014 Direct
0.05 Direct
0.05 Direct
61 Maintenance of Health care
Health
Thoothukudi
Thoothukudi
on wheels
62 Child care centers
63 Establishment of Kitchen
Gardening -Distribution of
seed kits to families
Child
Development
Agriculture &
Animal
Husbandry
Thoothukudi
Thoothukudi
0.23
0.159
0.00
0.159 Vedanta
Foundation
Thoothukudi
Thoothukudi
0.01
0.01
0.00
0.01 Direct
64 Irrigation channel cleaning Agriculture &
Thoothukudi
Thoothukudi
0.15
0.0569
0.00
0.0569 Direct
65 Cattle Camp
Animal
Husbandry
Agriculture &
Animal
Husbandry
Thoothukudi
Thoothukudi
0.0025
0.00
0.00
0.00 Direct
66 Vocational training to Youth
Livelihood
Thoothukudi
Thoothukudi
0.87
1.2523
0.00
1.2523 IL & FS
- Tamira Muthukal
67 Honorarium for NGO's
Sterlite Women
Empowerment
68 Support to Federations -
Towards entrepreneurship
Sterlite Women
Empowerment
Thoothukudi
Thoothukudi
0.09
0.06
0.00
0.06 Direct
Thoothukudi
Thoothukudi
0.03
0.00
0.00
0.00 Direct
Vedanta Limited Integrated Report and Annual Accounts 2017-18
135
SIIL – Tuticorin
Project or Programme
1. Local area or otherwise
Amount
Outlay in
Crore
Cumulative
Spend till
reporting
period Amount
Spent, Direct
or
implementing
agency
Sl.
No. CSR Project or Activity Identified
Sector in which the
project is covered
Area
Name of District/
State
Direct Overhead
2. Specify the district
(Budget)
Amount Spent (in Crore)
(in Crore)
69 Women's Day Celebrations
/ Seminars & Exhibition
Sterlite Women
Empowerment
70 Child Friendly Villages
71 Drinking water supply
Model Village
Initiatives
Model Village
Initiatives
Thoothukudi
Thoothukudi
0.08
0.065
0.00
0.065 Direct
Thoothukudi
Thoothukudi
0.01
0.0018
0.00
0.0018 Direct
Thoothukudi
Thoothukudi
0.00
0.2765
0.00
0.2765 Direct
72 Field level workers
Documentation Thoothukudi
Thoothukudi
0.07
0.1214
0.00
0.1214 Direct
73 Photos and Banners
Documentation Thoothukudi
Thoothukudi
0.05 0.00967
0.00 0.00967 Direct
74 Study
75 Vision to all
Total (INR Cr)
Documentation Thoothukudi
Thoothukudi
0.10
0.0684
Eye test for
students
Thoothukudi
Thoothukudi
0.00
0.00
0.00
0.00
0.0684 Direct
0.00 Aravinth
Eye
hospital
3.99
4.50
0.0
4.50
Cairn Oil and Gas
Project or Programme
1. Local area or otherwise
Amount
Outlay in
Crore
Cumulative
Spend till
reporting
period Amount
Spent, Direct
or
implementing
agency
Sl.
No. CSR Project or Activity Identified
Sector in which the
project is covered
Area
Name of District/
State
Direct Overhead
2. Specify the district
(Budget)
Amount Spent (in Crore)
(in Crore)
76 Project Saath, support to
Specially abled students on
skill development,
infrastructural support to
schools, etc.
Children’s
Wellbeing &
Education
Barmer
Rajasthan
2.47
1.95
0
1.95 Yuva
Unstoppable
77 Pahounch – Girls and
children health and
nutritional supplements;
micro level interventions;
MLI under PPP model
Health
Gujarat
Gujarat
0.95
0.95
0
0.95 CHETNA
78 Running MHV’s in Rajasthan
and Gujarat; Care India
Mother and Child health,
Govt Hospital cleaning;
Specialist Doctors
Water &
Sanitation
79 Construction of toilets
under “Swachch Bharat
Mission”, individual
household toilets/bathroom
construction and school
toilets and providing Safe
drinking water to rural
communities of Barmer at a
nominal cost
80 NABARD Watershed
Development, Dairy
Development and NRM &
Farm Based Initiatives
Agriculture &
Livestock
Barmer
Rajasthan
4.24
4.34
0
4.34 Helpage
India,
Wockhardt
Foundation,
Dhara
Sansthan
Barmer &
Jodhpur
Rajasthan
8.68
6.05
0
6.05 RDO,
Waterlife,
Fontus
Barmer
Rajasthan
2.75
2.17
0
2.17 BAIF, SURE
Integrated Report Management Review Statutory Reports Financial Statements
136
Vedanta Limited Integrated Report and Annual Accounts 2017-18
Annexure A continued
Cairn Oil and Gas
Project or Programme
1. Local area or otherwise
Amount
Outlay in
Crore
Sl.
No. CSR Project or Activity Identified
Sector in which the
project is covered
Area
Name of District/
State
Skill
Development
Barmer, Jalore,
Jodhpur
Rajasthan
Direct Overhead
1.77
2.86
2. Specify the district
(Budget)
Amount Spent (in Crore)
(in Crore)
81 Skills development through
CEC Barmer, ITI, GEP,
women empowerment,
CCoE etc.
82 Green Belt Atria
Environment,
Restoration &
Protection
Barmer
Rajasthan
0.17
0.22
83 Project Divyang - support
to 3 paralympics and
Pink City Marathon
Sports & Culture Barmer
0.38
0.37
Rajahmundry,
AP, (East
Godavari
District)
84 Construction of Pavillion,
Bus Stand, Circle
construction, etc.
Infrastructure
Development
85 Micro Level Interventions
based on days of national
importance
Programmes of
National
Importance
Barmer
Rajasthan
0.33
1.25
Barmer
Rajasthan
0.35
0.25
86 Branding and
IEC Campaign Barmer
Rajasthan
0.2
0
communication for CSR
projects in Barmer.
87 Baseline or impact
assessments, etc.
Programme &
Admin
Barmer
Rajasthan
0.71
1.08
Andhra
Pradesh
2
2
88 CSR Contribution to
Others
Ravva
District Collector’s fund;
Strengthening the existing
Cairn NASSCOM
Knowledge Centre (CNKC)
in Challapalli Village and
initiation of new CNKC at
Gollavilli Village in
Uppalaguptham Mandal.
Total (INR Cr)
Grand Total
Cumulative
Spend till
reporting
period Amount
Spent, Direct
or
implementing
agency
0
0
0
0
0
0
0
0
2.86 IL&FS,
NTTF
0.22 Nimbus
0.37 Paralympic
Committee
of India
1.25 Direct
0.25 BJSS
0 Direct
1.08 NRMC
2 District
Administra-
tion -East
Godavari
(AP)
25.00
49.59
23.49
43.86
0
1.38
23.49
45.19
* Difference in sum of activity wise expenditure and total expenditure is due to round off of activity wise figures.
7. A responsibility statement of the CSR Committee that the implementation and monitoring of CSR Policy, is in compliance with
CSR objectives and Policy of the Company.
The CSR Committee of the Company hereby confirms that the implementation and monitoring of CSR Policy, is in compliance with
CSR objectives and policy of the Company.
Ravi Kant
Non-Executive Independent Director
(Chairman of CSR Committee)
DIN: 00016184
Vedanta Limited Integrated Report and Annual Accounts 2017-18
137
Annexure B
Annual Report on Corporate Social Responsibility Activities
Disclosure in Board’s report as per provisions of Section 197 of the Companies Act, 2013 read with Rule 5(1) of the Companies
(Appointment and Remuneration of Managerial Personnel) Rules, 2018
Sr.
No. Requirement
1
Ratio of the remuneration of each Director to the median
remuneration of the employees of the company for
the financial year
Name of the Director
Category
Disclosure
Navin Agarwal (1)
Kuldip Kumar Kaura (2)
Tarun Jain
GR Arun Kumar
Thomas Albanese (3)
Chairman
Interim Chief Executive
Officer
Whole-Time Director
Whole-Time Director and
Chief Financial Officer
Whole-Time Director and
Chief Executive Officer
Name of the Director
Category
2 Percentage increase in remuneration of each Director,
Navin Agarwal
Chairman
Chief Financial Officer,Chief Executive Officer,
Company Secretary or Manager, if any, in the financial year
Kuldip Kumar Kaura
Tarun Jain
GR Arun Kumar
Bhumika Sood
Thomas Albanese
Interim Chief Executive
Officer
Whole-time Director
Whole-Time Director and
Chief Financial Officer
Company Secretary
Whole-time Director and
Chief Executive Officer
Ratio
363.16
25.38
249.66
80.12
89.44
Ratio
Nil
Nil
Nil
30%
8%
Nil
3 Percentage increase in the median remuneration of employees in the
financial year
4 Number of permanent employees on the rolls of company
5 Average percentile increase already made in the salaries of
employees other than the managerial personnel in the last financial
year and its comparison with the percentile increase in the
managerial remuneration and justification thereof and point out if
there are any exceptional circumstances for increase in the
managerial remuneration
The median remuneration of the employees in the financial year
was increased by 5.5%
There were 9543 employees of Vedanta Limited as on 31 March
2018
Average increment in FY ‘17-’18 for Managerial Personnel
(M4 and Above): 13.03%
Average Increment in FY ‘17-’18 for Non-Managerial Personnel
(M5 and Below): 15.22%
No exceptional increase given in the managerial remuneration.
6 Affirmation that the remuneration is as per the remuneration policy
Yes
of the Company
1. The ratio inclusive of remuneration received from Vedanta Resources Plc, UK, the Holding Company, for Mr. Navin Agarwal is 375.41.
2. For a period from September 1, 2017 to March 31, 2018. The ratio inclusive of remuneration received from Vedanta Resources Plc, UK, the Holding Company, for Mr. Kuldip Kumar Kaura is 112.92.
3. For a period from April 1, 2017 to August 31, 2017. The ratio inclusive of remuneration received from Vedanta Resources Plc, UK, the Holding Company, for Mr. Thomas Albanese is 125.47.
Integrated Report Management Review Statutory Reports Financial Statements 138
Vedanta Limited Integrated Report and Annual Accounts 2017-18
Annexure C
Form No. MGT-9
Extract of Annual Return
as on the financial year ended on 31 March, 2018
[Pursuant to section 92(3) of the Companies Act, 2013 and Rule 12(1) of the Companies
(Management and Administration) Rules, 2014]
I. Registration and other details:
1 CIN
2. Registration Date
3. Name of the Company
L13209MH1965PLC291394
June 25, 1965
Vedanta Limited
4. Category / Sub-Category of the Company
Public Listed Company
5. Address of the Registered office and contact details
1st Floor, ‘C’ wing, Unit 103, Corporate Avenue, Atul Projects,
Chakala, Andheri (East), Mumbai 400093, Maharashtra
Email id: Comp.Sect@vedanta.co.in
Tel: +91 22 66434500
Fax: +91 22 66434530
Website: www.vedantalimited.com
6. Whether listed company
Yes
7. Name, Address and Contact details of Registrar and Transfer Agent,
if any
Karvy Computershare Private Limited
Karvy Selenium Tower No.B, Plot No.31-32, Gachibowli, Financial
District,
Nanakramguda, Serilingampally
Hyderabad, Telangana – 500 032, India
Email id: einward.ris@karvy.com
Tel: +91 40 33211000 / 67162222
Fax: +91 40 23311968
Website: www.karvycomputershare.com
II. Principal Business Activities of the Company
All the business activities contributing 10 % or more of the total turnover of the company shall be stated:-
S.
No. Name and Description of main products / services
1. Copper & Copper products
2. Aluminum & Aluminum products
3. Extraction of crude petroleum and natural gas
NIC Code of the
Product/service
24201
24202
0610/0620
% to total turnover
of the Company
46.46%
34.59%
10.95%
III. Particulars of Holding, Subsidiary and Associate Companies:
S.
No. Company*
Twin Star Holding Limited
1
2 Finsider International Company Limited
3 Westglobe Limited
4 Welter Trading Limited
CIN/GLN
-
-
-
-
NOTE * All the above entities are subsidiaries of Volcan Investment Limited, the ultimate Holding Company
Holding/
Subsidiary/Associate
Holding Company
Holding Company
Holding Company
Holding Company
Holding/
Subsidiary/
Associate
Applicable
Section
37.11%
10.80%
1.19%
1.03%
2(46)
2(46)
2(46)
2(46)
Vedanta Limited Integrated Report and Annual Accounts 2017-18
139
III. Particulars of Holding, Subsidiary and Associate Companies:
Holding/
Subsidiary/Associate
Holding/
Subsidiary/
Associate
Applicable
Section
S.
No. Company*
1 Hindustan Zinc Limited
2 Bharat Aluminium Company Limited
3 MALCO Energy Limited
4 Talwandi Sabo Power Limited
5 Sesa Resources Limited
6 Sesa Mining Corporation Limited
7 Sterlite Ports Limted
8 Maritime Ventures Private Limited
9 Goa Sea Port Private Limited
10 Vizag General Cargo Berth Private Limited
11 Paradip Multi Cargo Berth Private Limited
12 Copper Mines of Tasmania Pty Limited
13 Thalanga copper mines Pty Limited
14 Monte Cello B.V.
15 Bloom Fountain Limited
16 Twinstar Energy Holding Limited
17 Twinstar Mauritius Holding Limited
18 Western Clusters Limited
19 Sterlite (USA) Inc.
20 Fujairah Gold FZC
21 THL Zinc Ventures Ltd
22 THL Zinc Ltd
23 THL Zinc Holding B.V.
24 THL Zinc Namibia Holdings (Proprietary) Limited
25 Skorpion Zinc (Proprietary) Limited
26 Skorpion Mining Company (Proprietary) Limited
27 Namzinc (Proprietary) Limited
28 Amica Guesthouse (Proprietary) Limited
29 Rosh Pinah Healthcare (Proprietary) Limited
30 Black Mountain Mining (Proprietary) Limited
31 Vedanta Lisheen Holdings Limited
32 Vedanta Lisheen Mining Limited
33 Killoran Lisheen Mining Limited
34 Killoran Lisheen Finance Limited
35 Lisheen Milling Limited
36 Vedanta Exploration Ireland Limited
37 Lisheen Mine Partnership
38 Lakomasko BV
39 Cairn India Holdings Limited
40 Cairn Energy Hydrocarbons Ltd
41 Cairn Exploration (No. 2) Limited
42 Cairn Energy Gujarat Block 1 Limited
43 Cairn Energy Discovery Limited
44 Cairn Energy India Pty Limited
45 CIG Mauritius Holdings Private Limited
46 CIG Mauritius Private Limited
47 Cairn Lanka (Pvt) Ltd
48 Cairn South Africa Proprietary Limited
49 Avanstrate (Japan) Inc. (ASI)
50 Avanstrate (Korea) Inc.
51 Avanstrate (Taiwan) Inc.
52 Sesa Sterlite Mauritius Holdings Limited
Associate
1
RoshSkor Township (Pty) Ltd
2 Gaurav Overseas Private Limited
3 Goa Maritime Private Limited
4 Madanpur South Coal Company Limited
5 Rampia Coal Mine and Energy Private Limited
NOTES:
1. Following Companies became Subsidiaries during the year:
Avanstrate (Japan) Inc. (ASI) on December 28, 2017
Avanstrate (Korea) Inc. on December 28, 2017
Avanstrate (Taiwan) Inc. on December 28, 2017
CIN/GLN
L27204RJ1966PLC001208
U74899DL1965PLC004518
U31300TN2001PLC069645
U40101PB2007SGC031035
U13209GA1965PLC000030
U13209GA1969PLC000091
U40109TN2010PLC084216
U61200TN2013PTC091762
U63000TN2016PTC111287
U35100TN2010PTC075408
U35100TN2011PTC079116
----
----
----
----
----
----
----
----
----
----
----
----
----
----
----
----
----
----
----
----
----
----
----
----
----
----
----
----
----
----
----
----
----
----
----
----
----
----
----
----
----
Subsidiaries
Subsidiaries
Subsidiaries
Subsidiaries
Subsidiaries
Subsidiaries
Subsidiaries
Subsidiaries
Subsidiaries
Subsidiaries
Subsidiaries
Subsidiaries
Subsidiaries
Subsidiaries
Subsidiaries
Subsidiaries
Subsidiaries
Subsidiaries
Subsidiaries
Subsidiaries
Subsidiaries
Subsidiaries
Subsidiaries
Subsidiaries
Subsidiaries
Subsidiaries
Subsidiaries
Subsidiaries
Subsidiaries
Subsidiaries
Subsidiaries
Subsidiaries
Subsidiaries
Subsidiaries
Subsidiaries
Subsidiaries
Subsidiaries
Subsidiaries
Subsidiaries
Subsidiaries
Subsidiaries
Subsidiaries
Subsidiaries
Subsidiaries
Subsidiaries
Subsidiaries
Subsidiaries
Subsidiaries
Subsidiaries
Subsidiaries
Subsidiaries
Subsidiaries
----
U45200MH1989PTC052534
U61200GA2003PTC003250
U10300CT2006PLC020006
U10101OR2008PTC009827
Associate
Associate
Associate
Associate
Associate
64.92%
51%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
69%
74%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
51.63%
51.63%
51.63%
100%
50%
50%
50%
18.05%
17.39%
2(87)
2(87)
2(87)
2(87)
2(87)
2(87)
2(87)
2(87)
2(87)
2(87)
2(87)
2(87)
2(87)
2(87)
2(87)
2(87)
2(87)
2(87)
2(87)
2(87)
2(87)
2(87)
2(87)
2(87)
2(87)
2(87)
2(87)
2(87)
2(87)
2(87)
2(87)
2(87)
2(87)
2(87)
2(87)
2(87)
2(87)
2(87)
2(87)
2(87)
2(87)
2(87)
2(87)
2(87)
2(87)
2(87)
2(87)
2(87)
2(87)
2(87)
2(87)
2(87)
2(6)
2(6)
2(6)
2(6)
2(6)
Integrated Report Management Review Statutory Reports Financial Statements 140
Vedanta Limited Integrated Report and Annual Accounts 2017-18
Annexure C continued
IV. Share Holding Pattern (Equity Share Capital Breakup as percentage of total Equity)
a) Category-wise Share Holding
Sub-Total A(1) :
251696
Category
Code
Category of Shareholder
No. of shares held at the
beginning of the year April 1, 2017
No. of shares held at the
end of the year March 31, 2018
Demat
Physical
(III)
(IV)
Total
(V)
% of Total
Shares
Demat
Physical
(VI)
(VII)
(VIII)
Total
(IX)
% of Total
Shares
% Change
during the
year
(X)
(XI)
(I)
(A)
(1)
(a)
(b)
(c)
(d)
(e)
(2)
(a)
(b)
(c)
(d)
(e)
(B)
(1)
(a)
(b)
(c)
(d)
(e)
(f)
(g)
(h)
(i)
(2)
(a)
(b)
(c)
(II)
Promoter and Promoter
Group
Indian
Individual /HUF
Central Government/
State Government(s)
Bodies Corporate
Financial Institutions /
Banks
Others
Foreign
Individuals (NRIs/Foreign
Individuals)
Bodies Corporate
Institutions
Qualified Foreign Investor
Others
Sub-Total A(2) :
Total A=A(1)+A(2)
Public Shareholding
Institutions
Mutual Funds / UTI
Financial Institutions /
Banks
Central Government /
State Government(s)
Venture Capital Funds
Insurance Companies
Foreign Institutional
Investors
Foreign Venture Capital
Investors
Qualified Foreign Investor
Others
Sub-Total B(1) :
Non-Institutions
Bodies Corporate
Individuals
(i) Individuals holding
nominal share capital upto
` 2 lakh
(ii) Individuals holding
nominal share capital in
excess of ` 2 lakh
Others
Clearing Members
Foreign Bodies
Foreign Bodies-DR
Foreign Nationals
I E P F
NBFC
Non Resident Indians
NRI Non-Repatriation
Overseas Corporate
Bodies
160656
0.00
(0.01)
251696
0
0
0
0
0
0
0
0
0
0
0
0
251696
0.01
160656
0
0
0
0
0.00
0.00
0.00
0.00
0
0
0
0
251696
0.01
160656
0
0.00
0
0
0
0
0
0
0
0
0
0
0
0
160656
0
1764165424
0 1764165424
59.51
1764165424
0 1764165424
0
0
0
0
0
0
0
0
0
0.00
0.00
0.00
0
0
0
0
0
0
0
0
0
1764165424
0 1764165424
59.51
1764165424
0 1764165424
1764417120
0 1764417120
59.52 1764326080
0 1764326080
67683076
9200
67692276
2.28
224144231
7200
224151431
119848315
40420 119888735
4.04 239318297
36420 239354717
0
0
21108231
0
0
0
0
0
0.00
0.00
0
0
0
0
0
0
21108231
0.71
20660864
0 20660864
0.00
0.00
0.00
0.00
0.00
0.00
47.46
0.00
0.00
0.00
47.46
47.46
6.03
6.44
0.00
0.00
0.56
0.00
0.00
0.00
0.00
(0.01)
0.00
(12.05)
0.00
0.00
0.00
(12.05)
(12.06)
3.75
2.40
0.00
0.00
(0.15)
483120557
14584
483135141
16.30
670925115
9784 670934899
18.05
1.75
0
0
0
0
0
0
0
0
0
0.00
0.00
0.00
0
0
0
0
0
0
0
0
0
0.00
0.00
0.00
691760179
64204 691824383
23.33 1155048507
53404
1155101911
31.08
0.00
0.00
0.00
7.75
62603509
4039721
66643230
2.25 314098655
792916
314891571
8.47
6.22
125064975
15896874 140961849
4.76 164709999
14607056
179317055
4.82
0.06
17702855
9763581
7794
2803111
0
0
87370
3052079
1068338
0
0
0
0
0
0
0
0
169156
0
0
17702855
0.60
24166559
9763581
7794
2803111
0
0
87370
3221235
1068338
0.33
0.00
0.09
0.00
0.00
0.00
0.11
0.04
6134255
7794
2359415
100
1060879
32660
3730460
2335948
0
0.00
1100
0
0
0
0
0
0
0
0
0
24166559
0.65
0.05
6134255
7794
2359415
100
1060879
32660
2335948
0.17
0.00
0.06
0.00
0.03
0.00
0.10
0.06
(0.16)
0.00
(0.03)
0.00
0.03
0.00
(0.01)
0.02
1100
0.00
0.00
164599
3895059
Vedanta Limited Integrated Report and Annual Accounts 2017-18
141
No. of shares held at the
beginning of the year April 1, 2017
No. of shares held at the
end of the year March 31, 2018
% of Total
Shares
(VI)
0.13
1.52
0.00
Category
Code
Category of Shareholder
(I)
(II)
Demat
Physical
(III)
(IV)
Total
(V)
Demat
Physical
(VII)
(VIII)
Total
(IX)
% of Total
Shares
(X)
ESOS Trusts
Trusts
Qualified Foreign Investor
3984256
0
3984256
2578001
42611216
45189217
0
0
0
9233871
5904930
0
9233871
2756
5907686
0
0
0
Sub-Total B(2) :
Total B=B(1)+B(2) :
Total (A+B) :
228715869
62716967 291432836
9.83 533776625
15567327 549343952
920476048
62781171 983257219
33.16 1688825132
15620731
1704445863
2684893168
62781171 2747674339
92.68 3453151212
15620731 3468771943
0.25
0.16
0.00
14.77
45.85
93.32
Shares held by
custodians, against which
Depository Receipts have
been issued
Promoter and Promoter
Group*
Public
99292708
117727192
0
0
99292708
117727192
3.35
3.97
99292708
149131988
0
0
99292708
149131988
2.67
4.01
(d)
(C)
(1)
(2)
Grand Total (A+B+C) :
2901913068
62781171 2964694239
100.00 3701575908
15620731 3717196639
100.00
*Twinstar Holdings Limited (Foreign Promoter) holds 2,48,23,177 ADS representing 99292708 equity shares. One (1) American Depository Shares represents Four (4) equity shares
During the FY 2017-18, 2,400 equity shares were allotted from the abeyance category.
% Change
during the
year
(XI)
0.12
(1.36)
0.00
4.94
12.69
0.63
(0.68)
0.04
0.00
Pursuant to the Scheme of Amalgamation & Arrangement, on April 28, 2017 there were 752,500,000 equity shares of Re.1/- each issued and alloted to the shareholders of erstwhile Cairn India
Limited. Accordingly, the percentage of shareholding as on March 31, 2018 has been diluted.
b) Shareholding of Promoter / Promoter Group
Shareholding at the beginning of the year
April 1, 2017
Shareholding at the end of the year
March 31, 2018
Change in
Share-
holding
during the
year
Sr.
no. Shareholder’s Name
Twin Star Holdings Limited*
1
2 Finsider International Company Limited
3 Westglobe Limited
4 Welter Trading Limited
5 Agarwal Galvanising Private Limited
6 Hare Krishna Packaging Private Limited
7
Lakecity Ventures Private Limited
8 Sterlite Metal Rolling Mills Private Limited
9 Richter Holdings Limited, Cyprus
10 Vedanta Resources Cyprus Limited
11 Vedanta Resources Holdings Limited
12 Vedanta Finance UK Limited
13 Monte Cello NV (MCNV) Netherland
Antilles
14 Vedanta Resources Plc, UK
15 Ankit Agarwal
16 Pratik Pravin Agarwal
17 Suman Didwania
18 Sakshi Mody
19 Pravin Agarwal
20 Dwarkaprasad Agarwal
21 Anil Agarwal
22 Vedvati Agarwal
23 Navin Agarwal
24 Kiran Agarwal
25 Agnivesh Agarwal
26 Priya Agarwal
Total
No. of
Shares
1379377457
401496480
44343139
38241056
0
0
0
0
0
0
0
0
0
0
110000
36000
87696
18000
160
0
0
0
0
0
0
0
% of total
Shares of
the
Company
46.53
13.54
1.50
1.29
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
% of Shares
pledged /
encumbered
to total
shares
% of total
Shares of
the
Company
% of Shares
pledged /
encumbered
to total shares
No. of
Shares
No. of
shares
0 1379377457
0 401496480
37.11
10.80
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
44343139
38241056
0
0
0
0
0
0
0
0
0
0
36300
0
87696
18000
18660
0
0
0
0
0
0
0
1.19
1.03
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
%
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0
0
0
0
0
0
0
0
0
0
0
0
0
0
(73700)
(36000)
0
0
18500
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
*Twinstar Holdings Limited (Foreign Promoter) holds 2,48,23,177 ADS representing 99292708 equity shares. One (1) American Depository Shares represents Four (4) equity shares
Pursuant to the Scheme of Amalgamation & Arrangement, on April 28, 2017 there were 752,500,000 equity shares of Re.1/- each issued and alloted to the shareholders of erstwhile Cairn India
Limited. Accordingly, the percentage of shareholding as on March 31, 2018 has been diluted.
1863709988
62.86
0 1863618788
50.14
(91200)
(0.004)
Integrated Report Management Review Statutory Reports Financial Statements
142
Vedanta Limited Integrated Report and Annual Accounts 2017-18
Annexure C continued
c) Change in Promoters’/Promoter Groups’ Shareholding (please specify, if there is no change)
Shareholding at the beginning
of the year April 1, 2017
Transaction details
Cumulative Holding during
the year 2017-18
Sr.
No.
Name of the Promoter/Promoter
Group
No. of
shares
% of total
Shares of
the
Company
1 Ankit Agarwal
110000
0.00
2 Pratik Pravin Agarwal
3 Pravin Agarwal
36000
160
0.00
0.00
Sale
Purchase Date
42000
31700
36000
– June 13, 2017
– December 27, 2017
– August 31, 2017
–
18500 April 6, 2017
% of total
Shares of
the
Company
0.00
0.00
0.00
0.00
No. of
shares
68000
36300
0
18660
Reason
Sale
Sale
Sale
Purchase
d) Shareholding Pattern of top ten Shareholders (other than Directors, Promoters and Holders of GDRs and ADRs):
Sr.
no. Name of the Shareholder
Shareholding at the beginning
of the year April 1, 2017
% of total
shares of the
company
No. of
shares
Transaction details
Sale
Purchase Date
Cumulative Holding during
the year 2017-18
% of total
shares of the
company
No. of
shares
1
Life Insurance Corporation of
India
115812033
3.91
– 153409605 19/05/2017
–
110000 07/07/2017
110000
2783000
1429315
1933537
1961502
2759386
2650829
1780000
1180678
1250000
541000
808491
466000
500000
1518000
645784
1622174
666990
461390
640743
727000
1743000
1047431
910833
144000
389000
726419
450000
1000000
– 07/07/2017
– 11/08/2017
– 18/08/2017
– 25/08/2017
– 01/09/2017
– 08/09/2017
–
15/09/2017
– 22/09/2017
– 06/10/2017
–
13/10/2017
– 20/10/2017
– 27/10/2017
– 31/10/2017
– 03/11/2017
–
–
10/11/2017
17/11/2017
– 24/11/2017
– 01/12/2017
–
–
12/01/2018
19/01/2018
– 26/01/2018
– 02/02/2018
– 09/02/2018
– 16/02/2018
– 23/02/2018
– 02/03/2018
– 09/03/2018
– 16/03/2018
– 30/03/2018
–
368000 07/04/2017
900000
1420000
– 07/04/2017
– 14/04/2017
–
–
–
2254000 21/04/2017
1955000 28/04/2017
14410759 19/05/2017
2250000
– 26/05/2017
–
–
–
–
–
854000 09/06/2017
801000 16/06/2017
4000 23/06/2017
141000 30/06/2017
23500 07/07/2017
269221638
269331638
269221638
266438638
265009323
263075786
261114284
258354898
255704069
253924069
252743391
251493391
250952391
250143900
249677900
249177900
247659900
247014116
245391942
244724952
244263562
243622819
242895819
241152819
240105388
239194555
239050555
238661555
237935136
237485136
236485136
28963818
28063818
26643818
28897818
30852818
45263577
43013577
43867577
44668577
44672577
44813577
44837077
7.24
7.25
7.24
7.17
7.13
7.08
7.02
6.95
6.88
6.83
6.80
6.77
6.75
6.73
6.72
6.70
6.66
6.65
6.60
6.58
6.57
6.55
6.53
6.49
6.46
6.43
6.43
6.42
6.40
6.39
6.36
0.78
0.75
0.72
0.78
0.83
1.22
1.16
1.18
1.20
1.20
1.21
1.21
2 Birla Sun Life Trustee
Company Private Limited A/c
28595818
0.96
Reason
Purchase
Purchase
Sale
Sale
Sale
Sale
Sale
Sale
Sale
Sale
Sale
Sale
Sale
Sale
Sale
Sale
Sale
Sale
Sale
Sale
Sale
Sale
Sale
Sale
Sale
Sale
Sale
Sale
Sale
Sale
Sale
Purchase
Sale
Sale
Purchase
Purchase
Purchase
Sale
Purchase
Purchase
Purchase
Purchase
Purchase
Vedanta Limited Integrated Report and Annual Accounts 2017-18
143
d) Shareholding Pattern of top ten Shareholders (other than Directors, Promoters and Holders of GDRs and ADRs): continued
Sr.
no. Name of the Shareholder
Shareholding at the beginning
of the year April 1, 2017
% of total
shares of the
company
No. of
shares
3 Stichting Depositary Apg
Emerging Markets Equity Pool 25260255
0.85
Transaction details
Sale
538
142500
15000
Purchase Date
– 04/08/2017
– 18/08/2017
– 01/09/2017
–
6134 15/09/2017
506134
12000
–
15/09/2017
– 22/09/2017
–
185000 29/09/2017
170000
100000
177053
550000
706000
–
13/10/2017
– 20/10/2017
– 27/10/2017
– 31/10/2017
–
10/11/2017
–
500000
17/11/2017
50000
–
17/11/2017
–
531000 01/12/2017
109000
– 08/12/2017
–
1328000 15/12/2017
100000
–
15/12/2017
–
899000 12/01/2018
534
75494
1126000
– 12/01/2018
– 19/01/2018
– 02/02/2018
–
196100 09/02/2018
1042250
– 09/02/2018
–
500000 23/02/2018
42966
1000000
– 02/03/2018
– 09/03/2018
–
938000 16/03/2018
2382647
1407659
1100000
– 16/03/2018
– 23/03/2018
– 30/03/2018
168010
– 07/04/2017
–
241489 14/04/2017
355775
2449465
619519
590409
1347073
– 21/04/2017
–
–
12/05/2017
19/05/2017
– 26/05/2017
– 02/06/2017
–
–
–
–
–
–
28989 14/07/2017
80765
21/07/2017
611149 28/07/2017
202871 04/08/2017
461952
11/08/2017
374748 18/08/2017
181795
– 01/09/2017
–
–
–
380556 08/09/2017
461466 15/09/2017
151738 22/09/2017
1405958
12047
– 29/09/2017
– 06/10/2017
–
–
–
475855 20/10/2017
338854 27/10/2017
93140 31/10/2017
1144025
– 03/11/2017
–
150870
10/11/2017
1058995
1125736
714284
–
17/11/2017
– 24/11/2017
– 01/12/2017
Cumulative Holding during
the year 2017-18
% of total
shares of the
company
No. of
shares
44836539
44694039
44679039
44685173
44179039
44167039
44352039
44182039
44082039
43904986
43354986
42648986
43148986
43098986
43629986
43520986
44848986
44748986
45647986
45647452
45571958
44445958
44642058
43599808
44099808
44056842
43056842
43994842
41612195
40204536
39104536
25092245
25333734
24977959
22528494
21908975
21318566
19971493
20000482
20081247
20692396
20895267
21357219
21731967
21550172
21930728
22392194
22543932
21137974
21125927
21601782
21940636
22033776
20889751
21040621
19981626
18855890
18141606
1.21
1.20
1.20
1.20
1.19
1.19
1.19
1.19
1.19
1.18
1.17
1.15
1.16
1.16
1.17
1.17
1.21
1.20
1.23
1.23
1.23
1.20
1.20
1.17
1.19
1.19
1.16
1.18
1.12
1.08
1.05
0.68
0.68
0.67
0.61
0.59
0.57
0.54
0.54
0.54
0.56
0.56
0.57
0.58
0.58
0.59
0.60
0.61
0.57
0.57
0.58
0.59
0.59
0.56
0.57
0.54
0.51
0.49
Reason
Sale
Sale
Sale
Purchase
Sale
Sale
Purchase
Sale
Sale
Sale
Sale
Sale
Purchase
Sale
Purchase
Sale
Purchase
Sale
Purchase
Sale
Sale
Sale
Purchase
Sale
Purchase
Sale
Sale
Purchase
Sale
Sale
Sale
Sale
Purchase
Sale
Sale
Sale
Sale
Sale
Purchase
Purchase
Purchase
Purchase
Purchase
Purchase
Sale
Purchase
Purchase
Purchase
Sale
Sale
Purchase
Purchase
Purchase
Sale
Purchase
Sale
Sale
Sale
Integrated Report Management Review Statutory Reports Financial Statements
144
Vedanta Limited Integrated Report and Annual Accounts 2017-18
Annexure C continued
d) Shareholding Pattern of top ten Shareholders (other than Directors, Promoters and Holders of GDRs and ADRs): continued
Sr.
no. Name of the Shareholder
Shareholding at the beginning
of the year April 1, 2017
% of total
shares of the
company
No. of
shares
Transaction details
Sale
Purchase Date
Cumulative Holding during
the year 2017-18
% of total
shares of the
company
No. of
shares
4 Abu Dhabi Investment
Authority - Behave
21656638
0.73
5 Franklin Templeton
Investment Funds
21041159
0.71
1099430
341025
68388
299912
637513
474143
734789
840468
43405
159373
69538
– 08/12/2017
– 22/12/2017
– 29/12/2017
– 05/01/2018
–
–
12/01/2018
19/01/2018
– 26/01/2018
– 02/02/2018
– 09/02/2018
– 16/02/2018
– 02/03/2018
–
439969 09/03/2018
1310000
– 21/04/2017
–
2713672 28/04/2017
3847747
– 28/04/2017
–
–
–
475000 05/05/2017
475000 12/05/2017
8974847 19/05/2017
1200000
318128
4263832
–
–
–
–
–
–
–
–
2403684
595194
1058126
42798
22898
– 26/05/2017
– 02/06/2017
–
16/06/2017
60180 23/06/2017
1371800 07/07/2017
124431 04/08/2017
28109
11/08/2017
1596000 18/08/2017
36264 08/09/2017
8520 15/09/2017
7810 22/09/2017
– 22/09/2017
–
17/11/2017
– 24/11/2017
– 01/12/2017
– 08/12/2017
–
6900 19/01/2018
55072
30603
59847
658730
1459020
191674
2627970
878700
875420
– 02/03/2018
– 23/03/2018
– 30/03/2018
– 07/04/2017
–
14/04/2017
– 21/04/2017
– 28/04/2017
– 05/05/2017
–
12/05/2017
–
253970 19/05/2017
1256860
861030
2921240
1230760
1730290
3052072
2441043
– 26/05/2017
– 02/06/2017
–
14/07/2017
– 21/07/2017
–
–
11/08/2017
18/08/2017
25/08/2017
17042176
16701151
16632763
16332851
15695338
15221195
14486406
13645938
13602533
13443160
13373622
13813591
20346638
23060310
19212563
19687563
20162563
29137410
27937410
27619282
23355450
23415630
24787430
24911861
24939970
26535970
26572234
26580754
26588564
24184880
23589686
22531560
22488762
22465864
22472764
22417692
22387089
22327242
20382429
18923409
18731735
16103765
15225065
14349645
14603615
13346755
12485725
9564485
8333725
6603435
3551363
1110320
0.46
0.45
0.45
0.44
0.42
0.41
0.39
0.37
0.37
0.36
0.36
0.37
0.55
0.62
0.52
0.53
0.54
0.78
0.75
0.74
0.63
0.63
0.67
0.67
0.67
0.71
0.71
0.72
0.72
0.65
0.63
0.61
0.60
0.60
0.60
0.60
0.60
0.60
0.55
0.51
0.50
0.43
0.41
0.39
0.39
0.36
0.34
0.26
0.22
0.18
0.10
0.03
Reason
Sale
Sale
Sale
Sale
Sale
Sale
Sale
Sale
Sale
Sale
Sale
Purchase
Sale
Purchase
Sale
Purchase
Purchase
Purchase
Sale
Sale
Sale
Purchase
Purchase
Purchase
Purchase
Purchase
Purchase
Purchase
Purchase
Sale
Sale
Sale
Sale
Sale
Purchase
Sale
Sale
Sale
Sale
Sale
Sale
Sale
Sale
Sale
Purchase
Sale
Sale
Sale
Sale
Sale
Sale
Sale
Vedanta Limited Integrated Report and Annual Accounts 2017-18
145
d) Shareholding Pattern of top ten Shareholders (other than Directors, Promoters and Holders of GDRs and ADRs): continued
Shareholding at the beginning
of the year April 1, 2017
% of total
shares of the
company
No. of
shares
Transaction details
Sale
Purchase Date
Cumulative Holding during
the year 2017-18
% of total
shares of the
company
No. of
shares
Sr.
no. Name of the Shareholder
6 Vanguard Emerging Markets
Stock Index Fund, A Series of
Vanguard International Equity
Index Fund
19989757
0.67
–
238601 07/04/2017
3400540
– 28/04/2017
7
Ishares India Index Mauritius
Company
12559171
0.42
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
175120 05/05/2017
54725 12/05/2017
8131100 19/05/2017
48158 02/06/2017
1963709 30/06/2017
90615 07/07/2017
393463 14/07/2017
187464 21/07/2017
120062 28/07/2017
56958 04/08/2017
75081
11/08/2017
468113 25/08/2017
146335 01/09/2017
132039 08/09/2017
119094 15/09/2017
80580 06/10/2017
83266
13/10/2017
61778 20/10/2017
56406 27/10/2017
605197
– 22/12/2017
–
–
132446 26/01/2018
118356 02/02/2018
28917489
– 23/03/2018
–
–
–
–
–
87206 07/04/2017
250920 14/04/2017
87822 21/04/2017
58548 05/05/2017
5634942 19/05/2017
555238
68771
27278
– 02/06/2017
– 23/06/2017
– 07/07/2017
–
–
23671
21/07/2017
19854 04/08/2017
28930
231440
113452
83017
115300
19035
10482
12228
17435
192572
32300
38087
– 18/08/2017
– 01/09/2017
– 15/09/2017
– 22/09/2017
– 29/09/2017
– 06/10/2017
– 13/10/2017
– 20/10/2017
– 27/10/2017
– 08/12/2017
– 29/12/2017
– 05/01/2018
–
–
–
–
157556 12/01/2018
72403 19/01/2018
56440 26/01/2018
101592 02/02/2018
45394
73320
183406
16743
– 09/02/2018
– 16/02/2018
– 02/03/2018
09/03/2018
Reason
Purchase
Sale
Purchase
Purchase
Purchase
Purchase
Purchase
Purchase
Purchase
Purchase
Purchase
Purchase
Purchase
Purchase
Purchase
Purchase
Purchase
Purchase
Purchase
Purchase
Purchase
Sale
Purchase
Purchase
Sale
Purchase
Purchase
Purchase
Purchase
Purchase
Sale
Sale
Sale
Purchase
Purchase
Sale
Sale
Sale
Sale
Sale
Sale
Sale
Sale
Sale
Sale
Sale
Sale
Purchase
Purchase
Purchase
Purchase
Sale
Sale
Sale
Sale
20228358
16827818
17002938
17057663
25188763
25236921
27200630
27291245
27684708
27872172
27992234
28049192
28124273
28592386
28738721
28870760
28989854
29070434
29153700
29215478
29271884
28666687
28799133
28917489
0
12646377
12897297
12985119
13043667
18678609
18123371
18054600
18027322
18050993
18070847
18041917
17810477
17697025
17614008
17498708
17479673
17469191
17456963
17439528
17246956
17214656
17176569
17334125
17406528
17462968
17564560
17519166
17445846
17262440
17245697
0.54
0.45
0.46
0.46
0.68
0.68
0.73
0.73
0.74
0.75
0.75
0.75
0.76
0.77
0.77
0.78
0.78
0.78
0.78
0.79
0.79
0.77
0.77
0.78
0.00
0.34
0.35
0.35
0.35
0.50
0.49
0.49
0.48
0.49
0.49
0.49
0.48
0.48
0.47
0.47
0.47
0.47
0.47
0.47
0.46
0.46
0.46
0.47
0.47
0.47
0.47
0.47
0.47
0.46
0.46
Integrated Report Management Review Statutory Reports Financial Statements
146
Vedanta Limited Integrated Report and Annual Accounts 2017-18
Annexure C continued
d) Shareholding Pattern of top ten Shareholders (other than Directors, Promoters and Holders of GDRs and ADRs): continued
Sr.
no. Name of the Shareholder
8 Dimensional Emerging
Markets Value Fund
Shareholding at the beginning
of the year April 1, 2017
% of total
shares of the
company
No. of
shares
14813520
0.50
Transaction details
Sale
Purchase Date
Cumulative Holding during
the year 2017-18
% of total
shares of the
company
No. of
shares
9 Vanguard Total International
Stock Index Fund
14637670
0.49
10 Societe Generale
446975
0.02
295404
– 07/04/2017
–
8315795 19/05/2017
591693
1057862
622563
37429
131655
320183
443954
458601
12041
143667
– 02/06/2017
– 09/06/2017
–
16/06/2017
– 04/08/2017
– 25/08/2017
– 01/09/2017
– 29/09/2017
– 06/10/2017
–
13/10/2017
– 20/10/2017
–
–
124836 21/04/2017
5481977 19/05/2017
863294
405808
–
–
–
–
–
–
–
–
–
–
–
–
–
– 02/06/2017
– 09/06/2017
675041
16/06/2017
954395 23/06/2017
138251 30/06/2017
124021
14/07/2017
113585 04/08/2017
126041 01/09/2017
112192
13/10/2017
214585 03/11/2017
149808 08/12/2017
133290 26/01/2018
201825 16/02/2018
127125 09/03/2018
166646 16/03/2018
210396
– 23/03/2018
–
293598 07/04/2017
305500
–
14/04/2017
–
–
–
–
205 21/04/2017
1753 28/04/2017
39168 12/05/2017
14568411
19/05/2017
3321389
1937523
–
–
–
168656
336828
62558
–
–
–
732704
52859
–
–
–
– 26/05/2017
– 02/06/2017
9565 09/06/2017
70919 16/06/2017
16835 23/06/2017
– 30/06/2017
– 07/07/2017
–
14/07/2017
24500 21/07/2017
79929 28/07/2017
43704 04/08/2017
–
–
11/08/2017
18/08/2017
10500 25/08/2017
413612 01/09/2017
14961 08/09/2017
36287
–
15/09/2017
–
32842 22/09/2017
14518116
22833911
22242218
21184356
20561793
20524364
20392709
20072526
19628572
19169971
19157930
19014263
14762506
20244483
19381189
18975381
19650422
20604817
20743068
20867089
20980674
21106715
21218907
21433492
21583300
21716590
21918415
22045540
22212186
22001790
740573
435073
435278
437031
476199
15044610
11723221
9785698
9795263
9866182
9883017
9714361
9377533
9314975
9339475
9419404
9463108
8730404
8677545
8688045
9101657
9116618
9080331
9113173
Reason
Sale
Purchase
Sale
Sale
Sale
Sale
Sale
Sale
Sale
Sale
Sale
Sale
Purchase
Purchase
Sale
Sale
Purchase
Purchase
Purchase
Purchase
Purchase
Purchase
Purchase
Purchase
Purchase
Purchase
Purchase
Purchase
Purchase
Sale
0.39
0.61
0.60
0.57
0.55
0.55
0.55
0.54
0.53
0.52
0.52
0.51
0.40
0.54
0.52
0.51
0.53
0.55
0.56
0.56
0.56
0.57
0.57
0.58
0.58
0.58
0.59
0.59
0.60
0.59
0.02
Purchase
0.01
0.01
0.01
0.01
0.40
0.32
0.26
0.26
0.27
0.27
0.26
0.25
0.25
0.25
0.25
0.25
0.23
0.23
0.23
0.24
0.25
0.24
0.25
Sale
Purchase
Purchase
Purchase
Purchase
Sale
Sale
Purchase
Purchase
Purchase
Sale
Sale
Sale
Purchase
Purchase
Purchase
Sale
Sale
Purchase
Purchase
Purchase
Sale
Purchase
Vedanta Limited Integrated Report and Annual Accounts 2017-18
147
d) Shareholding Pattern of top ten Shareholders (other than Directors, Promoters and Holders of GDRs and ADRs): continued
Sr.
no. Name of the Shareholder
Shareholding at the beginning
of the year April 1, 2017
% of total
shares of the
company
No. of
shares
Transaction details
Sale
Purchase Date
–
235567 29/09/2017
198747
– 06/10/2017
–
–
–
–
21451 20/10/2017
2597
27/10/2017
560000 31/10/2017
50275
10/11/2017
192259
–
17/11/2017
–
–
418628
24/11/2017
17175 01/12/2017
242346
08/12/2017
–
–
103809
15/12/2017
628469 22/12/2017
8750
–
–
5552
457875
1133924
243604
296176
230369
29/12/2017
35986 05/01/2018
173107
12/01/2018
–
19/01/2018
– 26/01/2018
– 02/02/2018
– 09/02/2018
– 16/02/2018
– 23/02/2018
–
–
–
–
2764507 02/03/2018
352685 09/03/2018
931513 16/03/2018
1020998 23/03/2018
27934
– 30/03/2018
Cumulative Holding during
the year 2017-18
% of total
shares of the
company
No. of
shares
9348740
9149993
9171444
9174041
9734041
9784316
9592057
10010685
10027860
9785514
9889323
10517792
10509042
10545028
10718135
10712583
10254708
9120784
8877180
8581004
8350635
11115142
11467827
12399340
13420338
13392404
0.25
0.25
0.25
0.25
0.26
0.26
0.26
0.27
0.27
0.26
0.27
0.28
0.28
0.28
0.29
0.29
0.28
0.25
0.24
0.23
0.22
0.30
0.31
0.33
0.36
0.36
Reason
Purchase
Sale
Purchase
Purchase
Purchase
Purchase
Sale
Purchase
Purchase
Sale
Purchase
Purchase
Sale
Purchase
Purchase
Sale
Sale
Sale
Sale
Sale
Sale
Purchase
Purchase
Purchase
Purchase
Sale
e) Shareholding of Directors and Key Managerial Personnel:
Shareholding at the beginning of the year Cumulative Shareholding during the year
Date wise
Increase /
Decrease in
Share-
holding
during the
year
specifying
the reasons
for increase
/ decrease
(e.g.
allotment /
transfer /
bonus/
sweat equity
etc.): No. of shares
-
-
-
-
-
-
-
-
-
8000 Equity
Shares &
26000
Preference
Shares(2)
-
-
Date wise
Increase /
Decrease in
Share-
holding
during the
year
specifying
the reasons
for increase
/ decrease
(e.g.
allotment /
transfer /
bonus/
sweat equity
etc.):
-
-
-
-
-
-
% of total
shares of the
company
-
-
-
0.00%
-
-
% of total
shares of the
company
No. of shares
-
-
-
1500 Equity
Shares
-
-
-
-
-
0.00%
-
-
S.
No. Name of the Director/Key Managerial Personnel (KMP)
1. Mr. Navin Agarwal
Executive Chairman
2. Mr. Thomas Albanese(1)
Whole-Time Director & Chief Executive Officer
3. Mr. Tarun Jain
Whole-Time Director
4. Mr. GR Arun Kumar
Whole-Time Director & Chief Financial Officer
5. Mr. Aman Mehta
Non-Executive Independent Director
6. Mr. K Venkataramanan
Non-Executive Independent Director
Integrated Report Management Review Statutory Reports Financial Statements
148
Vedanta Limited Integrated Report and Annual Accounts 2017-18
Annexure C continued
e) Shareholding of Directors and Key Managerial Personnel: continued
Shareholding at the beginning of the year Cumulative Shareholding during the year
Date wise
Increase /
Decrease in
Share-
holding
during the
year
specifying
the reasons
for increase
/ decrease
(e.g.
allotment /
transfer /
bonus/
sweat equity
etc.): No. of shares
% of total
shares of the
company
No. of shares
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
Date wise
Increase /
Decrease in
Share-
holding
during the
year
specifying
the reasons
for increase
/ decrease
(e.g.
allotment /
transfer /
bonus/
sweat equity
etc.):
% of total
shares of the
company
-
-
-
-
-
-
-
-
-
-
-
-
-
-
S.
No. Name of the Director/Key Managerial Personnel (KMP)
7. Ms. Lalita D Gupte
Non-Executive Independent Director
8. Mr. Naresh Chandra(3)
Non-Executive Independent Director
9. Mr. Ravi Kant
Non-Executive Independent Director
10. Mr. UK Sinha
Non-Executive Independent Director
11. Ms. Priya Agarwal
Non-Executive Director
12. Mr. K.K Kaura
Interim CEO
13. Ms. Bhumika Sood
Company Secretary & Compliance Officer
Notes:
1. Mr. Thomas Albanese ceased to be member of the Board w.e.f. August 31, 2017.
2. Pursuant to Scheme of Arrangement between erstwhile Cairn India Limited and Vedanta Limited, the holding of Mr. GR Arun Kumar has changed to 8,000 equity shares and 26,000
preference shares.
3. Mr. Naresh Chandra ceased to be member of the Board w.e.f. July 9, 2017 due to demise.
V. INDEBTEDNESS
Indebtedness of the Company including interest outstanding/accrued but not due for payment
Indebtedness at the beginning of the financial year
i) Principal Amount
ii) Interest due but not paid
iii) Interest accrued but not due
Total (i+ii+iii)
Change in Indebtedness during the year
• Addition
• Reduction
Net Change relating to principle amount
Indebtedness at the end of the financial year
i) Principal Amount
ii) Interest due but not paid
iii) Interest accrued but not due
Total (i+ii+iii)
Secured Loans
excluding
Unsecured
Total
deposits
Loans
Deposits
Indebtedness
(` in Crore)
29,374
13,859
–
717
–
6
30,091
13,865
3,765
(12,606)
(8,841)
62,912
(56,591)
6,321
20,532
20,181
–
705
–
4
21,238
20,185
–
–
–
–
–
–
–
–
–
–
–
43,233
–
723
43,956
66,677
(69,197)
(2,520)
40,713
–
709
41,423
Vedanta Limited Integrated Report and Annual Accounts 2017-18
149
VI. Remuneration of Directors and Key Managerial Personnel
A. Remuneration to Managing Director, Whole-time Directors and/or Manager and Key Managerial Personnel:
S.
No. Particulars of Remuneration
1 Gross salary
(a) Salary as per provisions contained in section 17(1)
of the Income-tax Act, 1961
(b) Value of perquisites u/s 17(2) Income-tax Act,
1961(5)
(c) Profits in lieu of salary under section 17(3)
Income-tax Act, 1961
2 Stock Option
3 Sweat Equity
4 Commission
- as % of profit
- others, specify
(Annual Performance Bonus)
5 Others, please specify (PF, Superannuation,
Medical and LTA)(5)
Total (A)
Ceiling as per the Act
Name of MD/WTD/Manager/KMP
Navin
Agarwal(1)
Thomas
Albanese(2)
Tarun Jain(3)
GR Arun
Kumar
Kuldip
Kumar
Kaura(4)
Bhumika
Sood
Total
Amount
8,56,18,845 2,08,47,100 6,26,76,004 2,41,67,316 1,50,49,012
27,47,280 21,11,05,557
1,01,65,430
31,65,740
39,600
59,600
0
0
0
0
7,63,78,560
0 4,56,56,807
72,12,187
0
0
0
0
0
0
0
0
3,03,34,985 2,69,40,212 3,10,22,385
1,39,11,000
1,28,58,360
20,84,726
86,55,556
21,61,732
0
0
0
0
0
0
0
0 1,34,30,370
0
0
0 12,92,47,554
0
0
0
0
15,07,909 10,37,16,491
3,16,464 2,60,76,838
21,53,56,180 5,30,37,778 14,80,50,352 4,75,11,835 1,50,49,012
45,71,653 48,35,76,810
10% of Net Profits
Note:
(1) Sitting fees paid to Mr. Navin Agrawal from HZL and erstwhile Cairn India Limited was ` 2,50,000 and ` 1,00,000 respectively.
Commission paid to Mr. Navin Agarwal from HZL was ` 10,00,000 during the FY 2017-18.
In addition to the above, Mr. Navin Agarwal received remuneration from Vedanta Resources Plc, UK, the Holding Company amounting to GBP 85,000 (INR 72.65 Lacs) for the financial year
ending March 31, 2018.
(2) For the period from April 1, 2017 to August 31, 2017
In addition to the above, Mr. Thomas Albanese received remuneration from Vedanta Resources Plc, UK, the Holding Company amounting to GBP 2,50,000 (INR 213.68 Lacs) during the
financial year 2017-2018.
(3) Sitting fees paid to Mr. Tarun Jain was ` 1,00,000 from erstwhile Cairn India Limited during the FY 2017-18
(4) For the period from September 1, 2017 to March 31, 2018
In addition to the above, Mr. Kuldip Kaura received remuneration from Vedanta Resources Plc, UK, the Holding Company amounting to GBP 607,360.09 (INR 519.13 Lacs) for the financial
year ending March 31, 2018
(5) Value of Perquisites u/s 17(2) Income-tax Act, 1961 does not include perquisite value of Superannuation. However, contribution to Superannuation is shown under ‘Others’.
• As the liabilities for defined benefit plan, i.e., gratuity are provided on accrual basis for the Company as a whole, the amounts pertaining to Key Management Personnel are not included
above;
• Valuation of Vedanta Resources Plc’s Shares granted under Deferred Share Bonus Plan (DSBP) to the Whole-time Directors for FY 2014-15, FY 2015-16, FY 16-17 are not included in the
remuneration above.
Integrated Report Management Review Statutory Reports Financial Statements
150
Vedanta Limited Integrated Report and Annual Accounts 2017-18
Annexure C continued
B. Remuneration to other directors:
S.
No. Particulars of Remuneration
1
Independent Directors
a) Fee for attending board/committee Meetings
b) Commission
c) Others, please specify
Total (1)
2. Other Non-Executive Directors
a) Fee for attending board / committee meetings
b) Commission
c) Others, please specify (includes salary, allowances, contribution to PF & superannuation,
perquisites & LTIP value)
Total (2)
Total (B)= (1+2)
Overall Ceiling as per the Act for Directors who are neither MD or WTD
Total Managerial Remuneration (A) + (B)
Overall Ceiling as per the Act
Name of Directors
Total
Amount
Mr. Aman Mehta(1)
8,50,000
Mr. K Venkataramanan 6,00,000
Ms. Lalita D Gupte
10,50,000
Mr. Naresh Chandra(3)
1,50,000(2)
Mr. Ravi Kant
10,50,000
Mr. UK Sinha(4)
50,000
Mr. Aman Mehta(1)
65,54,794
Mr. K Venkataramanan 75,00,000
Ms. Lalita D Gupte
75,00,000
Mr. Naresh Chandra(3)
Mr. Ravi Kant
Mr. UK Sinha(4)
75,00,000
20,54,795
3,90,411
3,52,50,000
Ms. Priya Agarwal(1)
4,00,000(2)
Nil
1% of Net Profit
11% of Net Profits
4,00,000
3,56,50,000
51,92,26,810
Note:
1. For the period from May 17, 2017 to March 31, 2018
2. For the FY 2017-18, Mr. Naresh Chandra and Ms. Priya Agarwal, had received sitting fees of ` 1,00,000, ` 50,000 respectively from erstwhile Cairn India Limited
3. For the period from April 1, 2017 to July 9, 2017
4. For a period from March 13, 2018 to March 31, 2018
VII. Penalties / Punishment/ Compounding of Offences:
Type
A. Company
Penalty
Punishment
Compounding
B. Directors
Penalty
Punishment
Compounding
C. Other Officers in Default
Penalty
Punishment
Compounding
Section of the
Companies Act
Brief
Description
Details of Penalty/
Punishment/
Compounding
fees imposed
Authority
(RD / NCLT/
COURT)
Appeal made, if
any (give Details)
NIL
NIL
NIL
NIL
NIL
NIL
NIL
NIL
NIL
NIL
NIL
NIL
NIL
NIL
NIL
NIL
NIL
NIL
NIL
NIL
NIL
NIL
NIL
NIL
NIL
NIL
NIL
NIL
NIL
NIL
NIL
NIL
NIL
NIL
NIL
NIL
NIL
NIL
NIL
NIL
NIL
NIL
NIL
NIL
NIL
Vedanta Limited Integrated Report and Annual Accounts 2017-18
151
Annexure D
Disclosure under the SEBI (Share Based Employee Benefits) Regulations, 2014
ESOS 2016 Scheme
Cairn India Employee Stock Option Plan (2006)
Particulars
Sr.
No
I. Details of the ESOS
1 Date of Shareholder's Approval
Postal Ballot approval on
December 12, 2016
2 Total Number of Options approved
14,82,50,244 options
3 Vesting Requirements
1 to 3 years basis Company’s
Relative Total Shareholder Return
(RTSR) performance against two
comparator groups. The first peer
group consists of 15 global
companies and the second group
consists of 6 Indian peer
companies.
4 The Pricing Formula
Re. 1(Par Value)
5 Maximum term of Options granted (years)
3 years
6 Source of shares
Secondary Acquisitions
7 Variation in terms of ESOP
NIL
II. Method used for accounting
Fair Value Method
III. Where the company opts for expensing of the
NA
options using the intrinsic value of the options, the
difference between the employees compensation
cost based on intrinsic value of the stock and the fair
value for the year and its impact on profits and on
EPS of the Company
IV. Option Movement during the year
No. of Options
1 Number of Options Outstanding at the beginning of
7,803,400
the year
2 Number of Options Granted during the year
1,00,88,960
3 Number of Options Forfeited / Surrendered during
11,36,108
the year
4 Number of Options Lapsed during the year
5 Number of Options Vested during the year
6 Number of Options Exercised during the year
7 Number of shares arising as a result of exercise of
options
8 Money realized by exercise of options if scheme is
implemented directly by the Company
9 Loan repaid by the Trust during the year from
exercise price received
0
0
0
0
0
Nil
10 Number of Options Outstanding at the end of the year 1,67,56,252
11 Number of Options exercisable at the end of the year Nil
V. Weighted average Fair Value of Options granted during the year whose
(a) Exercise price equals market price
(b) Exercise price is greater than market price
NA
NA
(c) Exercise price is less than market price
275.3/161.1
Weighted average Exercise price of options
granted during the year whose
(a) Exercise price equals market price
(b) Exercise price is greater than market price
(c) Exercise price is less than market price
NA
NA
Re. 1
The plan was approved by the
shareholders of erstwhile Cairn India
Limited (CIL) at the Extra-ordinary General
Meeting held on November 17, 2006 and
was ratified at the AGM held on
September 20, 2007.
The plan was further modified in terms of
the approval of the shareholders granted at
the AGM held on August 22, 2012.
Further, the Nomination and Remuneration
Committee of CIL at their meeting held on
April 11, 2017 approved the following:
• Conversion of outstanding Cairn Stock
Options to equivalent number of
Vedanta stock options with Modified
Exercise price;
• Modified Exercise price of the Vedanta
stock options to be equal to the Original
Exercise Price of Cairn India Stock
Options less INR 40.00;
• Vedanta stock required to settle these
outstanding stock options to be
sourced through Secondary market
acquisition via ESOS Trust formed to
enable Vedanta Limited Share Plan.
No. of Options
8,962,666
0
239,282
0
0
1,592,759
0
0
0
7,130,625
7,130,625
NA
NA
NA
NA
NA
NA
VI The weighted average market price of options
exercised during the year
No options were exercised during
the year
324.64
Integrated Report Management Review Statutory Reports Financial Statements 152
Vedanta Limited Integrated Report and Annual Accounts 2017-18
Annexure D continued
VII Exercise Price
For Stock options outstanding at the end of the period Re. 1
VIIIEmployee-wise details of options granted during the financial year 2017-18 to:
As decided by the Nomination and
Remuneration Committee
i) Name of employee
Mr. Navin Agarwal
Mr. Tarun Jain
Mr. Thomas Albanese
Mr. GR Arun Kumar
Ms. Bhumika Sood
Designation
No. of options granted
Executive Chairman
Whole Time Director
Whole Time Director & Chief
Executive Officer
Whole Time Director & Chief
Financial Officer
Company Secretary
Nil
1,11,980
Nil
66,070
6,720
(ii) Employees who were granted, during any one year, options amounting to 5% or more of the options granted during the year
Name of employee
Nil
Designation
(iii) Identified employees who were granted option, during any one year equal to or exceeding 1% of the issued capital (excluding
outstanding warrants and conversions) of the company at the time of grant.
Name of employee
Nil
Designation
IX Method and Assumptions used to estimate the fair value of options granted during the year:
The fair value of options granted with time based vesting have been calculated using the Black Scholes Option Pricing model
The Assumptions used in the model are as follows:
Variables
ESOS 2016 Scheme
Assumptions
Cairn India Employee Stock Option Plan
(2006)
1. Risk Free Interest Rate
2. Expected Life(in years)
3. Expected Volatility
4. Dividend Yield
5. Price of the underlying share in market at the time
of the option grant (`)
Assumptions:
As given in the Fair valuation report
6.50%
3 years
48.00%
3.70%
308.90
The fair value of options granted with performance based vesting have been calculated
using the Monte Carlo Option Pricing model
The Assumptions used in the model are as follows:
Variables
1. Risk Free Interest Rate
2. Expected Life(in years)
3. Expected Volatility
4. Dividend Yield
5. Price of the underlying share in market at the time
of the option grant (`)
Assumptions:
As given in the Fair valuation report
Assumptions
6.50%
3 Years
48.00%
3.70%
308.90
NA
NA
NA
NA
NA
NA
NA
NA
NA
NA
NA
NA
NA
NA
NA
NOTE: The Nomination and Remuneration Committee of the erstwhile Cairn India Limited (CIL) at their meeting held on April 11, 2017, had approved cash out of the outstanding Cairn India
Performance Option Plan (CIPOP) Options. The payout was based on the stock price of CIL as on March 27, 2017 less exercise price of INR 10.
Vedanta Limited Integrated Report and Annual Accounts 2017-18
153
Details Related to Trust
Details in connection with transactions made by the Trust meant for the purpose of administering the schemes under the regulations are as
follows:
I. General information on all schemes
S.
No. Particulars
1 Name of the Trust
2 Details of the Trustee(s)
Details
Vedanta Limited ESOS Trust
(1) Suresh Bose, Vedanta Limited, DLF Atria, Phase 2,
Jacaranda Marg, DLF City, Gurgaon 122002 (Haryana)
(2) Deodatta Padgaonkar, Vedanta Limited, Vedanta House,
75 Nehru Road, Vile Parle (East), Mumbai 400099 (Maharashtra)
(3) Dilip Pattanayak, Hindustan Zinc Limited, ‘Yashad Bhawan’,
Udaipur – 313 004 (Rajasthan)
(4) Anup Agarwal, Vedanta Limited, DLF Atria, Phase 2, Jacaranda Marg,
DLF City, Gurgaon 122002 (Haryana)
(5) Rashmi Mohanty, Vedanta Limited, DLF Atria, Phase 2, Jacaranda Marg,
DLF City, Gurgaon 122002 (Haryana)
3 Amount of loan disbursed by company / any company in
the group, during the year
` 2,02,19,71,406
4 Amount of loan outstanding (repayable to company / any
company in the group) as at the end of the year
` 2,36,09,63,536
5 Amount of loan, if any, taken from any other source for
Nil
which company / any company in the group has provided
any security or guarantee
6 Any other contribution made to the Trust during the year Nil
II. Brief details of transactions in shares by the Trust
Sl.
No. Particulars
Details
1 Number of shares held at the beginning of the year
3,984,256
2 Number of shares acquired during the year through
(i) primary issuance
(ii) secondary acquisition,
3 Number of shares acquired during the year as a
percentage of paid up equity capital as at the end of the
previous financial year
Not Applicable
68,42,374
0.2308%
4 Weighted average cost of acquisition per share
` 295.51
5 Number of shares transferred to the employees / sold
15,92,759
along with the purpose thereof
6 Number of shares held at the end of the year
92,33,871
III. In case of secondary acquisition of shares by the Trust
Number of shares
Held at the beginning of the year
Acquired during the year
Sold during the year
Transferred to the employees during the year
Held at the end of the year
As a percentage of paid-up equity capital as at the end of the year immediately preceding the year
in which shareholders’ approval was obtained
39,84,256 (0.134%)
68,42,374
0
15,92,759
92,33,871
Integrated Report Management Review Statutory Reports Financial Statements
154
Vedanta Limited Integrated Report and Annual Accounts 2017-18
Annexure E
Secretarial Audit Report
for the financial year ended March 31, 2018
The Members,
Vedanta Limited
1st Floor, C Wing,
Unit No. 103,
Corporate Avenue, Atul Projects
Chakala, Andheri(East)
Mumbai-400093
We have conducted the secretarial audit of the compliance of
applicable statutory provisions and the adherence to good
corporate practices by Vedanta Limited (hereinafter called the
company). Secretarial Audit was conducted in a manner that
provided us a reasonable basis for evaluating the corporate
conducts / statutory compliances and expressing our opinion
thereon.
Based on our verification of the Company’s books, papers, minute
books, forms and returns filed and other records maintained by the
company and also the information provided by the Company, its
officers, agents and authorized representatives during the conduct
of secretarial audit. We hereby report that in our opinion, the
company has, during the audit period covering the financial year
ended on March 31, 2018 complied with the statutory provisions
listed hereunder and also that the Company has proper Board-
processes and compliance-mechanism in place to the extent, in the
manner and subject to the reporting made hereinafter:
We have examined the books, papers, minute books, forms and
returns filed and other records maintained by the Company for the
financial year ended on March 31, 2018 according to the provisions
of:
(i) The Companies Act, 2013 (the Act) and the rules made
thereunder;
(ii) The Securities Contracts (Regulation) Act, 1956 (‘SCRA’) and the
rules made thereunder;
(iii) The Depositories Act, 1996 and the Regulations and Bye-laws
framed thereunder to the extent of Regulation 55A;
(iv) Foreign Exchange Management Act, 1999 and the rules and
regulations made thereunder to the extent of Foreign Direct
Investment, Overseas Direct Investment and External
Commercial Borrowings;
(v) The following Regulations and Guidelines prescribed under the
Securities and Exchange Board of India Act, 1992 (‘SEBI Act’):-
a) The Securities and Exchange Board of India (Substantial
Acquisition of Shares and Takeovers) Regulations, 2011;
b) The Securities and Exchange Board of India (Prohibition of
Insider Trading) Regulations, 2015;
c) The Securities and Exchange Board of India (Issue of Capital
and Disclosure Requirements) Regulations, 2009;
d) The Securities and Exchange Board of India (Share Based
employee Benefits) Regulations, 2014;
e) The Securities and Exchange Board of India (Issue and Listing
of Debt Securities) Regulations, 2008;
f) The Securities and Exchange Board of India (Registrars to an
Issue and Share Transfer Agents) Regulations, 1993 regarding
the Companies Act and dealing with client to the extent of
securities issued;
g) The Securities and Exchange Board of India (Delisting of
Equity Shares) Regulations, 2009; Not Applicable
h) The Securities and Exchange Board of India (Buyback of
Securities) Regulations, 1998. Not Applicable
(vi) The other laws, as informed and certified by the management of
the Company which are specifically applicable to the Company
based on their Sectors/Businesses are:
a) Mines and Minerals (Development Regulation) Act, 2015 and
rules and regulations made thereunder;
b) Indian Boilers Act, 1923 and rules and regulations made
thereunder;
c) Manufacture, Storage and Import of Hazardous Chemical
Rules, 1989.
We have also examined compliance with the applicable clauses of
the following:
a) Secretarial Standards issued by The Institute of Company
Secretaries of India.
b) SEBI (Listing Obligations and Disclosure Requirements)
Regulations, 2015.
During the period under review the Company has generally
complied with the provisions of the Act, Rules, Regulations,
Guidelines, Standards, etc. mentioned above.
We further report that,
The Board of Directors of the Company is duly constituted with
proper balance of Executive Directors, Non-Executive Directors
and Independent Directors. The changes in the composition of the
Board of Directors that took place during the period under review
were carried out in compliance with the provisions of the Act.
Adequate notice is given to all directors to schedule the Board
Meetings, agenda and detailed notes on agenda were sent in
advance(and at a Shorter Notice for which necessary approvals
obtained), and a system exists for seeking and obtaining further
information and clarifications on the agenda items before the
meeting and for meaningful participation at the meeting.
All decisions at Board Meetings and Committee Meetings are
carried out unanimously as recorded in the minutes of the meetings
of the Board of Directors or Committee of the Board, as the case
may be.
We further report that there are adequate systems and processes in
the company commensurate with the size and operations of the
company to monitor and ensure compliance with applicable laws,
rules, regulations and guidelines.
We further report that during the audit period following major
events have happened which are deemed to have major bearing on
the company’s affairs in pursuance of the above referred laws, rules,
regulations, guidelines, standards, etc.
1. Cairn India Limited has merged with the Company vide National
Company Law Tribunal, Mumbai Bench order dated 23rd March
2017 effective from April 11th 2017.
Vedanta Limited Integrated Report and Annual Accounts 2017-18
155
Annexure-A to the Secretarial Audit Report
2. The Company has issued 752,500,000 equity shares of `
1/- each fully paid up pursuant to scheme of arrangement
between Cairn India Limited and Vedanta Limited as approved
by National Company Law Tribunal, Mumbai Bench dated 23rd
March 2017.
3. The Company has issued 3,010,000,000 Non-Convertible
Non-Cumulative Redeemable Preference shares of ` 10/- each
fully paid up pursuant to scheme of arrangement between Cairn
India Limited and Vedanta Limited as approved by National
Company Law Tribunal, Mumbai Bench dated 23rd March 2017.
The Members,
Vedanta Limited
1st Floor, C Wing,
Unit No. 103,
Corporate Avenue, Atul Projects
Chakala, Andheri(East)
Mumbai-400093
1. Maintenance of secretarial record is the responsibility of the
management of the Company. Our responsibility is to express an
opinion on these secretarial records based on our audit.
4. The Company has issued Non-Convertible Debentures of `
2. We have followed the audit practices and processes as were
4,850 Crores during the period under review.
5. The Company has redeemed Non-Convertible Debentures of `
3500 Crores during the period under review.
Date: 27.04.2018
Place: Delhi
For Chandrasekaran Associates
Company Secretaries
Dr. S Chandrasekaran
Company Secretaries
Senior Partner
Membership No. 1644
Certificate of Practice No. 715
Note: This report is to be read with our letter of even date which is annexed as Annexure-A to
this report and forms an integral part of this report.
appropriate to obtain reasonable assurance about the
correctness of the contents of the secretarial records. The
verification was done on the random test basis to ensure that
correct facts are reflected in secretarial records. We believe that
the processes and practices, we followed provide a reasonable
basis for our opinion.
3. We have not verified the correctness and appropriateness of
financial records and Books of Accounts of the Company.
4. Where ever required, we have obtained the Management
representation about the compliance of laws, rules and
regulations and happening of events etc.
5. The compliance of the provisions of Corporate and other
applicable laws, rules, regulations, standards is the responsibility
of management. Our examination was limited to the verification
of procedures on the random test basis.
6. The Secretarial Audit report is neither an assurance as to the
future viability of the company nor of the efficacy or
effectiveness with which the management has conducted the
affairs of the Company.
Date: 27.04.2018
Place: Delhi
For Chandrasekaran Associates
Company Secretaries
Dr. S Chandrasekaran
Company Secretaries
Senior Partner
Membership No. 1644
Certificate of Practice No. 715
Integrated Report Management Review Statutory Reports Financial Statements 156
Vedanta Limited Integrated Report and Annual Accounts 2017-18
Annexure F
(A) Conservation of Energy:
a) Conservation of natural resources continues to be the key
focus area of your Company. Some of the important steps
taken in this direction follow.
Oil & Gas Business:
Rajasthan Operations
i. Maximized uptime of Vapour Recovery Units to minimize the gas
flaring, and also avoided flaring during milling operations.
ii. Optimized usage of Steam Driven Pumps and optimized the
efficiency of injection water heater.
iii. Operation of Steam Turbine Generators (STGs) achieved at
>99% of rated capacity, thus reducing the grid power
consumption. Further, STGs efficiency was improved by
replacement of Separate Oil purification unit for Actuator.
iv. Energy efficiency improvement by installing Automatic Tube
Cleaning System in heater exchangers.
v. VFD driven second stage condensate pump for pumping
condensate into first stage separator at RGT (Efficiency
improvement towards energy demand from 37 KW to 16 KW).
vi. Existing One Number Multi Plunger 2nd Stage pump with 37KW
Motor replaced with Penta Flex wobble plate plunger pump with
VFD Operated 15KW Motor. Hence power is saved by
approximately 264 KWHr/ Day.
vii. Installation of separate Lighting Transformer from 430 V to 390
V which led to saving of 26,472.5 KW per annum.
Ravva Operations
i.
Implemented two turbine operation of gas turbines instead of
three gas turbines during lower ambient temperature season,
which has considerably reduced the fuel gas internal
consumption (for plant operation) by ~4,38,892 SCM.
Cambay Operations
i. Automation of Crude Transfer Pump for optimizing pump
runhours.
ii. Installation of Tip Seals in HCDP Condenser Fans, thereby
optimizing operating cycle of the fans.
iii. Installation of Occupancy Sensor in office areas to optimize
lighting.
iv. Installation of 150 LED Lights.
v. Water sumps interconnection for energy conservation.
vi. Hot oil heaters efficiency improvement by replacement of
refractory material.
ii. Utilization of excess BFG of BF3 by interconnection of Power
plant 2 BFG duct with Power plant 1 benefiting an additional
generation of 2.5 MW.
iii. Replacement of old water pumps of BF3 complex water
pumping station with the energy efficient pumps and motors
achieving power savings of 132 KW.
iv. Usage of blast furnace waste dust in sinter mix and oxygen
enrichment in sinter combustion burner to reduce coke breeze
consumption from 65 kg/TS to 60 Kg/TS.
v. Introduction of pulverized coal injection 50Kg/THM in PID-1
which is a replacement fuel to Coke.
vi. Retrofitting of pumping station of power plant having 2 river
water pumps with a single energy efficient pump achieving
power saving of 65 KW.
vii. Replacement of impeller of HBS CA fan with energy efficient
one in PID-II achieving power saving of 46 KW.
viii.Sinter plant operation on 2 chill fans instead of 3 fans for around
40% of time by providing pneumatic gates for facilitating
cleaning of wind box as and when required (Saving- 112 KW).
ix. Proportioning de-dusting fan optimization during monsoon
season by regulating damper to 40% for power saving achieving
power saving of 56 KW.
x. Automation of lights in PID-II for auto switching ON-OFF
resulting in stoppage of wastage of power. (Saving- 10 KW)
xi. Initiated replacement of conventional lamps with the LED lamps
in Value Addition Business in phased manner. (Saving- 20 KW)
xii. CT make-up pump discharge line orifice fixing. (Saving- 10 KW)
xiii.Optimization in working pressure of compressor in PP-2.
(Saving- 10 KW)
IOG
i. Conversion of HPSV/MH lamps into LED fittings in Street lights,
high mast tower, Plant lighting and Haulage lighting of IOG.
(Saving- 180,000 KWH)
ii. Operation of 250 HP Dewatering pump on VFD in place of
conventional starter in Codli mine and use of VFD in Appron
feeder. (Saving- 200,000 KWH)
iii. Impeller trimming of 425 HP Dewatering pump for energy
conservation in Sonshi mine. (Saving- 240,000 KWH)
iv. Conversion of Office conventional light into Energy Efficient LED
lights. (Saving- 5,000 KWH)
v. Automation to reduce idle running of conveyor in Bicholim and
Codli mine. (Saving- 15,000 KWH)
vii. PGBC after cooler fins internal cleaning by condensate and
chemical herewith increasing the efficiency and reduction in
power consumption.
viii.Sludge reduction in Adani tanks using sludge breaker chemical
by which fuel consumption for trucking back of sludge to Suvali
terminal was eliminated.
ix. PGC after cooler temperature set point reduction, by which load
vi. New Electrical operated Lighting tower installed near Stack -1,
Pit-1 Stack and unfinished ore stack at EQU weighbridge and
replaced mobile lighting tower DG-sets to avoid diesel
consumption in Codli (VL). (Saving- 2 KL of Diesel)
vii. Operation of 425 HP *2 Nos. Dewatering pumps running of
Electrical grid power instead of DG set in Codli (VL). (Saving- 70
KL of Diesel)
on HCDP chillers reduced.
x. No waste oil sales by internal reprocessing.
Copper Business:
i. Optimization of Smelter Scrubber Quenching water consumption.
ii. Optimization of seal water consumption by recycling of the
same.
iii. Improving the vacuum of waste heat steam turbine generator to
increase the power generation.
iv. Usage of Energy efficient LED lighting (Conversion of around
25% of total lighting load).
v. Reduction of fresh water consumption by improving the return
water consumption .
vi. Condensate recovery in CPP.
vii. Upgradation plant air compressor-C with energy efficient.
viii.Variable speed drive for Tail gas scrubber recirculation pumps.
ix. Optimize use of cooling water pumps and compressors in TPP.
Iron Ore Business:
VAB
i. Coke oven stack bottom tapping to optimize the coke oven flue
gas heat intake in power plant boiler benefiting an increase in
power generation by 2 MW.
IOK
Fuel consumption and engine emission levels of the transport
vehicles and earth moving equipment, together with the
optimization of electrical energy consumption in all activities,
remains a focus area.
i.
Installation of APFC panel in plant which has improved the
power factor and reduced the energy losses (Annual Saving
– 37.27 KL of Diesel).
ii. Installation of LED Lighting in mobile lightning towers by
replacing 1,000 W metal halide lamps with 300 W LED lamps
and Haul road lights HPSV 250W to 90W (Annual Saving- 40
KL of Diesel)
iii. Replacement of High mask lighting tower with LED at railway
siding (Annual Saving-17.48 KL of Diesel).
iv. Arresting of compressed air leakage as identified during the
Energy audit (Annual Saving- 6.25 KL of Diesel)
v. Automation of mobile lighting device in mines resulting in
reduction of extra diesel consumption (Annual Saving- 7.98 KL
of Diesel).
Vedanta Limited Integrated Report and Annual Accounts 2017-18
157
Power Business:
2400MW Jharsuguda:
i. Reduction in 200 KW power consumption of service water by
stopping one service water pump.
ii. Auxiliary power reduction of 150 KW by running single seal air
fan for 6 Mills in service by reducing header pressure.
iii. Savings of 44 KW to HVAC condenser without effecting
condenser performance.
iv. Reduce the loading and unloading set points of individual
compressors by 0.5 Kpa, saving of 2 KW/MT of ash conveying.
v. Reduction of specific power consumption to 1.98 KW/MT of
coal feeding by increasing conveyor loading/utilization.
vi. Replace the existing 1000 no. of Halogen lamps with LED for
streetlights & Boiler, saving of 130 KW.
vii. SWAS room pump loading reduction by reducing the flow by
5 KW.
1215 MW Jharsuguda:
i. Cooling Tower fills replacement done in 8 units, Retrofit of BFP
Recirculation valves in all units, Condenser bullet cleaning in
four unit, APH seals replacement done in four unit, Selective
Soot blowing, CW Interconnection done in between unit 8 & 9
to improve vacuum & reduce auxiliary power consumption.
ii. Sliding pressure operation during partial load to save 5.2 Kcal/
(B) Additional investments and proposals, if any, being
implemented for reduction of consumption of energy
Oil & Gas Business:
Rajasthan Operations
i. 2nd number Multi Plunger 2nd Stage pump with 37 KW Motor to
also be replaced with Penta Flex wobble plate plunger pump
with VFD Operated 15 KW Motor. Saving expected around
264 KWHr/day
ii. Replacement of Conventional type 250 W MV lamps Street
Light fitting with LED type (65 nos.) to be taken up, with
expected saving around 107 kWh per day.
iii. Replacement of Florescent tube light with LED tube light
(425 Nos.) to be taken up in substation building and Security
building in RGT and well pads, with expected saving around
165 KWH per day.
Ravva Operations
i.
Installation of 24V, 0.37KW DC Motor with Solar power driven
instead of existing gas lift offshore chemical injection pumps to
reduce gas lifting gas consumption at offshore platforms.
ii. VFD to be installed for LP flare blower motor. Reduction in
energy consumption is estimated as 165,564 KWH as 75 KW
motor which operates at 32.34KW will be operated at 11.6 KW.
iii. Replacing 40 nos. of 70W HPSV lamps with energy efficient
KWH in heat rate and 200 KW in BFP consumption.
32W LED light fittings in plant.
iii. Reduction of unaccounted loss by 15 Kcal and reduce turbine
heat rate from 2,113 to 2,098 Kcal.
iv. Replacing 500 nos. of 4 feet 36W fluorescent lamps with
energy efficient 20W LED tubes in plant offices & LQ.
iv. Establish mill operating window to improve air fuel ratio up
v. Replacing 15 nos. of existing 250W HPSV lamps in plant with
to 1.1.
energy efficient 90W LED lights in plant.
v. Periodic Condenser tube cleaning by bullet to reduce
condenser DP upto design level and improve vacuum.
vi. Optimization of RH spray and RH steam temperature, water
chemistry, running of drives & stopping idle equipment.
vii. U#8,6,2 all FF bag replacement with new bag (emission
reduced from 48 µmg/m3 to 30 µmg/m3).
viii.Reduction of number of running mill during part load operation.
ix. Stopping of One CW pump Load <500MW.
Aluminium Business:
Smelter Plant Jharsuguda:
Electrical Energy:
DC Energy saving
1. SGL100% cathode implementation
2. Shandong cathode implementation
AC auxiliary Energy saving
i. Drive installed in CT-1 with temperature feedback control in
Casthouse.
ii. Installation of VFD in pump house.
iii. FTP Air slide fan running hour optimization.
iv. Implementation of 100% LED street lights in Smelter Plant-1.
v. Optimization of Cooling tower running hour.
vi. Replacement of LED lights in office and MCC area.
vii. Installation of 10KW capacity Solar Power Plant.
viii.Rectifier conversion efficiency improvement.
Lanjigarh- Refinery
The following major energy conservation measures are taken at
Lanjigarh:-
• Conversion of plant Street light to LED including high-mast
light.
• Conversion of colony Street lights to LED.
• Increase of throughput of Ball Mill-3 from 300 TPH to
320 TPH.
• Bauxite Benefication Project.
Lanjigarh- CGPP
• Internal modification in coal mill (2 nos).
• Cooling tower fan hub modification.
• Replacement of recirculation valve in BFP.
• LED conversion from conventional lighting system in
switchyards.
Cambay Operations
i.
Installation of 150 LED Lights.
Copper Business:
i. VFD for SAP-1 SFO-14 and SFO-9 blower (500KW).
ii. Vapor absorption machine for chilled water application.
iii. Replacement of conventional lights into LED lights.
iv. Alternate green fuel for furnace oil.
v. Planning to setup Sewage treatment plant to treat Municipal
sewage to generate fresh water for plant & nearby villages
usage.
vi. Planning to setup Desalination plant to self-sustain on the water
requirement.
Iron Ore Business:
VAB
i. Replacement of conventional light fixtures with LED across
Value Addition Business.
ii. Replacement of 2 nos. of HT Blower motors of Blast Furnace 1
and 2 with an Energy efficient motors.
iii. Replacement of cooling tower pump at PID-1 with energy
efficient pump.
iv. Replacement of return water pump at PID-1 with energy efficient
pump.
v. Downsizing of screening de-dusting and propitiating dedusting
fan impellers.
IOG
i. Lighting using conventional fixtures of around 900KW capacity
is planned to be converted into LED fixtures to obtain a saving of
around 50%.
ii. Study of introducing inverter technology based Air conditioning
systems with a saving of approx. 30% of energy utilized.
iii. Introducing VFD starter panels in 90% of de watering associated
pumping systems with a saving of around 35 % in energy
expended.
IOK
i. Grid power supply for the plant operations instead of DG thus
reducing the direct consumption.
ii. Increasing the efficiency of 220 KW cone crusher 2 motor as a
result of Energy audit (Potential Annual Saving – 1.1 KL of Diesel).
Integrated Report Management Review Statutory Reports Financial Statements 158
Vedanta Limited Integrated Report and Annual Accounts 2017-18
Annexure F continued
iii. Replacement of 725 KVA with 320 KVA DG Set (Potential
Annual Saving- 85.2 KL of Diesel).
iv. Integrated Command and Control Centre.
Power Business:
2400MW Jharsuguda:
i. CFD analysis & implementation of its recommendation for APC
reduction by 750KW & SHR improvement by 5Kcal/Kwh.
ii. VFD installation in LDO pump - 43KW
iii. VFD installation in Raw water make up pump - 5KW
iv. HFO to LDO conversion - 0.01% DM makeup reduction (saving
of 0.5gm/Kwhr in specific coal consumption).
Installation of VFD’s for HT DRIVES.
1215MW Jharsuguda:
i.
ii. Green cooling tower installation.
iii. Automatic condenser ball cleaning system for condenser.
iv. Additional Economizer coil installation.
Installation of 10KW capacity Solar Power Plant.
Aluminium Business:
Smelter Plant Jharsuguda:
i.
ii. Replacement of office & MCC area lights with LED lights.
iii. SGL100% cathode implementation.
iv. Shandong cathode implementation.
Refinery
S.
NO Project
1
VFD conversion of
Ball Mill Pump
(26-PU-0008)
Target Area
Estimate
Savings
1,250,000
Flow control of Test liquor to
ball mill area through speed
control of motor by installation
of VFD and energy saving by
reduction of recirculation load
loss.
2 LED tube lights for
Office Buildings
Replacement of conventional
tube lights with LED
500,000
3 Common cooling
tower fan: Ball mill
Common cooling tower fan
for all the mills
250,000
4 Installation of energy
efficient motor
Replacement of final series
motor with energy efficient
motor
5 Re-insulation of
pipelines / tank
Heat loss reduction by
targeting the damaged
insulation of tanks
125,000
-
CGPP
i. Nil
(C) Impact of above measures in a) and b) for reduction of
energy consumption and consequent impact of cost of
production of goods
Oil & Gas Business:
Rajasthan Operations
i. Reduction in internal consumption of natural gas.
ii. Conservation of steam and electricity.
Ravva Operations
i. Procurement of 24V, 0.37KW DC Motor with Solar power
driven for offshore chemical injection pumps to reduce gas
lifting gas consumption at offshore platforms.
ii. Procurement of VFD for LP flare blower motor. Reduction in
energy consumption is estimated as 1,65,564 KWH as 75KW
motor which operates at 32.34KW will be operated at 11.6 KW
and would correspond to energy saving of ~ 1,65,564 KWH per
year and cost savings of ~5.5 lacs INR/annum.
iii. Procurement of 40 nos, 32W LED light fittings for replacing of
existing 70W HPSV lamps in plant and would correspond to
energy saving of ~ 6,657 KWH per year and cost savings of
~22,169 INR/annum.
iv. Procurement of 500 nos., 4 feet, 20W LED tubes for converting
of existing 36W fluorescent lamps to LED tubes and would
correspond to energy saving of ~ 35,040 KWH per year and
cost saving of ~1.16 lacs/annum.
v. Procurement of 15 nos., 90W LED light fittings for replacing of
existing 250W HPSV lamps in plant and would correspond to
energy saving of ~ 10,512 KWH per year and cost savings of
~35,000 INR/annum.
Cambay Operations
i. Water sumps interconnection resulted in energy savings of of ~
21 MWH.
ii. Hot oil heaters efficiency improvement by replacement of
refractory material. - ~7 to 10% efficiency improvement.
iii. PGBC after-cooler fins internal cleaning by condensate and
chemical herewith increasing the efficiency and reduction in
power consumption. – 10 to 15% efficiency improvement.
iv. PGC after-cooler temperature set point reduction, by which
load on HCDP chillers reduced.- 720 KW/day
Copper Business:
i. The energy consumption per ton of anode produced 7.29 GJ/
MT of Anode including waste heat Steam generation benefits.
Iron Ore Business:
VAB
i. The Energy Conservation measures undertaken in various areas
in 2017-18 have an annual saving potential of 3,200 MWh of
Electricity per annum for VAB.
ii. The Energy Conservation measures proposed in various areas in
2018-19 have an annual saving potential of 3,511 MWh of
Electricity per annum for VAB.
IOG
i. The Energy Conservation measures undertaken in various areas
in 2017-18 have an annual saving potential of 641 MWh of
Electricity per annum for IOG and 72 KL per annum of Diesel for
IOG.
ii. The Energy Conservation measures proposed in various areas in
2018-19 have an annual saving potential of 3,000 MWh of
Electricity per annum for IOG.
IOK
i. The Energy Conservation measures undertaken in various areas
in 2017-18 have an annual saving potential of 108.98 KL of Diesel
for IOK.
ii. The proposals being implemented for Energy Conservation
measures have an annual saving potential of 86.31 KL of Diesel
for IOK.
Power Business:
2400MW Jharsuguda
0.24% APC (auxiliary power consumption) improvement in FY 18.
• Achieved best figures in APC since commissioning
Yearly
Half Yearly
Quarterly
Month
7.74%
7.41%
7.27%
6.81%
FY-18
H2-18
Q3 FY-18
Nov-17
Reduction of 32.5 gm/kwhr in specific coal consumption in FY
2017-18.
• Achieved best figures in APC since commissioning
Quarterly
Month
767gm/kwh
Q4 FY-18
764gm/kwh
Jan-18
Vedanta Limited Integrated Report and Annual Accounts 2017-18
159
1215MW Jharsuguda:
• There is a saving of 5,169,530 GJ/Annum for FY 17-18 from the
above projects.
sewage to generate fresh water for plant & nearby villages’
usage.
iv. Planning to setup a Natural gas terminal for alternate usage of
• There is potential saving of 4,748,932 GJ/Annum for FY 18-19
FO & LPG.
from the above projects.
v. Planning to setup Desalination plant to self-sustain on the water
• 0.22% Auxiliary Power Reduction at Power plant.
• Reduction of 0.05 ml/MWh Specific Oil Consumption in Power
requirement.
Business.
Aluminium Business:
Smelter Plant Jharsuguda:
• For Smelter saved from the energy saving measures is 16Million
KWH/per anum(approx.)
CPP Plant Jharsuguda:
• There is a saving of 4,31,830 GJ/Annum for FY 16-17 from the
above projects.
Iron Ore Business:
IOK
i.
Installation of 10KW capacity Solar Power Plant proposed thus,
focusing more on cleaner and renewable sources on energy
(Potential Annual Saving- 10.8 KL of Diesel).
ii. Increment in Solar Street lights in Mines proposed (Potential
Annual Saving- 2.0 KW of Electricity).
IOG
i. 5 Nos. Solar lamps has been installed in Codli, Curpem and
• There is potential saving of 4,52,522 GJ/Annum for FY 17-18
Colomba Mine. (Saving- 1,000 KWH)
from the above projects.
• 0.12% Auxiliary Power Reduction at Power plant.
• Reduction of 0.05 ml/MWh Specific Oil Consumption in Power
Aluminium Business:
Lanjigarh Refinery
Business.
(D) The steps taken by the company for utilizing alternate
sources of energy
Oil & Gas Business:
Rajasthan Operations
i. Renewable energy (biogas) was purchased from energy
exchange to the tune of 47.83 lakh units of electricity, resulting
in about 4000 tCO2 equivalent indirect reduction of
greenhouse gas emissions.
ii. A proposal for setting up a 20 MW solar power generation plant
is under consideration.
iii. Solar Power Generation at AGI-32 which have saving of 17,563
KW per Annum.
iv. A total of 41,973 Non-Solar Renewable Energy Certificates were
purchased.
v. Energy saving through harnessing Solar Energy for lighting and
pumping -
a. Installation of Solar Lamps at Mangla 3/6 - Solar street lights
(20 Nos.) each having capacity of 11 W installed at Mangla
3/6 to harness renewal power and avoid conventional energy
source.
b. Installation of solar pump for irrigation activities, drinking
water facility at Gangli forest area, thereby reducing the
conventional source of energy - Solar pumps were installed
at MPT (03 Nos.; 2Hp each), Gangli forest area (01 nos.; 5
Hp) for utilization of solar energy for pumping of water to
avoid consumption of conventional energy source.
Copper Business:
i. Planning to Setup 9 MW solar power plant.
ii. Purchased Renewable Energy Certificates of non-Solar 23,019
certificates as per Tamil Nadu Electricity Regulatory
Commission regulations.
iii. Planning to setup Sewage treatment plant to treat Municipal
Technology Absorption, Adaptation and Innovation
S.NO
1
Project Description
Solar plant
installation
Targeted Area of
Improvement
Estimate Annual
Savings(KWH)
Solar plant for
supply to admin
offices
1,56,250
Form of disclosure of particulars with respect to Technology
Absorption Research and Development (R & D)
Copper Business:
Specific areas in which R&D carried out by the company
i. Alternate Material for pig iron.
ii. Recovering of copper sulphate from the electrolyte.
iii. Minor metals recovery from concentrate.
Iron Ore Business:
VAB
Specific areas in which R&D carried out by the company
i. Sinter plant reduction in coke breeze consumption by utilization
of blast furnace waste dust.
ii. Oxygen enrichment in sinter plant.
iii. Modified shutdown burden and procedure for smooth start-up
of blast furnace after plant shutdown.
Benefits as a result of R&D
i. Reduction in coke breeze consumption by 3 to 4 kg/ton of
sinter.
ii. Reduction in coke breeze consumption by 1 kg/ton of sinter.
iii. Reduction in Coke consumption and revival of blast furnace in
optimum time.
Aluminium Business:
CPP Plant Jharsuguda:
• LED Installation in CPP.
Efforts in brief
made towards
technology
absorption,
adaptation and
innovation
Oil & Gas Business:
Rajasthan Operations
• Wastewater generated at well pads is being treated to reuse in water injection in MBA field. The treatment process
i.e. electrocoagulation has been revisited and adopted alternative water treatment technology i.e. chemical based
treatment process. The initiative consume less energy and resulted in energy consumption reduction through
minimizing the DG operations. Annual saving of GHG emission achieved through the initiative is 744.97 tCO2 eq
through reduction in Diesel consumption.
• Micro bubble Technology utilized in Produced water System for better Oil / Water Separation.
• Further efforts made to reduce Dissolved Oxygen content for improvement of viscocity of polymer mother solution.
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160
Vedanta Limited Integrated Report and Annual Accounts 2017-18
Annexure F continued
Cambay Asset
• LA-07 is an oil well not completed with Gas lift, hence the well could not be operated with artificial lift. To overcome
the limitation a Straddle gas lift system was installed successfully across the circulation sliding sleeve.
• Wells LB-5 and LB-9 in Cambay required gas lift for production enhancement. However, LB platform does not have a
Gas lift compressor. As an innovative solution, new Gas zone was perforated and accessed in LB-7 and this Gas was
successfully diverted to LB-5 and LB-9 for utilization as Gas lift.
• Well GA-03 had earlier loaded and been shut-in. During a brainstorming workshop for revival of shut-in wells, the
well was picked up for attempting revival. The well was initially unable to flow into production header and had
shallow sand fill. The sand fill was cleared and well was initially flown into a closed drain drum (CDD) for unloading
against zero backpressure. The well was later successfully diverted to production header and revived.
• Sludge reduction in Adani tanks using sludge breaker chemical by which trucking back of sludge to Suvali terminal
eliminated.
Ravva Asset
Innovative design and fabrication of a tool,- Modified Gas Lift Orifice (MGLO), was developed in-house to facilitate Gas
lift in wells that do not have artificial lift jewellery or require deeper gas lift injection in order to increase production.
Successfully commissioned in some wells at Ravva.
Iron Ore Business:
VAB:
a. Pulverized coal injection in blast furnace 1 & 2.
b. Ore addition in ladle.
c. Usage of Maximum Low Grade Goan Iron Ore in Blast Furnace.
d. Use of high thermal conductivity bricks for oven bed.
e. Hydraulic compacting station in Battery-1.
f. Oven flue arch modification from semicircular arch to flat arch to improve productivity.
IOK
a. Installation of Truck simulator to check the proficiency of the operator.
b. Installation of LDR (Light Detecting Resistors) and Proximity sensors for Auto on-off of Haul road lighting with respect
to Haul trucks travelling.
Power Business:
2400MW Jharsuguda
• Implementation of Online boiler tube leakage detection system.
1215MW Jharsuguda:
• Automatic online Condenser ball cleaning system.
• Economizer coil addition.
• Green cooling tower.
Aluminium Business:
CPP Plant Jharsuguda:
• Selective Soot blowing in boilers.
• Condenser bullet Cleaning.
• HFO to LDO Conversion.
• Isolation of SWAS grab sample.
• Governor Tuning by solvina for the first time in India.
• Augmentation of new CT fills.
• Condenser tube cleaning.
• Conversion of 2nd elevation HFO guns to LDO.
Oil & Gas Business:
Cambay Asset
Benefits derived
as a result of
above efforts e.g.,
product
improvement, cost
reduction, product
development,
import
substitution
• LA-07 had a low reservoir pressure and it was suspected the well will not sustain on self or fail to revive on self in
case of shut-down. Installation of Straddle Gas lift ensured sustained 650 BOPD production from the well.
• The innovative strategy to route LB-7 gas as artificial lift for LB-5 and LB-9 wells added 200 BOPD of additional
production on a platform that was not equipped to support artificial lift.
• Activating GA-03 with sustained efforts and out of the box thinking added ~1,000 BOPD production.
Vedanta Limited Integrated Report and Annual Accounts 2017-18
161
Ravva Asset
The tool, Modified Gas Lift Orifice (MGLO) facilitated introduction of Gas lift in wells which were not completed with
any artificial lift jewellery. Enhancement of production was achieved with the help of this new tool by allowing deeper
gas lift injection. The tool helped revive 2 shut-in wells RH-2 and RG-2 adding 650 BOEPD and 850 BOPD production
respectively.
Iron Ore Business
VAB
a. Reduction in coke rate resulting reduced COP.
b. Increase in productivity and reduction in coke rate.
c. Special grade production.
d. Reduce generation of coal fines from 10% to 7.5% and increase use of from 45% to 50%.
e. Improvement in coke oven productivity.
IOK
a. Increases proficiency of the operator.
b. Optimum use of the electricity for Haul road lighting.
Power Business
2400MW Jharsuguda
• Reduction in forced outage time.
1215MW Jharsuguda:
• Improvement in condenser Vacuum from 87.5 to 88 KPA
• Reduction of boiler exit flue gas temp. by 8 dgc.
• Reduction in turbine heat rate by 15 Kcal & DM Make up.
• Reduction of APC from 9.51% to 9.29%.
Aluminium Business
CPP Plant Jharsuguda:
• Improvement in heat rate from 2,451 to 2,394.
• Zero power outage.
• Reduction in specific raw water consumption & DM Make up.
• Reduction of APC from 9.81% to 9.3%.
• Condenser tube cleaning for vacuum improvement.
• Conversion of 2nd elevation HFO guns to LDO for startup time reduction.
In case of imported technology (imported during the last 5 years reckoned from the beginning of the financial year), the following
information may be furnished:
Oil & Gas Business
Technology imported
Ravva Operations
• The details of technology imported:
• Fluid based sealant technology
• Formation isolation valves (FIVs).
Year of import
2014-15
Copper Division
No
Iron Ore - Value Addition
Business:
Blast Furnace 3 with advanced Pulverized
Coal Injection & O2 Enrichment facility/
Sintering Technology - Agglomeration of
Iron Ore, Coke and Flux Fines into Sintered
Lumps/ New Pig Casting Machine is
Imported under EPCG
2012 (BF & SP)
2014 (New PCM)
Power Business
No
Has technology been fully absorbed
Yes
Yes
Aluminium Business
Plant commissioned to its full capacity.
2006
Yes
Integrated Report Management Review Statutory Reports Financial Statements 162
Vedanta Limited Integrated Report and Annual Accounts 2017-18
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163
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Integrated Report Management Review Statutory Reports Financial Statements
164
Vedanta Limited Integrated Report and Annual Accounts 2017-18
Report on Corporate Governance
Company’s Philosophy on Code of Governance
The Company’s philosophy on Corporate Governance is
embedded in the legacy of transparent, fair and ethical practices.
Efficient Corporate Governance is imperative for generating added
value for our shareholders and maintaining confidence amongst
stakeholders at large.
We aim to grow and empower the organization by enhancing the
quality we create, putting continued thrust on our values and taking
utmost care of our people. We ensure that our progress leaves
positive imprints on the environment and that our growth is all-
inclusive for the enhancement of our communities. Our governance
framework supports and enables effective execution of Company’s
strategy together with high quality and timely decision making.
Vedanta’s Governance Structure
Shareholders
Around 7 lakhs shareholders
exercise governance
Appoint
Risk Management
Committee
Elect
Stakeholders Relationship
Committee
Constitutes
Board of Directors
Eminence personalities
with diverse expertise
Constitutes
Corporate Social
Responsibility Committee
Reports
Auditors
Reports
Audit Committee
Nomination &
Remuneration Committee
Appoint
Internal control function
A dedicated Management
Assurance Services (MAS) team
ensures internal controls and works
closely with internal auditors
Reports
Management
Group EXCO, BU EXCO and
SBU EXCO comprising of members
of senior management
The Governance standards of the Company are reflected in the
decision making process followed by the Board. The Executive
Committee (EXCO) at the Group (Group EXCO), Business Units
(BU EXCO) and Strategic Business Unit (SBU EXCO) deliberate the
strategic and other sessions before placing them before the Board/
shareholders for consideration and approvals.
Compliance with Corporate Governance Guidelines
Besides complying with the statutorily prescribed Corporate
Governance practices, the Company has voluntarily adopted and
evolved various practices of governance conforming to highest
ethical and responsible standards of business, globally
benchmarked. These practices reflect the way business is
conducted and value is generated.
Board of Directors
At the core of our corporate governance practices is the Board of
Directors, who is committed to maintaining a high standard of
corporate governance practices within the Group and devotes
considerable effort to identify and formalize best practices.
Composition, Directorship and Meetings
The composition of the Board is in compliance with the most recent
governance standards issued by the Securities and Exchange Board
of India (SEBI) on the recommendations of Kotak Committee.
The Company recognizes and embraces the benefits of having a
diverse board, and sees increasing diversity at board level as an
essential element in maintaining a competitive advantage. The
Board comprises of 2 woman directors one of whom is an
Independent Director. Further the Board comprises of members
with diverse backgrounds having considerable expertise and
experience in their respective fields.
As at March 31, 2018, the Board of Company is an efficient mix of
Executive Directors (3), Non-Executive (1) and Independent
Directors (5). The Chairman of the Board is an Executive director.
Composition of Board
1
The Board provides entrepreneurial leadership for the Group and
governs the Company within framework of prudent and effective
controls ensuring that the Company is delivering excellent
operational performance, innovative culture and creates sustainable
and long-term value for stakeholders.
4
Your Company’s Board combines a number of longer serving
Directors with Directors who have joined the Board more recently.
This combination provides the Board with a fresh perspective while
ensuring there is continuity and experience from Directors who
have served during a period of rapid growth and development for
the business.
1 - Executive Chairman
2 - Executive and Whole-Time Director
3 - Non-Executive Director
4 - Non-Executive Independent Director
2
3
Vedanta Limited Integrated Report and Annual Accounts 2017-18
Vedanta Limited Integrated Report and Annual Accounts 2017-18
165
The Chairman leads the Board and upholds the highest standards of
integrity, probity and corporate governance through setting clear
expectations in terms of culture and values, as well as in terms of
the style and tone of board discussions. The Chairman promotes
constructive relationship and effective communication between
the Directors.
There is a clear demarcation of duties and responsibilities among
the position of the Chairman of the Board and Chief Executive
Officer of the Company to ensure best corporate performance.
The Board composition is in conformity with the provisions of the
Companies Act, 2013 and Regulation 17 of the SEBI (Listing
Obligations and Disclosure Requirements) Regulations, 2015
(Listing Regulations).
Additionally, in case of business exigencies, resolutions/matters are
passed by way of circulation and if required the same is supported
by an audio call to explain the rationale. During the year ten (10)
matters/resolutions were approved through circulation.
Total nine (9) board meetings were held during the financial year. All
Directors have demonstrated high levels of availability and
responsiveness for additional meetings and discussions whenever
these have been required. The maximum gap between any two
meetings was not more than one hundred and twenty (120) days.
Video / tele-conferencing facilities were facilitated to Directors
travelling in India or abroad for participation in the meeting on
requirement basis.
Detailed profile of the Directors can be viewed on the website at
www.vedantalimited.com.
Table 1: Details of attendance at Board Meetings
Mr. Kuldip Kumar Kaura - Interim Chief Executive Officer, Mr. GR
Arun Kumar – Whole-Time Director & Chief Financial Officer and
Ms. Bhumika Sood – Company Secretary are the Key Managerial
Personnel (KMPs) of the Company.
During the year under review, following changes took place in the
position of Directors/ Key Managerial Personnel (KMPs) of the
Company:
• Mr. Naresh Chandra, Independent Director ceased to be a
member of the Board and committees effective July 9, 2017 due
to demise. The Directors placed on record their deep
appreciation for his valuable guidance.
• Mr. Aman Mehta appointed as an Independent Director and
Ms. Priya Agarwal was appointed as Non- Executive Director on
the Board w.e.f. May 17, 2017. The appointment was approved by
the shareholders of the Company in the 52nd Annual General
Meeting held on July 14, 2017
• The term of Mr. Thomas Albanese as Whole-Time Director and
Chief Executive Officer (CEO) was extended by the Board till
August 31, 2017. Mr. Albanese superannuated as the CEO and
member of the Board w.e.f. August 31, 2017.
• Ms. Lalita D. Gupte and Mr. Ravi Kant were re-appointed as
Independent Directors for a second and final term w.e.f January
29, 2018 till August 10, 2021 subject to approval of the
shareholders in the forthcoming Annual General Meeting.
• Mr. UK Sinha was appointed by the Board at its meeting held on
March 13, 2018 w.e.f. the closing of business hours of March, 13,
2018.
• Mr. Tarun Jain was re-appointed as the Whole-Time Director by
the Board at their meeting held on March 28, 2018 w.e.f. April 1,
2018.
S. No. Date of Meeting
1
2
3
4
5
6
7
8
9
11-Apr-17
15-May-17
25-Jul-17
31-Aug-17
02-Nov-17
19-Dec-17
31-Jan-18
13-Mar-18
28-Mar-18
No. of
Directors
Attended
Present
Board
Strength
8
8
9
9
8
8
8
8
9
8
7
9
8*
8
6
8
8
9
%
100%
87.5%
100%
100%
100%
75%
100%
100%
100%
*Ms. Lalita D. Gupte, Mr. Ravi Kant and Mr. Thomas Albanese attended the meeting through
audio call.
Composition of the Board, other Directorship(s)/ Committee
Membership(s)/ Chairmanship(s) as on March 31, 2018 and
attendance of directors at Board Meetings, Last Annual General
Meeting (AGM) are as given in Table – 2.
None of the Director is a Director in more than 10 public limited
companies or acts as an Independent Director in more than 7 listed
companies or 3 listed companies in case he/she serves as a
Whole-time Director in any listed company (as specified in
Regulation 25 of the Listing Regulations).
Further, none of the Directors are members of more than 10 board
level committees of Indian public limited companies, nor are they
Chairman of more than 5 committees, across all companies in
which they are directors. The necessary disclosures regarding
committee positions have been received.
Mr. Kaura was appointed as an Interim Chief Executive Officer
(CEO) of the Company w.e.f. September 1, 2017.
None of the Directors are related to other Directors as specified
under Companies Act & Listing Regulations.
The Company follows a structured process of decision-making by
the Board and its Committees. To ensure smooth conduct of the
meetings, an annual calendar of the Board and Committee
meetings is prepared in advance in consultation with the Board
members. The detailed agenda along with the explanatory notes
and annexures are circulated in advance of the meeting to the
respective Board and Committee members. In special and
exceptional circumstances, the agenda is sent at a shorter notice,
with due adherence to the applicable provisions including
Secretarial Standards issued by the Institute of Company
Secretaries of India.
Integrated Report Management Review Statutory Reports Financial Statements
166
Vedanta Limited Integrated Report and Annual Accounts 2017-18
Report on Corporate Governance continued
Table – 2
Name of Directors
DIN
Category
Held Attended
Navin Agarwal
Aman Mehta(1)
K Venkataramanan
Lalita D. Gupte(2)
Naresh Chandra(10)
Ravi Kant(2)
UK Sinha(8)
Priya Agarwal(1)
Tarun Jain(4)
GR Arun Kumar
Thomas Albanese (11)
00006303 Executive Chairman
00009364 Independent Director
00001647 Independent Director
00043559 Independent Director
00015833 Independent Director
00016184
Independent Director
00010336 Independent Director
05162177 Non-Executive Director
00006843 Whole- Time Director
01874769 Whole- Time Director &
Chief Financial Officer
06853915 Whole- Time Director &
Chief Executive Officer
9
7
9
9
2
9
1
7
9
9
4
No. of Board meetings held during
his / her tenure and attended in
2017-18
Number of
Directorships in other
entities including this
entity
Number of
Committee# positions
held in public
companies* including
this entity
All@
Listed Member Chairman
Whether
attended last
AGM held on
July 14, 2017
Yes
Yes
No
Yes
NA
Yes
NA
Yes
Yes
Yes
Yes
4
6
6
6
-
3
3
1
3
9
-
2
6
3
6(3)
-
2
2
1
2(5)
2(6)
-
-
7
1
8
-
1
2
-
2
2(7)
-
-
1
-
2
-
-
-
-
-
-
-
%
100
90
100
100
50
90
100
90
100
100
9
6
9
9(9)
1
8(9)
1
6
9
9
4(9)
100
# only Audit Committee and Stakeholders Relationship Committee has been considered as per Regulation 26 of the Listing Regulations.
* excluding private limited companies, foreign companies and companies under Section 8 of Companies Act, 2013, trusts and alternate directorships as per Regulation 26 of the Listing Regulations.
@ excludes foreign companies but includes Private Companies and companies under Section 8 of the Companies Act, 2013.
(1) Appointed w.e.f. May 17, 2017.
(2) Re-appointed as Independent Directors for a second and final term w.e.f. January 29, 2018 till August 10, 2021.
(3) Ms. Lalita D. Gupte is a Director in India Infradebt Limited whose only Debt Securities are listed.
(4) Re-appointed as Whole-Time Director w.e.f. April 1, 2018.
(5) Mr. Tarun Jain is a Director in Bharat Aluminum Company Limited whose only Debt Securities are listed.
(6) Mr. GR Arun Kumar is a Director in Vizag General Cargo Berth Private Limited whose only Debt Securities are listed.
(7) Mr. GR Arun Kumar is a member of the Audit Committee of Vizag General Cargo Berth Private Limited whose only Debt Securities are listed.
(8) Appointed as Non-Executive Independent Director on the Board of the Company w.e.f. close of business hours on March 13, 2018.
(9) Attended the meeting held on August 31, 2017 through audio call.
(10) Mr. Naresh Chandra ceased to be a Director on the Board w.e.f. July 9, 2017 due to demise.
(11) Mr. Thomas Albanese superannuated from the position of Whole-Time Director and CEO w.e.f. end of business hours on August 31, 2017 consequent to contract completion.
Matters reserved for the Board and delegated authorities
A formal schedule of matters of commercial and financial
importance are reserved for the board. This covers areas such as:
setting the Group’s purpose and strategic vision; monitoring the
performance of delivery of the approved strategy; approving major
investments, acquisitions and divestments; the oversight of risk and
the setting of the Group’s risk appetite; and reviewing the Group’s
governance framework.
The Board has delegated some of its responsibilities to the board
committees, and details of how the committees have fuelled on
behalf of the Board are provided in the report.
Information Supplied to the Board
One of the prerequisites for value-generating work by the Board is
that the Board has a firm grasp on the operations and on events in
the outside world. We achieve this through a well-structured body
of material for the Board.
The Board has complete access to all the relevant information within
the Company. All Board meetings are governed by a structured
agenda which is backed by comprehensive background information.
The Company leverages technology and synergizes it with the
green initiatives to the optimum. As a part of green initiative, all the
agenda papers and notes are circulated to the Directors through an
electronic platform. This ensures greater security, and provides the
Directors with a more efficient way of working, by combining good
governance with the use of the latest technology.
Compliance reports of all laws applicable to Company is presented
before the Board on quarterly basis. The minutes of the Board
meetings of the Company’s subsidiaries and a statement of all
significant transactions and arrangements entered into by the
subsidiary companies are also placed before the Board.
Expositions covering various aspects of business, major
subsidiaries, global and domestic business environment, safety and
environment related matters, strategy and risk management
practices are given to the Board.
Throughout the year, Directors are also provided with detailed
briefing materials on the performance of the Company and market
analysis on the performance of, and prospects for, the business.
Updates on relevant statutory changes and judicial pronouncements
around industry related laws are regularly circulated to the directors.
Each director has complete access to any Company information and
full freedom to interact with senior management.
Business reviews by the Group EXCO, Business EXCO and SBU
EXCO on the performance and operation of the Company is
conducted on monthly basis and update to the Board is given in the
quarterly meetings. Board has constituted various committees and
sub-committees with clearly agreed reporting procedures and are
guided by the charter prescribing the terms of reference.
Important decisions taken by the Board and its committees are
promptly communicated to the concerned departments or divisions.
The Company also has an effective post Board Meeting follow up
procedure. Action taken report on the decisions taken in a meeting
is placed at the immediately succeeding meeting for information of
the Board.
Board Familiarisation and Induction Programme
A formal and comprehensive induction about the Company, its
operations and the industry in which the Company operates, is given
to all the new directors including site visits and meetings with
members of the Board and other key senior executives including
Business CEOs and CFOs. They are also introduced to the
organization structure, strategy, constitution, policies and board
procedures.
A formal letter of appointment setting out the role, functions, duties
and responsibilities, details regarding remuneration, training and
development and performance evaluation process is given to
Independent Directors at the time of their appointment.
The Directors are also provided with induction materials including
Company’s corporate profile, its organizational structure, the
Company’s history and milestones, latest annual report, Code of
Vedanta Limited Integrated Report and Annual Accounts 2017-18
Vedanta Limited Integrated Report and Annual Accounts 2017-18
167
Conduct and Business Ethics, the Code for Prevention of Insider
Trading and other applicable codes. They are also periodically
updated on all business related issues and new initiatives.
Following the initial induction, a continuing understanding of the
business is developed through appropriate business engagements.
In addition, Executive Committee members and other senior
executives make expositions on business and performance of
various divisions and units including subsidiaries in the Board and
committee meetings. They are also apprised about risk assessment
and minimization procedure.
The Board is kept abreast of performance and Company’s
operations/ updates/ major developments affecting the business
by reports from the Chief Executive Officer on quarterly basis.
Detailed familiarisation programme for Directors is available on the
Company’s website at www.vedantalimited.com.
Board Independence
The independent directors bring an element of objectivity to the board
processes and an objective view in the board deliberations. They
provide a valuable outside perspective to the deliberations of the
board and contribute significantly to the decision making process.
All Independent Directors have provided an affirmation of their
independence as required under the provisions of the Companies
Act, 2013 and Listing Regulations.
There are no material pecuniary relationships or transactions
between the Independent Directors and the Company, except for
sitting fees and commission drawn by them for attending the
meeting of the Board and Committee(s) thereof. None of the
Non-Executive Directors hold any shares or convertible instruments
in the Company.
Selection/Appointment Procedure
The Nominations and Remuneration Committee has in place a
formal and transparent process for the appointment of new
Independent Directors on the Board. The committee, based on
defined criteria, makes recommendations to the Board on the
induction of new directors.
As per the Company’s Nomination and Remuneration Policy the
following steps are carried for selection of new Board member(s):
• The Nomination and Remuneration Committee (‘NRC’) takes
into consideration the knowledge, professional & functional
expertise and background, industry orientation, accomplished
personalities, diverse academic, professional or technical
qualification, age and more before recommending a new
member to the Board for their approval for appointment;
• In case of appointment of Independent Directors, the NRC
additionally satisfies itself with regard to the independence of
the Directors vis-à-vis the Company so as to enable the Board to
discharge its functions and duties effectively;
• The NRC ensures that the candidates identified for appointment
as Directors are not disqualified for appointment under Section
164 and other applicable provisions of the Companies Act, 2013;
• In case of re-appointment, performance evaluation and
engagement level is considered by the NRC and
recommendations are made to the Board.
Separate Meeting of Independent Directors
Independent Directors play a pivotal role in maintaining a
transparent working environment in the company.
The Company facilitates the conduct of separate meetings of the
Independent Directors without the presence of Non-Independent
Directors and management of the Company to enable them to
interact and discuss about the performance of the Company and
the Board, risk faced by it, competition, strategy, leadership
strengths and weaknesses, governance, compliance, board
movements, human resources matters etc. These meetings afford
an opportunity to the Independent Directors for exchanging
valuable views.
The Independent Directors also meet with the Statutory Auditors to
discuss internal audit effectiveness, environment control and invite
their general feedback. Independent Director updates the Audit
and the Board about the outcome of the meetings and action, if
any, required to be taken by the Company.
During the year under review, the Independent Directors met once
on March 28, 2018 to discuss:
• The performance of the Chairperson of the Company, taking
into account the views of Executive and Non-Executive
Directors;
• The performance of the Non-Independent Directors and the
Board as a whole;
• The quality, quantity and timeliness of flow of information
between the Company management and the Board.
Risk Mitigation Plan
Your Company has in place comprehensive risk assessment and
minimization procedures, which are reviewed by the Risk
Management Committee periodically to ensure that management
controls risk through means of properly defined framework. The
Audit Committee of the Company also reviews the risk matrix and
mitigation plan from time to time. A separate section on principal
risks and uncertainties is covered in the Management Discussions &
Analysis.
Insider Trading Prohibition Policy
Your Company has a robust mechanism in place to prevent insider
trading and have formulated the Insider Trading Prohibition Policy
(‘Policy’) which serve as a guiding charter for all the concerned
persons associated with the Company and defines the principles
and the restrictions to be observed while dealing or proposing to
deal in any transaction w.r.t. the Securities of the Company and
related matters. The objective of the Policy is to prevent misuse of
any Unpublished Price Sensitive Information (UPSI) and prohibit any
insider trading activity, in order to protect the interest of the
shareholders at large.
In view of the recent corporate restructuring and to cater to the
ever changing environment considering the size and operations of
the Company, the Board of Directors of the Company in its meeting
held on January 31, 2018 have revised the Insider Trading
Prohibition Policy.
The Policy specifies the procedures and restrictions to be followed
by Directors, employees of the Company and other associated/
connected person before undertaking any transaction in securities
of the Company. The Policy is available on the website of the
Company at www.vedantalimited.com.
The Company has in place designated Insider Trading Monitoring
Committee comprising of senior executive members viz., Chief
Financial Officer (CFO); Company Secretary (CS); and Group Chief
Human Resource Officer (CHRO)/ VP Group HR. The Committee is
responsible for the overall administration of the Policy and actively
reviews the transaction undertaken by the Insiders.
Tracking of the trading in securities of the Company by the Insiders
is done by our Registrar & Share Transfer Agent, M/s Karvy
Computershare (P) Ltd. Reports w.r.t. the transaction executed by
the Insiders are reported to the Committee on weekly basis.
An annual disclosure is also taken from all the Insiders of the
Company disclosing their shareholding in the Company as at the
year end.
Various knowledge sharing emails/ updates are sent to the Insiders
in order to monitor and prevent any non-compliance of the Policy/
Integrated Report Management Review Statutory Reports Financial Statements 168
Vedanta Limited Integrated Report and Annual Accounts 2017-18
Report on Corporate Governance continued
SEBI (Prohibition of Insider Trading) Regulations, 2015. As a way
forward towards digitization, the Company is in the process of
developing an automated tool for monitoring and reporting of
trades done by the Insider.
Code of Business Conduct and Ethics
The Company remains committed to the highest standards of
business conduct and expects all of its employees to act
accordingly. The Code of Business Conduct and Ethics (‘COC/
Code’) as adopted by the Board is applicable to all the Directors,
senior management and employees of the Company. The COC is
available on the website of the Company at www.vedantalimited.
com.
Certification
The certification provided by Interim CEO and CFO w.r.t. the
financial statements as required under Listing Regulations was
placed before the Board and the same is provided as Annexure II to
this report.
Board Committees
The Board is assisted by six (6) principal committees each of which
is responsible for reviewing and dealing with matters within its own
terms of reference. The Board is responsible for constituting,
assigning, co-opting and fixing the terms of reference of various
Committees and the same is updated from time to time with
reference to best corporate governance practices.
The Code underpins our social, ethical and environmental
commitments and sends a clear message to our stakeholders of our
commitment to responsible business practice.
The Company Secretary officiates as the Secretary of the
committee(s).
The Code also includes within its ambit the provisions of US
Foreign Corrupt Practices Act (FCPA) and UK Bribery Act (UKBA).
Accordingly, the Company and all officials acting on behalf of the
Company including its subsidiaries and affiliates ensure due
compliance with the FCPA and UKBA and all applicable anti-
corruption laws, in doing business anywhere in the world.
The Company has received affirmations from the Board and Senior
Management confirming their compliance with the Code for the
year ended March 31, 2018. An annual declaration signed by the
Interim Chief Executive Officer (CEO) to this effect is attached as
Annexure I to this Report.
These Committees have optimum representation of the members
of the Board with requisite expertise who hold meetings at such
intervals as is deemed necessary to effectively perform the tasks
assigned to them.
Each Committee is directed and guided by its Charter defining its
purpose, scope, responsibilities and authorities, among others.
The proceedings of all committee meetings are circulated to the
members of the committee and the minutes of the meetings of all the
committees are placed before the Board for its review and noting.
Details on the role and composition of these Committees, including
the number of meetings held during the financial year and the
related attendance are provided below.
As on March 31, 2018 the Board has following six (6) committees as detailed below:
1
2
3
4
Audit Committee
1. Lalita D. Gupte,
Independent Director
(Chairperson)
2. Ravi Kant, Independent
Director
3. Aman Mehta,
Independent Director
4. UK Sinha, Independent
Director
Nomination and
Remuneration Committee
1. Aman Mehta,
Independent Director
(Chairperson)
2. Lalita D. Gupte,
Independent Director
3. Ravi Kant, Independent
Director
4. Navin Agarwal,
Executive Chairman
Stakeholder Relationship
Committee
1. Lalita D. Gupte,
Independent Director
(Chairperson)
2. K Venkatramanan,
Independent Director
3. UK Sinha, Independent
Director
Corporate Social
Responsibility Committee
1. Ravi Kant, Independent
Director (Chairperson)
2. Aman Mehta,
Independent Director
3. K. Venkatramanan,
Independent Director
4. UK Sinha, Independent
4. Tarun Jain, Whole-Time
Director
Director
5. GR Arun Kumar,
Whole-Time Director &
Chief Financial Officer
5. Tarun Jain, Whole-Time
Director
6. Priya Agarwal, Non-
Executive Director
5
6
7
Risk Management
Committee
1. Tarun Jain, Whole-Time
Director
2. GR Arun Kumar,
Whole-Time Director &
Chief Financial Officer
3. Dilip Golani, Head
Management
Assurance
4. Deodatta Padgaonkar,
Risk Officer
Committee Of Drectors
1. Navin Agarwal,
Executive Chairman
2. Tarun Jain, Whole-Time
Director
3. GR Arun Kumar,
Whole-Time Director &
Chief Financial Officer
Finance Standing
Committee of Directors
1. Tarun Jain, Whole-Time
Director
2. GR Arun Kumar,
Whole-Time Director &
Chief Financial Officer
Vedanta Limited Integrated Report and Annual Accounts 2017-18
Vedanta Limited Integrated Report and Annual Accounts 2017-18
169
1. Audit Committee
The Board of Directors has entrusted the audit committee with
the responsibility to supervise the financial reporting processes
and ensure accurate and timely disclosures with highest levels of
transparency, integrity and quality of financial control and
reporting.
During the year under review, the following changes took place
in the constitution of the Committee:
• Mr. Naresh Chandra ceased to be a member of the
Committee w.e.f. July 9, 2017 due to demise.
• The Committee was re-constituted by the Board of Directors
through a resolution passed by circulation on July 12, 2017 by
appointing Mr. Aman Mehta.
• With the induction of Mr. UK Sinha on the Board of the
Company, the Committee has been further re-constituted on
March 28, 2018 by appointing Mr. Sinha as a member of the
Committee.
The composition of the Committee is in compliance with the
provisions of Section 177 of the Companies Act, 2013 and
Regulation 18 of the Listing Regulations.
As on March 31, 2018, the Audit Committee comprises of four
(4) Non-Executive Directors all of whom are Independent. The
Chairperson of the Audit Committee is a Non-Executive
Independent Director. All the members of the Audit Committee
are financially literate.
The Group CFO, Director & Group Head – Management
Assurance Services (MAS), and the Statutory Auditors are
permanent invitees to the meetings of the Audit Committee.
Further, the Committee invites such of the executives, as it
considers appropriate, to brief the Audit Committee on
important matters.
The Committee met five (5) times during the FY 2017-18 i.e. on
May 15, 2017; July 25, 2017; November 2, 2017; January 30,
2018 and March 28, 2018. The time gap between two meetings
was less than one hundred and twenty days (120 days).
Additionally, the Audit Committee members have approved
eight (8) matters by passing resolution(s) by circulation during
the year under review. The details of attendance of members at
its meeting during FY 2017-18 are given below:
Table – 3
Name of the Committee
Member
Lalita D. Gupte(4)
Naresh Chandra(1)
Ravi Kant(4)
Aman Mehta(2)
UK Sinha(3)
5
1
5
4
0
5
0
5
4
0
100
0
100
100
0
(1) Ceased to be member of Audit Committee due to demise on July 09, 2017.
(2) Appointed as member w.e.f. July 12, 2017.
(3) Appointed as member w.e.f. March 28, 2018.
(4) Attended the meeting held on August 31, 2017 through audio call and were not
counted for the purpose of quorum.
The Audit Committee members also meet the Statutory
Auditors without the presence of the management.
Audit Committee is broadly entrusted with the following
responsibilities:
1. Ensuring integrity of the Company’s financial statements;
2. Recommending to the Board, the appointment, re-
appointment and, if required, the replacement or removal of
the statutory auditor and the fixation of audit fees;
3. Ensuring effectiveness of the Company’s financial reporting
systems and processes;
4. Evaluation of effectiveness and adequacy of internal financial
controls;
5. Evaluation and scrutiny of inter-corporate loans and
investments;
6. Approval or any subsequent modification of transactions of
the Company with related parties;
7. The Company’s compliance with legal and regulatory
requirements pertaining to financial reporting;
8. Discussing with the Management, Internal Auditor and
Statutory Auditor the policies with respect to risk assessment
and risk management
9. Reviewing the quarterly, half-yearly and annual financial
statements with the management, before submission to the
Board for approval;
10. Reviewing with management, the annual financial statements
and auditors report before submission to Board for approval,
with particular reference to:
•
Directos’ Responsibility Statement pursuant to clause (c)
of sub-section 3 of Section 134 of the Companies Act,
2013;
• Major accounting entries;
• Compliance with listing and other legal requirements
relating to financial statements;
• Significant adjustments in financial statements arising out
of audit findings;
• Changes, if any, in accounting policies and practices along
with reasons for the same.
11. Reviewing and monitoring the auditors’ independence and
performance;
12. Reviewing the functioning of Whistle Blower mechanism;
13. Assessing the performance of statutory auditors and internal
auditors;
14. Reviewing the financial statements, minutes and details of
investments made by the subsidiary companies;
15. Reviewing the audit process of company’s statutory auditor
(including qualification and independence of the auditors for
the purpose of issuing an audit report or related work) and
internal audit function
16. Valuation of undertaking and assets of the Company
17. Monitoring the end use/application of funds raised through
an issue on quarterly basis;
18. Discussing the company’s earning press releases as well as
financial information and earnings guidance provided to
analysts and rating agencies;
19. Implementation, reviewing and reporting to the Board the
compliances with applicable provision Sarbanes-Oxley Act
(SOX), Securities and Exchange Commission (SEC)
Regulations including review of Annual Report on Form 20-F
and Form 6K.
21. Mandatorily reviewing the following information:
• Management discussion and analysis of financial condition
and results of operations;
• Statement of significant related party transactions ,
submitted by management;
• Internal audit reports relating to internal control
weaknesses;
• Management letters / letters of internal control
weaknesses issued by the statutory auditors;
• Reviewing the appointment, removal and terms of
remuneration of the internal auditor;
• Statement of deviations:
a. Quarterly statement of deviation(s) including report of
monitoring agency, if applicable, submitted to stock
exchange(s) in terms of Regulation 32(1) of Listing
Regulations;
b. Annual statement of funds utilised for purposes other
than those stated in the offer document/prospectus/
notice in terms of Regulation 32(7) of Listing
Regulations.
Number of Meetings during his/ her tenure
20. Reviewing of results and reconciliation under INDAS and
Held
Attended
% of Attendance
IFRS
Integrated Report Management Review Statutory Reports Financial Statements
170
Vedanta Limited Integrated Report and Annual Accounts 2017-18
Report on Corporate Governance continued
2. Nomination and Remuneration Committee
The Nomination and Remuneration Committee (NRC) reviews
planning and the composition of the board, having regard to the
benefits of diversity.
and monitors the Board’s composition and ensure that the Board
comprises individuals with the right blend of skills, knowledge
and experience to maintain a high degree of effectiveness in
discharging its responsibilities.
The composition of the Committee is in compliance with the
provisions of Section 178 of the Companies Act, 2013 and
Regulation 19 of the Listing Regulations. The Chairperson of the
Committee is a Non-Executive Independent Director.
The Committee met six (6) times during FY 2017-18 i.e. on May
15, 2017; July 25, 2017; August 31, 2017; November 2, 2017;
March 13, 2018 and March 28, 2018.
Table – 4
Name of the Committee
Member
Amar Mehta(1)
Naresh Chandra(2)
Lalita D. Gupte(3)
Ravi Kant(3)
Navin Agarwal
Number of Meetings during his/ her tenure
Held
Attended
% of Attendance
5
1
6
6
6
5
0
6
6
6
100
0
100
100
100
(1) Appointed as a member & Chairman w.e.f. July 12, 2017
(2) Ceased to be a member, due to demise on July, 09, 2017
(3) Attended the meeting held on August 31, 2017 through audio call and were not
counted for the purpose of quorum.
Nomination and Remuneration Committee is broadly entrusted
with the following responsibilities:
1. Identifying persons who are qualified to become Directors
and who may be appointed in senior management in
accordance with the criteria laid down, and recommend to
the Board their appointment and removal;
2. Providing assurance that the Board has the effective
composition and size to adequately discharge its
responsibilities and duties and devising a policy on diversity
of the Board of Directors;
3. Recommending and reviewing the remuneration policies and
remuneration of Directors based on their performance and
defined assessment criteria;
4. Ensuring that an evaluation of the performance of the Board
is executed;
5. Formulation of criteria for evaluation of performance of
Independent Directors and the Board;
6. Considering and evaluating whether to extend or continue
the term of appointment of the Independent Director, based
on the report of performance evaluation of Independent
Directors;
7. Overseeing and monitoring the terms and conditions of the
Employees’ Stock Option Scheme(s);
8. Making recommendations to the Board on the appointment
and retirement of Directors and ensuring that there is an
appropriate induction programme in place for new Directors;
9. Carry out any other function as directed by the Board and/or
mandated by any statutory authority through any notification,
amendment or modification from time to time.
Succession Planning
The Company strives to ensure adequate succession planning of
its leadership talent pool.
The company uses succession management and planning to
ensure that it identifies and develops future leaders to face the
challenges of growth effectively and successfully. This ensures
the systematic and long-term development of the individuals
and provides a continuous flow of talented people to meet the
organization’s management needs.
The NRC is entrusted with the responsibility to ensure the
effective processes are established relating to succession
The Committee also ensures that contingency plans for
succession are in place in case of any urgencies.
A comprehensive discussion on the HR initiatives and
performance plans is given in the Directors Report.
Performance Evaluation
The Board ensures that the Directors continue to provide
suitable leadership for the Company through a regular
performance evaluation process, training processes and annual
re-election by shareholders.
In accordance to the requirements of the Companies Act, 2013
and Listing Regulations, a formal Board performance evaluation
of the Board as well as of its Committees, individual Directors
and the Chairman was undertaken. The performance evaluation
of Interim ‘CEO’ was also conducted.
The suggestions arising out of the Board Evaluation undertaken
for FY 2016-17 have been considered by the Company and
appropriate actions were taken wherever required.
In line with the Company’s best governance practices, the
evaluation for FY 2017-18 was conducted by a leading Global HR
Consulting Firm. The evaluation process involved a customised
questionnaire capable of being benchmarked against peers and
previous years’ responses. The questionnaires were
pragmatically structured to draw out significant issues that were
relevant for evaluation and to assist in identifying any areas for
improvement.
The anonymity of all respondents was ensured throughout the
process to encourage an open and honest exchange of views.
The results of the evaluation were directly submitted with the
external agency by all the Directors. The compilation of results
was done by the Agency and reports were directly shared to the
Chairman, NRC Chairperson and Independent Directors. Each
director was provided with a feedback on their individual and
collective contribution to the Board and its Committees.
The evaluation process elicited responses from the directors in a
judicious manner - ranging from composition and induction of
the board and its committees to effectiveness and governance.
The individual Directors performance was evaluated on
parameters such as level of participation of the Directors,
understanding of the roles and responsibilities of Directors,
business and competitive environment in which the Company
operates, the strategic issues, challenges for the Company and
independent judgement among others.
The results of the evaluation were shared with the NRC and the
Board in their meeting held on March 28, 2018. The survey
results demonstrated very strong confidence in the leadership of
the Board. Some of the observations of the Board post
evaluation process are:
• The Company is well governed, right focus and apt strategy
with clear improvement in performance in last 2 years and
Board has worked on development areas pointed out earlier;
• Improvement areas suggested
(a) formalization of on boarding/ orientation of new members;
(b) further focus on succession planning at Board level.
To summarize the evaluation results, the Board is satisfied with
the evaluation results which reflected the overall engagement of
the Members and the effectiveness of the Board and its
Committees.
The performance evaluation was positive with all responses
indicating continued improved performance during the year.
Further, the Board and Committees have agreed to further
improve the effectiveness and functioning of the Board and
Committees.
Vedanta Limited Integrated Report and Annual Accounts 2017-18
Vedanta Limited Integrated Report and Annual Accounts 2017-18
171
Remuneration Policy for Directors
The Company has a policy for the remuneration of directors,
Key Managerial Personnel (KMPs), senior management
personnel framed by NRC. It lays down principles and
parameters to ensure that remunerations are competitive,
reasonable and in line with corporate and individual
performance.
The following points highlights the broad objectives of the
Policy:
a) Alignment with business strategy and level of responsibility
and impact;
b) Attracting and motivating talented executives for their skills,
experience and knowledge;
c) Alignment of executives’ interest with shareholder returns
and long-term performance of the Company;
d) Ensuring that the remuneration to the Directors, KMP and
Senior Management involves a balance between fixed and
annual performance pay reflecting short- and long-term
performance objectives appropriate to the working of the
Company and its goals;
e) Ensuring that benefits and perquisites are based on
competitive market practices and contribute to the overall
competitive level of total compensation.
The Executive Directors’ (ED) remuneration has two
components: fixed pay and annual variable pay (performance
linked incentive). The fixed component is based upon the
industry practice and benchmarks considering the skill,
knowledge, experience and job responsibilities. The
performance linked incentive is linked to the achievement of the
Company and individual performance goals. Such variable
compensation is ‘at risk’, and rewards performance and
contributions to both short-term and long-term financial
performance of the Company. The remuneration of the EDs is
governed by the agreements executed with them, subject to the
approval of the Board and of the members in general meetings
and such other approvals as may be necessary.
The Non-Executive Independent Directors are paid
remuneration by way of commission and sitting fees. The
appointment letter covering the terms and conditions of
appointment of Non-Executive Independent Directors is
available on the Company’s website www.vedantalimited.com.
The Board decides the payment of commission within the limits
approved by the members subject to the limit not exceeding 1%
of the net profits of the Company.
No stock options were issued to the Non-Executive Directors
during the year.
The details of remuneration paid/ payable to the Directors during FY 2017-18 are as follows:
Table 5: Remuneration paid or payable to Directors for the year ended March 31, 2018 and relationship with each other
Relationship
with other
Directors
Sitting Fees
Salary and
Perquisites
Provident and
Superannuation
Funds
Commission to
non-executive
directors /
performance
incentive for
the executive
directors
No. of
Stock-
holding
options of
the Holding
Company
Vedanta
Limited
ESOS 201 6,
ESOS 2017
Total
Name of the Director
Navin Agarwal
Naresh Chandra(2)
Ravi Kant
Lalita D. Gupte
K Venkataramanan
Aman Mehta(3)
UK Sinha(4)
Priya Agarwal
Thomas Albanese(5)
Tarun Jain
GR Arun Kumar
Note 1
None
None
None
None
None
None
Note 1
None
None
None
-
17,21,62,835
1,28,58,360
3,03,34,985 21,53,56,180
5,17,440
1,50,000
10,50,000
10,50,000
6,00,000
8,50,000
50,000
4,00,000
-
-
-
-
-
-
-
-
-
-
-
-
-
-
20,54,795
22,04,795
75,00,000
85,50,000
75,00,000
85,50,000
75,00,000
81,00,000
65,54,794
74,04,794
3,90,411
4,40,411
-
4,00,000
-
-
-
-
-
-
-
- 2,40,12,840
20,84,726
2,69,40,212 5,30,37,778
5,10,000
-
-
-
-
-
-
-
-
-
-
10,83,72,411
86,55,556
3,10,22,385 14,80,50,352
1,80,000
2,94,980
- 3,14,39,103
21,61,732
1,39,11,000 4,75,11,835
46,500
1,41,070
41,072
1,707
DSBP
FY 14-15,
FY 15-16 &
FY 16-17
(in shares)
1,65,622
-
-
-
-
-
-
-
-
Notes:
1. None of the Directors are related to other Director as specified under Companies Act and
Listing Regulations.
2. For the period from April 1, 2017 to July 9, 2017
3. For the period from May 17, 2017 to March 31, 2018
4. For the period from March 13, 2018 to March 31, 2018
5. For the period from April 1, 2017 to August 31, 2017
In addition to the above, Mr. Thomas Albanese received remuneration from Vedanta
Resources Plc, UK, the Holding Company amounting to GBP 2,50,000 (INR 213.68 Lacs)
during the financial year 2017-2018.
• Sitting fees are paid for Board level Committees i.e. Audit, Stakeholders, Nomination and
Remuneration and Corporate Social Responsibility Committee.
• The Performance incentive to Executive Directors for FY 2016-17 is paid during FY
2017-18.
i. Mr. Navin Agarwal’s shares will vest in a staggered manner over the period of 3
ii.
years from the date of grant in the ratio 40:30:30
Mr. Thomas Albanese has been given 137,832 shares under DSBP from VRPLC
for the year FY 2014-15, FY 2015-16 & FY 2016-17; the shares will vest in a
staggered manner over the period of 3 years from the date of grant in the ratio
40:30:30
iii. Mr. Tarun Jain & Mr. Arun Kumar’s share will vest in a staggered manner over the
period of 2 years from the date of grant in the ratio 50:50
• The stock option includes VRPLC (scheme PSP 2014, PSP 2015, PSP 2016, PSP
2017), VEDL scheme ESOS 2016 (grant 2016 & 2017) & Cash Plan (2016 & 2017)
options.
• The PSP 2014 options vest after three years from date of grant i.e. on November 17,
2017, based on achievement of performance conditions and completion to tenure
with the Group.
• For the FY 2017-18, Mr. Naresh Chandra and Ms. Priya Agarwal had received sitting fees
• The PSP 2015 options vests after three years from date of grant i.e. on December 30,
of Rs. 1,00,000 and Rs. 50,000 respectively from erstwhile Cairn India Limited.
• Sitting fees paid to Mr. Navin Agrawal from HZL and Cairn was Rs. 250,000 and Rs.
•
1,00,000 respectively.
Commission paid to Mr. Navin Agarwal from HZL was 10,00,000 during the FY 2017-18.
In addition to the above Mr. Navin Agarwal received remuneration from Vedanta
resources Plc, UK, the Holding Company amounting to GBP 85,000 (INR 72.65 lacs) for
the financial year ending March 31, 2018.
2018, based on achievement of performance conditions.
• The PSP 2016 options vests after three years from date of grant i.e. on November 11,
2019, based on achievement of performance conditions.
• The PSP 2017 options vests after three years from date of grant i.e. on November 14,
2020, based on achievement of performance conditions.
• The Cash Plan 2016 vests after three years from date of grant i.e. on March 2, 2020,
based on achievement of performance conditions.
• Mr. Tarun Jain was paid Rs. 1,00,000 from erstwhile Cairn India Limited during the FY
• The Cash Plan 2017 vests after three years from date of grant i.e. on November 14,
2017-18.
2020, based on achievement of performance conditions.
• The Company’s holding Company i.e., Vedanta Resources Plc, has granted its stock
• The ESOS 2016 options vests after three years from date of grant i.e. on December
options to Company’s Executive Directors. The fair value for the year 2017-18 in relation
to option granted to Mr. Navin Agarwal is INR 3.4 crore, Mr. Tarun Jain is INR 1.7 crore,
Mr. Thomas Albanese is INR 3.5 crore.
• Deferred Share Bonus Plan (DSBP): A portion of the FY 2014-15, FY 2015-16 &
FY 2016-17 annual bonus was converted into deferred share bonus plan as per the Annual
Bonus Scheme for Directors. Accordingly,
15, 2019, based on achievement of performance conditions.
• The ESOS 2017 options vests after three years from date of grant i.e. on September 1,
2020, based on achievement of performance conditions.
Integrated Report Management Review Statutory Reports Financial Statements
172
Vedanta Limited Integrated Report and Annual Accounts 2017-18
Report on Corporate Governance continued
3. Stakeholders’ Relationship Committee
The Stakeholders’ Relationship Committee (SRC) is empowered
to perform the functions of the board relating to review and
redressal of stakeholders grievances. It primarily focuses on:
• Review and timely redressal of stakeholders grievances;
• Oversee of the performance of Registrar & Transfer Agent of
the Company;
• Review of corporate actions related to security holders;
• Review various investor related queries;
• Suggesting methods to upgrade the standards of services to
investors and use of technology for better interaction with
the investors.
The composition of the Committee is in compliance with the
provisions of Section 178 of the Companies Act, 2013 and
Regulation 20 of the Listing Regulations. The Chairperson of the
Committee is a Non-Executive Independent Director.
The Board had reconstituted the Stakeholders’ Relationship
Committee on April 1, 2017, July 12, 2017 and March 28, 2018
by inducting Mr. K. Venkataramanan, Mr. GR Arun Kumar and
Mr. UK Sinha respectively as a member of the Committee. Further,
as on March 31, 2018 the Committee comprises five (5) members.
The Committee met once during the financial year 2017-18 i.e.
on November 2, 2018. The details of attendance of members at
the meeting is given below:
Table - 6
Name of the Committee
Member
Lalita D. Gupte
K Venkatramanan(1)
UK Sinha(2)
Tarun Jain
GR Arun Kumar(3)
Number of Meetings during his/ her tenure
Held
Attended
% of Attendance
1
1
0
1
1
1
1
0
1
1
100
100
NA
100
100
(1) Appointed as a member w.e.f. April 1, 2017
(2) Appointed as a member w.e.f. March 28, 2018
(3) Appointed as a member w.e.f. July 12, 2017
Investor Complaints
The Registrar & Transfer Agent of the Company viz. Karvy
Computershare Private Limited (Karvy) handles investor
grievances in coordination with the Compliance Officer. All
grievances can be addressed to Karvy. The Company monitors
the work of Karvy, to ensure that the investor grievances are
settled expeditiously and satisfactorily. The status of complaints
is reported to the Board on a quarterly basis and also filed with
the stock exchanges.
During the financial year 2017-18, the investor complaints
received by the Company were general in nature, which were
resolved to the satisfaction of the shareholders. The status of
queries and complaints received during the financial year ended
March 31, 2018 is given in Table 6.
Table – 7: The details of shareholders’ complaints during FY 2017-18:
Sr.
No Nature of complaints /letters and correspondence
Received
Replied
Closing
Balance
Issuance of Duplicate Share Certificates
Revalidation Dividend Warrants
Share Transfers/related to the transfer of shares
Transmission of Shares/Deletion of the name of the share certificate
1
2
3 Change of Address/Updation of bank mandates/ECS/Updation of signature
4 Conversion into Remat & Demat/Split
5
6
7 Clarification on shares/transfers/Stop Transfers
8 Non-receipt of shares/new face value shares
9
10 Non-receipt of Dividend
11 Non-receipt of Annual Reports
12 Inclusion/Updation of Nominee Shareholder
13 Communication to be in physical mode
14 Misc. requests/grievances
Sub-Total (A)
Registration of Power of Attorney
15 Complaints received through Stock Exchanges, SEBI and Ministry of Corporate Affairs
(a) Non receipt of shares
(b) Non receipt of dividends
(c) Miscellaneous
Sub-Total (B)
TOTAL (A+B)
16 Complaints received through Stock Exchanges, SEBI and Ministry of Corporate Affairs for
Redeemable Preference Shares
(a) Clarifications on the scheme and related matter
Sub-Total (C )
TOTAL (A+B+C)
Note: The Company received Nil complaints w.r.t. Non-Convertible Debentures.
372
672
1,536
1,037
371
1,073
2,319
430
9
3,106
296
12
200
194
11,627
18
24
11
53
372
672
1,536
1,037
371
1,073
2,319
430
9
3,106
296
12
200
194
11,627
18
24
11
53
11,680
11,680
5
5
5
5
11,685
11,685
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
Vedanta Limited Integrated Report and Annual Accounts 2017-18
Vedanta Limited Integrated Report and Annual Accounts 2017-18
173
4. Corporate Social Responsibility (CSR) Committee
The CSR Committee is responsible for fulfilling the CSR
During the financial year 2017-18, the Committee met three (3)
on June 28, 2017, October 12, 2017 and January 12, 2018.
objectives of the Company. The composition of the Committee
is in compliance with the provisions of Section 135 of the
Companies Act, 2013 and provisions made thereunder. The
Board reconstituted the Committee on April 1, 2017, by
appointing Mr. K. Ventaramanan as member; on July 12, 2017 by
appointing Mr. Ravi Kant as Chairman and Mr. Aman Mehta and
Ms. Priya Agarwal as the members of the Committee; and on
March 28, 2018 with the induction of Mr. UK Sinha on the Board
of the Company. The Chairperson of the Committee is a
Non-Executive Independent Director. The Committee
comprises six (6) members including four (4) Independent
Directors; one (1) Non-Executive Director and one (1) Whole-
Time Director.
The Committee met two times during the financial year 2017-18
i.e. on May 15, 2017 and January 30, 2018. The details of
attendance of members at the meeting is given below:
Table – 8
Name of the Committee
Member
Ravi Kant
Aman Mehta(1)
K Venkatramanan(2)
Naresh Chandra(3)
UK Sinha(4)
Priya Agarwal(1)
Tarun Jain
Thomas Albanese(5)
Number of Meetings during his/ her tenure
Held
Attended
% of Attendance
2
1
2
1
0
1
2
1
2
1
2
0
0
1
2
0
100
100
100
0
NA
100
100
0
(1) Appointed as a member w.e.f. July 12, 2017
(2) Appointed as a member w.e.f. April 1, 2017
(3) Ceased to be a member w.e.f. July 9, 2017
(4) Appointed as a member w.e.f. March 28, 2018
(5) Ceased to be a member w.e.f. August 31, 2017
Corporate Social Responsibility Committee is entrusted with
the following responsibilities:
1. Formulating and recommending to the Board the CSR Policy
and activities to be undertaken by the Company in
compliance with provisions of the Companies Act, 2013 and
the rules made thereunder;
2. Recommending the amount of expenditure to be incurred on
CSR activities of the Company;
3. Overseeing the implementation of CSR activities and
projects;
4. Evaluating performance of the Company in the area of CSR;
5. Monitoring implementation of CSR Policy of the Company
from time to time;
6. Carry out any other function as directed by the Board and/or
mandated by any statutory authority through any notification,
amendment or modification from time to time.
5. Risk Management Committee
The Company has a duly constituted Risk Management
Committee (RMC) which assists the Board in oversight and
review of the risk management framework as well as the
assessment of risks, their management and mitigation
procedures under the aegis of the overall business risk
management framework.
The constitution of the Committee is in compliance with
Regulation 21 of the Listing Regulations. As on March 31, 2018,
the Committee comprises three (3) members including two (2)
Executive Directors and one (1) member from the Senior
Management. The Committee also has an appointed Risk
Officer. The meetings of the Committee are chaired by the
Director as specified in Regulation 21 of the Listing Regulations.
Risk Management Committee is entrusted with the following
responsibilities:
1. Framing, reviewing and monitoring the Risk Management
Policy and Plan of the Company and to recommend to the
Audit Committee/ Board for approval/ changes;
2. On a continuous basis attaining reasonable assurance from
the management that all known and emerging risks have
been identified and accordingly mitigated/managed;
3. Assessing risks and procedures and minimising the same;
4. Ensuring suitable measures are taken to attain prudent
balance between the overall risk and reward associated with
it.
Re-Constitution of Internal Board Committees
The board has also constituted various internal committees, as a
means of improving board effectiveness and efficiency where more
focused, specialized and technically oriented discussions are
required. As on April 1, 2017 there were four (4) internal Board
committees as highlighted below:
• CFO Committee
• Committee of Directors
• Committee of Directors for Issuance of Share Certificates
• Share & Debenture Transfer Committee
In order to have more efficient and effective control and seamless
management, the scope and composition of the Committee of
Directors was revised by the Board of Directors of the Company in
their meeting held on November 2, 2017.
Further, the Board in its meeting held on November 2, 2017 has
consolidated the ‘CFO Committee’ and the ‘Committee of
Directors for Issuance of Share Certificates’ and renamed the same
as ‘Finance Standing Committee of Directors’.
The following are the internal committees of the Board as on March
31, 2018. A brief description of the Committee including their roles,
responsibilities and constitution is also provided in the report.
• Share & Debenture Transfer Committee
• Finance Standing Committee of Directors
• Committee of Directors
Share & Debenture Transfer Committee
The Committee comprises of three (3) members, Mr. GR Arun
Kumar, Whole-Time Director & Chief Financial Officer, Ms. Pooja
Yadava, GM Legal and Ms. Bhumika Sood, Company Secretary &
Compliance Officer. During the year the Committee met eighteen
(18) times.
The role of Share & Debenture Transfer Committee primarily
includes the following:
• Allotment of shares, debentures or any other securities;
• Approval of transfer or transmission of shares, debentures or any
other securities;
• Issue of duplicate certificates and new certificates on split/
consolidation/renewal/ demat /remat of shares/ debentures/
other securities issued by the company from time to time.
The number of pending share transfers as on March 31, 2018 is Nil.
Finance Standing Committee
The Finance Standing Committee (FSC) of Directors is entrusted
with the responsibility to consider and approve the finance and
treasury related proposal within the overall limits approved by the
Board. The Committee comprises of two (2) Executive Directors.
The Company meets as and when required. During FY 2017-18, the
committee met two (2) times on December 22, 2017 and
March 26, 2018.
Integrated Report Management Review Statutory Reports Financial Statements
174
Vedanta Limited Integrated Report and Annual Accounts 2017-18
Report on Corporate Governance continued
Committee of Directors
The Committee of Directors (COD) is responsible to consider,
review and approve all borrowing proposals, within the overall limits
approved by the Board from time to time. The Committee
facilitates seamless operations and cater to various day-to-day
requirements. The Committee meets as and when deem necessary.
The scope of the Committee was revised in the Board meeting held
on November 2, 2017.
decisions consistent with the organization’s Vision, Mission and
Guiding Principles. The brief profile of EXCO members forms part
of the Annual Report. EXCO meetings are conducted on monthly
basis and are presided by the Group CEO. The CFOs/Deputy
CFOs, COO’s, Head Finance, Business EXCO members of
respective businesses and subsidiaries are also invitees to EXCO
meetings. The Chairman of the Company often attends the EXCO
meetings.
As on March 31, 2018, the Committee comprises three (3)
Executive Directors. The Committee met five (5) times during the
financial year 2017-18.
The role and responsibilities of the Committee covers the following
broad areas:
• Regular evaluation of the Company’s various business divisions
The Committee operates within the overall responsibilities and
powers entrusted upon the Committee by the Board.
Executive Committee (EXCO)
The Executive Committee of the Company ensures implementation
of the Board’s fiduciary, strategic and generative plans, policies, and
and key subsidiaries;
• Assessment of Policy framework;
• Functional review is carried out by the functional EXCO for
ensuring centralised and explicit focus to each function; and
• Review on Health, Safety and Environment.
General Body Meetings
Annual General Meetings
The details of the Annual General Meetings held during the last three years and special resolutions passed thereat are provided under in
Table – 9
Table – 9: Last Three Annual General Meetings:
Year
Location
Date & Time
Special Resolutions passed
2014-15
Panjim Community Centre
Near Four Pillars, Mala, Panaji,
Goa
July 11, 2015 at 11.00 a.m.
• To approve offer or invitation for subscription of Non-
Convertible Debentures or other Debt Securities on
Private Placement basis.
2015-16 Main Hall of Institute Menezes
June 29, 2016 at 11.00 a.m.
• To approve an offer or invitation for subscription of
Braganza, Panaji, Goa - 403 001
2016-17
Rangsharda Auditorium,
K.C. Marg, Bandra Reclamation,
Bandra (West),
Mumbai - 400 050.
July 14, 2017 at 10.30 a.m.
Non-Convertible Debentures or other Debt Securities
upto Rs. 20,000 Crore on a Private Placement basis;
• To waive the excess remuneration paid to Mr. Navin
Agarwal, Whole-Time Director (DIN: 00006303) of the
Company for FY 2013-14.
• To consider appointment of Mr. G.R. Arun Kumar as Whole
Time Director, designated as Chief Financial Officer (CFO)
of the Company for the period from November 22, 2016
to November 21, 2019
• To consider re-appointment of Mr. Thomas Albanese as
Whole Time Director designated as Chief Executive
Officer (CEO) of the Company for the period from April 1,
2017 to August 31, 2017
• To approve offer or invitation to subscribe the Non-
Convertible Debentures or other Debt Securities upto INR
20,000 crores on a Private Placement basis
• To waive the excess remuneration paid to Mr. Navin
Agarwal, Whole-Time Director (DIN:00006303) of the
Company for FY 2013-14
Postal Ballot
There were no resolutions passed during the year 2017-18 through postal ballot
Further, none of the businesses that are proposed to be transacted at the forthcoming AGM require passing a resolution through postal
ballot. Also, there is no immediate proposal for passing any resolution through postal ballot.
Vedanta Limited Integrated Report and Annual Accounts 2017-18
Vedanta Limited Integrated Report and Annual Accounts 2017-18
175
Means of Communication
Effective communication of information to the shareholders forms a vital part of Corporate Governance.
Financial Results
The Company intimates Quarterly/Half-Yearly/Annual Results to stock exchanges, immediately
after the Board meetings at which they are approved.
The results of the Company are also published within 48 hours of the conclusion of the meeting in
at least one prominent national and one regional newspaper having wide circulation.
The quarterly financial results during FY 2017-18 were published in the newspaper as detailed
below:
Quarter
(FY 2017-18) Date of Board Meeting Date of Publication
1
2
3
4
July 25, 2017
July 26, 2017
November 2, 2017
November 3, 2017
January 31, 2018
February 1, 2018
May 3, 2018
May 4, 2018
Newspaper
Business Standard
Maharashtra Times
Economic Times
Financial Express Jansatta
Navshakti (Marathi)
Free Press Journal
Business Standard
Economic Times
Business Standard
Economic Times
Financial Express
Maharashtra Times
Business Standard,
Financial Express,
Economic Times,
Maharashtra Times
Further, the financial results are also displayed on the Company’s website: www.vedantalimited.com
and posted on NSE Electronic Application Processing System (NEAPS) and BSE Corporate
Compliance & Listing Centre (the Listing Centre).
Further, as a good corporate governance practice, the Company sends its quarterly financial results
to shareholders whose email ids are registered with the depository participants through email after
they are approved by the Board and disseminated to the stock exchanges.
The Company’s corporate website www.vedantalimited.com gives comprehensive information
about the management, vision, mission, policies, corporate governance, sustainability and investor
relations.
The section on ‘Investor Relations’ serves to inform the shareholders, by giving up-to-date financial
results, annual reports, shareholding patterns, official news releases, financial analysis reports,
schedule of analyst meet, Notices and other general information about the Company.
Website
News Releases
Official news releases are sent to stock exchanges and simultaneously displayed on the Company’s
website: www.vedantalimited.com.
Presentations made to
Institutional Investors and Analysts
The schedule of analyst/institutional investor meets and detailed presentations made to them are
sent to stock exchanges and simultaneously are also posted on the Company’s website:
www.vedantalimited.com.
Annual Report
In consonance with the Company’s sustainability initiatives, the Company sends soft copies of
Annual Reports to those shareholders whose email ids are registered with the Company. Hard
copies are also sent to those shareholders whose email ids are not registered. Shareholders are
requested to support this green initiative by registering/updating their e-mail addresses for
receiving electronic communications.
The complete Annual Report and Accounts of the Company are available on the Company’s
website: www.vedantalimited.com.
Filing with Stock Exchanges
All filings with the stock exchanges are displayed on NEAPS and the Listing Centre
Chairman Communique
Printed copy of the Chairman’s speech is distributed to each shareholder at the AGM. The speech
is also placed on the website of the Company and published in the newspaper for better
circulation.
Integrated Report Management Review Statutory Reports Financial Statements 176
Vedanta Limited Integrated Report and Annual Accounts 2017-18
Report on Corporate Governance continued
General Shareholder Information
a) Annual General Meeting for FY 2017-18
The Board welcomes the opportunity to enter into dialogue with the shareholders at the forthcoming Annual General Meeting (AGM)
and views it as an opportunity to engage with all the shareholders on the performance of the business they own.
The AGM is scheduled as per the below details:
: August 24, 2018
Date
Time : 10:30 a.m. IST
Venue : Rangsharda Auditorium, K.C. Marg, Bandra Reclamation, Bandra (West), Mumbai – 400 050
A separate Notice of Meeting, containing an explanation of the items of special business, has been sent to shareholders and is available
on the Company’s website.
b) Financial Year: April 1 to March 31
For the year ended March 31, 2018, the financial results were considered and approved by the Board in their meeting held on the
following dates:
First Quarter Ended Results
Second Quarter and Half Year Ended Results : November 2, 2017
Third Quarter Ended Results
Fourth Quarter and Year Ended Results
: January 31, 2018
: May 3, 2018
: July 25, 2017
The tentative dates of meeting of the Board to consider and approve the quarterly financial results for FY 2018-19 are as follows:
First Quarter Ended Results
Second Quarter and Half Year Ended Results : End October 2018
: End January 2019
Third Quarter Ended Results
: End April 2019
Fourth Quarter and Year Ended Results
: End July 2018
c) Dividend
During the year, the Company has paid the following dividend:
Date of Board Meeting
Type of Security
Type of Dividend
Amount of Dividend
Record Date
March 13, 2018
Equity Shares
Interim Dividend
Rs. 21.20 per share
Preference Shares
Preference Dividend
Rs. 0.75 per share on
Pro-rata basis
Wednesday,
March 21, 2018
The Board have not recommended any final dividend.
d) Book Closure
The Register of Members and Share Transfer Books of the Company will remain closed from Monday, August 20, 2018 to Thursday,
August 23, 2018 (both days inclusive).
e) Listing Details
BSE Limited (BSE)
Phiroze Jeejeebhoy Towers, Dalal Street, Mumbai - 400 001
Equity
Preference (7.50% Non-Cumulative Non-Convertible Redeemable
Preference Shares of Rs.10/- each fully paid up)
National Stock Exchange of India Limited (NSE)
Exchange Plaza, Plot No. C/1, G-Block, Bandra Kurla Complex,
Bandra(East), Mumbai - 400 051
Equity
Preference
(7.50% Non-Cumulative Non-Convertible Redeemable
Preference Shares of Rs.10/- each fully paid up)
New York Stock Exchange (NYSE)
American Depository Shares (ADS)
Scrip Code
ISIN code
500295
INE205A01025
700134
INE205A04011
VEDL
INE205A01025
VEDL P1
INE205A04011
VEDL
CUSIP
92242Y100
The Company’s Non-Convertible Debentures are listed on the BSE Limited (BSE). The company has paid annual listing fees as
applicable to BSE Limited, National Stock Exchange of India Limited and New York Stock Exchange.
Vedanta Limited Integrated Report and Annual Accounts 2017-18
Vedanta Limited Integrated Report and Annual Accounts 2017-18
177
f) Stock Market Data for FY 2017-18
High, Low (based on the closing prices) during each month of FY 2017-18 on NSE, BSE and the New York Stock Exchange, US (NYSE) is
given below:
Date
April-17
May-17
June-17
July-17
August-17
September-17
October-17
November-17
December-17
January-18
February-18
March-18
Company’s Share Performance versus BSE Sensex and
BSE Metal Index
140
60
BSE
NSE
NYSE
High Price
Low Price
High Price
Low Price
High Price
Low Price
278.00
248.35
252.70
283.60
310.00
334.50
345.00
346.80
335.20
355.70
345.80
334.00
226.60
217.95
226.60
250.00
276.70
297.20
310.55
291.05
277.60
318.90
305.00
269.00
277.50
248.45
252.65
283.70
310.25
334.65
345.20
346.40
335.50
355.70
346.20
333.65
226.50
217.75
226.50
250.40
276.60
297.00
310.15
294.00
277.65
318.70
305.15
268.75
17.19
15.78
15.60
17.72
19.68
20.92
21.38
21.63
21.16
21.99
21.67
20.29
14.22
13.78
14.24
15.6
17.27
18.75
19.27
17.96
17.35
20.45
18.75
17.03
Company’s Share Performance versus NIFTY 50 and
NIFTY Metal
140
75
7
1
-
R
P
A
7
1
-
y
a
M
7
1
-
n
u
J
7
1
-
l
u
J
7
1
-
g
u
A
7
1
-
p
e
S
7
1
-
t
c
O
7
1
-
v
o
N
7
1
-
c
e
D
8
1
-
n
a
J
8
1
-
b
e
F
8
1
-
r
a
M
7
1
-
R
P
A
7
1
-
y
a
M
7
1
-
n
u
J
7
1
-
l
u
J
7
1
-
g
u
A
7
1
-
p
e
S
7
1
-
t
c
O
7
1
-
v
o
N
7
1
-
c
e
D
8
1
-
n
a
J
8
1
-
b
e
F
8
1
-
r
a
M
VEDL BSE
BSE Sensex
BSE Matal
VEDL NSE
Nifty 50
Nifty Matal
g) Share Transfer System
Requests for Transfer/ Transmission of shares held in physical form can be lodged with the Karvy. The requests are approved by the
Company and the same is generally processed within 15 days of receipt of clear and valid documents.
Pursuant to Regulation 40(9) of Listing Regulations, a certificate on half yearly basis, was issued by the Company Secretary in practice
confirming due compliance of share transfer formalities by the Company.
Audits were also carried out by the practicing Company Secretary to reconcile the total admitted capital with NSDL and CDSL. The
reports for the same were submitted to BSE and NSE. The audit confirms that the total issued / paid up and listed capital is in
agreement with the aggregate of the total number of shares in physical form and the total number of shares in dematerialised form (held
with NSDL and CDSL).
h) Distribution of Shareholding
i) Shareholding according to shareholders class as on March 31, 2018;
Shareholding of Nominal value of Re. 1/-
No. of shareholders
shareholders Number of shares held
Shareholding (%)
% of Total
1 – 5000
5001 – 10000
10001 – 20000
20001 – 30000
30001 – 40000
40001 – 50000
50001 – 100000
100001 and above
Total
488,129
3,739
1,493
380
202
123
201
726
98.61
0.76
0.30
0.08
0.04
0.02
0.04
0.15
120,139,389
27,106,409
20,836,110
9,389,967
6,921,901
5,581,859
14,337,351
3,512,883,653
3.23
0.73
0.56
0.25
0.19
0.15
0.39
94.50
494,993
100.00
3,717,196,639
100.00
Integrated Report Management Review Statutory Reports Financial Statements
178
Vedanta Limited Integrated Report and Annual Accounts 2017-18
Report on Corporate Governance continued
Categories of Shareholders are as under:
Sr.
No. Category
(a) Promoter’s holding
Indian promoters
Foreign promoters (excluding ADR)
(b) Public Shareholding
Banks, Mutual funds, Financial Institutions, Insurance Companies
(Central/State Govt. Institutions/ Non-Govt. Institutions)
FIIs /Foreign Corporate Bodies
Private Corporate Bodies
Indian Public
NRIs
Trust
H U F
Clearing Members
Foreign Bodies-DR
Foreign Nationals
(c) American Depository Receipts
Grand Total
Shareholding as on March 31, 2018
3
1
2
1 - Promoter’s holding
2 - Public Shareholding
3 - American Depository Receipts
March 31, 2018
No. of shares held
Percentage of
shareholding
Face value Re. 1/-
160,656
1,764,165,424
484,199,672
670,943,793
314,891,571
197,237,944
6,231,007
15,141,557
7,306,549
6,134,255
2,359,415
100
248,424,696
0.00
47.46
13.02
18.05
8.47
5.31
0.17
0.41
0.20
0.17
0.06
0.00
6.68
3,717,196,639
100.00
Top Ten Shareholders (including holding of less than 1% of the Capital) as on March 31, 2018
Name of the Shareholder
No. of shares held
Shareholding (%)
TWINSTAR HOLDINGS LIMITED
FINSIDER INTERNATIONAL COMPANY LIMITED
CITIBANK N.A. NEW YORK, NYADR DEPARTMENT
LIC OF INDIA HEALTH PLUS FUND
PREM PRAKASH GOYAL
HDFC TRUSTEE CO LTD A/C HDFC RETIREMENT SAVINGS FU
WESTGLOBE LIMITED
PTC CABLES PRIVATE LTD
ADITYA BIRLA SUN LIFE TRUSTEE PRIVATE LIMITED A/C
WELTER TRADING LIMITED
1,280,084,749
401,496,480
248,573,117
236,640,744
185,806,863
64,029,452
44,343,139
42,730,200
40,366,128
38,241,056
34.44
10.80
6.69
6.37
5.00
1.72
1.19
1.15
1.09
1.03
*In addition, Twin Star Holdings Limited holds 24,823,177 American Depository shares (ADS) representing 99,292,708 equity shares of Re. 1/- each wherein Citibank NA, New York is the
depository for all ADS
i)
Commodity Price Risk or Foreign Exchange Risk and
Hedging Activities
Fluctuation in commodity prices (including oil)
Impact: Prices and demand for the Group’s products are
expected to remain volatile / uncertain and strongly influenced
by global economic conditions. Volatility in commodity prices
and demand may adversely affect our earnings, cash flow and
reserves.
Mitigation: Our Group has a well-diversified portfolio, which
acts as a hedge against fluctuations in commodities and delivers
cash flows through the cycle. We consider exposure to
commodity price fluctuations to be an integral part of our
Group’s business and its usual policy is to sell its products at
prevailing market prices, and not to enter into long-term price
hedging arrangements. However, to minimise price risk for
finished goods where price of raw material is also determined by
same underlying base metal prices (e.g. purchase of alumina,
copper concentrate for manufacturing and selling copper and
aluminium products, respectively) we employ back-to-back
hedging. In exceptional circumstances, we may enter into
strategic hedging with prior approval of the Executive
Vedanta Limited Integrated Report and Annual Accounts 2017-18
Vedanta Limited Integrated Report and Annual Accounts 2017-18
179
Committee. The Group monitors the commodity markets
closely to determine the effect of price fluctuations on earnings,
capital expenditure and cash flows.
Currency exchange rate fluctuations
Impact: Our assets, earnings and cash flows are influenced by a
variety of currencies due to the diversity of the countries in
which we operate. Fluctuations in exchange rates of those
currencies may have an impact on our financials. Although the
majority of the Group’s revenue is tied to commodity prices that
are typically priced by reference to the US dollar, a significant
part of its expenses are incurred and paid in local currency.
Moreover, some of the Group borrowings are denominated in
US dollars, while a large percentage of cash and liquid
investments are held in other currencies, mainly in the Indian
rupee. Any material fluctuations of these currencies against the
US dollar could result in lower profitability or in higher cash
outflows towards debt obligations.
Mitigation: We do not speculate in forex. We have developed
robust controls in forex management to monitor, measure and
hedge currency risk liabilities. The Finance Standing Committee
(FSC), reviews the forex-related matters periodically and
suggests necessary courses of action as may be needed by
businesses from time to time, and within the overall framework
of the forex policy.
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 uses forward exchange contracts, currency
swaps and other derivatives to hedge the effects of movements in
exchange rates on foreign currency denominated assets and
liabilities. The sources of foreign exchange risk are outstanding
amounts payable for imported raw materials, capital goods and
other supplies as well as financing transactions and loans
denominated in foreign currencies. The Group is also exposed to
foreign exchange risk on its net investment in foreign operations.
Most of these transactions are denominated in US dollars.
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. However
all new long-term borrowing exposures are being hedged. The
hedge mechanisms are reviewed periodically to ensure that the risk
from fluctuating currency exchange rates is appropriately managed.
j) Dematerialisation of Shares qnd Liquidity
The Company’s shares are compulsorily traded in dematerialised
form on the stock exchanges. As on March 31, 2018, over 99%
shares of the Company were held in dematerialised form.
The number of shares held in dematerialised form and physical
mode as on March 31, 2018 is detailed below:
Form/Mode
Dematerialised
Form:
NSDL
CDSL
Physical Mode
Total
No. of Shares
In Percentage
3,325,197,879
376,378,029
15,620,731
3,717,196,639
89.45%
10.12%
0.42%
100%
Note:
1. 308232 equity shares are pending for allotment and listing hence, are kept under
abeyance category since they are under dispute.
2. The Company has allotted 2400 equity shares of Re.1/- each on March 26, 2018 in
physical mode from the abeyance category. The application for listing of these shares
with BSE Limited and The National Stock Exchange of India Limited has been filed by
the Company on April 10, 2018 and the approval is awaited.
The equity shares of the Company are freely tradable in the
market and are among the most liquid and actively traded shares
in the stock exchanges.
k) Outstanding GDRS/ADRS/Warrants/Options
In June 2007 and July 2009, Company issued 150,000,000
and 131,906,011 ADS, which are listed and traded on the New
York Stock Exchange (NYSE). Pursuant to the Scheme of
Amalgamation and Arrangement, ADS were listed with NYSE of
which 62,106,174 representing ADS were outstanding as on
March 31, 2018. As of the year end, there were nine (9)
registered holders of the ADS. Citibank N.A., New York acts as
the Depository for the ADS / ADR issued by the Company.
l) Unclaimed Shares
Pursuant to the SEBI Circular and Regulation 39 of the Listing
Regulations regarding the procedure to be adopted for
unclaimed shares issued in physical form in public issue or
otherwise the Company has a separate demat account in the
title of ‘Vedanta Limited – Unclaimed Suspense Account with
M/s Karvy Stock Broking Limited.
Description
Aggregate number of shareholders and the outstanding shares in the suspense account
lying at the beginning of the year;
Number shares of Sesa Goa Limited transferred to the unclaimed suspense account during
the year;
Number of shareholders who approached issuer for transfer of shares from suspense
account during the year;
Number of shareholders to whom shares were transferred from suspense account during
the year;
Number of shares transferred to IEPF account pursuant to Investor Education and
Protection Fund Authority (Accounting, Audit, Transfer and Refund) Rules, 2016 read with
Amendment Rules, 2017
Aggregate number of shareholders and the outstanding shares in the suspense account
lying at the end of the year. The voting rights on these shares shall remain frozen till the
rightful owner of such shares claims the shares.
No. of
shareholders
No. of Equity shares
of Re. 1 each
1,042
3,389
(48)
0
(410)
13,54,845
28,21,712
91,659
0
688,680
3,973
3,396,218
Integrated Report Management Review Statutory Reports Financial Statements
180
Vedanta Limited Integrated Report and Annual Accounts 2017-18
Report on Corporate Governance continued
m) Listing of Debt Securities
The following Secured Redeemable Non-Convertible Debentures (NCDs) are listed with the BSE Limited and ISIN number with
National Securities Depositories Limited:
S. No ISIN Number
Issuance date
Maturity date
Coupon rate
Payment
frequency
Embedded opt
on if any
No. of NCDs
(face value of Rs.
10 lakh each)
1
INE268A07145*
5-Apr-13
5-Apr-23
9.10%
Annually
2
INE268A07152
4-Jul-13
4-Jul-23
9.17%
Annually
3
INE268A07160
5-Jul-13
5-Jul-23
9.17%
Annually
Call/Put option
date: 05 April
2018
Call/Put option
date: 04 July
2018
Call/Put option
date: 05 July
2018
INE205A07030
17-Aug-15
17-Aug-20
9.45%
Annually
NA
4
5
INE205A07048
30-Sep-16
20-Apr-20
8.70%
6
INE205A07055
30-Sep-16
27-Sep-19
8.65%
7
INE205A07063
7-Oct-16
15-Apr-21
8.75%
8
INE205A07071
7-Oct-16
15-Sep-21
8.75%
Interest compounded
annually and payable at
maturity
NA
Interest compounded
annually and payable at
maturity
NA
Interest compounded
annually and payable at
maturity
NA
Interest compounded
annually and payable at
maturity
NA
9
INE205A07089
28-Oct-16
28-Oct-19
8.25%
Annually
NA
10 INE205A07097
22-Nov-16
22- Apr-20
7.95%
Annually
Call/Put option
date: 22 Nov
2019
11
INE205A07105
30-Nov-16
29-Nov-19
7.50%
Annually
12 INE205A07113
31-May-17
31-May-19
7.60%
Annually
13 INE205A07121
20-Dec-17
4-Dec-20
7.80%
Annually
NA
NA
NA
*The Company exercised the call option and redeemed the debentures (ISIN no. INE268A07145) on April 5, 2018 as per Information Memorandum
Debenture Trustees:
Axis Trustee Services Limited
2nd Floor, Wadia International Centre,
Pandurang Budhkar Marg, Worli,
Mumbai – 400 025
n) Plant Locations
Amount
(in Crores)
2500
25000
7500
750
4500
450
20000
6000
2000
600
1500
150
2500
250
2500
250
3000
3000
2000
3500
5000
300
300
200
350
500
Division
Location
Copper Anodes (Smelter), Refinery,
Continuous Cast Copper Rods
Copper Cathodes (Refinery) and Continuous
Cast Copper Rods / Wire
• SIPCOT Industrial Complex, Madurai By-pass Road, T.V. Puram PO, Tuticorin – 628
002 Tamil Nadu, India.
• 1/1/2 Chinchpada, Silvassa – 396 230 Union Territory of Dadra and Nagar Haveli,
India
Continuous Cast Copper Rods
• 209-B, Piparia Industrial Estate, Piparia, Silvassa – 396 230, Union Territory of Dadra
and Nagar Haveli, India
Iron Ore – Mining
• Megalahally Office Complex, Megalahally Village, Hireguntanur, Hobli, Chitradurga
Taluk and district, Karnataka, India*
Pig Iron Division 1
• Sy NO 39,41,36/1 (p) 37 (P), 42/1 (p) 43/1 (p) Amona, P.O. Marcel, Bicholim, Goa -
403107, India
Metallurgical Coke (Met Coke)
• 207, Navelim, Sankhalim, Bicholim Goa - 403505, India
PIG Iron Division 2
Aluminium Smelters
• SY No 177 N 120 (P) Navelim P.O. Sanquelim Bicholim Goa 403505
• PMO Office, Bhurkahamuda, PO-Sripura, Dist – Jharsuguda, Odisha – 768 202, India
Vedanta Limited Integrated Report and Annual Accounts 2017-18
Vedanta Limited Integrated Report and Annual Accounts 2017-18
181
Division
Alumina Refinery
Aluminium
Power
Location
• Alumina Refinery Project, At / PO – Lanjigarh, Via – Viswanathpur, Kalahandi,
Lanjigarh, Odisha – 766 027, India
• Post Box No. 4, Mettur Dam R.S. - 636 402, Salem District, Tamil Nadu, India
• Bhurkahamunda, PO -Sripura, Dist- Jharsuguda Odisha, Pin-768202, India
• Power Plant 1, Plot s/y No 44/4 & 44/5, Amona Village, Navellim, Bicholim – Goa
- 403107, India
• SIPCOT Industrial Complex, Meelavitan, Tuticorin, Tamil Nadu, Pin-628002, India
Oil & Gas
• Assets
– RJ-ON-90/1 - Barmer Basin -India
– CB/OS-2 - Cambay Basin -India
– PKGM-1 Ravva - Krishna Godavari Basin -India
– KG-ONN-2003/1- Krishna Godavari Basin -India
– KG-OSN-2009/3 - Krishna Godavari Basin -India
– Block-01- Orange Basin – South Africa
• Pipeline
– Radhanpur Terminal, Patan, Gujarat
– Viramgam Terminal, Ahmedabad
– Bhogat Terminal, Dwarka, Gujarat
• Plant
– Mangala Processing Terminal, Barmer, Rajasthan
– Raageshwari Gas Terminal, Rajasthan
*The Supreme Court passed its final order in SLP (C) 32138/2015 (with connected matters), the M/s Goa Foundation v/s Sesa Sterlite Limited & Others on February 7, 2018 wherein it
quashed the second renewals granted for the mining leases by the State of Goa. The court directed all lease holders operating under a second renewal to stop all mining operations with
effect from March 16, 2018 until fresh mining leases (not fresh renewals or other renewals) are granted and fresh environmental clearances are granted.
Kotak Committee Recommendations
In light of various developments in the realm of corporate governance across the globe and in continuation of its role as a proactive
regulator, the Securities and Exchange Board of India (SEBI) in its Board meeting held on March 28, 2018 had approved various
recommendations of the Report of Kotak Committee on Corporate Governance. Moreover, the SEBI vide its notification dated May 9,
2018 and May 10, 2018 have notified the timelines for implementation of the recommendations.
Your Company is already compliant with majority of the recommendations of the Kotak Committee as approved by the SEBI.
In line with the Company’s constant endeavour to adopt the best governance practice, the Company has voluntarily taken steps to follow
the discretionary requirements. The table provided below highlights the status of compliance of your Company with the report. Further,
the Company is analysing and taking steps for ensuring compliance of the other recommendations of the Committee.
Recommendation
Minimum Number of Directors on
a Board
Requirement
6 directors
Gender Diversity on the Board
Atleast one woman as an independent
director to be on the Board
Quorum for Board Meetings
One-third of its total strength or three
directors, whichever is higher, including
at least one independent director
Quorum for Nomination and
Remuneration Meetings
NRC to meet atleast once in a year
2 members or one-third members of
the committee, whichever is higher
including atleast one ID in a year.
Maximum Number of Directorships No person shall hold office as a
director, including any alternate
directorship, in more than eight listed
entities at the same time (of which
independent directorships shall not
exceed seven), with effect from April 1,
2019 and not more than seven listed
entities with effect from April 1, 2020:
Effective Date Status of implementation
April 1,
2019
April 1,
2019
April 1,
2019
April 1,
2019
Already Compliant
The Company has currently 9 Directors on
Board.
Already Compliant:
The Company has 2 woman directors on
Board including 1 Independent Director (ID)
Fully Compliant
The meetings of the board are always
convened with presence of atleast 1 ID.
During the FY 2017-18, minimum 50% of
IDs were present.
Already Compliant
The NRC meets more than once in a year
(6 times during the FY 2017-18 with
presence of 75% IDs).
April 1, 2019/
April 1, 2020
as applicable
Fully Compliant
As on March 31, 2018, none of the
Directors holds office in more than 7 listed
entities.
Integrated Report Management Review Statutory Reports Financial Statements
182
Vedanta Limited Integrated Report and Annual Accounts 2017-18
Report on Corporate Governance continued
Recommendation
Requirement
Effective Date Status of implementation
Eligibility Criteria for Independent
Directors
IDs to provide confirmation that:
• They are or were not a promoter of
October 1,
2018
Fully Compliant
The Company has already taken
confirmations from the IDs for FY 18-19 in
this regard.
the listed entity or its holding,
subsidiary or associate company or
• member of the promoter group of
the listed entity;
• who is not a non-independent
director of another company on the
board of which any non-
independent director of the listed
entity is an independent director.
No person to be appointed or continue
as an alternate director for an
Independent Director.
Role of the Audit Committee to include
reviewing the utilization of loans and/
or advances from/investment by the
holding company in the subsidiary
exceeding rupees 100 crore or 10% of
the asset size of the subsidiary,
whichever is lower.
RMC to meet atleast once in a year.
The role of RMC shall specifically cover
cyber security.
The unlisted subsidiary to bring to the
board of the listed entity a statement of
all the significant transactions entered
into by the unlisted subsidiary.
AGM to be conducted within a period
of five months from the date of closing
of the financial year with effect from
the financial year beginning April 1,
2018.
Separate section on website for
investors and to provide all information
mandated under Regulation 46 of the
Listing Regulations.
Alternate Directors for
Independent Directors
Role of Audit Committee
Role of Risk Management
Committee (RMC)
Material Transaction by unlisted
subsidiary companies
Timeline for Annual General
Meetings of Listed Entities
Disclosure on website
October 1,
2018
Fully Compliant
April 1,
2019
Fully Compliant
The details are placed before the Board
April 1,
2019
April 1,
2019
Already Compliant
During the FY 2017-18, RMC met 3 times.
Further, the role of RMC already includes
cyber security.
Already Compliant
The minutes of meetings of Audit
Committee and Board of subsidiary
companies are placed at the Board and
Audit committee of the Company.
April 1,
2019
Already Compliant:
AGM is conducted in the month of July
every year.
April 1,
2019
Already Compliant
Other Disclosures
a) Framework for monitoring Subsidiary Companies
As per the recommendation of the Kotak Committee on
Corporate Governance, the definition of the material subsidiary
as per the provision of Regulation 16(1)(c) has been amended. As
per the recommendation, “material subsidiary” means a
subsidiary whose income or networth exceeds 10% of the
consolidated income or networth of the listed entity.
In terms of clause (c) of sub-regulation (1) of Regulation 16 of the
existing Listing Regulations ‘material subsidiary’ means a
subsidiary, whose income or net worth exceeds twenty
percent of the consolidated income or net worth respectively,
of the listed entity and its subsidiaries in the immediately
preceding accounting year.
In compliance with the said regulation, the Company has a
policy on Determining Material Subsidiary, which has been
approved by the Board and the same has been displayed on the
Company’s website at http://www.vedantalimited.com.
As on March 31, 2018, there is no material unlisted subsidiary of
the Company in terms of the provisions of Regulation 24(1) of
the Listing Regulations.
The management of subsidiary companies is carried out by their
separate Board of Directors who are empowered to exercise all
the duties and rights for efficient monitoring and management of
the companies. The Company oversees and monitors the
performance of subsidiary companies by following means:
i. The Audit Committee reviews the financial statements and,
in particular, the investments made by the subsidiary
companies;
ii. The minutes of the Board meeting of the subsidiary
companies is placed before the Board of the Company for
their review;
iii. A statement of all significant transactions of the subsidiary
companies is placed before the Board of Directors of the
Company for its review.
b) Materially Significant Related Party Transactions
Pursuant to Section 188 of the Companies Act, 2013 and
Regulation 23 of the Listing Regulations, all the Related Party
Transactions were at arm’s length price and the same were duly
approved by the Audit Committee.
Explanation to sub-regulation (1) of Regulation 23 of Listing
Regulations provides that “A transaction with a related party
shall be considered material if the transaction(s) to be entered
into individually or taken together with previous transactions
during a financial year, exceeds ten percent of the annual
Vedanta Limited Integrated Report and Annual Accounts 2017-18
Vedanta Limited Integrated Report and Annual Accounts 2017-18
183
consolidated turnover of the listed entity as per the last
audited financial statements of the listed entity.”
d) Vigil Mechanism/Whistle Blower Policy
Your Company is committed to highest standards of ethical,
Further, as per the recommendations of the Kotak Committee, a
transaction involving payments made to a related party with
respect to brand usage or royalty shall be considered material if
the transaction(s) to be entered into individually or taken
together with previous transactions during a financial year,
exceeds two percent of the annual consolidated turnover of the
listed entity as per the last audited financial statements of the
listed entity.
Proper disclosures by the members of the Board of Directors
and KMPs relating to material financial and commercial
transactions whether held directly/ indirectly or on behalf of
third parties were given to the Board.
In compliance with the said regulation, the Company has a
policy on Related Party Transactions, which has been approved
by the Board and the same has been displayed on the
Company’s website at http://www.vedantalimited.com.
A comprehensive list of related party transactions as required
under IndAS 24 as prescribed in Companies (Indian Accounting
Standard) Rules, 2015 and Companies (Indian Accounting
Standard) Amendment Rules, 2016, forms part of Notes to the
Financial Statements in the Annual Report.
c) Non-Compliance by the Company, Penalties, Strictures
imposed by Stock Exchange or SEBI or any Statutory
Authority on any matter related to Capital Markets during
the last three years
There has been no non-compliance by the Company or penalty,
strictures imposed by stock exchange or SEBI or any statutory
authority on any matter related to capital markets during the last
three years.
moral and legal business conduct. The Company has in place a
Whistle Blower Policy, as part of vigil mechanism which provides
appropriate avenues to the Directors and employees to bring to
the attention of the management instances of unethical
behaviour, actual or suspected incidents of fraud or violation of
the Company’s Code of Conduct that could adversely impact
the Company’s operations, business performance and / or
reputation.
The Audit Committee has laid down certain procedures
governing the receipt, retention and treatment of complaints
regarding the Company’s accounting, internal accounting
controls or auditing matters, and protecting the confidential,
anonymous reporting by Director(s) or employee(s) or any other
person regarding questionable accounting or auditing matters.
The Company also has a designated email id sgl.whistleblower@
vedanta.co.in for reporting complaints. Further, the complaints
can also be lodged on the web-based portal www.vedanta.
ethicspoint.com.
The Whistle Blower Policy forms part of the Code of Business
Conduct and Ethics, and the same has been displayed on the
Company’s website at http://www.vedantalimited.com.
During the year, the concerns reported under this mechanism
have been scrutinised and appropriate actions were undertaken.
It is also affirmed that no personnel has been denied access to
the Audit Committee.
Discretionary Requirements
Status of implementation of discretionary requirements as mentioned in Part E of Schedule II under Listing Regulations is as follows:
The Board
Shareholder Rights
Requirement
Status
A non-executive chairperson may be entitled
to maintain a chairperson’s office at the listed
entity’s expense and also allowed
reimbursement of expenses incurred in
performance of his duties.
A half-yearly declaration of financial
performance including summary of the
significant events in last six-months, may be
sent to each household of shareholders.
The Board of the Company is chaired by an
Executive Director who maintains the
Chairman’s office at the Company’s expense.
Quarterly financial results were sent to those
shareholders whose email id was registered
with the Company.
Modified opinion(s) in audit report
To move towards a regime of financial
statements with unmodified audit opinion.
There was no qualification by the auditors on
the financial statements of the Company.
Separate posts of chairperson and chief
executive officer
Appoint separate persons to the post of
chairperson and managing director or chief
executive officer.
The office of Chairman and Chief Executive
Officer of the Company are held by different
individuals.
Reporting of internal auditor
Internal auditor may report directly to the
audit committee.
The same is reported by briefing the Audit
Committee through discussion and
presentation of the observations, review,
comments and recommendations, amongst
others in the Internal Audit presentation by
the Company’s Internal Auditor.
Integrated Report Management Review Statutory Reports Financial Statements
184
Vedanta Limited Integrated Report and Annual Accounts 2017-18
Report on Corporate Governance continued
Disclosures of the compliance with Corporate Governance requirements specified in Regulation 17 to 27 and Clauses (b) to (i) of
Sub-Regulation (2) of Regulation 46 of Listing Regulations
S. No. Particulars
Regulation
(Yes/No/NA) Complied with the following
Compliance
Status
1
Board of Directors
17
Yes
• Composition {17(1)}
• Frequency of Meetings {17(2)}
• Review of Compliance Report {17(3)}
• Plans for orderly succession for appointments {17(4)}
• Code of Conduct {17(5)}
• Fees / compensation to Non-Executive Directors {17(6)}
• Minimum information to be placed before the Board {17(7)}
• Compliance Certificate {17(8)}
• Risk assessment and management {17(9)}
• Performance evaluation of Independent Directors {17(10)}
2
Audit Committee
18
Yes
• Composition {18(1)}
• Meetings {18(2)(a) and (b)}
• Powers of the Committee {18(2)(c)}
• Role of the Committee and review of information by the Committee {18(3)}
3
4
5
6
7
8
9
Nomination and
Remuneration
Committee
Stakeholder
Relationship
Committee
Risk Management
Committee
Vigil Mechanism
Related Party
Transactions
19
20
21
22
23
Yes
Yes
Yes
Yes
• Composition {19(1)}
• Chairperson {19(2) and (3)}
• Role of the Committee {19(4)}
• Composition {20(1)}
• Chairperson {20(2)}
• Other Members {20(3)}
• Role of the Committee {20(4)}
• Composition {21(1) and (2)}
• Chairperson {21(3)}
• Role of the Committee {21(4)}
• Formulation of Vigil Mechanism for Directors and employees {22(1)}
• Director access to Chairperson of Audit Committee {22(2)}
Yes
• Policy on Materiality of Related Party Transactions and dealing with Related
Party Transactions {23(1)}
• Approval including omnibus approval of Audit Committee {23(2) and (3)}
• Review of Related Party Transactions
• There were no material Related Party Transactions
Subsidiaries of the
Entity
24
Yes
• There was no material subsidiary of the Company and as a result the other
compliance in respect of material subsidiary were not applicable {24(1)}
• Review of financial statements of unlisted subsidiary by the Audit Committee
{24(2)}
• Minutes of Meetings of Board of unlisted subsidiary placed at meeting of the
listed entity {24(3)}
• Significant transactions and arrangements of unlisted subsidiary {24(4)}
Obligations with
respect to
Independent Directors
25
Yes
• Maximum directorships and tenure {25(1) and (2)}
• Meetings of Independent Directors {25(3) and (4)}
• Replacement {25(6)}
• Familiarisation of Independent Directors {25(7)}
10 Obligations with
26
Yes
respect to Directors
and Senior
Management
11
Other Corporate
Governance
Requirements
12 Website
27
46
Yes
Yes
• Memberships / Chairmanships in Committees {26(1) and (2)}
• Affirmation on compliance of Code of Conduct by Directors and Senior
Management {26(3)}
• Disclosure of shareholding by Non-Executive Directors {26(4)}
• Disclosures by Senior Management about potential conflicts of interest {26(5)}
• Compliance with discretionary requirements {27(1)}
• Filing of quarterly compliance report on Corporate Governance {27(2)}
• Maintaining Functional Website {46(1)}
• Details disseminated on website {46(2)}
• Contents on website and updating the website {46(3)}
Vedanta Limited Integrated Report and Annual Accounts 2017-18
Vedanta Limited Integrated Report and Annual Accounts 2017-18
185
Good Governance Policies of the Company
The company constantly strives to conduct its business and
strengthen its relationships in a dignified, distinctive and responsible
manner. The Company has adopted several policies and guidelines
for ethical and transparent conduct of its business and operations.
These include:
• Insider Trading Prohibition Policy;
• Policy on Prevention of Sexual Harassment at Work Place;
• Dividend Distribution Policy;
• Policy for determination material events/UPSI and archival;
• Nomination & Remuneration Policy;
• Related Party Transaction Policy;
• Determing Material Subsidiary Policy;
o) Address for Correspondence
• Corporate Social Responsibility Policy;
• Biodiversity Policy;
• Energy and Carbon Policy;
• HIV AIDS Policy;
• Health, Safety & Environment Policy;
• Human Rights Policy;
• Supplier and Contractor Management Policy;
• Water Management Policy.
The policies are also available on the website of the Company at
http://www.vedantalimited.com.
Company’s Registered Office Address
Vedanta Limited
1st Floor, ‘C’ Wing, Unit 103, Corporate Avenue,
Atul Projects, Chakala, Andheri (East),
Mumbai – 400 093, Maharashtra, India.
T +91 22 66434500 /Fax +91 22 66434530
Email id : comp.sect@vedanta.co.in
Website: www.vedantalimited.com
CIN : L13209MH1965PLC291394
Compliance Officer
Ms. Bhumika Sood
Company Secretary & Compliance Officer
Tel : +91 124 – 4593 000
Email : comp.sect@vedanta.co.in
Corporate Communications
Mr. Arun Arora
Head, Group Communications
Tel : +91 124 – 4593 000
Email : gc@vedanta.co.in
Registrar and Transfer Agent
Karvy Computershare Private Limited
Karvy Selenium Tower B,
Plot 31-32, Gachibowli Financial District,
Nanakramguda
Hyderabad – 500 032
Tel: +91 40 6716 2222
Fax: +91 40 2300 1153
Email: einward.ris@karvy.com
Investor Relations
Ms. Rashmi Mohanty
Group Head Treasury & Director – Investor Relations
Phone : +91 124 – 4593 000
Email : ir@vedanta.co.in
Retail Shareholders
Ms. Bhumika Sood
Company Secretary & Compliance Officer
Tel : +91 124 – 4593 000
Email : comp.sect@vedanta.co.in
Annexure I
Declaration by Chief Executive Officer on Code of Business Conduct and Ethics of the Company
As Interim Chief Executive Officer of Vedanta Limited and as required under the provisions of Securities and Exchange Board of India
(Listing Obligations and Disclosure Requirements) Regulations, 2015, I, Kuldip Kumar Kaura, hereby declare that all members of the Board
and senior management personnel have affirmed compliance with the Code of Business Conduct and Ethics of the Company for FY
2017-18.
Place: Mumbai
Date May 03, 2018
For Vedanta Limited
Kuldip Kumar Kaura
Interim Chief Executive Officer
Integrated Report Management Review Statutory Reports Financial Statements 186
Vedanta Limited Integrated Report and Annual Accounts 2017-18
Report on Corporate Governance continued
Annexure II
Certification
We, Kuldip Kumar Kaura, Interim Chief Executive Officer and GR Arun Kumar, Whole-Time Director & Chief Financial Officer, certify that:
A. We have reviewed financial statements and the cash flow statement for the year and that to the best of our knowledge and belief:
(1) These statements do not contain any materially untrue statement or omit any material fact or contain statements that might be
misleading;
(2) These statements together present a true and fair view of the Company’s affairs and are in compliance with existing accounting
standards, applicable laws and regulations.
B. There are, to the best of our knowledge and belief, no transactions entered into by the Company during the year, which are fraudulent,
illegal or violative of the Company’s code of conduct.
C. We accept responsibility for establishing and maintaining internal controls for financial reporting. We have evaluated the effectiveness
of internal control systems of the Company pertaining to financial reporting, and we have not noticed any deficiency in the design of
operation of such internal controls, or of which we are aware that needs to be rectified, or informed to the auditors and the Audit
Committee.
D. During the year it was disclosed to the Auditors and the Audit Committee that:
(1) There were no significant changes in internal control over financial reporting;
(2) No significant changes in accounting policies were made during the year that require disclosure in the notes to the financial
statements; and
(3) No instances of significant fraud and the involvement therein, if any, of the management or an employee having a significant role in
the Company’s internal control system over financial reporting, has come to our notice.
Kuldip Kumar Kaura
Interim Chief Executive Officer
PAN: AFVPK8712R
Place: Mumbai
Date: May 03, 2018
GR Arun Kumar
Whole-Time Director & Chief
Financial Officer
DIN: 01874769
Vedanta Limited Integrated Report and Annual Accounts 2017-18
Vedanta Limited Integrated Report and Annual Accounts 2017-18
187
Auditor’s Report on compliance with the conditions of Corporate Governance as per provisions of
Chapter IV of Securities and Exchange Board of India (Listing Obligations and Disclosure
Requirements) Regulations, 2015
The Members
Vedanta Limited
1st Floor, ‘C’ Wing
Unit 103, Corporate Avenue, Atul Projects
Chakala, Andheri (E),
Mumbai
1. The accompanying Corporate Governance Report prepared by Vedanta Limited (hereinafter the “Company”), contains details as
required by the provisions of Chapter IV of Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements)
Regulations, 2015, as amended (“the Listing Regulations”) (‘Applicable criteria’) with respect to Corporate Governance for the year
ended March 31, 2018.
Management’s Responsibility
2. The preparation of the Corporate Governance Report is the responsibility of the Management of the Company including the
preparation and maintenance of all relevant supporting records and documents. This responsibility also includes the design,
implementation and maintenance of internal control relevant to the preparation and presentation of the Corporate Governance Report.
3. The Management along with the Board of Directors are also responsible for ensuring that the Company complies with the conditions of
Corporate Governance as stipulated in the Listing Regulations, issued by the Securities and Exchange Board of India.
Auditors’ Responsibility
4. Pursuant to the requirements of the Listing Regulations, our responsibility is to express a reasonable assurance in the form of an opinion
whether the Company has complied with the specific requirements of the Listing Regulations referred to in paragraph 1 above.
5. We conducted our examination of the Corporate Governance Report in accordance with the Guidance Note on Reports or Certificates
for Special Purposes and the Guidance Note on Certification of Corporate Governance, both issued by the Institute of Chartered
Accountants of India (“ICAI”). The Guidance Note on Reports or Certificates for Special Purposes requires that we comply with the
ethical requirements of the Code of Ethics issued by the Institute of Chartered Accountants of India.
6. We have complied with the relevant applicable requirements of the Standard on Quality Control (SQC) 1, Quality Control for Firms that
perform Audits and Reviews of Historical Financial Information, and other Assurance and Related Services Engagements.
7. The procedures selected depend on the auditor’s judgement, including the assessment of the risks associated in compliance of the
Corporate Governance Report with the applicable criteria. Summary of key procedures performed include:
i.
Reading and understanding of the information prepared by the Company and included in its Corporate Governance Report;
ii. Obtained and verified that the composition of the Board of Directors w.r.t executive and non-executive directors has been met
throughout the reporting period;
iii. Obtained and read the Directors register as on March 31, 2018 and verified that at-least one women director was on the Board
during the year;
iv. Obtained and read the minutes of the following committee meetings held from April 1, 2017 to March 31, 2018:
(a) Board of Directors meeting;
(b) Audit committee;
(c) Nomination and remuneration committee;
(d) Stakeholders Relationship Committee; and
(e) Risk management committee
v. Obtained necessary representations and declarations from directors of the Company including the independent directors ; and
vi. Performed necessary inquiries with the management and also obtained necessary specific representations from management.
The above-mentioned procedures include examining evidence supporting the particulars in the Corporate Governance Report on a test
basis. Further, our scope of work under this report did not involve us performing audit tests for the purposes of expressing an opinion on
the fairness or accuracy of any of the financial information or the financial statements of the Company taken as a whole.
Integrated Report Management Review Statutory Reports Financial Statements
188
Vedanta Limited Integrated Report and Annual Accounts 2017-18
Report on Corporate Governance continued
Opinion
8. Based on the procedures performed by us as referred in paragraph 7 above, and according to the information and explanations given to
us, we are of the opinion that the Company has complied with the conditions of Corporate Governance as stipulated in the Listing
Regulations, as applicable as at March 31, 2018, referred to in paragraph 1 above.
Other matters and Restriction on Use
9. This report is neither an assurance as to the future viability of the Company nor the efficiency or effectiveness with which the
management has conducted the affairs of the Company.
10. This report is addressed to and provided to the members of the Company solely for the purpose of enabling it to comply with its
obligations under the Listing Regulations with reference to Corporate Governance Report accompanied with by a report thereon from
the statutory auditors and should not be used by any other person or for any other purpose. Accordingly, we do not accept or assume
any liability or any duty of care or for any other purpose or to any other party to whom it is shown or into whose hands it may come
without our prior consent in writing. We have no responsibility to update this report for events and circumstances occurring after the
date of this report.
For S.R. Batliboi & Co. LLP
Chartered Accountants
ICAI Firm Registration Number: 301003E/E300005
per Raj Agrawal
Partner
Membership Number: 82028
Place: Mumbai
Date: May 03, 2018
Vedanta Limited Integrated Report and Annual Accounts 2017-18
189
Standalone
Financial
Statements
Integrated Report Management Review Statutory Reports Financial Statements 190
Vedanta Limited Integrated Report and Annual Accounts 2017-18
Independent Auditor’s Report
To the Members of Vedanta Limited
Report on the Standalone Ind AS Financial Statements
We have audited the accompanying standalone Ind AS financial
statements of Vedanta Limited (“the Company”), which comprise
the Balance Sheet as at March 31, 2018, the Statement of Profit and
Loss, including the statement of Other Comprehensive Income, the
Cash Flow Statement and the Statement of Changes in Equity for
the year then ended, and a summary of significant accounting
policies and other explanatory information.
Management’s Responsibility for the Standalone Ind AS
Financial Statements
The Company’s Board of Directors is responsible for the matters
stated in Section 134(5) of the Companies Act, 2013 (“the Act”)
with respect to the preparation of these standalone Ind AS financial
statements that give a true and fair view of the financial position,
financial performance including other comprehensive income, cash
flows and changes in equity of the Company in accordance with
accounting principles generally accepted in India, including the
Indian Accounting Standards (Ind AS) specified under section 133
of the Act., read with the Companies (Indian Accounting Standards)
Rules, 2015, as amended. This responsibility also includes
maintenance of adequate accounting records in accordance with
the provisions of the Act for safeguarding of the assets of the
Company and for preventing and detecting frauds and other
irregularities; selection and application of appropriate accounting
policies; making judgments and estimates that are reasonable and
prudent; and the design, implementation and maintenance of
adequate internal financial control that were operating effectively
for ensuring the accuracy and completeness of the accounting
records, relevant to the preparation and presentation of the Ind AS
financial statements that give a true and fair view and are free from
material misstatement(s), whether due to fraud or error.
Auditor’s Responsibility
Our responsibility is to express an opinion on these standalone Ind
AS financial statements based on our audit. We have taken into
account the provisions of the Act, the accounting and auditing
standards and matters which are required to be included in the
audit report under the provisions of the Act and the Rules made
thereunder. We conducted our audit of the standalone Ind AS
financial statements in accordance with the Standards on Auditing,
issued by the Institute of Chartered Accountants of India, as
specified under Section 143(10) of the Act. Those Standards require
that we comply with ethical requirements and plan and perform the
audit to obtain reasonable assurance about whether the financial
statements are free from material misstatement.
An audit involves performing procedures to obtain audit evidence
about the amounts and disclosures in the financial statements. The
procedures selected depend on the auditor’s judgment, including
the assessment of the risks of material misstatement of the
standalone Ind AS financial statements, whether due to fraud or
error. In making those risk assessments, the auditor considers
internal financial control relevant to the Company’s preparation of
the standalone Ind AS financial statements that give a true and fair
view in order to design audit procedures that are appropriate in the
circumstances. An audit also includes evaluating the
appropriateness of accounting policies used and the
reasonableness of the accounting estimates made by the
Company’s Directors, as well as evaluating the overall presentation
of the standalone Ind AS financial statements. We believe that the
audit evidence we have obtained is sufficient and appropriate to
provide a basis for our audit opinion on the standalone Ind AS
financial statements.
Opinion
In our opinion and to the best of our information and according to
the explanations given to us, the standalone Ind AS financial
statements give the information required by the Act in the manner
so required and give a true and fair view in conformity with the
accounting principles generally accepted in India, of the state of
affairs of the Company as at March 31, 2018, its profits including
other comprehensive income, its cash flows and the changes in
equity for the year ended on that date.
Report on Other Legal and Regulatory Requirements
1. As required by the Companies (Auditor’s report) Order, 2016
(“the Order”) issued by the Central Government of India in terms
of sub-section (11) of section 143 of the Act, we give in the
Annexure 1 a statement on the matters specified in paragraphs 3
and 4 of the Order.
2. As required by section 143 (3) of the Act, we report that:
(a) We have sought and obtained all the information and
explanations which to the best of our knowledge and belief
were necessary for the purpose of our audit;
(b) In our opinion, proper books of account as required by law
have been kept by the Company so far as it appears from our
examination of those books;
(c) The Balance Sheet, Statement of Profit and Loss including
the Statement of Other Comprehensive Income, the Cash
Flow Statement and Statement of Changes in Equity dealt
with by this Report are in agreement with the books of
account;
(d) In our opinion, the aforesaid standalone Ind AS financial
statements comply with the Accounting Standards specified
under section 133 of the Act, read with Companies (Indian
Accounting Standards) Rules, 2015, as amended;
(e) On the basis of written representations received from the
directors as on March 31, 2018, and taken on record by the
Board of Directors, none of the directors is disqualified as on
March 31, 2018, from being appointed as a director in terms
of section 164 (2) of the Act;
(f) With respect to the adequacy of the internal financial
controls over financial reporting of the Company and the
operating effectiveness of such controls, refer to our separate
Report in “Annexure 2” to this report;
(g) With respect to the other matters to be included in the
Auditor’s Report in accordance with Rule 11 of the Companies
(Audit and Auditors) Rules, 2014, in our opinion and to the
best of our information and according to the explanations
given to us:
i. The Company has disclosed the impact of pending
litigations on its financial position in its standalone Ind AS
financial statements – Refer Note 49 to the financial
statements;
ii. The Company did not have any long-term contracts
including derivative contracts for which there were any
material foreseeable losses;
iii. There has been no delay in transferring amounts, required
to be transferred, to the Investor Education and Protection
Fund by the Company.
For S.R. Batliboi & Co. LLP
Chartered Accountants
ICAI Firm Registration Number: 301003E/
E300005
Place: Gurugram
Date: May 03, 2018
per Raj Agrawal
Partner
Membership Number: 82028
Vedanta Limited Integrated Report and Annual Accounts 2017-18
191
Annexure 1 referred to in paragraph 1 under the heading “Report on Other Legal and Regulatory Requirements” of our report of
even date
Re: Vedanta Limited (‘the Company’)
(i) (a) The Company has maintained proper records showing full
particulars, including quantitative details and situation of fixed
assets.
(c) There is no amounts of loans granted to companies listed in
the register maintained under section 189 of the Act which
are overdue for more than ninety days.
(b) All fixed assets have not been physically verified by the
management during the year but there is a regular
programme of verification which, in our opinion, is reasonable
having regard to the size of the Company and the nature of
its assets. No material discrepancies were noticed on such
verification.
(c) According to the information and explanations given by the
management, the title deeds of immovable properties
included in fixed assets are held in the name of the Company
except for the title deeds of immovable properties in oil and
gas blocks, jointly owned with other joint venture partners,
which are held in the name of the licensee of the block. The
written down value of such immovable properties in the
accompanying financial statement aggregates to ₹ 96.47
Crore.
(ii) The management has conducted physical verification of
inventory at reasonable intervals during the year and no material
discrepancies were noticed on such physical verification.
(iii) (a) The Company has granted loans to companies covered in the
register maintained under section 189 of the Act. In our
opinion and according to the information and explanations
given to us, the terms and conditions of the grant of such
loans are not prejudicial to the Company’s interest.
(b) The Company has granted loans that are either re-payable on
demand or have a schedule for repayment of interest and
principal, to companies covered in the register maintained
under section 189 of the Act. We are informed that (a)
repayment of loan was received as and when the demands
were raised, during the year; and (b) loans which had a
schedule for repayment were not due during the current year;
and thus, there has been no default on the part of the parties
to whom the monies have been lent. The payment of interest
has been regular in all cases.
(iv) In our opinion and according to the information and explanations
given to us, provisions of sections 185 and 186 of the Act in
respect of loans to directors including entities in which they are
interested and in respect of loans and advances given,
investments made and guarantees given have been complied
with by the Company. The Company has not granted any
security in terms of sections 185 and 186 of the Act.
(v) According to information and explanations given to us, the
Company has not accepted any deposit from the public during
the year. In respect of unclaimed deposits, the Company has
complied with the provisions of sections 73 to 76 of the Act and
the rules framed there under.
(vi) We have broadly reviewed the books of account maintained by
the Company pursuant to the rules made by the Central
Government for the maintenance of cost records under section
148(1) of the Act, related to the manufacture of goods and
generation of electricity, and are of the opinion that prima facie,
the specified accounts and records have been made and
maintained. We have not, however, made a detailed examination
of the same.
(vii) (a) The Company is regular in depositing with appropriate
authorities undisputed statutory dues including provident
fund, employees’ state insurance, income-tax, sales-tax,
service tax, duty of custom, duty of excise, value added tax,
goods and service tax, cess and other statutory dues
applicable to it.
(b) According to the information and explanations given to us, no
undisputed amounts payable in respect of provident fund,
employees’ state insurance, income-tax, service tax,
sales-tax, duty of custom, duty of excise, value added tax,
goods and service tax, cess and other statutory dues were
outstanding, at the year end, for a period of more than six
months from the date they became payable.
(c) According to the records of the Company, the dues of income-tax, sales-tax, service tax, customs duty, excise duty and value added
tax on account of any dispute, are as follows:
Name of the Statute
Nature of the dues
(in ₹ Crore) * Period to which amount relates
Amount
Income tax Act, 1961
Income tax
Withholding Tax demand
Income Tax
Finance Act, 1994
Service tax demand
637.5 AY 2006-07 and AY
2008-09 to AY 2013-14
1,126.55 A.Y. 2007-08 to 2011-12
833.73 AY 2002-03, 2004-10,
and 2012-13
19,385.73 AY 2006-07
30.35 AY 1999-00, 2008-09
and 2009-10
24.31 2006-07, 2007-08,
2016-17 and 2017-18
2.69 2009-17
200.28 2002-16
0.51 2007-16
Forum where the dispute is
pending
Commissioner of Income
Tax (Appeals)
High Court
Income Tax Appellate
Tribunal
Income Tax Appellate
Tribunal
Not applicable as
application filed for
rectification
High Court
Commissioner (Appeals)
Custom, Excise and Service
tax appellate tribunal
Commissioner of Excise
Integrated Report Management Review Statutory Reports Financial Statements
192
Vedanta Limited Integrated Report and Annual Accounts 2017-18
Name of the Statute
Nature of the dues
(in ₹ Crore) * Period to which amount relates
Central Excise Act, 1944
Excise duty
300.63 1997-13 and 2014-15
Amount
Oil Cess and NCCD
Demand
Education cess and
secondary higher education
cess on oil cess demand
Custom duty
Custom Act, 1962
Central Sales Tax, 1956
Sales tax
Value added tax
Odisha Value Added Tax
2004
Andhra Pradesh VAT Act,
2005
Tamil Nadu VAT Act, 2006 Value added tax
Value added tax
8.15 1997-2016
4.53 2000-06
0.43 2009-15
0.21 2002-03 and 2007-08
53.45 2013-2015
63.38 2004-05 to 2013-14
6.97 2007-14
0.18 1996-97 and 2005-10
26.49 2005-06 to 2006-07
19.72 2004-05 to 2019-10 and
2012-13 to 2016-17
21.26 1998-99 to 2014-15 and
2016-17
11.08 2004-06
1.40 2008-12
5.64 2014-15
0.08 2012-15
10.98 2008-09 to 2010-11
47.40 2007-08
Forum where the dispute is
pending
Custom, Excise and Service
tax appellate tribunal
Commissioner of central
excise
High Court
Commissioner Appeals
Custom, Excise and Service
tax appellate tribunal
Custom, Excise and Service
tax appellate tribunal
Custom, Excise and Service
tax appellate tribunal
Commissioner appeals
Supreme Court
High Court
Commissioner
High Court
Additional Commissioner
Sales Tax
Value Added Tax Tribunal
Additional commissioner of
commercial taxes
Deputy Commissioner
Appeals
High Court
Commissioner
* Net of amounts paid under protest/ adjusted against refunds.
(viii)
In our opinion and according to the information and
explanations given by the management, the Company has
not defaulted in repayment of loans or borrowing to bank or
government or dues to debenture holders. The Company did
not have any outstanding dues to financial institutions.
(xiv)
(ix)
(x)
(xi)
In our opinion and according to the information and
explanations given by the management, the Company has
utilized the monies raised by way of debt instruments in the
nature of debentures and term loans for the purposes for
which they were raised. The Company has not raised moneys
by way of initial public offer or further public offer.
Based upon the audit procedures performed for the purpose
of reporting the true and fair view of the financial statements
and according to the information and explanations given by
the management, we report that no fraud by the Company or
no material fraud on the Company by the officers and
employees of the Company has been noticed or reported
during the year.
According to the information and explanations given by the
management, the managerial remuneration has been paid /
provided in accordance with the requisite approvals
mandated by the provisions of section 197 read with
Schedule V to the Act.
(xii)
In our opinion, the Company is not a Nidhi Company.
Therefore, the provisions of clause 3(xii) of the Order are not
applicable to the Company and hence not commented upon.
(xiii)
According to the information and explanations given by the
management, transactions with the related parties are in
compliance with sections 177 and 188 of the Act where
applicable and the details have been disclosed in the notes to
the financial statements, as required by the applicable
accounting standards.
According to the information and explanations given to us
and on an overall examination of the balance sheet, the
Company has not made any preferential allotment or private
placement of shares or fully or partly convertible debentures
during the year under review and hence, reporting
requirements under clause 3(xiv) of the Order are not
applicable to the Company and hence not commented upon.
(xv)
(xvi)
According to the information and explanations given by the
management, the Company has not entered into any
non-cash transactions with directors or persons connected
with them as referred to in section 192 of the Act.
According to the information and explanations given to us,
the provisions of section 45-IA of the Reserve Bank of India
Act, 1934 are not applicable to the Company.
For S.R. Batliboi & Co. LLP
Chartered Accountants
ICAI Firm Registration Number: 301003E/
E300005
Place: Gurugram
Date: May 03, 2018
per Raj Agrawal
Partner
Membership Number: 82028
Vedanta Limited Integrated Report and Annual Accounts 2017-18
193
Annexure 2 referred to in para 2(f) under the heading “Report on Other Legal and Regulatory Requirements” to the independent
Auditor’s Report of even date on the Standalone Ind AS Financial Statements of Vedanta Limited
Report on the Internal Financial Controls under Clause (i) of Sub-section 3 of Section 143 of the Companies Act, 2013 (“the Act”)
We have audited the internal financial controls over financial
reporting of Vedanta Limited (“the Company”) as of March 31, 2018
in conjunction with our audit of the standalone Ind AS financial
statements of the Company for the year ended on that date.
Management’s Responsibility for Internal Financial Controls
The Company’s Management is responsible for establishing and
maintaining internal financial controls based on the internal control
over financial reporting criteria established under the Committee of
Sponsoring Organizations of the Treadway Commission (2013
framework) (“COSO 2013 criteria”), which considers the essential
components of internal control stated in the Guidance Note on
Audit of Internal Financial Controls Over Financial Reporting issued
by the Institute of Chartered Accountants of India. These
responsibilities include the design, implementation and
maintenance of adequate internal financial controls that were
operating effectively for ensuring the orderly and efficient conduct
of its business, including adherence to the Company’s policies, the
safeguarding of its assets, the prevention and detection of frauds
and errors, the accuracy and completeness of the accounting
records, and the timely preparation of reliable financial information,
as required under the Act.
Auditor’s Responsibility
Our responsibility is to express an opinion on the Company’s
internal financial controls over financial reporting based on our
audit. We conducted our audit in accordance with the Guidance
Note on Audit of Internal Financial Controls Over Financial
Reporting (the “Guidance Note”) and the Standards on Auditing as
specified under section 143(10) of the Act, to the extent applicable
to an audit of internal financial controls, and, both issued by the
Institute of Chartered Accountants of India. Those Standards and
the Guidance Note require that we comply with ethical
requirements and plan and perform the audit to obtain reasonable
assurance about whether adequate internal financial controls over
financial reporting was established and maintained and if such
controls operated effectively in all material respects.
Our audit involves performing procedures to obtain audit evidence
about the adequacy of the internal financial controls system over
financial reporting and their operating effectiveness. Our audit of
internal financial controls over financial reporting included obtaining
an understanding of internal financial controls over financial
reporting, assessing the risk that a material weakness exists, and
testing and evaluating the design and operating effectiveness of
internal control based on the assessed risk. The procedures
selected depend on the auditor’s judgement, including the
assessment of the risks of material misstatement of the financial
statements, whether due to fraud or error.
We believe that the audit evidence we have obtained is sufficient
and appropriate to provide a basis for our audit opinion on the
internal financial controls system over financial reporting.
Meaning of Internal Financial Controls Over Financial
Reporting
A company’s internal financial control over financial reporting is a
process designed to provide reasonable assurance regarding the
reliability of financial reporting and the preparation of financial
statements for external purposes in accordance with generally
accepted accounting principles. A company’s internal financial
control over financial reporting includes those policies and
procedures that (1) pertain to the maintenance of records that, in
reasonable detail, accurately and fairly reflect the transactions and
dispositions of the assets of the company; (2) provide reasonable
assurance that transactions are recorded as necessary to permit
preparation of financial statements in accordance with generally
accepted accounting principles, and that receipts and expenditures
of the company are being made only in accordance with
authorisations of management and directors of the company; and
(3) provide reasonable assurance regarding prevention or timely
detection of unauthorised acquisition, use, or disposition of the
company’s assets that could have a material effect on the financial
statements.
Inherent Limitations of Internal Financial Controls Over
Financial Reporting
Because of the inherent limitations of internal financial controls over
financial reporting, including the possibility of collusion or improper
management override of controls, material misstatements due to
error or fraud may occur and not be detected. Also, projections of
any evaluation of the internal financial controls over financial
reporting to future periods are subject to the risk that the internal
financial control over financial reporting may become inadequate
because of changes in conditions, or that the degree of compliance
with the policies or procedures may deteriorate.
Opinion
In our opinion, the Company has, in all material respects, an
adequate internal financial controls system over financial reporting
and such internal financial controls over financial reporting were
operating effectively as at March 31, 2018, based on the internal
control over financial reporting in COSO 2013 criteria, considering
the essential components of internal control stated in the Guidance
Note on Audit of Internal Financial Controls Over Financial
Reporting issued by the Institute of Chartered Accountants of India.
For S.R. Batliboi & Co. LLP
Chartered Accountants
ICAI Firm Registration Number: 301003E/
E300005
Place: Gurugram
Date: May 03, 2018
per Raj Agrawal
Partner
Membership Number: 82028
Integrated Report Management Review Statutory Reports Financial Statements
194
Vedanta Limited Integrated Report and Annual Accounts 2017-18
Balance Sheet
as at March 31, 2018
Particulars
ASSETS
Non-current assets
Property, plant and equipment
Capital work-in-progress
Intangible assets
Exploration intangible assets under development
Financial assets
Investments
Trade receivables
Others
Deferred tax assets (net)
Income tax assets (net of provisions)
Other non-current assets
Total non-current assets
Current assets
Inventories
Financial assets
Investments
Trade receivables
Cash and cash equivalents
Other bank balances
Loans
Others
Other current assets
Total current assets
Total assets
EQUITY AND LIABILITIES
Equity
Equity share capital
Other equity
Total Equity
Liabilities
Non-current liabilities
Financial liabilities
Borrowings
Other financial liabilities
Provisions
Deferred tax liabilities (net)
Other non-current liabilities
Total non-current liabilities
Current liabilities
Financial liabilities
Borrowings
Trade payables
Other financial liabilities
Other current liabilities
Provisions
Current tax liabilities (net of payments)
Total current liabilities
Total Equity and Liabilities
See accompanying notes to the financial statements
As at
March 31,
2018
(` in crore)
As at
March 31,
2017
Note
5
5
5
5
6
11
7
35
8
9
10
11
12
13
14
15
16
17
18
19
20
21
35
22
23
24
25
26
27
37,132
10,386
44
7,983
62,473
471
443
-
2,429
2,577
36,042
12,215
155
5,028
66,417
551
388
1,958
2,189
1,863
1,23,938
1,26,806
8,149
5,540
5,537
1,968
1,144
450
14
3,105
2,864
19,668
1,529
638
776
286
9,274
1,667
23,231
39,378
1,47,169
1,66,184
372
78,941
372
79,396
79,313
79,768
14,810
44
852
26
2,479
22,248
3,208
808
-
2,541
18,211
28,805
18,320
14,066
12,270
4,815
129
45
14,309
14,975
24,639
3,561
82
45
49,645
57,611
1,47,169
1,66,184
As per our report of even date
For and on behalf of Board of Directors
For S.R. Batliboi & Co. LLP
Chartered Accountants
ICAI Firm Registration No. 301003E/E300005
per Raj Agrawal
Partner
Membership No.: 82028
Place: Gurugram
Date: May 03, 2018
Navin Agarwal
Executive Chairman
DIN 00006303
GR Arun Kumar
Whole-Time Director and
Chief Financial Officer
DIN 01874769
Place: Mumbai
Date: May 03, 2018
Kuldip Kumar Kaura
Interim Chief Executive Officer
PAN AFVPK8712R
Bhumika Sood
Company Secretary
ICSI Membership No. A19326
Vedanta Limited Integrated Report and Annual Accounts 2017-18
195
Statement of Profit and Loss
for the year ended March 31, 2018
Particulars
Revenue from operations (Net of excise duty)
Add: Excise duty
Revenue from operations (Gross of excise duty)
Other income
Total Income
Expenses:
Cost of materials consumed
Purchases of stock-in-trade
Changes in inventories of finished goods and work-in-progress
Employee benefits expense
Depreciation, depletion and amortisation expense
Power and fuel charges
Excise duty on sales
Share of expenses in producing oil and gas blocks
Other expenses
Finance costs
Total expenses
Profit before exceptional items and tax
Net exceptional gain
Profit before tax
Tax expense/(benefit) :
On other than exceptional items
Net current tax expense
Net deferred tax expense/(benefit)
On exceptional items
Net deferred tax expense
Net tax expense/(benefit) :
Net Profit for the year (A)
Other Comprehensive Income
Items that will not be reclassified to profit or loss
Re-measurements of defined benefit obligations
Tax credit
Gains on fair value of equity instruments measured at fair value through other comprehensive income
Items that will be reclassified to profit or loss
Effective portion of gains/(loss) on hedging instruments in cash flow hedges
Tax credit/(expense)
Currency translation (loss)/gain
Tax expense
Total Other Comprehensive Income for the year (B)
Total Comprehensive Income for the year (A+B)
Earnings per share after tax and exceptional items (in `)
- Basic & Diluted
Earnings per share after tax but before exceptional items (in `)
- Basic & Diluted
See accompanying notes to the financial statements
(` in Crores except as stated)
Year ended
Year ended
March 31,
March 31,
2017
2018
Note
28
29
30
31
5
32
33
34
35
36
45,524
450
45,974
3,866
49,840
25,209
426
(11)
802
2,842
6,643
450
1,004
4,758
3,900
46,023
3,817
5,407
9,224
-
1,026
942
1,968
7,256
1
5
90
96
(5)
2
49
(7)
39
135
36,663
1,877
38,540
9,705
48,245
18,788
580
(417)
784
2,986
4,582
1,877
1,000
4,695
3,896
38,771
9,474
1,324
10,798
2
(360)
87
(271)
11,069
1
1
27
29
29
(10)
(110)
(22)
(113)
(84)
7,391
10,985
19.47
29.04
7.46
25.72
As per our report of even date
For and on behalf of Board of Directors
For S.R. Batliboi & Co. LLP
Chartered Accountants
ICAI Firm Registration No. 301003E/E300005
per Raj Agrawal
Partner
Membership No.: 82028
Place: Gurugram
Date: May 03, 2018
Navin Agarwal
Executive Chairman
DIN 00006303
GR Arun Kumar
Whole-Time Director and
Chief Financial Officer
DIN 01874769
Place: Mumbai
Date: May 03, 2018
Kuldip Kumar Kaura
Interim Chief Executive Officer
PAN AFVPK8712R
Bhumika Sood
Company Secretary
ICSI Membership No. A19326
Integrated Report Management Review Statutory Reports Financial Statements
196
Vedanta Limited Integrated Report and Annual Accounts 2017-18
Statement of Cash Flows
for the year ended March 31, 2018
Cash flows from operating activities
Profit/ (loss) before tax
Adjustments for:
Depreciation, depletion and amortization
Net exceptional gain
Provision for doubtful debts/advances
Exploration costs written off
Fair value gain on financial assets held for trading
Loss on sale of property, plant and equipments, net
Foreign exchange loss/(gains), net
Unwinding of discount on decommissioning liability
Loss on sale of investment in subsidiary
Other non-operating income / (expense)
Share based payment expense
Interest and dividend income
Interest expense
Deferred government grant
Changes in assets and liabilities:
Increase in trade and other receivables
Increase in inventories
(Increase) / Decrease in financial and other assets
(Decrease) / Increase in trade and other payable
Increase / (Decrease) in other current and non-current liabilities
Cash generated from operations
Income taxes paid
Net cash generated from operating activities
Cash flows from investing activities
Purchases of property, plant and equipment (including intangibles)
Proceeds from sale of property, plant and equipment
Loans repaid by/(given to) related parties (net)
Proceeds from redemption of short-term deposits
Short-term deposits made
Proceeds from sale of short term investments
Short-term investments made
Interest received
Dividend received
Payment towards investment in Subsidiary
Payments made to site restoration fund
Net cash from / (used in) investing activities
Cash flows from financing activities
Proceeds on exercise of Cairn stock options
Proceeds from working capital loan short term loans, net
Proceeds from current borrowings
Repayment of current borrowings
Proceeds from long-term borrowings
Repayment of long-term borrowings
Interest paid
Payment of dividends to equity holders of the parent, including dividend distribution tax
Net cash (used in)/generated from financing activities
Net (decrease)/increase in cash and cash equivalents
Cash and cash equivalents at the beginning of the year
Cash and cash equivalents at the end of the year (Note 12)
Notes:
1. The figures in bracket indicates outflow.
2. The cash flow statement has been prepared using the indirect method as set out in Ind-AS 7
See accompanying notes to the financial statements
As per our report of even date
For and on behalf of Board of Directors
For S.R. Batliboi & Co. LLP
Chartered Accountants
ICAI Firm Registration No. 301003E/E300005
per Raj Agrawal
Partner
Membership No.: 82028
Place: Gurugram
Date: May 03, 2018
Navin Agarwal
Executive Chairman
DIN 00006303
GR Arun Kumar
Whole-Time Director and
Chief Financial Officer
DIN 01874769
Place: Mumbai
Date: May 03, 2018
Year ended
March 31,
2018
(` in Crore)
Year ended
March 31,
2017
9,224
10,798
2,869
(5,407)
38
-
(615)
11
(92)
27
-
18
47
(2,798)
3,873
(69)
(313)
(2,623)
(1,078)
(1,043)
1,279
3,348
(59)
3,289
3,011
(1,324)
2
29
(1,042)
19
123
32
3
(47)
22
(8,534)
3,741
(65)
(190)
(321)
102
1,863
(46)
8,176
(37)
8,139
(2,198)
7
(4)
392
(336)
55,873
(41,353)
610
8,101
(18)
(43)
(1,636)
12
142
112
(281)
60,981
(64,914)
465
7,105
(15,552)
(40)
21,031
(13,606)
-
3,815
3,650
(10,158)
1,143
(4,045)
(4,036)
(14,461)
(24,092)
228
1,003
2
4,634
11,285
(9,012)
6,020
(3,188)
(4,134)
(790)
4,817
(650)
1,653
1,231
1,003
Kuldip Kumar Kaura
Interim Chief Executive Officer
PAN AFVPK8712R
Bhumika Sood
Company Secretary
ICSI Membership No. A19326
Vedanta Limited Integrated Report and Annual Accounts 2017-18
197
Statement of Changes in Equity
for the year ended March 31, 2018
A. Equity Share Capital
Equity shares of ` 1 each issued, subscribed and fully paid except shares to be issued
As at March 31, 2018 and March 31, 2017 *
Number
of shares
(in Crore)
Amount
(` in Crore)
372
372
* Includes 75.25 Crore shares which have been issued during the current year pursuant to merger as described in Note 4.
B. Other Equity
Reserves and
surplus
Items of Other
comprehensive income
(` in Crore)
Particulars
Balance as at April 01, 2016
Profit for the year
Other comprehensive income for the year, net of tax
Total comprehensive income for the year
Transferred to financial liability pursuant to merger (Refer note 4)
Creation of Debenture redemption reserve (net)
Share based transactions (Refer other reserves)
Acquisition of additional stake in erstwhile Cairn India Limited
during the year
Dividends including tax (Refer note 37)
Balance as at March 31, 2017
Profit for the year
Other comprehensive income for the year, net of tax
Total Comprehensive Income for the year
Transfer from Debenture redemption reserve (net)
Recognition of share based payment
Stock options cancelled during the year
Exercise of stock options
Dividends including tax (Refer note 37)
Capital
reserve(a)
29,037
-
-
-
(3,010)
-
-
-
-
Securities
premium
reserve
19,009
-
-
-
-
-
-
-
-
26,027
-
-
19,009
-
-
-
-
-
-
-
-
-
-
-
-
-
-
Retained
earnings
12,666
11,069
2
11,071
-
(571)
-
-
(7,370)
15,796
7,256
6
7,262
249
-
3
10
(7,881)
-
-
571
(53)
(20)
-
17,549
-
-
-
(249)
47
(3)
(22)
-
Balance as at March 31, 2018
26,027
19,009
15,439
17,322
Other
reserves
(Refer
below)
17,051
-
-
Equity
instruments
through
OCI
32
-
27
Hedging
Reserve
(2)
-
19
Foreign
Currency
Translation
Reserve
1,071
-
(132)
(132)
-
-
-
Total other
equity
78,864
11,069
(84)
10,985
(3,010)
-
(53)
-
-
(20)
(7,370)
939
-
42
79,396
7,256
135
42
-
-
-
-
-
7,391
-
47
-
(12)
(7,881)
981
78,941
27
-
-
-
-
-
59
-
90
90
-
-
-
-
-
149
19
-
-
-
-
-
17
-
(3)
(3)
-
-
-
-
-
14
(a) Balance as at March 31, 2018 and March 31, 2017 includes ` 25,896 Crore generated pursuant to merger as described in note 4.
Other reserves comprise of:
Particulars
Balance as at April 01, 2016
Transfer from retained earnings
Cancellation of stock options pursuant to merger (Refer
note 38)
Stock options cancelled during the year
Recognition of share based payment
Exercise of stock options (erstwhile Cairn India Limited)
Acquisition of additional stake in erstwhile Cairn India
Limited during the year
Balance as at March 31, 2017
Transfer to retained earnings
Recognition of share based payment
Stock options cancelled during the year
Exercise of stock options
Balance as at March 31, 2018
See accompanying notes to the financial statements
Preference
share
redemption
reserve
Amalgamation
Reserve
Capital
redemption
reserve
Debenture
redemption
reserve
38
-
1,108
571
-
-
-
-
-
-
-
-
-
-
77
-
-
-
-
-
-
38
1,679
77
-
-
-
-
(249)
-
-
-
-
-
-
-
38
1,430
77
General
reserve
15,584
-
-
13
-
-
-
Share Based
Payment
Reserve
249
-
(63)
(28)
22
(25)
-
(` in Crore)
Total
17,051
571
(63)
(15)
22
3
(20)
15,597
155
17,549
-
-
-
-
-
47
(3)
(22)
(249)
47
(3)
(22)
15,597
177
17,322
(5)
-
-
-
-
28
(20)
3
-
-
-
-
3
As per our report of even date
For and on behalf of Board of Directors
For S.R. Batliboi & Co. LLP
Chartered Accountants
ICAI Firm Registration No. 301003E/E300005
per Raj Agrawal
Partner
Membership No.: 82028
Place: Gurugram
Date: May 03, 2018
Navin Agarwal
Executive Chairman
DIN 00006303
GR Arun Kumar
Whole-Time Director and
Chief Financial Officer
DIN 01874769
Place: Mumbai
Date: May 03, 2018
Kuldip Kumar Kaura
Interim Chief Executive Officer
PAN AFVPK8712R
Bhumika Sood
Company Secretary
ICSI Membership No. A19326
Integrated Report Management Review Statutory Reports Financial Statements
198
Vedanta Limited Integrated Report and Annual Accounts 2017-18
Notes forming part of the Financial Statements
as at and for the year ended March 31, 2018
1 Company overview :
Vedanta Limited, is a public limited Company domiciled in India and has its registered office at 1st Floor, ’C’ wing, Unit 103, Corporate
Avenue, Atul Projects, Chakala, Andheri (East), Mumbai-400093, Maharashtra. Vedanta’s equity shares are listed on National Stock
Exchange and Bombay Stock Exchange in India and its American Depository Shares (“ADS”) are listed on New York Stock Exchange in
United States of America. Each ADS represents four equity shares. Vedanta is majority-owned by and is a controlled subsidiary of Vedanta
Resources Plc, the London listed diversified natural resource Company.
The Company is principally engaged in the exploration, production and sale of aluminium, iron ore, copper, commercial power and oil and
gas.
The Company’s aluminium business (Jharsuguda aluminium) principally consists of production of 2.0 mtpa alumina at Lanjigarh, Odisha,
production of 0.5 mtpa aluminium at Jharsuguda, Odisha and captive power plants situated at Jharsuguda & Lanjigarh. The Company is
also setting up a 1.25 mtpa aluminium smelter at Jharsuguda, 4.0 mtpa of alumina refinery at Lanjigarh and 210 MW power plant at
Lanjigarh.
The Company’s iron ore business (Iron ore) consists of iron ore exploration, mining, beneficiation and exports. Vedanta has iron ore mining
operations in the States of Goa and Karnataka. Vedanta is also in the business of manufacturing pig iron and metallurgical coke.
The Company’s copper business (Copper India) principally consists of custom smelting and includes a copper smelter, a refinery, a
phosphoric acid plant and power plants at Tuticorin, Tamilnadu and a refinery and two copper rod plants at Silvassa in the Union Territory
of Dadra and Nagar Haveli.
The Company’s power business comprises of 600 MW thermal coal based power facility in the State of Odisha.
The Company’s oil and gas business comprises of surveying, prospecting, drilling, exploring, acquiring, developing, producing,
transporting, marketing, distributing and generally dealing in minerals, oils, petroleum, gas and related by-products and other activities
incidental to the same. As part of its business activities, the Company also holds interests in its subsidiary companies which have been
granted rights to explore and develop oil exploration blocks. The oil and gas business largely operates in the state of Gujarat, Rajasthan and
Andhra Pradesh. (Refer note 4).
These are the Company’s separate financial statements. The details of Company’s material subsidiaries, associates and joint ventures is
given in note 44.
2 Basis of preparation of financial statements :
(a) Basis of preparation
These financial statements have been prepared in accordance with Indian Accounting Standards (Ind AS) notified under the Companies
(Indian Accounting Standards) Rules, 2015 (as amended from time to time).
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.
Accounting policies are consistently applied except where newly issued accounting standard(s) is initially adopted on revision to an existing
accounting standard requiring change in the accounting policy hitherto in use as disclosed below.
These financial statements are approved for issue by the Board of Directors on May 3, 2018.
Certain comparative figures appearing in these financial statements have been regrouped and/or reclassified to better reflect the nature of
those items.
Amounts less than ` 0.50 Crore have been presented as “0”.
(b) Basis of measurement
The financial statements have been prepared on a going concern basis 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:
Application of new and revised standards
The Company has adopted with effect from April 1, 2017, the following new amendment and pronouncements.
• Ind AS 7 Statement of Cash Flows: Narrow-scope amendments: The amendments introduce an additional disclosure that will enable
users of financial statements to evaluate changes in liabilities arising from financing activities. The required disclosure is given in note
19(VI).
• Ind AS 102 Share-based Payment: Few amendments to clarify the classification and measurement of share-based payment
transactions have been issued. This does not have any significant impact on the amounts reported in the financial statements.
• Guidance Note on Oil and Gas Accounting: The Institute of Chartered Accountants of India (‘ICAI’), on December 6, 2016 issued the
revised Guidance Note on accounting for Oil and Gas producing activities (‘Guidance Note’), applicable from April 1, 2017.
Till March 31, 2017, proved and probable reserves (or 2P reserves) on entitlement interest basis were being considered for providing
depletion on oil and gas assets. As per the Guidance Note, proved and developed reserves (or 1P reserves) on working interest basis are to
be considered for computing depletion. The change has been applied prospectively and as a result, depreciation, depletion and
amortization expense for the year is lower by ` 697 Crore and profit after tax is higher by ` 454 Crore.
Vedanta Limited Integrated Report and Annual Accounts 2017-18
199
Notes forming part of the Financial Statements
as at and for the year ended March 31, 2018
3 Significant accounting policies
The Company has applied the following accounting policies to all periods presented in the financial statements.
(a) Revenue recognition
Revenues are measured at the fair value of the consideration received or receivable, net of discounts, volume rebates, outgoing sales
taxes/ goods & service tax and other indirect taxes excluding excise duty.
Excise duty is a liability of the manufacturer which forms part of the cost of production, irrespective of whether the goods are sold or not.
Since the recovery of excise duty flows to Company on its own account, revenue includes excise duty.
• Sale of goods/rendering of services
Revenues from sales of goods are recognised when all significant risks and rewards of ownership of the goods sold are transferred to
the customer which usually is on delivery of the goods to the shipping agent. Revenues from sale of by-products are included in
revenue.
Certain of the Company’s sales contracts provide for provisional pricing based on the price on The London Metal Exchange (“LME”), as
specified in the contract, when shipped. Final settlement of the price is based on the applicable price for a specified future period. The
Company’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 represents the Company’s share of oil, gas and condensate production, recognized on a
direct entitlement basis, when significant risks and rewards of ownership are transferred to the buyers. Direct entitlement basis
represents entitlement to variable physical volumes of hydrocarbons, representing recovery of the costs incurred and a stipulated share
of the production remaining after such cost recovery. The stipulated share of production is arrived after reducing government’s share of
profit petroleum which is accounted for when the obligation (legal or constructive), 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 rate arrived at based on the principles laid down under the relevant Tariff Regulations as notified by the regulatory bodies,
as applicable.
Revenue from rendering of services is recognised on the basis of work performed.
• 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 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 Company 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 statement of profit and loss 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 Company, and the amount of the dividend can be
measured reliably.
(b) Property, plant and equipment
(i) Mining properties and leases
The costs of mining properties and leases , which include the costs of acquiring and developing mining properties and mineral rights, are
capitalised as property, plant and equipment under the heading “Mining property and leases” in the year in which they are incurred.
When a decision is taken that a mining property is viable for commercial production (i.e. when the Company determines that the mining
property will provide sufficient and sustainable return relative to the risks and the Company decided to proceed with the mine
development), all further pre-production primary development expenditure other than land, buildings, plant and equipment is capitalised as
part of the cost of the mining property until the mining property is capable of commercial production.
The stripping cost incurred during the production phase of a surface mine is deferred 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 Company uses the expected volume of waste compared with the actual volume of waste
extracted for a given value of ore production for the purpose of determining the cost of the stripping activity asset.
Deferred stripping cost 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 the circumstance where a property is abandoned, the cumulative capitalized costs relating to the property are written off in the same
period i.e. when the Company 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.
Integrated Report Management Review Statutory Reports Financial Statements
200
Vedanta Limited Integrated Report and Annual Accounts 2017-18
Notes forming part of the Financial Statements
as at and for the year ended March 31, 2018
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.
(ii) Oil and gas assets- (developing/producing assets)
For oil and gas, assets a successful efforts based accounting policy is followed.
All costs incurred after the technical feasibility and commercial viability of producing 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 statement of profit and loss to the extent that the net proceeds exceed or
are less than the appropriate portion of the net capitalised costs of the asset.
(iii) 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.
Land acquired free of cost or at below market rate from the government is recognized at fair value with corresponding credit to deferred
income.
If significant parts of an item of property, plant and equipment have different useful lives, then they are accounted for as separate items
(major components) of property, plant and equipment. Major inspection and overhaul expenditure is capitalized, if the recognition criteria
are met.
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 statement of profit and loss when the asset is derecognised.
(iv) Assets under construction
Assets under construction are capitalized 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 (net of income) associated with the commissioning of an asset and any obligations for decommissioning costs are capitalised until
the period of commissioning has been completed and the asset is ready for its intended use.
(v) Depreciation, depletion and amortisation expense
Mining properties and other assets in the course of development or construction and freehold land are not depreciated.
• 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.
Leasehold land and buildings are depreciated on a straight-line basis over the period of the lease or, if shorter, their useful economic life.
• Oil and gas assets: (Refer note 2(b))
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 depletable 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.
Depletable reserves are proved reserves for acquisition costs and proved and developed reserves for successful exploratory wells,
development wells, processing facilities, distribution assets, estimated future abandonment cost and all other related costs. These
assets are depleted within each cost centre. Reserves for this purpose are considered on working interest basis which are reassessed
atleast annually. Impact of changes to reserves are accounted for prospectively.
Till March 31, 2017 depletable reserves were proven and probable oil and gas reserves. 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 these reserves.
• Other assets:
Depreciation on other 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 based on technical estimates) given as below.
Management’s assessment of independent technical evaluation/advice 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.
Vedanta Limited Integrated Report and Annual Accounts 2017-18
201
Notes forming part of the Financial Statements
as at and for the year ended March 31, 2018
Estimated useful lives of assets are as follows:
Asset
Buildings (Residential, factory etc.)
Plant and equipment
Railway siding
Roads (grouped under buildings)
Office equipment
Furniture and fixture
Vehicles
Ships
Aircraft
River fleet
Useful life
(in years)
3-60
15-40
15
3-10
3-6
8-10
8-10
25
20
28
Major inspection and overhaul costs are depreciated over the estimated life of the economic benefit derived from such costs. The
carrying amount of the remaining previous overhaul cost is charged to the statement of profit and loss if the next overhaul is undertaken
earlier than the previously estimated life of the economic benefit.
The Company reviews the residual value and useful life of an asset at least at each financial year-end and, if expectations differ from
previous estimates, the change(s) is accounted for as a change in accounting estimate.
(c) Intangible assets
Intangible assets acquired separately are measured on initial recognition at cost. Following initial recognition, intangible assets are carried
at cost less accumulated amortization and accumulated impairment losses, if any.
Intangible assets are amortised over their estimated useful life on a straight line basis. Software is amortised over the estimated useful life
of software license of five years. Amounts paid for securing mining rights are amortised over the period of the mining lease of 16-25 years.
The amortization period and the amortization method are reviewed at least at each financial year end. If the expected useful life of the
asset is different from previous estimates, the change is accounted for prospectively as a change in accounting estimate.
(d) Exploration and evaluation intangible 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 (intangible assets) and stated at cost less impairment, if any. Exploration and evaluation assets are transferred to
property, plant and equipment when the technical feasibility and commercial viability has been determined. Exploration intangible assets
under development 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 equipments and facilities and other costs of exploration activities:
• Acquisition costs - costs associated with acquisition of licenses 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, defense clearance, etc.), and salaries and other expenses of geologists, geophysical crews and other personnel
conducting those studies.
• Costs of exploration drilling and equipping exploration and appraisal wells.
Exploration expenditure incurred in the process of determining oil and gas exploration targets is capitalised within “Exploration and
evaluation assets” (intangible 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.
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 center within property, plant and
equipment - development/producing assets 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 statement of profit and
loss
Expenditure incurred on the acquisition of a license interest is initially capitalised on a license-by-license basis. Costs are held,
undepleted, within exploration and evaluation assets until such time as the exploration phase on the license 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 statement of profit and loss.
Integrated Report Management Review Statutory Reports Financial Statements 202
Vedanta Limited Integrated Report and Annual Accounts 2017-18
Notes forming part of the Financial Statements
as at and for the year ended March 31, 2018
(e) 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.
Non-current assets and disposal group’s 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 balance sheet.
(f) Impairment of 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 Company assess at each reporting date, whether there is an indication that an asset may be impaired. The Company 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. External factors, such as 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 then an impairment review is undertaken and 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 be specific to the entity 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 Company’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.
If the recoverable amount of an asset or CGU is estimated to be less than its carrying amount, the carrying amount of the asset or CGU is
reduced to its recoverable amount. An impairment loss is recognised in the statement of profit and loss.
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.
Exploration and evaluation assets:
In assessing whether there is any indication that an exploration and evaluation asset may be impaired, the Company considers, as a
minimum, the following indications:
• the period for which the entity 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 entity 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 underway or planned. To the extent that capitalised
expenditure is no longer expected to be recovered, it is charged to the statement of profit and loss.
(g) 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.
(i) 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. 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 Company commits to purchase or sell the asset.
Vedanta Limited Integrated Report and Annual Accounts 2017-18
203
Notes forming part of the Financial Statements
as at and for the year ended March 31, 2018
For the purpose of subsequent measurement, financial assets are classified in four categories:
• Debt instruments at amortised cost
A ‘debt instrument’ is measured at the 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. 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 the statement of profit and loss. The losses arising from
impairment are recognised in the statement of profit and loss.
• 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 recognized in the other comprehensive income (OCI). However, the interest income, impairment losses & reversals and
foreign exchange gain or loss are recognised in the statement of profit and loss. On derecognition of the asset, cumulative gain or loss
previously recognised in OCI is reclassified from the equity to profit or loss. Interest earned whilst holding FVOCI 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
amortized cost or as FVOCI, is classified as at FVTPL.
In addition, the Company may elect to designate a debt instrument, which otherwise meets amortized 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 Company 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 recognized in the statement of
profit and loss.
• Equity instruments
All equity investments in scope of Ind AS 109 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 Ind AS 103 applies are classified as at FVTPL. For all other
equity instruments, the Company may make an irrevocable election to present in other comprehensive income subsequent changes in
the fair value. The Company makes such election on an instrument-by-instrument basis. The classification is made on initial recognition
and is irrevocable.
If the Company decides to classify an equity instrument as at FVOCI, then all fair value changes on the instrument, excluding dividends,
are recognized in OCI. There is no recycling of the amounts from OCI to the statement of profit or loss, even on sale of investment.
However, the Company 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 statement of profit and loss.
(ii) Financial Assets - derecognition
The Company 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.
(iii) Impairment of financial assets
In accordance with Ind AS 109, the Company applies expected credit loss (ECL) model for measurement and recognition of impairment
loss on the following financial assets:
• 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 Ind AS 18
The Company follows ‘simplified approach’ for recognition of impairment loss allowance on trade receivables.
The application of simplified approach does not require the Company 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 Company 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 entity
reverts to recognising impairment loss allowance based on 12-month ECL.
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Notes forming part of the Financial Statements
as at and for the year ended March 31, 2018
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 Company in accordance with the contract and all the cash
flows that the entity expects to receive (i.e., all cash shortfalls), discounted at the original EIR.
ECL impairment loss allowance (or reversal) recognized during the year is recognized as income/ expense in the statement of profit and
loss. The balance sheet presentation for various financial instruments is described below:
• Financial assets measured at amortised cost: ECL is presented as an allowance, i.e., as an integral part of the measurement of those
assets in the balance sheet. Until the asset meets write-off criteria, the Company 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 Company 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 Company does not have any purchased or originated credit-impaired financial assets, i.e., financial assets which are credit impaired on
purchase/ origination.
(iv) Financial liabilities – Recognition & Subsequent measurement
Financial liabilities are classified, at initial recognition, as financial liabilities at fair value through profit or loss, or as loans, borrowings and
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 Company’s financial liabilities include trade and other payables, loans and borrowings including bank overdrafts, financial guarantees
and derivative financial instruments.
The subsequent 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 repurchasing in the near term. This category also includes derivative financial instruments entered into by the Company that
are not designated as hedging instruments in hedge relationships as defined by Ind AS 109. 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 statement of profit and loss.
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 Ind AS 109 are satisfied. For liabilities designated as FVTPL, fair value gains/ losses attributable to
changes in own credit risk are recognized in OCI. These gains/ loss are not subsequently transferred to the statement of profit and loss.
However, the Company may transfer the cumulative gain or loss within equity. All other changes in fair value of such liability are
recognised in the statement of profit or loss. The Company has not designated any financial liability as at fair value through profit and
loss.
• Financial liabilities at amortised cost (Loans & Borrowings)
After initial recognition, interest-bearing loans and borrowings are subsequently measured at amortised cost using the EIR method.
Gains and losses are recognised in the statement of profit and loss 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 statement of profit and loss.
(v) 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 statement of profit and loss.
(vi) 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.
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Notes forming part of the Financial Statements
as at and for the year ended March 31, 2018
If the hybrid contract contains a host that is a financial asset within the scope of Ind AS 109, the Company does not separate embedded
derivatives. Rather, it applies the classification requirements contained in Ind AS 109 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 the statement of profit and loss,
unless designated as effective hedging instruments.
(vii) Equity instruments
An equity instrument is any contract that evidences a residual interest in the assets of any entity after deducting all of its liabilities. Equity
instruments issued by the Company are recognised at the proceeds received, net of direct issue costs.
(viii) Offsetting of financial instruments
Financial assets and financial liabilities are offset and the net amount is reported in the balance sheet 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.
(ix) 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 Company enters into forward, option,
swap contracts and other derivative financial instruments. The Company 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 the statement of profit and loss, except for the
effective portion of cash flow hedges, which is recognised in OCI and later reclassified to the statement of profit and loss 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 Company formally designates and documents the hedge relationship to which the Company
wishes to apply hedge accounting. The documentation includes the Company’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
entity 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 the statement of profit and
loss 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 profit or
loss. Hedge accounting is discontinued when the Company 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 statement of profit and loss.
Amounts recognised as OCI are transferred to profit or loss 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 as OCI are transferred to the initial 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.
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Notes forming part of the Financial Statements
as at and for the year ended March 31, 2018
(h) Financial guarantees
Financial guarantees issued by the Company on behalf of group companies are designated as ‘Insurance Contracts’. The Company
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 the statement of profit and loss.
(i) Leases
Determining whether an arrangement contains lease
At inception of an arrangement, the Company determines whether the arrangement is or contains a lease. The arrangement is, or contains,
a lease if fulfilment of the arrangement is dependent on the use of a specific asset or assets and the arrangement conveys a right to use the
asset or assets, even if that right is not explicitly specified in an arrangement.
At inception or on reassessment of an arrangement that contains lease, the Company separates payments and other consideration
required by the arrangement into those for the lease and those for other elements on the basis of their relative fair values. If the Company
concludes for a finance lease that it is impracticable to separate the payments reliably, then an asset and a liability are recognised at an
amount equal to the fair value of the underlying asset; subsequently the liability is reduced as payments are made and an imputed finance
cost on the liability is recognised using the Company’s incremental borrowing rate.
Company as a lessee
A lease is classified at the inception date as a finance lease or an operating lease. A lease that transfers substantially all the risks and
rewards incidental to ownership to the Company is classified as a finance lease.
Finance leases are capitalised at the commencement of the lease at the inception date fair value of the leased property or, if lower, at the
present value of the minimum lease payments. Lease payments are apportioned between finance charges and reduction of the lease
liability so as to achieve a constant rate of interest on the remaining balance of the liability. Finance charges are recognised in finance costs
in the statement of profit and loss, unless they are directly attributable to qualifying assets, in which case they are capitalized in accordance
with the Company’s general policy on the borrowing costs. Contingent rentals are recognised as expenses in the periods in which they are
incurred.
A leased asset is depreciated over the useful life of the asset. However, if there is no reasonable certainty that the Company will obtain
ownership by the end of the lease term, the asset is depreciated over the shorter of the estimated useful life of the asset and the lease term
Operating lease payments are recognised as an expense in the statement of profit and loss on a straight-line basis over the lease term
unless the payments are structured to increase in line with general inflation to compensate for the lessor’s expected inflationary cost
increase.
Company as a lessor
Leases in which the Company 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 unless the payments are
structured to increase in line with the general inflation to compensate for the lessor’s expected inflationary cost increase. 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 is transferred from the Company to the
lessee. Amounts due from lessees under finance leases are recorded as receivables at the Company’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.
(j) Inventories
Inventories including 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 a weighted average basis except in Oil and Gas business where stores and spares are valued on FIFO basis;
• finished products are valued at raw material cost plus costs of conversion, comprising labor costs and an attributable proportion of
manufacturing overheads based on normal levels of activity and are moved out of inventory on a FIFO basis, however, cost of finished
goods of oil and condesate is determined on a quarterly weighted average basis; 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 to completion and disposal.
(k) Government Grant
Grants and subsidies from the government are recognised when there is reasonable assurance that (i) the Company 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 statement of profit and loss over the
periods necessary to match them with the related costs, which they are intended to compensate.
Where the grant relates to an asset, it is recognised as deferred income and released to income in equal amounts over the expected useful
life of the related asset and presented within other income.
When the Company receives grants of non-monetary assets, the asset and the grant are recorded at fair value amounts and released to
profit or loss over the expected useful life in a pattern of consumption of the benefit of the underlying asset.
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Notes forming part of the Financial Statements
as at and for the year ended March 31, 2018
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 favorable 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 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.
(l) 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 exceptions below, deferred tax is provided, using the balance sheet method, on all deductible temporary differences at the
reporting date between the tax bases of assets and liabilities and their carrying amounts for financial reporting purposes, on carry forward
of unused tax credits and unused tax loss;
• deferred income tax is not recognised 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 or 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 realized 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 recognized outside profit or loss is recognised outside the statement of profit and loss (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 liabilities are offset when they relate to income taxes levied by the same taxation authority and the Company
intends to settle its current tax assets and liabilities on a net basis.
(m) Retirement benefits schemes
The Company 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 separately for each plan using the projected unit credit method by third party qualified actuaries.
Remeasurements including, effects of asset ceiling and return on plan asets (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 statement of profit and loss.
Past service costs are recognised in profit or loss on the earlier of:
- the date of the plan amendment or curtailment, and
- the date that the Company 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 cost is recognised within cost of sales, administrative expenses and
distribution expenses. Net interest expense or income is recognized with finance costs.
For defined contribution schemes, the amount charged to the statement of profit and loss 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.
(n) Share-based payments
Certain employees (including executive directors) of the Company 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 award 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 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. Amounts recharged to subsidiaries in respect of awards granted to employees of subsidiaries are
recognised as inter-company debtors until repaid.
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.
Additionally, VRPLC offers certain share based incentives under the Long-Term Incentive Plan (“LTIP”) to employees and directors of the
Company. VRPLC recovers the proportionate cost (calculated based on the grant date fair value of the options granted) from the Company,
which is charged to the statement of profit and loss.
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Notes forming part of the Financial Statements
as at and for the year ended March 31, 2018
(o) Provisions, contingent liabilities and contingent assets
Provisions represent liabilities for which the amount or timing is uncertain. Provisions are recognized when the Company 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 recognized in the statement of profit and loss 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 the Company 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 Company does not recognize a
contingent liability but discloses its existence in the financial statements.
Contingent assets are not recognised but disclosed in the financial statements when an inflow of economic benefits is probable.
(p) 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 statement of profit and loss 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 finance cost
in the statement of profit and loss.
Costs for the restoration of subsequent site damage, which is caused on an ongoing basis during production, are charged to the statement
of profit and loss as extraction progresses. Where the costs of site restoration are not anticipated to be material, they are expensed as
incurred.
(q) Accounting for foreign currency transactions
The functional currency of the Company is determined as the currency of the primary economic environment in which it operates. For all
principal businesses of the company, the functional currency is Indian rupee (`) with an exception of oil and gas business which has a US
dollar functional currency as that is the currency of the primary economic environment in which it operates. The financial statements are
presented in Indian rupee (`). All financial information presented in Indian Rupees has been rounded to the nearest Crore.
All exchange differences are included in the statement of profit and loss except those on monetary item designated as an effective hedging
instrument of the currency risk of designated forecasted sales or purchases, which are recognized in the other comprehensive income.
The exchange differences on foreign currency borrowings relating to asset under construction, and for future productive use, are included
in the cost of those assets when they are regarded as an adjustment to interest costs on those foreign currency borrowings.
The statement of profit and loss of oil and gas business is translated into Indian Rupees (INR) at the average rates of exchange during the
year / exchange rates prevailing as on the date of the transaction. The Balance Sheet is translated at the exchange rate as at the reporting
date. Exchange difference arising on translation is recognised in other comprehensive income and would be recycled to the statement of
profit and loss as and when these operations are disposed off.
The Company had applied paragraph 46A of AS 11 under Indian GAAP. Ind AS 101 gives an option, which has been exercised by the
Company, whereby a first time adopter can continue its Indian GAAP policy for accounting for exchange differences arising from
translation of long-term foreign currency monetary items recognised in the Indian GAAP financial statements for the period ending
immediately before the beginning of the first Ind AS financial reporting period. Hence, foreign exchange gain/loss on long-term foreign
currency monetary items recognized upto March 31, 2016 has been deferred/capitalized. Such exchange differences arising on translation/
settlement of long-term foreign currency monetary items and pertaining to the acquisition of a depreciable asset are amortised over the
remaining useful lives of the assets.
From accounting periods commencing on or after April 01, 2016, exchange differences arising on translation/ settlement of long-term
foreign currency monetary items, acquired post April 01, 2016, pertaining to the acquisition of a depreciable asset are charged to the
statement of profit and loss.
(r) Earnings per share
The Company presents basic and diluted earnings per share (“EPS”) data for its equity shares. Basic EPS is calculated by dividing the profit
or loss attributable to equity shareholders of the Company by the weighted average number of equity shares outstanding during the year.
Diluted EPS is determined by adjusting the profit or loss attributable to equity shareholders and the weighted average number of equity
shares outstanding for the effects of all dilutive potential equity shares.
(s) Buyers’ Credit
The Company enters into arrangements whereby financial institutions make direct payments to suppliers for raw materials and project
materials. The financial institutions are subsequently repaid by the Company 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 materials). Where these arrangements are for
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Notes forming part of the Financial Statements
as at and for the year ended March 31, 2018
raw materials 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 (under Trade and other payables). Where these arrangements are for project
materials with a maturity up to thirty six months, the economic substance of the transaction is determined to be financing in nature, and
these are classified as projects buyers’ credit within borrowings in the balance sheet.
(t) Current and non-current classification
The Company presents assets and liabilities in the balance sheet 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 Company’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 Company’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 Company 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.
(u) 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. 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 project, the income generated from such short-term investments is deducted from the total capitalized borrowing cost. 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 Company during the year.
All other borrowing costs are recognised in the statement of profit and loss in the year in which they are incurred.
Capitalisation of interest on borrowings related to construction or development projects is ceased when substantially all activities that are
necessary to make the assest ready for their intended use are complete or when delay occurs 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 calculating the effective interest rate, the Company
estimates the expected cash flows by considering all the contractual terms of the financial instrument (for example, prepayment, extension,
call and similar options).
(v) Cash and cash equivalents
Cash and cash equivalents comprise cash at bank and on 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 statement of cash flows, cash and cash equivalents consist of cash and short-term deposits, as defined above, and
additionally includes unpaid dividend account.
(w) Equity investment in subsidiaries, associates and joint ventures
Investments representing equity interest in subsidiaries, associates and joint ventures are carried at cost. A subsidiary is an entity that is
controlled by the Company. Control is evidenced where the Company has the power over the investee or 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 returns. An
associate is an entity over which the Company is in a position to exercise significant influence over operating and financial policies.
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.
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Vedanta Limited Integrated Report and Annual Accounts 2017-18
Notes forming part of the Financial Statements
as at and for the year ended March 31, 2018
Joint Operations
The Company has joint operations within its Oil and gas segment and participates in several unincorporated joint operations which involve
the joint control of assets used in oil and gas exploration and producing activities. The Company accounts for its share of assets and
income and expenditure of joint Operations in which it holds an interest. Liabilities in unincorporated joint ventures, where the Company 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 financial statements under the appropriate headings. (Details of joint operations are set out in
note 44).
(x) 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 specifically covered by Ind AS 103. Such transactions are
accounted for using the pooling-of-interest method. The assets and liabilities of the acquired entity are recognised at their carrying
amounts recorded in the parent entity’s consolidated financial statements with the exception of certain income tax and deferred tax assets.
No adjustments are made to reflect fair values, or recognise any new assets or liabilities. The only adjustments that are made are to
harmonise accounting policies. The components of equity of the acquired companies are added to the same components within the
Company’s equity. The difference, if any, between the amounts recorded as share capital issued plus any additional consideration in the
form of cash or other assets and the amount of share capital of the transferor is transferred to capital reserve. The Company’s shares issued
in consideration for the acquired companies are recognized from the moment the acquired companies are included in these financial
statements and the financial statements of the commonly controlled entities are combined, retrospectively, as if the transaction had
occurred at the beginning of the earliest reporting period presented. However, the prior year comparative information is only adjusted for
periods during which entities were under common control.
(y) Significant accounting estimates and judgements
The preparation of the financial statements in conformity with Ind AS 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 financial statements and the reported amounts of revenues and expenses
for the years presented. Actual results may differ from these estimates under different assumptions and conditions.
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.
In particular, information about significant areas of estimation uncertainty and critical judgments in applying accounting policies that have
the most significant effect on the amounts recognized in the financial statements are as given below:
1 Significant Estimates
(i) Oil & Gas reserves
Significant technical and commercial judgements are required to determine the Company’s estimated oil and natural gas reserves.
Reserves considered for computing depletion are proved reserves for acquisition costs and proved and developed reserves for successful
exploratory wells, development wells, processing facilities, distribution assets, estimated future abandonment cost and all other related
costs. Reserves for this purpose are considered on working interest basis which are reassessed atleast annually. Details of such reserves
are given in note 43.
Changes in reserves as a result of change in management assumptions could impact the depreciation rates and the carrying value of
assets.
(ii) Carrying value of exploration and evaluation assets
The recoverability of a project is assessed under Ind AS 106. 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 exists. Change to the valuation of exploration assets is an area of
judgement. Further details on the Company’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 statement of profit and
loss 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 impairment charge/reversal impact and the assumptions used are disclosed in note 34 and carrying values of exploration and
evaluation assets in note 5.
(iii) Carrying value of developing/producing oil and gas assets
Management performs impairment tests on the Company’s developing/producing oil and gas assets where indicators of impairment are
identified in accordance with Ind AS 36.
Vedanta Limited Integrated Report and Annual Accounts 2017-18
211
Notes forming part of the Financial Statements
as at and for the year ended March 31, 2018
The impairment assessments are based on a range of estimates and assumptions, including:
Estimates/assumptions
Basis
Future production
proved and probable reserves, resource estimates and, in certain cases, expansion projects
Commodity prices
management’s best estimate benchmarked with external sources of information, to ensure they are within the
range of available analyst forecast
Discount to price
management’s best estimate based on historical prevailing discount
Extension of PSC
assumed that PSC for Rajasthan block would be extended till 2030 on the expected commercial terms as per
the announced government policy
Discount rates
cost of capital risk-adjusted for the risk specific to the asset/ CGU
Any subsequent changes to cash flows due to changes in the above mentioned factors could impact the carrying value of the assets.
Details of carrying values and impairment charge/reversal and the assumptions and sensitivities used are disclosed in note 5 and 34
respectively.
(iv) 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
Basis
Future production
Commodity prices
Exchange rates
Discount rates
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
management best estimate benchmarked with external sources of information
cost of capital risk-adjusted for the risk specific to the asset/ CGU
Details of carrying values and impairment charge/reversal and the assumptions used are disclosed in note 5 and 34.
(v) Assessment of impairment at Lanjigarh Refinery
During financial year 2015-16, the Company has received the necessary approvals for expansion of the Lanjigarh refinery to 4 million
tonnes per annum (MTPA). Accordingly, second stream operations were commenced in Alumina refinery from April 2016 and the refinery
was debottlenecked to nameplate capacity of 2 MTPA in this year. We continue to explore the feasibility of expanding our alumina refinery
capacity, from 2 to 4 million and then up to 6 million tonnes per annum, subject to bauxite availability and regulatory approvals.
The State of Odisha has abundant bauxite resources and given the initiatives by the Government of Odisha, management is confident that
bauxite will be made available in the short to medium term. The Company has entered into agreements with various suppliers
internationally and domestically to ensure the availability of bauxite to run its refinery.
Recoverability value assessment during the previous year ended March 31, 2017 including sensitivity analysis on the key assumptions
indicated recoverable value exceeds the carrying value. No negative developments have occurred since the previous year and accordingly,
it is not expected that the carrying amount would exceed the recoverable amount and hence the recoverable value for the year ended
March 31, 2018 was not re-determined.
The carrying amounts of property plant and equipment related to alumina refinery operations at Lanjigarh and related mining assets as at
March 31, 2018 is ` 8,326 Crore and March 31, 2017 is ` 8,690 Crore.
(vi) Assessment of Impairment of Goa iron ore mines:
Pursuant to an order passed by the Hon’ble Supreme Court of India on February 07, 2018, the second renewal of the mining leases granted
by the State of Goa in 2014-15 to all miners including Vedanta were cancelled. Consequentially all mining operations stopped with effect
from March 16, 2018 until fresh mining leases (not fresh renewals or other renewals) and fresh environmental clearances are granted in
accordance with the provisions of The Mines and Minerals (Development and Regulation) (MMDR) Act. Significant uncertainty exists over
the resumption of mining at Goa under the current leases. The Company has assessed the recoverable value of all its assets and liabilities
associated with existing mining leases which led to a non-cash impairment charge during the year.
Details of impairment charge and method of estimating recoverable value are disclosed in note 34.
(vii) Restoration, rehabilitation and environmental costs:
Provision is made for costs associated with restoration and rehabilitation of mining sites as soon as the obligation to incur such costs arises.
Such restoration and closure costs are typical of extractive industries and they are normally incurred at the end of the life of the mine or oil
fields. The costs are estimated on the basis of mine closure plans and the estimated discounted costs of dismantling and removing these
facilities and the costs of restoration are capitalised as soon as the obligation to incur such costs arises.
Integrated Report Management Review Statutory Reports Financial Statements
212
Vedanta Limited Integrated Report and Annual Accounts 2017-18
Notes forming part of the Financial Statements
as at and for the year ended March 31, 2018
The provision for decommissioning oil and gas assets is based on the current estimates of the costs for removing and decommissioning
production facilities, the forecast timing of settlement of decommissioning liabilities and the appropriate discount rate.
A corresponding provision is created on the liability side. The capitalised asset is charged to the statement of profit and loss over the life of
the asset through depreciation over the life of the operation and the provision is increased each period via unwinding the discount on the
provision. Management estimates are based on local legislation and/or other agreements. The actual costs and cash outflows may differ
from estimates because of changes in laws and regulations, changes in prices, analysis of site conditions and changes in restoration
technology. Details of such provisions are set out in note 21 and 27.
(viii) Provisions and liabilities
Provisions and liabilities are recognised in the period when it becomes probable that there will be a future outflow of funds resulting from
past operations or events that can be reasonably estimated. The timing of recognition requires the application of judgement to existing
facts and circumstances which may be subject to change especially when taken in the context of the legal environment in India. The actual
cash outflows may take place over many years in the future and hence the carrying amounts of provisions and liabilities are regularly
reviewed and adjusted to take into account the changing circumstances and other factors that influence the provisions and liabilities. This is
set out in note 21 and 27.
(ix) The HZL and BALCO call options
The Company had exercised its call option to acquire the remaining 49% interest in BALCO and 29.5% interest in HZL. The Government of
India has however, contested the validity of the options and disputed their valuation performed in terms of the relevant agreements the
details of which are set out in note 6. 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 fair value. Accordingly, the value of the option would be nil, and
hence, the call options have not been recognized in the financial statements.
(x) Recoverability of deferred tax and other income tax assets
The Company 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 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 statement of profit and loss.
Additionally, the Company has tax receivables on account of refund arising on account of past amalgamation and relating to various tax
disputes. The recoverability of these receivables involve 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.
The details of MAT assets (recognized and unrecognized) are set out in note 35.
(xi) Operations of Copper Business
The renewal of consent to operate (CTO) under the Air and Water Acts for copper smelter in India was rejected by the State Pollution
Control Board on April 09, 2018 for want of further clarifications and consequently, the operations have presently been suspended. The
company has filed an appeal in the Tribunal. Even though there can be no assurance regarding the final outcome of the process, as per the
company’s assessment, it is in compliance with the applicable regulations and expects the renewal of CTO in next few months.
The carrying value of assets as at March 31, 2018 is ` 2,131 Crore.
2 Significant Judgement
a) Revenue recognition and receivable recovery in relation to the power business
In certain cases, the Company’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 Ind AS 18 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 Company has obtained in relation to
such claims. In addition the fact that the contracts are with government owned companies implies the credit risk is low (Refer note 11 (iv))
b) Contingencies
In the normal course of business, contingent liabilities may arise from litigation, taxation and other claims against the Company. A tax
provision is recognised when the Company has a present obligation as a result of a past event, it is probable that the Company 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.
Vedanta Limited Integrated Report and Annual Accounts 2017-18
213
Notes forming part of the Financial Statements
as at and for the year ended March 31, 2018
Although there can be no assurance regarding the final outcome of the legal proceedings, the Company does not expect them to have a
materially adverse impact on the Company’s financial position or profitability. The liabilities which are assessed as possible and hence are
not recognised in these financial statements are disclosed in note 49.
c) Exceptional items:
Exceptional 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. Also tax charges
related to exceptional items and certain one-time tax effects are considered Exceptional. Such items are material by nature or amount to
the year’s result and require separate disclosure in accordance with Ind AS.
The determination as to which items should be disclosed separately requires a degree of judgement. These are set out in note 34.
(z) Recently issued accounting pronouncements
The following standards/amendment to standards have been issued but are not yet effective up to the date of issuance of the Company’s
financial statements. Except specifically disclosed below, the Company is evaluating the requirements of these standards, improvements
and amendments and has not yet determined the impact on the financial statements.
• Ind AS 115: Revenue from Contracts with Customers
This standard outlines a single comprehensive model for entities to use in accounting for revenue arising from contracts with customers.
The standard replaces most of the current revenue recognition guidance. The core principle of the new standard is for companies to
recognize revenue to depict the transfer of goods or services to customers in amounts that reflect the consideration to which the
company expects to be entitled in exchange for those goods or services. The new standard also will result in enhanced disclosures
about revenue, provide guidance for transactions that were not previously addressed comprehensively including service revenues and
contract modifications and improve guidance for multiple element arrangements. The new Standard comes into effect for the annual
reporting periods beginning on or after April 1, 2018.
In order to identify the potential impact of the standard on the Company’s financial statements, the Company has analyzed contracts of
the relevant revenue streams of the Company. The work done is focused on evaluating the contractual arrangements across the
Company’s principal revenue streams, particularly key terms and conditions which may impact revenue recognition and measurement
of revenue.
Based on the work carried out, the area’s of impact in implementing Ind AS 115, on the Company results is detailed below.
The Company has products which are provisionally priced at the date revenue is recognised. Revenue in respect of such contracts will
be recognised when control passes to the customer and will be 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 will be accounted in accordance with Ind AS 109 “Financial Instruments” rather than Ind AS 115 and therefore the
Ind AS 115 rules on variable consideration do not apply. These ‘provisional pricing’ adjustments i.e. the consideration received post
transfer of control will continue to be included in the revenue on the face of the statement of profit and loss, and these would be
disclosed by way of note to the financial statements.
On the basis of the analysis conducted, the new standard would result in identification of freight and insurance services as a separate
performance obligation implying segregation of revenue on account of sale of goods and sale of services. The revenue on account of
these services is required to be deferred and recognised over time as this obligation is fulfilled.
The overall effect of implementation of Ind AS 115 is not material on the recognition and measurement of revenues, though there would
be significant additional disclosure requirements for the Company to comply with.
The Company will adopt the modified transitional approach to implementation where any transitional adjustment is recognised in
retained earnings at April 01, 2018 without adjustment of comparatives and the new standard will only be applied to contracts that
remain in force at that date.
• Other recently issued accounting pronouncements and not effective for the year ended March 31, 2018:
Standards not yet effective for the financial statements for the year ended March 31, 2018
Amendments to Ind AS 12: Recognition of Deferred Tax Assets for Unrealised Losses
Amendment to Ind AS 21: Foreign Currency Transactions and Advance Consideration
Amendment to Ind AS 40: Investment Property
Amendment to Ind AS 28: Investments in Associates and Joint Ventures
Amendment to Ind AS 112: Disclosure of Interests in Other Entities
Effective for annual periods
beginning on or after
April 01, 2018
April 01, 2018
April 01, 2018
April 01, 2018
April 01, 2018
Integrated Report Management Review Statutory Reports Financial Statements
214
Vedanta Limited Integrated Report and Annual Accounts 2017-18
Notes forming part of the Financial Statements
as at and for the year ended March 31, 2018
4 Merger of Cairn India Limited with Vedanta Limited
(i) Vedanta Limited and Cairn India Limited (Cairn), had initially announced a scheme of merger between the two companies on June 14,
2015, terms whereof were amended on July 22, 2016 (“Scheme”). As per the terms of the Scheme, Cairn India Limited was to merge
into Vedanta Limited and upon the merger becoming effective:
a) Non-controlling shareholders of Cairn India Limited were to receive one equity share in Vedanta Limited of face value ` 1 each and
four 7.5% Redeemable Preference Shares (redeemable after 18 months from issuance) in Vedanta Limited with a face value of ` 10
each for each equity share held in Cairn India Limited.
b) No shares were to be issued to Vedanta Limited or any of its subsidiaries for their shareholding in Cairn India Limited.
c) The employees of Cairn India Limited who were holding stock options in Cairn India Limited were to be compensated either in cash
or through issuance of stock options of Vedanta Limited.
d) The authorised share capital of Cairn India Limited aggregating to ` 2,250 Crore was to be assumed by the Company, resulting in an
increase in its authorised share capital from ` 5,162 Crore (divided into 5,127 Crore equity shares of ` 1 each and 3.50 Crore
preference shares of ` 10 each) to ` 7,412 Crore (divided into 4,402 Crore equity shares of ` 1 each and 301 Crore preference shares
of ` 10 each).
All substantive approvals for effecting the merger of Cairn India Limited with Vedanta Limited were received by March 27, 2017 and
therefore the same was accounted for in the previous financial year ended March 31, 2017. The Board of Directors of both the
companies made the merger operative on April 11, 2017, whereafter Cairn India Limited ceased to exist.
(ii) Since the amalgamating entity, Cairn India Limited, was a subsidiary of the Company and both have in turn been controlled by a
common parent Vedanta Resources Plc, the transaction has been accounted for in accordance with the Appendix C to Ind AS 103
“Common Control Business Combination”, which requires retroactive accounting of the merger from the date common control was
established. Accordingly, financial information as on April 1, 2015, being the earliest period presented in the annual standalone financial
statements of the Company, and all periods thereafter, were restated to give effect of the merger.
(iii) The accounting effects arising out of merger are explained below:
a) Equity shares aggregating to ` 75 Crore required to be issued to the non-controlling shareholders of Cairn, has been accounted for
as an item of equity on April 1, 2015, as equity shares proposed to be issued.
b) Upon the merger being substantively completed in March 2017, the liability towards issuance of preference shares of
` 3,010 Crore has been accounted for as a financial liability.
c) The carrying value of the assets, liabilities and reserves of Cairn India Limited as appearing in the consolidated financial statements of
the Company have been recognised in the standalone financial statements of the Company. The said values relating to Cairn India
Limited in the consolidated financial statements of the Company prior to the merger, were computed by restating past business
combinations as permitted by Ind AS 101.
d) Sesa Resources Limited (‘SRL’), a wholly owned subsidiary of the Company, held investments in Cairn having a fair value of ` 956
Crore, which have been cancelled without any consideration. Accordingly, the said fair value, has been reduced from the carrying
value of investments in SRL with a corresponding reduction in the value of Reserves and Surplus. As per the provisions of the
Scheme necessary adjustment in the Reserves and Surplus has been carried through the Securities premium account.
e) Twin Star Mauritius Holdings Limited (‘TMHL’), an indirect wholly owned subsidiary, also held investments in Cairn and had
corresponding liabilities which it had incurred to fund the purchase of investments in Cairn. As per the terms of the Scheme, the
investments held by TMHL have been cancelled and accordingly, its liabilities have been reflected in the financial statements of the
Company.
The net effects of ` 28,906 Crore arising out of the above adjustments have been recognised as a capital reserve on December 8,
2011, being the date of initial common control.
(iv) All changes to the liabilities arising on account of interest and exchange differences post December 8, 2011, of ` 11,311 Crore, have been
recognised directly in retained earnings as of April 1, 2015 and net charge of ` 623 Crore in the statement of profit and loss as an
“Exceptional item” for the financial year ended March 31, 2017.
(v) All the direct subsidiaries of Cairn India Limited, viz., Cairn India Holdings Limited (‘CIHL’) and CIG Mauritius Holding Private Limited
have become the direct subsidiaries of the Company.
(vi) Further, some of the wholly owned subsidiaries of the Company had advanced monies to TMHL, either directly or through some other
wholly owned subsidiaries. Pursuant to the merger being effective, the amounts recoverable from TMHL have been impaired by the said
subsidiaries as TMHL’s investments in Cairn has been cancelled. This has had the effect of discharging the obligation reflected in the
financial statements of the Company (refer ‘(iii)e’ above) with a corresponding reduction in the value of the Company’s investments in its
direct subsidiaries. The net excess of liability being discharged over the carrying value of such investments of ` 1,993 Crore has been
recognised as an exceptional gain in the statement of profit and loss during the previous year. During the current year, CIHL discharged
the balance obligation ` 6,762 Crore which resulted in a further reduction in the carrying value of the said subsidiary by an equivalent
amount.
Vedanta Limited Integrated Report and Annual Accounts 2017-18
215
Notes forming part of the Financial Statements
as at and for the year ended March 31, 2018
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Integrated Report Management Review Statutory Reports Financial Statements
216
Vedanta Limited Integrated Report and Annual Accounts 2017-18
Notes forming part of the Financial Statements
as at and for the year ended March 31, 2018
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Vedanta Limited Integrated Report and Annual Accounts 2017-18
217
Notes forming part of the Financial Statements
as at and for the year ended March 31, 2018
5 Property, plant and equipment, Intangible assets, Capital work-in-progress and Exploration intangible assets under development
continued
iii) Capital work-in progress
Particulars
Gross Block
Opening balance
Additions during the year*
Amount capitalised during the year
Foreign exchange translation difference
Closing Balance
Accumulated Impairment / Provision
Opening balance
Provision for loss on unusable items (Refer note 34)
Impairment charge during the year (Refer note 34)
Closing balance
Net closing balance
* Additions includes expenditure capitalised during the year.
iv) Explorations intangible assets under development
Particulars
Gross Block
Opening balance
Additions for the year
Deductions / Adjustments
Transferred to capital work in progress
Exploration costs written off (Refer note 32)
Foreign exchange translation difference
Closing balance
Accumulated Impairment
Opening balance
Impairment reversal (Refer note 34)
Foreign exchange translation difference
Closing balance
Net closing balance
As at
March 31,
2018
(` in Crore)
As at
March 31,
2017
12,755
1,197
(2,710)
(52)
16,749
1,062
(4,936)
(120)
11,190
12,755
540
251
13
804
339
-
201
540
10,386
12,215
As at
March 31,
2018
(` in Crore)
As at
March 31,
2017
29,251
68
(32)
(100)
-
91
29,893
88
-
(25)
(29)
(676)
29,278
29,251
24,223
(2,977)
49
25,144
(366)
(555)
21,295
24,223
7,983
5,028
a) Additions includes deferred stripping cost of ` Nil Crore (March 31, 2017 ` 4 Crore).
b) Certain property, plant and equipment are pledged as collateral against borrowings, the details related to which have been described in
Note 19 on “Borrowings”.
c) In accordance with the exemption given under Ind AS 101, which has been exercised by the Company, a first time adopter can continue
its previous GAAP policy for accounting for exchange differences arising from translation of long-term foreign currency monetary items
recognised in the previous GAAP financial statements for the period ending immediately before the beginning of the first Ind AS
financial reporting period i.e. April 01, 2016.
Accordingly, foreign currency exchange differences arising on translation/settlement of long-term foreign currency monetary items
acquired before April 01, 2016 pertaining to the acquisition of a depreciable asset amounting to ` 1 crore gain (March 31, 2017 ` 4 crore
loss) is adjusted to the cost of respective item of property, plant and equipment.
Capital work-in-progress includes foreign currency exchange loss of ` 17 crore incurred during the year (March 31, 2017
` 27 crore gain) on such long term foreign currency monetary liabilities.
d) Gross block of property, plant and equipment includes ` 32,694 Crore (March 31, 2017 ` 31,967 Crore) representing Company’s share
of assets co-owned with the joint venture partners. Accumulated depreciation, depletion and impairment on these assets is ` 30,487
Crore (March 31, 2017 ` 29,790 Crore) and net book value is ` 2,207 Crore (March 31, 2017 ` 2,177 Crore).
Capital work-in-progress includes ` 994 Crore (March 31, 2017 ` 1,001 Crore) jointly owned with the joint venture partners.
Exploration intangible assets under development includes ` 7,950 Crore (March 31, 2017 ` 5,028 Crore) jointly owned with the joint
venture partners.
Integrated Report Management Review Statutory Reports Financial Statements 218
Vedanta Limited Integrated Report and Annual Accounts 2017-18
Notes forming part of the Financial Statements
as at and for the year ended March 31, 2018
5 Property, plant and equipment, Intangible assets, Capital work-in-progress and Exploration intangible assets under
development continued
e) Reconciliation of depreciation, depletion and amortisation expense
Particulars
Depreciation/Depletion/Amortisation expense on:
Property, Plant and equipment
Intangible assets
As per Property, plant & Equipment Schedule
Less: cost allocated to joint ventures
As per Statement of Profit and Loss
For the
year ended
March 31,
2018
(` in crore)
For the
year ended
March 31,
2017
2,839
30
2,869
(27)
2,842
2,986
25
3,011
(25)
2,986
f) Freehold Land includes gross block of ` 119 Crore (March 31, 2017 ` 111 Crore), accumulated amortisation of ` 95 Crore (March 31, 2017
` 82 Crore), which is available for use during the lifetime of the Production Sharing Contract of the respective Oil and Gas blocks.
6 Financial Assets- Non Current : Investments
Particulars
(a)
Investment in equity shares - at cost
Subsidiary companies
Quoted
- Hindustan Zinc Limited, of ` 2/-eacha
Unquoted
- Bharat Aluminium Company Limited, of
` 10/- eachb
As at March 31, 2018
As at March 31, 2017
No.
Amount
(` in Crore)
No.
Amount
(` in Crore)
2,74,31,54,310
44,398
2,74,31,54,310
44,398
11,25,18,495
553
11,25,18,495
553
- Monte Cello Corporation BV, Netherlands, of
40
204
40
204
Euro 453.78 each
Less: Reduction pursuant to merger (Refer note 4)
(204)
- Sterlite (USA) Inc., of $.01 per share (` 42.77 at
100
0
0
(204)
100
0
0
each year end)
- Cairn India Holdings Limited (CIHL) of 1 GBP
each, fully paid up (Refer note 4)
Less: Reduction pursuant to merger (Refer note 4)
42,08,00,000
28,873
42,08,00,000
28,873
(15,067)
13,806
(8,305)
20,568
- Vizag General Cargo Berth Private Limited, of
3,21,08,000
32
3,21,08,000
` 10 each
- Paradip Multi Cargo Berth Private Limited, of
10,000
` 10 each
- Sterlite Ports Limited of ` 2 each, (including 6
shares of ` 2 each held jointly with nominees)
- Talwandi Sabo Power Limited, of ` 10 each
- Sesa Resources Limited, of ` 10 each (Refer note 4)
- Bloom Fountain Limited, of US$ 1 eachc
Less: Reduction pursuant to merger (Refer note 4)
2,50,000
3,20,66,09,692
12,50,000
2,20,10,00,001
0
0
10,000
2,50,000
3,207 3,20,66,09,692
12,50,000
2,20,10,00,001
757
414
14,734
(14,320)
14,734
(14,320)
- Malco Energy Limited (formerly Vedanta
Aluminium Limited), of ` 2 each (including 6
shares of ` 2 each held jointly with nominees)
Less: Reduction pursuant to merger (Refer note 4)
- THL Zinc Ventures Limited of US$ 100 each
Less: Reduction pursuant to merger (Refer note 4)
- THL Zinc Holdings B.V. of EURO 1 each
Less: Reduction pursuant to merger (Refer note 4)
Associate companies - unquoted
- Gaurav Overseas Private Limited, of ` 10 eachd
Joint venture - unquoted
- Rampia Coal Mines and Energy Private Limited,
of ` 1 each
Investment in equity shares at fair value
through other comprehensive income
Quoted
- Sterlite Technologies Limited, of ` 2 each
Unquoted
- Sterlite Power Transmission Limited, of ` 2 each
- Goa Shipyard Limited of ` 10 each
2,33,66,406
116
2,33,66,406
116
1,00,001
37,38,000
3,23,000
2,43,48,016
(23)
46
(46)
23
(23)
(23)
46
(46)
23
(23)
93
0
0
0
2
1,00,001
37,38,000
2,10,000
2,43,48,016
47,64,295
149
47,64,295
9,52,859
2,50,828
11
0
9,52,859
62,707
32
0
0
3,207
757
414
93
0
0
0
2
60
10
0
Vedanta Limited Integrated Report and Annual Accounts 2017-18
219
Notes forming part of the Financial Statements
as at and for the year ended March 31, 2018
6 Financial Assets- Non Current : Investments continued
(b)
Particulars
Investment in preference shares of subsidiary
companies - at cost
Subsidiary companies – Unquoted
- Bloom Fountain Limited, 0.25% Optionally
Convertible Redeemable Preference shares of
US$ 1 each
- Bloom Fountain Limited, 0.25% Optionally
Convertible Redeemable Preference shares of
US$ 100 each
- THL Zinc Ventures Limited, 0.25% Optionally
Convertible Redeemable Preference shares of
US$ 1 each
Less: Reduction pursuant to merger (Refer note 4)
- THL Zinc Holdings BV, 0.25% Optionally
Convertible Redeemable Preference shares of
EURO 1 each
Less: Reduction pursuant to merger (Refer note 4)
(c)
Investment in Government or Trust securities at
amortised cost
- 7 Years National Savings Certificates (March 31,
2018: ` 35,450 March 31, 2017: ` 35,450)
(Deposit with Sales Tax Authority)
- UTI Master gain of ` 10 each (March 31, 2018:
` 4,072, March 31, 2017: ` 4,072)
- Vedanta Limited ESOS Trust (March 31, 2018:
` 5,000, March 31, 2017: ` 5,000)
(d)
Investments in debentures of subsidiary
companies at cost
- Vizag General Cargo Berth Private Limited, 0.1%
As at March 31, 2018
As at March 31, 2017
No.
Amount
(` in Crore)
No.
Amount
(` in Crore)
18,59,900
907
18,59,900
3,60,500
215
3,60,500
70,00,000
3,187
(3,187)
55,00,000
2,495
(2,495)
-
100
-
70,00,000
3,187
(3,187)
55,00,000
2,495
(2,495)
-
100
-
0
0
0
0
0
907
215
0
0
0
0
0
compulsorily convertible debentures of ` 1,000 each e
15,00,000
149
15,00,000
149
- MALCO Energy Limited, compulsorily
convertible debentures of ` 1,000 each f
Less: Reduction pursuant to merger (Refer note 4)
6,13,54,483
6,136
(6,118)
(e)
Investments in Co-operative societies at fair
value through profit and loss
- Sesa Ghor Premises Holders Maintenance
40
200
230
468
450
500
40
Society Limited, of ` 200 each (March 31, 2018:
` 4,000, March 31, 2017: ` 4,000)
- Sesa Goa Sirsaim Employees Consumers Co
Operative Society Limited, of ` 10 each
(March 31, 2018: ` 2,000 March 31, 2017: ` 2,000)
- Sesa Goa Sanquelim Employees Consumers
Co- operative Society Limited, of ` 10 each
(March 31, 2018: ` 2,300 March 31, 2017: ` 2,300)
- Sesa Goa Sonshi Employees Consumers
Co- operative Society Limited, of ` 10 each
(March 31, 2018: ` 4,680 March 31, 2017: ` 4,680)
- Sesa Goa Codli Employees Consumers Co-
operative Society Limited, of ` 10 each (March
31, 2018: ` 4,500, March 31, 2017: ` 4,500)
- Sesa Goa Shipyard Employees Consumers
Co-operative Society Limited, of ` 10 each
(March 31, 2018: ` 5,000 March 31, 2017: ` 5,000)
- The Mapusa Urban Cooperative Bank Limited, of
` 25 each (March 31, 2018: ` 1,000, March 31,
2017: ` 1,000)
Less: Provision for diminution in value of investments in:
Cairn India Holdings Limited (CIHL)
Bloom Fountain Limited
Sesa Resources Limited (Refer note 34)
Rampia Coal Mines and Energy Private Limited
Total
Aggregate amount of impairment
Aggregate amount of quoted investments
Market value of quoted investments
Aggregate carrying amount of unquoted investments
18
0
0
0
0
0
0
0
(52)
(1,536)
(648)
(2)
62,473
(2,238)
44,547
82,704
17,926
6,11,84,065
6,118
(6,118)
40
200
230
468
450
500
40
0
0
0
0
0
0
0
0
(3,410)
(1,536)
-
(2)
66,417
(4,948)
44,458
79,296
21,959
Integrated Report Management Review Statutory Reports Financial Statements 220
Vedanta Limited Integrated Report and Annual Accounts 2017-18
Notes forming part of the Financial Statements
as at and for the year ended March 31, 2018
6 Financial Assets- Non Current : Investments continued
a. Pursuant to the Government of India’s policy of disinvestment, the Company in April 2002 acquired 26% equity interest in Hindustan
Zinc Limited (HZL) from the Government of India. Under the terms of the Shareholder’s Agreement (‘SHA’),the Company had two call
options to purchase all of the Government of India’s shares in HZL at fair market value. The Company exercised the first call option on
August 29, 2003 and acquired an additional 18.9% of HZL’s issued share capital. The Company also acquired an additional 20% of the
equity capital in HZL through an open offer, increasing its shareholding to 64.9%. The second call option provided the Company the
right to acquire the Government of India’s remaining 29.5% share in HZL. This call option was subject to the right of the Government of
India to sell 3.5% of HZL shares to HZL employees. The Company exercised the second call option on July 21, 2009.The Government
of India disputed the validity of the call option and refused to act upon the second call option. Consequently the Company invoked
arbitration which is in the early stages. The next date of hearing is scheduled on November 24, 2018.
b. Pursuant to the Government of India’s policy of divestment, the Company in March 2001 acquired 51% equity interest in BALCO from
the Government of India. Under the terms of the SHA, the Company had a call option to purchase the Government of India’s remaining
ownership interest in BALCO at any point from March 2, 2004. The Company exercised this option on March 19, 2004. However, the
Government of India contested the valuation and validity of the option and contended that the clauses of the SHA violate the erstwhile
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 Company, the arbitral tribunal by a majority award rejected the claims of the
Company on the ground that the clauses relating to the call option, the right of first refusal, the “tagalong” rights and the restriction on
the transfer of shares violate the erstwhile Companies Act, 1956 and are not enforceable. The Company has challenged the validity of
the majority award before the Hon’ble High Court at 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 to partially set aside
the arbitral award in respect of certain matters involving valuation. The matter is currently scheduled for hearing by the Delhi High Court
on July 3, 2018.
On January 9, 2012, the Company offered to acquire the Government of India’s interests in HZL and BALCO for ` 15,492 Crore and
` 1,782 Crore respectively. This offer was separate from the contested exercise of the call options, and Company 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.
c. During the the previous year, the Company made an investment of ` 14,730 Crore in 220 Crore equity shares of US$ 1 each in Bloom
Fountain Limited.
d. During the current year, the Company made an investment of ` 11.30 Lacs in 1.13 Lacs equity shares having face value of ` 10/- each in
Gaurav Overseas Private Limited .
e. During the current year, the maturity of investments in compulsorily convertible debentures of Vizag General Cargo Berth Private has
been extented has been extented by 2 years 10 months till January 28, 2021.
f. During the current year, the Company made an investment in 1,70,418 Compulsory convertible debentures of Malco energy limited
(MEL) having face value of ` 100/- each at a premium of ` 900/- each.
7 Non-current financial assets - Others
Particulars
Bank Deposits
Unsecured, considered good
Security Deposits
Unsecured, considered doubtful
Security Deposits
Less: Provision for doubtful security deposits
Total
(i) Bank deposits earns interest at fixed rate based on respective deposit rate.
(ii) Bank deposits includes site restoration fund amounting to ` 318 Crore (March 31, 2017: ` 275 Crore)
As at
March 31,
2018
(` in Crore)
As at
March 31,
2017
318
283
125
105
15
(15)
15
(15)
443
388
Vedanta Limited Integrated Report and Annual Accounts 2017-18
221
Notes forming part of the Financial Statements
as at and for the year ended March 31, 2018
8 Other non-current assets
Particulars
Unsecured, considered Good
Capital advances
Leasehold land prepayments (a)
Prepaid Expenses
Claims and other receivables
Loan to Employee Benefit Trust
Balance with government authorities (b) (c)
Unsecured, considered Doubtful
Claims and other receivables
Capital advances
Less: Provision for doubtful advances
Total
As at
March 31,
2018
(` in Crore)
As at
March 31,
2017
1,286
202
-
433
236
420
213
6
(219)
714
179
5
649
-
316
-
-
-
2,577
1,863
(a) Represents prepayments in respect of land taken under operating leases, being amortised equally over the period of the lease.
(b) Includes ` 30 Crore (March 31, 2017: ` 30 Crore), being Company’s share of gross amount of ` 86 Crore (March 31, 2017: ` 86 Crore)
paid under protest on account of Education Cess and Secondary Higher Education Cess for the year ended 2013-14.
(c) Includes ` 48 Crore (March 31, 2017: ` 46 Crores), being Company’s share of gross amount of ` 139 Crore (March 31, 2017: ` 131
Crores), of excess oil cess paid under Oil Industry (Development) Act.
9 Inventories
Particulars
Raw Materials
Goods-in transit
Work-in-progress
Finished goods
Fuel Stock
Goods-in transit
Stores and Spares
Goods-in transit
Total
As at
March 31,
2018
3,008
1,887
1,811
364
284
377
384
34
(` in Crore)
As at
March 31,
2017
1,169
1,483
1,764
403
249
63
368
41
8,149
5,540
(i) For method of valuation of inventories, refer note 3(j).
(ii) Inventories with a carrying amount of ` 7,961 Crore (March 31, 2017 : ` 5,125 Crore) have been pledged as security against certain bank
borrowings of the Company (Refer note 19).
(iii) Inventory held at net realizable value amounted to ` 90 Crore (March 31, 2017 : ` 2 Crore).
(iv) The write down of inventories amounting to ` 42 Crore (March 31, 2017: ` Nil Crore) has been charged to the statement of profit and
loss.
10 Current Financial Assets - Investments
Particulars
Investments carried at fair value through profit and loss
Investment in mutual funds- quoted
Investment in mutual funds- unquoted
Investment in bonds - quoted
Commercial Paper - quoted
Investment in India Grid Trust - quoted
Total
Aggregate amount of quoted investments, and market value thereof
Aggregate amount of unquoted investments
As at
March 31,
2018
(` in Crore)
As at
March 31,
2017
1,761
1,835
1,819
-
122
3,750
12,042
3,628
248
-
5,537
19,668
3,702
1,835
7,626
12,042
Integrated Report Management Review Statutory Reports Financial Statements
222
Vedanta Limited Integrated Report and Annual Accounts 2017-18
Notes forming part of the Financial Statements
as at and for the year ended March 31, 2018
11 Trade receivables
Particulars
Unsecured
- Considered good
- Considered doubtful
Less: Provision for doubtful trade receivables
Total
Classified as:
Non-current trade receivables
Current trade receivables
Total
As at
March 31,
2018
(` in Crore)
As at
March 31,
2017
2,439
521
(521)
2,080
539
(539)
2,439
2,080
471
1,968
551
1,529
2,439
2,080
(i) The interest free credit period given to customers is upto 90 days. Also refer note 48c(d).
(ii) Trade receivables with a carrying value of ` 2,429 Crore (March 31, 2017 : ` 1,917 Crore) have been given as collateral towards
borrowings (Refer note 19).
(iii) For amounts due and terms and conditions relating to related party receivables see note 51.
(iv) Current & Non-current trade receivables (net of provisions) includes ` 767 Crores as at March 31, 2018 (March 31, 2017: ` 893 Crores)
relating to amounts held back by a customer in the power segment, owing to certain disputes relating to computation of tariffs and
differential revenue recognised with respect to tariffs pending finalisation by the state electricity regulatory commission. Basis legal
advice received on the matter, the management considers these to be fully recoverable as there is a high probability of success.
(v) There are no outstanding debts due from directors or other officers of the Company.
12 Current financial assets - Cash and cash equivalents
Particulars
Balances with banks in current accounts
Deposits with original maturity of less than 3 months (a)
(including interest accrued thereon)
Cash on hand
Total
(a) Includes Nil Crore (March 31, 2017 ` 115 Crores) on lien with banks.
(b) Bank deposits earns interest at fixed rate based on respective deposit rate.
For the purpose of statement of cash flows, cash and cash equivalent comprises the following:
Particulars
Cash and cash equivalents as above
Earmarked unpaid dividend accounts (Refer Note 13)
Total
13 Current financial assets - Other bank balances
Particulars
Bank deposits with original maturity for more than 12 months (including interest accrued thereon) a
Bank deposits with original maturity for more than 3 months but not more than 12 months (including interest
accrued thereon) b
Earmarked unpaid dividend accounts c
Total
Bank deposits earns interest at fixed rate based on respective deposit rate.
a
b
c
Includes ` 8 Crore (March 31, 2017 : ` 1 Crore) on lien with banks.
Includes ` 193 Crore (March 31, 2017 : ` 195 Crore) on lien with banks and margin money ` 39 Crore (March 31, 2017 : ` 40 Crore)
Earmarked unpaid dividend accounts are restricted in use as it relates to unclaimed or unpaid dividend.
As at
March 31,
2018
(` in Crore)
As at
March 31,
2017
1,144
494
-
0
1,144
144
0
638
As at
March 31,
2018
1,144
87
1,231
(` in Crore)
As at
March 31,
2017
638
365
1,003
As at
March 31,
2018
(` in Crore)
As at
March 31,
2017
8
1
355
87
450
410
365
776
Vedanta Limited Integrated Report and Annual Accounts 2017-18
223
Notes forming part of the Financial Statements
as at and for the year ended March 31, 2018
14 Current financial assets - Loans
Particulars
Unsecured, considered good
Loans and advances to related parties (Refer note 51)
Loan to employees
Security deposits refundable
Others
Total
15 Current financial assets- Others
Particulars
Unsecured, considered good
Receivables from related parties (Refer note 51)
Security deposits
Derivative instruments (Refer note 48)
Others
Unbilled revenue
Dividend receivable
Claims and other receivables
Advance recoverable (Oil and gas business)
Unsecured advances, considered doubtful
Security deposits
Advance recoverable (Oil and gas business)
Less: Provision for doubtful advances
Total
16 Other Current Assets
Particulars
Unsecured, considered good
Advance to suppliers
Advance to related parties (Refer note 51)
Prepaid expenses
Claims and other receivables
Balance with government authorities
Export incentive receivable
Advance recoverable (Oil and gas business)
Leasehold prepayments
Unsecured, considered doubtful
Advance to suppliers
Claims and other receivables
Less: Provision for doubtful advances
Total
As at
March 31,
2018
(` in Crore)
As at
March 31,
2017
9
2
-
3
14
253
2
31
-
286
As at
March 31,
2018
(` in Crore)
As at
March 31,
2017
107
12
102
237
1,646
65
936
7
177
(184)
159
8
7
136
7,544
42
1,378
6
174
(180)
3,105
9,274
As at
March 31,
2018
(` in Crore)
As at
March 31,
2017
1,280
455
78
149
526
353
21
2
37
2
(39)
668
140
86
55
427
263
25
3
18
2
(20)
2,864
1,667
Integrated Report Management Review Statutory Reports Financial Statements
224
Vedanta Limited Integrated Report and Annual Accounts 2017-18
Notes forming part of the Financial Statements
as at and for the year ended March 31, 2018
17 Share capital
Particulars
A. Authorised equity share capital
Opening balance (equity shares of ` 1 each with voting rights)
Less: Pursuant to the scheme of merger (Refer note 4)
Closing balance [equity shares of ` 1 each with voting rights]
Authorised preference share capital (a)
Opening balance (preference shares of ` 10/- each)
Add: Pursuant to the scheme of merger (Refer note 4)
Closing balance [preference shares of ` 10/- each]
B. Issued,subscribed and paid up (a)
Equity shares of ` 1/- each with voting rights (b) (c)
C. To be issued pursuant to merger
Equity shares of ` 1/- each with voting rights (Refer note 4) (d)
As at March 31, 2018
As at March 31, 2017
Number
(in Crore)
Amount
(` in Crore)
Number
(in Crore)
Amount
(` in Crore)
4,402
-
4,402
301
-
301
4,402
-
4,402
3,010
-
3,010
5,127
(725)
4,402
4
297
301
5,127
(725)
4,402
35
2,975
3,010
372
372
297
297
-
372
-
372
75
372
75
372
(a) During the year, 7.5% preference share capital of ` 3,010 Crore comprising of 301 Crore shares of ` 10/- each have been issued and the same are disclosed under
borrowings (Refer note 19).
(b) Includes 308,232 (March 31, 2017: 310,632) equity shares kept in abeyance. These shares are not part of listed equity capital.
(c) Includes 92,33,871 (March 31, 2017: 39,84,256) equity shares held by Vedanta Limited ESOS Trust (Refer note 38).
(d) Voting rights exercisable upon issuance.
D. Shares held by ultimate holding Company and its subsidiaries*
Particulars
Twin Star Holdings Limited
Twin Star Holdings Limited (2)
Finsider International Company Limited
Westglobe Limited
Welter Trading Limited
Total
As at March 31, 2018
As at March 31, 2017
No. of
Shares held
(in Crore)
128.01
9.93
40.15
4.43
3.82
% of
holding
34.44
2.67
10.80
1.19
1.03
No. of
Shares held
(in Crore)
128.01
9.93
40.15
4.43
3.82
% of
holding
43.18
3.35
13.54
1.50
1.29
186.34
50.13
186.34
62.86
* The % of holding has been calculated on the issued and subscribed share capital as at respective balance sheet date.
(1) All the above entities are subsidiaries of Volcan Investments Limited, the ultimate holding Company.
(2) Represented by 2,48,23,177 American Depository Shares (“ADS”).
E. Aggregate number of bonus shares issued, shares issued for consideration other than cash and shares bought back during the
period of five years immediately preceding the reporting date
Particulars
Equity shares issued pursuant to Scheme of Amalgamation (in FY 2017-18)
Preference shares issued pursuant to Scheme of Amalgamation (in FY 2017-18)
Equity shares issued pursuant to Scheme of Amalgamation (in FY 2013-14)
F. Details of shareholders holding more than 5% shares in the Company*
Particulars
Twin Star Holdings Limited
Twin Star Holdings Limited #
Finsider International Company Limited
As at
March 31,
2018
75
301
210
(in Crore)
As at
March 31,
2017
-
-
210
As at March 31, 2018
As at March 31, 2017
No. of
Shares held
(` in Crore)
128.01
9.93
40.15
% of
holding
34.44
2.67
10.80
No. of
Shares held
(` in Crore)
128.01
9.93
40.15
% of
holding
43.18
3.35
13.54
* The % of holding has been calculated on the issued and subscribed share capital as at respective balance sheet date.
# 2,48,23,177 ADS, held by CITI Bank N.A. New York as a depository.
As per the records of the Company, including its register of shareholders/members, the above shareholding represents legal ownership of shares.
Vedanta Limited Integrated Report and Annual Accounts 2017-18
225
Notes forming part of the Financial Statements
as at and for the year ended March 31, 2018
17 Share capital continued
G. Other disclosures
(1) The Company has one class of equity shares having a par value of ` 1 per share. Each shareholder is eligible for one vote per share
held and dividend as and when declared by the Company. The dividend proposed by the Board of Directors is subject to the
approval of the shareholders in the ensuing Annual General Meeting, except in case of interim dividend which is paid as and when
declared by the Board of Directors. In the event of liquidation of the Company, the holders of equity shares will be entitled to receive
any of the remaining assets of the Company, after distribution of all preferential amounts, in proportion to their shareholding.
(2) The Company has one class of 7.5% non-cumulative redeemable preference shares having a par value of ` 10 per share. Each
preference shareholder is eligible for one vote per share as per terms of Section 47(2) of the Companies Act 2013 and dividend as
and when declared by the Company. As per the terms of preference shares, these shares are redeemable at par on expiry of 18
months from the date of their allotment. In the event of winding up of Vedanta Limited, the holders of Preference Shares shall have a
right to receive repayment of capital paid up and arrears of dividend, whether declared or not, up to the commencement of winding
up, in prioirty to any payment of capital on the equity shares out of the surplus of Vedanta Limited.
(3) ADS shareholders do not have right to attend General meetings in person and also do not have right to vote. They are represented by
depository, CITI Bank N.A. New York. As on March 31, 2018 - 24,84,24,696 equity shares were held in the form of 6,21,06,174 ADS
(March 31, 2017- 21,70,19,900 equity shares in form of 5,42,54,975 ADS).
(4) In terms of Scheme of Arrangement as approved by the Hon’ble High Court of Judicature at Mumbai, vide its order dated April 19,
2002, the erstwhile Sterlite Industries (India) Limited (merged with the Company during 2013-14) during 2002-2003 reduced its
paid up share capital by ` 10 Crore. There are 204,525 equity shares (March 31, 2017: 199,026 equity shares) of ` 1 each pending
clearance from NSDL/CDSL. The Company has filed an application in Hon’ble High Court of Mumbai to cancel these shares, the
final decision on which is pending. Hon’ble High Court of Judicature at Mumbai, vide its interim order dated September 06, 2002
restrained any transaction with respect to subject shares.
18 Other equity (Refer statement of changes in equity)
a) General reserve: Under the erstwhile Companies Act 1956, general reserve was created through an annual transfer of net income at
a specified percentage in accordance with applicable regulations. The purpose of these transfers was to ensure that if a dividend
distribution in a given year is more than 10% of the paid-up capital of the Company for that year, then the total dividend distribution is
less than the total distributable results for that year. Consequent to introduction of Companies Act 2013, the requirement to
mandatorily transfer a specified percentage of the net profit to general reserve has been withdrawn.
b) Debenture redemption reserve: The Companies Act requires companies that issue debentures to create a debenture redemption
reserve from annual profits until such debentures are redeemed. Companies are required to maintain 25% as a reserve of outstanding
redeemable debentures. The amounts credited to the debenture redemption reserve may not be utilised except to redeem debentures.
c) Preference share redemption reserve: The Companies Act provides that companies that issue preference shares may redeem those
shares from profits of the Company which otherwise would be available for dividends, or from proceeds of a new issue of shares made for
the purpose of redemption of the preference shares. If there is a premium payable on redemption, the premium must be provided for,
either by reducing the additional paid in capital (securities premium account) or net income, before the shares are redeemed. If profits are
used to redeem preference shares, the value of the nominal amount of shares redeemed should be transferred from profits (retained
earnings) to the preference share redemption reserve account. This amount should then be utilised for the purpose of redemption of
redeemable preference shares. This reserve can be used to issue fully paid-up bonus shares to the shareholders of the Company.
d) Capital reserve: The balance in capital reserve has mainly arisen consequent to merger of Cairn India Limited with the Company in
the previous year as described in note 4.
19 Non current financial liabilities - Borrowings
Particulars
Secured (at amortised cost)
Redeemable Non Convertible Debentures
Term loans from banks
Rupee term loans
External commercial borrowings
Unsecured (at amortised cost)
Deferred Sales Tax Liability
7.5% Redeemable Preference shares
Non current financial liabilities - Borrowings (A)
Less: Current maturities of long term borrowings (Refer note 25)
Total Non current financial liabilities - Borrowings (Net)
Current financial liabilities - Borrowings (B) (Refer note 23)
Total Borrowings (A+B)
As at
March 31,
2018
(` in Crore)
As at
March 31,
2017
8,600
11,247
10,692
-
16,935
648
91
3,010
22,393
(7,583)
94
-
28,924
(6,676)
14,810
22,248
18,320
14,309
40,713
43,233
i) The Company has not defaulted in the repayment of loans and interest as at Balance Sheet date.
ii) Bank loans availed by the Company are subject to certain covenants relating to interest service coverage, current ratio, debt service
coverage ratio, total outside liabilities to total net worth, fixed assets coverage ratio, ratio of total term liabilities to net worth and return
on fixed assets. The Company has complied with the covenants as per the terms of the loan agreement.
Integrated Report Management Review Statutory Reports Financial Statements
226
Vedanta Limited Integrated Report and Annual Accounts 2017-18
Notes forming part of the Financial Statements
as at and for the year ended March 31, 2018
19 Non current financial liabilities - Borrowings continued
iii) Summary of Redeemable non convertible debentures (Carrying Value):
Particulars
7.60% due May 2019
9.10% due April 2018 **
9.17% due July 2018 **
9.45% due August 2020
7.80% due December 2020
9.24% due December 2022 *
9.24% due December 2022 *
9.40% due November 2022 *
9.40% due October 2022 *
9.36% due October 2017
9.36% due December 2017
8.65% due September 2019
8.70% due April 2020
8.75% due April 2021
8.75% due September 2021
8.25% due October 2019
7.95% due April 2020 **
7.50% due November 2019 **
Total
As at
March 31,
2018
(` in Crore)
As at
March 31,
2017
351
2,500
1,200
1,999
500
-
-
-
-
-
-
150
600
250
250
300
300
200
-
2,499
1,200
1,999
-
499
500
500
500
975
525
150
600
250
250
300
300
200
8,600
11,247
* The NCDs have been pre-paid during the year
** The debenture holders of these NCDs and the Company have put and call option at the end of 5 years from the respective date of the allotment of the NCDs
(iv) Summary of secured borrowings:
Vedanta Limited has taken borrowings towards funding of its acquisitions, capital expenditure and working capital requirements. The
borrowings comprise of funding arrangements from various banks. The Company’s total secured borrowings and a summary of security
provided by the Company are as follows -
Particulars
Secured long term borrowings
Secured short term borrowings
Total secured borrowings
Facility Category
Security details
Project Buyers’ credit
from banks
First pari passu charge on the entire current assets of Vedanta Limited, both present and
future. First pari passu charge on all rights, title, claim and benefit in all the whole of the
current assets of the borrower, both present and future, including stock & raw material,
stock in process, semi-finished, finished goods and stores & spares not relating to plant and
machinery (consumable stores & spares)
Secured by first charge on entire stock of raw material, semi-finished goods, finished goods,
consumable stores and spares and such other movables including book debts and bills of
Vedanta Limited’s Iron ore division at Goa and charge on Iron ore Goa’s all other current
assets including outstanding monies and receivables on pari passu basis
External commercial
borrowings
Other secured project buyers’ credit from banks
Other secured external commercial borrowings
As at
March 31,
2018
(` in Crore)
As at
March 31,
2017
19,292
1,240
28,830
544
20,532
29,374
As at
March 31,
2018
(` in Crore)
As at
March 31,
2017
125
-
2
-
-
-
12
648
Vedanta Limited Integrated Report and Annual Accounts 2017-18
227
Notes forming part of the Financial Statements
as at and for the year ended March 31, 2018
19 Non current financial liabilities - Borrowings continued
Facility Category
Security details
Redeemable Non
Convertible
Debentures
Secured by way of movable fixed assets in relation to the Lanjigarh Refinery Expansion
Project including 210 MW Power Project for the Lanjigarh Refinery Expansion Project at
Lanjigarh, Orissa
a) Secured by way of “movable fixed assets” in relation to the 1.6 MTPA Aluminium Smelter
alongwith 1215 MW (135MW * 9) captive power plant located in Jharsuguda and 1 MTPA
Alumina Refinery alongwith 90 MW Co-generation power plant located at Lanjigarh in
Odisha State and shall include all present movable plant and machinery, machinery spares,
tools and accessories, fixtures, mechanical and electrical equipments, machinery and all
other movable fixed assets and all estate, right, title, interest, property, claims and demands
whatsoever in relation to assets.
b) The whole of the movable fixed assets of the 1.6 MTPA Aluminium Smelter along with 1215
MW captive power plant in Jharsuguda and 1 MTPA alumina refinery alongwith 75 MW
co-generation plant in Lanjigarh, including its movable plant and machinery, capital
works-in-progress, machinery spares, tools and accessories, and other movable fixed assets
As at
March 31,
2018
(` in Crore)
As at
March 31,
2017
1,200
1,200
2,500
2,500
First Pari Passu charge on the movable fixed assets both present and future of 2400 MW
(600 MW*4)Jharsuguda Power Plant
2,500
2,500
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 the Company along with 90 MW power plant in
Lanjigarh’ and all its related capacity expansions
Secured by way of movable fixed assets of the Lanjigarh Refinery Expansion Project
including 210 MW Power Project for the Lanjigarh Refinery Expansion Project with a
minimum security cover of 1 time of the outstanding amount of the debenture
Other secured redeemable non-convertible debentures
Working capital loans* Secured by first pari passu charge on current assets, present and future of Vedanta Limited
First pari passu charge on the entire current assets of Vedanta Limited, both present and
future. First pari passu charge on all rights, title, claim and benefit in all the whole of the
current assets of the borrower, both present and future, including stock and raw material.
Stock in process, semi finished and finished goods, stores and spares not relating to plant,
and machinery (consumable stores and spares)
1,550
1,550
850
-
-
3,497
308
639
366
-
Secured by first charge on entire stock of raw material, semi-finished goods, finished goods,
consumable stores and spares and all book debts of Vedanta Limited’s Iron ore division at
Goa on pari passu basis
166
166
Rupee Term loans
Secured by first pari passu charge by way of hypothecation on the entire movable property,
plant and equipments (including CWIP) of the Aluminium and Power Project, both present and
future except for assets acquired under buyer’s credit where there is a second charge; and
mortgage by deposit of documents of title of the land pertaining to the property, plant and
equipments. Aluminium and Power project shall mean the manufacturing facilities comprising
of (i) alumina refinery having output of 1 MTPA along with co-generation captive power plant
with an aggregate capacity of 75 MW at Lanjigarh, Orissa. (ii) aluminium smelter having an
output of 1.6 MTPA along with a 1215 (9x135) MW CPP at Jharsuguda, Orissa
Secured by creating first pari-passu charge by way of hypothecation of the movable property,
plant and equipments except for assets acquired under buyer’s credit where there is a second
charge, and mortgage on all the immovable property, plant and equipments of the Aluminium
Division of Vedanta Limited, both present and future, including leasehold land
Secured by a first pari passu charge by way of hypothecation on the entire movable
property, plant and equipments (including CWIP) of the project at Vedanta Limited’s
Jharsuguda Aluminium division except for assets acquired under buyer’s credit where there
is a second charge, both present and future; and mortgage by deposit of documents of title
of the land pertaining to the property, plant and equipments
Secured by aggregate of the property, plant and equipments of Aluminium Division and the
Lanjigarh Expansion Project reduced by the outstanding amount of other borrowings having first
pari passu charge on the property, plant and equipments of Aluminium division and the Lanjigarh
Expansion Project except for assets acquired under buyer’s credit where there is a second charge
Other secured rupee term loans
Total
2,048
2,659
5,521
9,292
1,891
1,942
1,232
1,245
-
1,797
20,532
29,374
* Represents loans repayable on demand from banks, packing credit in foreign currencies from banks and amounts due on factoring.
Integrated Report Management Review Statutory Reports Financial Statements 228
Vedanta Limited Integrated Report and Annual Accounts 2017-18
Notes forming part of the Financial Statements
as at and for the year ended March 31, 2018
19 Non current financial liabilities - Borrowings continued
v) Terms of repayment of total borrowings outstanding as at March 31, 2018 are provided below -
Weighted
average
interest rate
as at March
31, 2018
Total
carrying
value
<1 year
1-3 years
3-5 years
>5 years
Remarks
8.36%
10,692
866
5,388
2,303
2,168 Repayable in 171 quarterly
(` in Crore)
8.89%
8,600
3,700
4,400
500
- Repayable in 13 bullet payments
installments and 6 installments
payable in the gap of 5 months
and 7 months
7.35%
7.71%
14,815
3,313
14,980
3,313
-
-
Borrowings
Rupee Term Loan
Redeemable Non Convertible
Debentures
Commercial paper
Working capital loan*
-
-
-
-
41
- Repayable in 88 bullet payments
- Export packing credit is
repayable within 1-6 months
from the date of drawal and
cash credit can be repaid
anytime as per the availability of
business surplus during the
validity of the facility.
- Repayable in 15 bullet payments
- Repayable in 1 bullet payment
29 Repayable monthly in 14 years
from the date of deferment. The
loan was initially measured at
fair value using a discount rate
of 7.50%
- Repayable in 1 bullet payment
upon 18 months from date of
issuance
Project Buyers' credit from banks
Amounts due on factoring
Deferred sales tax liability
1.77%
8.50%
NA
127
65
91
127
65
10
-
-
37
Redeemable Preference shares
7.50%
3,010
3,010
-
-
Total
40,713
26,071
9,825
2,844
2,197
The above maturity is based on the total principal outstanding gross of issue expenses.
* Represents loans repayable on demand from banks for ` 477 Crore and packing credit in foreign currencies from banks.
Terms of repayment of total borrowings outstanding as at March 31, 2017 are provided below -
Weighted
average
interest rate
as at March
31, 2017
Total
carrying
value
<1 year
1-3 years
3-5 years
>5 years
Remarks
9.58%
16,935
2,520
3,413
8,483
2,519 Repayable in 200 quarterly
(` in Crore)
Borrowings
Rupee Term Loan
External Commercial Borrowings
Redeemable Non Convertible
Debentures
Commercial paper
Working capital loan*
2.46%
9.16%
6.64%
8.14%
648
11,247
648
3,499
-
4,149
-
3,599
12,595
1,194
12,595
1,194
-
-
-
-
installments and 20 half yearly
installments
- Repayable in 1 bullet payment
- Repayable in 17 bullet payments
- Repayable in 8 bullet payments
- Export packing credit is repayable
within 1-6 months from the date
of drawal and cash credit can be
repaid anytime as per the
availability of business surplus
during the validity of the facility
Project Buyers' credit from banks
Amounts due on factoring
Deferred sales tax liability
1.50%
3.92%
NA
12
508
94
12
508
9
-
-
28
-
-
32
- Repayable in 1 bullet payment
- Repayable in 2 bullet payments
58 Repayable monthly in 14 years
from the date of deferment. The
loan was initially measured at fair
value using a discount rate of
7.50%
Total
43,233
20,985
7,590
12,114
2,577
The above maturity is based on the total principal outstanding gross of issue expenses.
* Includes loans repayable on demand from banks for ` 24 crore and packing credit in foreign currencies from banks.
* Represents loans repayable on demand from banks, packing credit in foreign currencies from banks and amounts due on factoring
Vedanta Limited Integrated Report and Annual Accounts 2017-18
229
Notes forming part of the Financial Statements
as at and for the year ended March 31, 2018
19 Non current financial liabilities - Borrowings continued
(vi) Movement in borrowings during the year is provided below-
Particulars
Opening balance at April 1, 2016
Cash flow
Other non cash changes
As at April 1, 2017
Cash flow
Other non cash changes
As at March 31, 2018
Borrowings due within
one year- Carrying
value
Borrowings due after
one year -Carrying
value
10,251
6,907
3,827
20,985
(2,693)
7,611
25,903
23,217
2,832
(3,801)
22,248
(2,902)
(4,536)
14,810
(` in Crore)
Total
33,468
9,739
26
43,233
(5,595)
3,075
40,713
Other non-cash changes comprises of amortisation of borrowing costs, foreign exchange difference on borrowings and reclassification
between borrowings due within one year and borrowings due after one year. Additionally non cash changes for the year ended March 31,
2018 includes preference shares issued on merger (Refer Note 4).
20 Non current financial liabilities - Others
Particulars
Payables for purchase of property, plant and equipment
Security deposits from vendors & others
Obligation for issuance of redeemable preference shares pursuant to merger (Refer note 4) a
Total
(a) For terms and conditions refer note 17(G).
21 Non current - Provisions
Particulars
Provision for employee benefits (Refer note 39) a
Provision for restoration, rehabilitation and environmental costs b
Total
a) Includes gratuity, compensated absences, deferred cash bonus etc.
b) The movement in provisions for restoration, rehabilitation and environmental costs is as follows (Refer note 3(p)):
Particulars
Opening balance
Additions during the year
Unwinding of discount
Revision in estimates
Amount utilised during the year
Unused amounts reversed (Refer note 34 (d))
Exchange differences
Closing balance
Classified as:
Current
Non current
Total
As at
March 31,
2018
44
-
-
44
(` in Crore)
As at
March 31,
2017
197
1
3,010
3,208
As at
March 31,
2018
32
820
852
(` in Crore)
As at
March 31,
2017
51
757
808
As at
March 31,
2018
(` in Crore)
As at
March 31,
2017
759
8
27
41
(1)
(17)
3
820
-
820
820
895
4
32
(151)
-
-
(21)
759
2
757
759
Integrated Report Management Review Statutory Reports Financial Statements
230
Vedanta Limited Integrated Report and Annual Accounts 2017-18
Notes forming part of the Financial Statements
as at and for the year ended March 31, 2018
22 Other non-current liabilities
Particulars
Deferred government grant a
Total
As at
March 31,
2018
2,479
2,479
(` in Crore)
As at
March 31,
2017
2,541
2,541
a. Represents government assistance in the form of the duty benefit availed under Export Promotion Capital Goods (EPCG) Scheme and Special Economic Zone
(SEZ) scheme on purchase of property, plant and equipments accounted for as government grant and being amortised over the useful life of such assets.
23 Current financial liabilities - Borrowings*
Particulars
At amortised cost
Secured
Project buyers credit from banks
Loans repayable on demand from Banks
Packing credit in foreign currencies from banks
Amounts due on factoring
Unsecured
Working Capital Loan
Packing credit in foreign currencies from banks
Commercial paper
Amounts due on factoring
Total
* Refer note 19 for borrowing details
As at
March 31,
2018
(` in Crore)
As at
March 31,
2017
127
477
636
-
12
24
-
508
95
2,105
14,815
65
-
1,170
12,595
-
18,320
14,309
The Company has discounted trade receivables on recourse basis of ` 65 Crore (March 31, 2017: ` 520 Crore). Accordingly, the monies
received on this account are shown as borrowings as the trade receivables does not meet de-recognition criteria. The above borrowings
pertaining to trade receivables discounted has been restated on account of foreign exchange fluctuation.
24 Current financial liabilities - Trade payables
Particulars
Trade payables: (a) (c)
Total outstanding dues of micro and small enterprises
(Refer note 42 for details of dues to micro and small enterprises)
Total outstanding dues of creditors other than micro and small enterprises
Operational buyers credit (b)
Total
As at
March 31,
2018
(` in Crore)
As at
March 31,
2017
84
5,530
8,452
26
4,480
10,469
14,066
14,975
(a) Trade payables are non- interest bearing and are normally settled upto 180 days terms
(b) Operational Buyer’s Credit is availed from offshore banks at an interest rate ranging from 1.5% to 3.5% per annum and are repayable within one year from the date
of draw down, based on the letter of comfort issued under working capital facilities sanctioned by domestics banks. Some of these facilities are secured by first
pari-passu charge over the present and future current assets of the Company.
(c) For amounts due and terms and conditions relating to related party payables see note 51.
Vedanta Limited Integrated Report and Annual Accounts 2017-18
231
Notes forming part of the Financial Statements
as at and for the year ended March 31, 2018
25 Current financial liabilities - Others
Particulars
Current maturities of long term borrowings (a)
Interest accrued but not due on borrowings
Derivative instruments (Refer note 48)
Unpaid/unclaimed dividend (b)
Profit petroleum payable
Payables for purchase of property, plant and equipment
Dues to related parties (Refer note 51)
Security deposits from vendors
Interim dividend payable
Other Liabilities (c)
Obligation recognised pursuant to merger (Refer note 4)
Total
(a) Current Maturities of Long Term Borrowings consists of:
Particulars
Redeemable non-convertible debentures
Deferred sales tax liability
Term loans from banks
Rupee term loans
External commercial borrowings
7.5% Redeemable preference shares
Total (Refer note 19)
As at
March 31,
2018
(` in Crore)
As at
March 31,
2017
7,583
738
26
87
481
1,655
3
17
-
1,680
-
6,676
723
561
365
580
1,640
13
16
6,580
653
6,832
12,270
24,639
As at
March 31,
2018
3,700
10
(` in Crore)
As at
March 31,
2017
3,499
9
863
-
3,010
2,520
648
-
7,583
6,676
(b) Does not include any amounts, due and outstanding, to be credited to Investor Education and Protection Fund except ` 38 Lacs (March 31, 2017: ` 38 Lacs) which
is held in abeyance due to a pending legal case.
(c) Includes revenue received in excess of entitlement interest of ` 648 Crore (March 31, 2017 : ` 5 Crore), reimbursement of expenses, provision for expenses,
liabilities related to compensation/claim etc.
26 Other current liabilities
Particulars
Statutory and other liabilities a
Amount payable to owned post-employment benefit trust (Refer note 51)
Advance from customers b
Advance from related party (Refer note 51)
Deferred government grant c
Total
As at
March 31,
2018
1,128
2
3,614
-
71
(` in Crore)
As at
March 31,
2017
703
1
2,777
14
66
4,815
3,561
a Statutory and other liabilities mainly includes contribution to PF, ESIC, withholding taxes, goods & service tax, excise duty, VAT, service tax etc.
b Advance from customers includes the amount received under long term supply agreements. The portion of advance that is expected to be settled within next 12
months has been classified as current liability.
c Represents current portion of government assistance in the form of the duty benefit availed under Export Promotion Capital Goods (EPCG) Scheme and Special
Economic Zone scheme on purchase of property, plant and equipments accounted for as government grant and being amortised over the useful life of such assets.
27 Current provisions
Particulars
Provision for employee benefitsa
Provision for restoration, rehabilitation and environmental costs (Refer note 21)
Total
a)
Includes gratuity, compensated absences, deferred cash bonus etc.
As at
March 31,
2018
129
-
129
(` in Crore)
As at
March 31,
2017
80
2
82
Integrated Report Management Review Statutory Reports Financial Statements
232
Vedanta Limited Integrated Report and Annual Accounts 2017-18
Notes forming part of the Financial Statements
as at and for the year ended March 31, 2018
28 Revenue from operations
Particulars
Sale of products (excluding excise duty)(a)
Less: Government share of profit petroleum
Total sale of products (excluding excise duty)
Add: Excise duty
Total sale of products (including excise duty)
Sale of services
Job work
Others
Other operating revenues
Export incentives
Scrap sales
Miscellaneous income
Gross revenue from operations
(` in Crore)
Year ended
March 31,
2018
Year ended
March 31,
2017
45,884
(1,598)
44,286
450
44,736
37,164
(1,696)
35,468
1,877
37,345
689
71
263
100
115
753
92
155
32
163
45,974
38,540
a) With effect from July 01, 2017 Goods and Service Tax (GST) has been implemented which has replaced several indirect taxes including excise duty. While Ind-AS
required excise duty to be included while computing revenues, GST is required to be excluded from revenue computation. Accordingly “Revenue from operation
(net of excise duty)” has been additionally disclosed to enhance comparability of financial information.
29 Other Income
Particulars
Net gain on current investments measured at FVTPL
Interest income from investments measured at FVTPL
Interest Income from financial assets at amortised cost
- Bank Deposits
- Loans
- Others
Dividend income from investments in subsidiaries
Dividend income from other investments measured at FVOCI
Dividend income from investments in measured at FVTPL
Net gain on foreign currency transactions and translation
Deferred government grant
Interest on outstanding income tax refunds
Miscellaneous income
Total
30 Changes in inventories of finished goods and work-in-progress
Particulars
Opening Stock:
Finished Goods
Work in Progress
Total
Add: Foreign exchange translation difference
Less: Impairment of stock during the year (Refer note 34 (d))
Closing Stock
Finished Goods
Work in Progress
Total
Changes in Inventory
(` in Crore)
Year ended
March 31,
2018
Year ended
March 31,
2017
615
232
1,042
316
49
11
121
2,195
1
8
307
69
181
77
53
28
71
8,065
1
-
-
65
-
64
3,866
9,705
(` in Crore)
Year ended
March 31,
2018
Year ended
March 31,
2017
403
1,764
2,167
0
3
364
1,811
2,175
(11)
298
1,457
1,755
(5)
-
403
1,764
2,167
(417)
Vedanta Limited Integrated Report and Annual Accounts 2017-18
233
Notes forming part of the Financial Statements
as at and for the year ended March 31, 2018
31 Employee benefits expense (a)
Particulars
Salaries and Wages
Share based payments (Refer note 38)
Contributions to provident and other funds (Refer Note 39)
Staff welfare expenses
Less: Cost allocated/directly booked in Joint ventures
Total
a. Net of recoveries of ` 56 Crore ( March 31, 2017 : ` 70 Crore) from subsidiaries.
32 Other Expenses *
Particulars
Cess on crude oil
Carriage
Consumption of stores and spare parts
Royalty
Repairs to plant and equipment
Repairs to building
Repairs others
Mine expenses
Water charges
Rates and taxes
Cess on power sale
Net loss on foreign currency transactions and translation
Insurance
Rent
Conveyance & travelling expenses
Power scheduling/unscheduling charges
Exploration costs written off (Refer note 5)
Loss on sale of property, plant and equipment
Remuneration to Auditors (a)
Excise duty on changes in inventory
Provision for doubtful trade receivables / advances
Loss on sale of subsidiary
Directors sitting fees and commission
Miscellaneous expenses (b) (c)
Less: Cost allocated/directly booked in Joint ventures
Total
* Net of recoveries of ` 73 Crore ( March 31, 2017 : ` 57 Crore) from subsidiaries
a. Remuneration to auditors comprises of:
Particulars
Payment to auditors
For statutory audit (including quarterly reviews)
For parent Company and US reporting
For tax audits and transfer pricing certifications
For certification services
For other services
For reimbursement of expenses
Total
(` in Crore)
Year ended
March 31,
2018
Year ended
March 31,
2017
1,165
56
85
84
(588)
802
1,235
58
80
78
(667)
784
(` in Crore)
Year ended
March 31,
2018
Year ended
March 31,
2017
1,085
609
520
254
407
59
95
206
155
25
-
-
75
52
68
-
-
11
11
(4)
38
-
3
1,366
(277)
983
635
717
245
376
50
67
318
126
32
3
112
56
49
50
42
29
19
11
7
2
3
3
965
(205)
4,758
4,695
(` in Crore)
Year ended
March 31,
2018
Year ended
March 31,
2017
6
4
0
0
-
1
11
6
4
0
0
0
1
11
b. Includes Corporate social responsibility expenses of ` 45 Crore (March 31, 2017 : ` 49 Crore) as detailed in note 41.
c. Includes refund of ` 4.28 Crore being the donation given to a political party.
Integrated Report Management Review Statutory Reports Financial Statements
234
Vedanta Limited Integrated Report and Annual Accounts 2017-18
Notes forming part of the Financial Statements
as at and for the year ended March 31, 2018
33 Finance Cost
Particulars
Interest expense on financial liabilities at amortised cost (a), (b)
Other finance costs
Net interest on defined benefit arrangement
Unwinding of discount and effect of changes in discount rate on provisions (Refer note 21)
Exchange differences regarded as an adjustment to borrowing cost
Less: Cost allocated to Joint Venture
Total
(` in Crore)
Year ended
March 31,
2018
Year ended
March 31,
2017
3,195
676
2
27
-
(0)
3,148
590
3
32
123
(0)
3,900
3,896
Includes ` 209 Crore (March 31, 2017 : Nil) on redeemable preference shares.
a)
b) Net of interest cost of ` 349 Crore (March 31, 2017 : ` 556 Crore) capitalised during the year, relating to funds borrowed specifically to acquire/construct the
qualifying assets. The capitalisation rate of these borrowings is approximately 8.1% (March 31, 2017 : approximately 9%).
34 Exceptional Items
Particulars
Loss on unusable capital work-in-progress (a)
Impairment of capital work-in-progress (b)
Reversal of impairment on Property, plant and equipments and exploration intangible assets under development (c)
Impairment of Iron ore assets (d)
Net gain on recognition or settlement of obligation recognised pursuant to merger (Refer note 4)
Charge pursuant to adverse arbitration order (e)
Net reversal/(charge) of impairment on investment in subsidiaries (f)
Total
(` in Crore)
Year ended
March 31,
2018
Year ended
March 31,
2017
(251)
-
3,513
(452)
-
(113)
2,710
-
(201)
252
-
1,370
-
(97)
5,407
1,324
a. During the year ended March 31, 2018, the Company has recognised a loss of ` 251 Crore relating to certain items of capital work-in-progress at the aluminium
operations, which are no longer expected to be used.
b. During the year ended March 31, 2017, the Company has recognised ` 201 Crore impairment charge relating to certain old items of capital work-in-progress at the
Alumina refinery operations.
c. During the year ended March 31, 2018, the Company has recognized net impairment reversal of ` 3,513 Crore on its assets in the oil and gas segment comprising of:
reversal of previously recorded impairment charge of ` 3,622 Crore relating to Rajasthan oil and gas block (“CGU”) mainly following the progress on key growth
i)
projects expected to result in the enhanced recovery of resources in a commercially viable manner leading to a higher forecast of oil production and adoption of
integrated development strategy for various projects leading to savings in cost. Of this reversal, ` 536 Crore reversal has been recorded against oil and gas
producing facilities and ` 3,086 Crore reversal has been recorded against exploration intangible assets under development.
The recoverable amount of the Company’s share in Rajasthan Oil and Gas cash generating unit “RJ CGU” was determined to be ` 8,664 Crore (US $ 1,332 million)
and ` 6,815 Crore (US $ 1,051 million) as at March 31, 2018 and March 31, 2017 respectively.
The recoverable amount of the RJ CGU was determined based on the fair value less costs of disposal approach, a level-3 valuation technique in the fair value
hierarchy, as it more accurately reflects the recoverable amount based on the Company’s view of the assumptions that would be used by 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 $ 62 per barrel for the next one year (March 31, 2017: US $ 58 per barrel) and scales upto long-term nominal price of US $ 65 per barrel three years
thereafter (March 31, 2017: US $ 70 per barrel) derived from a consensus of various analyst recommendations. Thereafter, these have been escalated at a rate of
2.5% per annum. The cash flows are discounted using the post-tax nominal discount rate of 10.1% (March 31, 2017: 10.2%) derived from the post-tax weighted
average cost of capital after factoring in the risks ascribed to PSC extension including successful implementation of key growth projects. Based on the sensitivities
carried out by the Company, change in crude price assumptions by US$ 1/bbl and changes to discount rate by 0.5% would lead to a change in recoverable value by
` 238 Crore (US $ 37 million) and ` 180 Crore (US $ 28 million) respectively.
ii)
impairment charge of ` 109 Crore recorded against exploration intangible assets under development representing the carrying value of exploratory wells in Block
PR-OSN-2004/1 which has been relinquished during the year.
During the year ended March 31, 2017, the Company has recognized net impairment reversal of ` 252 Crore relating to Rajasthan Oil and Gas block. Of this net
reversal, ` 114 Crore charge has been recorded against cost of oil and gas producing facilities and ` 366 Crore reversal has been recorded against exploration
intangible assets under development.
d. During the year ended March 31, 2018, the Company has recognized an impairment charge of ` 452 Crore as against the net carrying value of ` 1,048 Crore on its
iron ore assets in Goa in the iron ore segment.
Pursuant to an order passed by the Hon’ble Supreme Court of India on February 7, 2018 the second renewal of the mining leases granted by the State of Goa to all
miners including Vedanta were cancelled. Consequentially all mining operations stopped with effect from March 16, 2018 until fresh mining leases (not fresh
renewals or other renewals) and fresh environmental clearances are granted in accordance with the provisions of the The Mines and Minerals (Development and
Regulation) (MMDR) Act.
Significant uncertainty exists over the resumption of mining at Goa under the current leases. The Company has assessed the recoverable value of all its assets and
liabilities associated with existing mining leases which led to a non-cash impairment charge. Upon consideration of past precedence, the provision for restoration
and rehabilitation with respect to these mines has been assessed as Nil, as the Company believes that the same would be carried out by the future successful
bidder at the time of mine closure.
e. Charge pursuant to unfavourable arbitration order- ` 113 Crore (Refer note 49 (b) - Contractor claims).
f. During the year ended March 31, 2018 and March 31, 2017 the Company has recognized net impairment reversal of ` 2,710 Crore and net impairment charge of
` 97 Crore respectively, on its investment in subsidaries, comprising of:
Vedanta Limited Integrated Report and Annual Accounts 2017-18
235
Notes forming part of the Financial Statements
as at and for the year ended March 31, 2018
34 Exceptional Items continued
Particulars
Reversal of impairment on investment in Cairn India Holdings Limited (Refer (i) below)
Impairment charge on investment in Bloom Fountain Limited pursuant to merger (Refer note 4)
Impairment charge on investment in Sesa Resources Limited (Refer (ii) below)
Net Impairment reversal/(charge) on investment in subsidiaries
Year ended
March 31,
2018
3,358
-
(648)
2,710
(` in Crore)
Year ended
March 31,
2017
313
(410)
-
(97)
(i) Cairn India Holding Limited (‘CIHL’) holds 35% share in Rajasthan oil and gas block through its step down subsidiary Cairn Energy
Hydrocarbons Limited. The recoverable value of investment in CIHL was determined to be ` 13,754 Crore (US $ 2,115 million) and
` 17,157 Crore (US $ 2,646 million) as at March 31, 2018 and March 31, 2017 respectively, represented by CIHL’s share of discounted
cash flows in RJ CGU held through its subsidiary and net fair value of its other assets. (Refer note (c)(i) above).
(ii) The net recoverable value of investment in Sesa Resources Limited (‘SRL’) was determined to be ` 109 Crore. The Supreme Court
judgement relating to iron ore mining in Goa resulted in impairment. The recoverable value is represented by the estimated selling price
of the underlying assets of SRL. (Refer note (d) above).
35 Tax expense
(a) Tax charge/(credit) recognised in profit or loss
Particulars
Current tax:
Current tax on profit for the year
Total Current Tax (a)
Deferred tax:
Origination and reversal of temporary differences
Charge in respect of deferred tax for earlier years
Net charge in respect of exceptional items
Total Deferred Tax (b)
Total tax charge (a+b)
Accounting profit before tax
Effective income tax rate (%)
As at
March 31,
2018
(` in Crore)
As at
March 31,
2017
-
-
2
2
994
32
942
1,968
1,968
9,224
21%
(258)
(102)
87
(273)
(271)
10,798
(3%)
(b) A reconciliation of income tax expense / (credit) applicable to accounting profit before tax at the Indian statutory income tax rate to
recognised income tax expense for the year indicated are as follows:
Particulars
Accounting profit before tax
Indian statutory income tax rate
Tax at statutory income tax rate
Disallowable expenses
Non-taxable income
Tax holidays and similar exemptions
Unrecognised tax assets (net)
Change in deferred tax balances due to change in income tax rate from 34.608% to 34.944%
Investment allowances
Charge/(credit) in respect of earlier years
Other permanent differences
As at
March 31,
2018
(` in Crore)
As at
March 31,
2017
9,224
10,798
34.608% 34.608%
3,737
18
(3,055)
(524)
341
-
(284)
(102)
(402)
3,192
88
(865)
(8)
-
41
-
32
(512)
Total
1,968
(271)
Certain businesses of the Company are eligible for specified tax incentives which are included in the table above as tax holidays and similar
exemptions. These are briefly described as under:
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 a tax holiday. Such a 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 Company has setup SEZ Operations in its aluminium division (where no benefit has been drawn).
Sectoral Benefit - Power Plants
To encourage the establishment of certain power plants, provided certain conditions are met, tax incentives exist to exempt 100% of
profits and gains for any ten consecutive years within the 15 years period following commencement of the power plant’s operation.
However, such undertakings generating power would continue to be subject to the MAT provisions.
The total effect of such tax holidays and exemptions was `8 crore for the year ended March 31,2018 (March 31,2017: `524 crore).
Integrated Report Management Review Statutory Reports Financial Statements
236
Vedanta Limited Integrated Report and Annual Accounts 2017-18
Notes forming part of the Financial Statements
as at and for the year ended March 31, 2018
35 Tax expense continued
Investment Allowance u/s 32 AC of the Income Tax Act -
Incentive for acquisition and installation of new high value plant or machinery to manufacturing companies by providing an additional
deduction of 15% of the actual cost of plant or machinery acquired and installed during the year. The actual cost of the new plant or machinery
should exceed `25 Crore to be eligible for this deduction. Deduction u/s 32AC was available up to financial year ended March 31, 2017.
(c) Deferred tax assets/liabilities
The Company 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 and the depreciation on mining reserves, net of losses carried forward by Vedanta
Limited (post the re-organisation) and unused tax credit in the form of MAT credits carried forward. Significant components of Deferred
tax (assets) & liabilities recognized in the balance sheet are as follows :
For the year ended 31 March 2018
Significant components of Deferred tax (assets) & liabilities
Property, Plant and Equipment
Voluntary retirement scheme
Employee benefits
Fair valuation of derivative asset/liability
Fair valuation of other asset/liability
Unused tax asset MAT credit entitlement
Unabsorbed depreciation and tax losses
Other temporary differences
Total
For the year ended 31 March 2017
Significant components of Deferred tax (assets) & liabilities
Property, Plant and Equipment
Voluntary retirement scheme
Employee benefits
Fair valuation of derivative asset/liability
Fair valuation of other asset/liability
Unused tax asset MAT credit entitlement
Unabsorbed depreciation and tax losses
Other temporary differences
Total
Opening
balance as at
April1, 2017
5,267
(5)
(20)
6
329
(3,971)
(3,322)
(242)
(1,958)
Opening
balance as at
April1, 2016
5,601
(7)
(19)
(4)
235
(3,890)
(3,393)
(216)
(1,693)
Charged /
(credited) to
statement of
profit or loss
1,912
(1)
9
-
(191)
-
337
(98)
1,968
Charged /
(credited) to
other
comprehensive
income
-
-
(5)
(2)
-
-
-
7
0
Charged /
(credited) to
statement of
profit or loss
(308)
2
-
-
94
(81)
71
(51)
(273)
Charged /
(credited) to
other
comprehensive
income
-
-
(1)
10
-
-
-
21
30
Exchange
difference
transferred to
translation of
foreign
operation
16
-
-
-
-
-
-
-
16
Exchange
difference
transferred to
translation of
foreign
operation
(26)
-
-
-
-
-
-
-
(26)
(` in Crore)
Closing
balance as at
March 31,2018
7,195
(6)
(16)
4
138
(3,971)
(2,985)
(333)
26
(` in Crore)
Closing
balance as at
March 31,2017
5,267
(5)
(20)
6
329
(3,971)
(3,322)
(242)
(1,958)
Charged /
(credited) to
Equity
-
-
-
-
-
-
-
-
-
Charged /
(credited) to
Equity
-
-
-
-
-
-
-
4
4
Recognition of deferred tax assets on MAT credit entitlement is based on the Company’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.
Unused tax losses for which no deferred tax asset is recognized amount to ` 270 Crore and Nil as at March 31, 2018 and March 31, 2017
respectively. The unused tax losses expire as detailed below :
Year ended
March 31, 2018
March 31, 2017
Nature of unrecognised deferred tax assets
Unutilised Capital losses
Unutilised Capital losses
Within one
year
128
-
Greater than one year,
less than five years
142
-
Greater than
five years
-
-
No expiry
date
-
-
(` in Crore)
Total
270
-
Vedanta Limited Integrated Report and Annual Accounts 2017-18
237
Notes forming part of the Financial Statements
as at and for the year ended March 31, 2018
36 Earnings per equity share
Particulars
Profit/(Loss) after tax and exceptional items
Less: Notional Preference Dividend *
Profit/(Loss) after tax and exceptional items attributable to equity share holders for Basic and Diluted EPS
Add: Exceptional items (net of tax)
Profit after tax but before exceptional items attributable to equity share holders for Basic and Diluted EPS
No. of Equity shares outstanding
Add: Shares to be issued pursuant to merger (Refer note 4)
Total Weighted Average no. of equity shares outstanding during the year for Basic and Dilutive EPS
Basic and Diluted Earnings/(Loss) per share after tax and exceptional items (in `)
Basic and Diluted Earnings/(Loss) per share after tax but before exceptional items (in `)
Nominal value per share (in `)
* till the date of issuance of preference shares i.e till April 28, 2017.
37 Distributions made and proposed
Particulars
Amounts recognised as distributions to equity shareholders:
Final dividend (March 31, 2016: ` 3/- per share (by erstwhile Cairn India Ltd.)) (Refer note 4) (a)
Interim dividend (March 31, 2018 : ` 21.20/- per share, March 31, 2017 : ` 1.75/- & 17.70/- per share) (b)
Dividend distribution tax (DDT) on above (c)
Preference dividends on redeemable preference shares :
Preference dividends for the year : 7.5% p.a. (March 31, 2017: Nil) (d)
Dividend distribution tax (DDT) on preference dividend (c)
Total
(` in Crore except as stated)
As at
March 31,
2018
As at
March 31,
2017
7,256
(17)
7,239
(4,465)
2,774
372
-
372
19.47
7.46
1.00
11,069
(272)
10,797
(1,237)
9,560
297
75
372
29.04
25.72
1.00
As at
March 31,
2018
(` in Crore)
As at
March 31,
2017
-
7,881
-
225
7,099
46
7,881
7,370
209
-
-
-
209
7,370
a) The above does not include dividend and tax thereon paid by erstwhile Cairn India Limited to its fellow subsidiaries.
b) The Board of Directors of the Company declared an interim dividend of ` 6,580 Crore on March 30, 2017 which has been paid during
the current year.
c) Tax on interim and final dividend (net of dividend from subsidiary) u/s 115O of the Income Tax Act, 1961.
d) Dividend @ 7.5% p.a. on the redeemable preference shares of face value of ` 10/- per preference share as per their terms of issuance
was declared during the year ended March 31, 2018. The same has been accounted for as a interest cost and has been recorded in the
statement of profit and loss. (Refer note 33)
38 Share Based Payments
The Company offers equity based option plans to its employees, officers and directors through the Company’s stock option plan
introduced in the previous year, Cairn India’s stock option plan now administered by the Company pursuant to merger with the Company
and Vedanta Resources Plc plans [Vedanta Resources Long-Term Incentive Plan (“LTIP”), Employee Share Ownership Plan (“ESOP”),
Performance Share Plan (“PSP”) and Deferred Share Bonus Plan (“DSBP”)] collectively referred as ‘VR PLC ESOP’ scheme.
The Vedanta Limited Employee Stock Option Scheme (ESOS) 2016
The Company introduced an Employee Stock Option Scheme 2016 (“ESOS”), which was approved by the Vedanta Limited shareholders to
provide equity settled incentive to all employees of the Company including subsidiary companies. The ESOS scheme includes both tenure
based and performance based on stock option options. The maximum value of options that can be awarded to members of the wider
management group is calculated by reference to the grade average cost-to-comapany (“CTC”) and individual grade of the employee. The
performance conditions attached to the option is measured by comparing company’s performance in terms of Total Shareholder Return
(“TSR”) over the performance period with the performance of two group of comparator companies (i.e. Indian and global comparator
companies) defined in the scheme. The extent to which an option vests will depend on the Company’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 options will be subject to a continued service condition only with the remainder measured in terms of TSR.
The performance condition is measured by taking Vedanta Limited’s TSR at the start and end of the performance period (without
averaging), and comparing its performance with that of the comparator group or groups. The information to enable this calculation to be
carried out on behalf of the Nomination and Remuneration Committee (the Committee) is provided by the Company’s advisers. The
Committee considers that this performance condition, which requires that the Company’s total return has outperformed a group of
industry peers, provides a reasonable alignment of the interests of participants with those of the shareholders.
Integrated Report Management Review Statutory Reports Financial Statements
238
Vedanta Limited Integrated Report and Annual Accounts 2017-18
Notes forming part of the Financial Statements
as at and for the year ended March 31, 2018
38 Share Based Payments continued
Initial options under the ESOS were granted on 15 December 2016. Further during the year, new options were granted in September 2017,
October 2017 and November 2017. However, in the scheme launched during the year, business performance (“EBIDTA”) set against
business plan for the financial year is included as an additional condition. The exercise price of the options is ` 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 March 31, 2018 is presented below:
Year of
Grant
2017
2018
2018
2018
Excerise Date
15 December 2016-14 December 2019
1 September 2017-31 August 2020
16 October 2017-15 October 2020
1 November 2017-31 October 2020
Options
outstanding
April 1, 2017
Options granted
during the year
Options
lapsed during
the year
78,03,400
-
-
-
6,70,998
3,93,310
-
-
78,03,400 1,00,81,350 10,64,308
-
1,00,41,040
11,570
28,740
Options lapsed
during the year
owing to
performance
conditions
-
5,81,568
573
1,422
5,83,563
Options
exercised
during the
year
Options
outstanding
March 31, 2018
- 71,32,402
- 90,66,162
10,997
-
27,318
-
- 1,62,36,879
The details of share options for the year ended March 31, 2017 is presented below:
Excerise Date
Options
outstanding
April 1, 2017
Options granted
during the year
Options
lapsed
during the
year
Options lapsed
during the year
owing to
performance
conditions
Options
exercised
during the year
Options
outstanding
March 31,
2018
15 December 2016-14 December 2019
- 80,00,000 1,96,600
-
- 78,03,400
Year of
Grant
2016
The fair value of all options has been determined at the date of grant of the option allowing for the effect of any market-based performance
conditions. This fair value, adjusted by the Group’s estimate of the number of options that will eventually vest as a result of non-market
conditions, is expensed over the vesting period.
The fair values were calculated using the Black-Scholes Model for tenure based and EBIDTA based options and Monte Carlo simulation
model for TSR based options. The inputs to the model include the share price at date of grant, exercise price, expected volatility, expected
dividends, expected term and the risk free rate of interest. Expected volatility has been calculated using historical return indices over the
period to date of grant that is commensurate with the performance period of the option. The volatilities of the industry peers have been
modelled based on historical movements in the indices over the period to date of grant which is also commensurate with the performance
period for the option. The history of return indices is used to determine the volatility and correlation of share prices for the comparator
companies and is needed for the Monte Carlo model to estimate their future TSR performance relative to the Vedanta Limited’s TSR
performance. All options are assumed to be exercised immediately after vesting, as the excercise period is 6 months.
The assumptions used in the calculations of the charge in respect of the ESOS options granted during the year ended March 31, 2018 and
March 31, 2017 are set out below:
Particulars
Number of Options
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 (EBIDTA & Service based/Performance based)
Year ended
March 31, 2018
ESOS September,
October &
November 2017
1,00,81,350
`1
`308.90
3 years
48%
3 years
3.70%
6.50%
10%p.a.
` 275.3/ ` 161.1
Year ended
March 31, 2017
ESOS December
2016
80,00,000
` 1
` 235.90
3 years
48%
3 years
3.20%
6.50%
10%p.a.
` 213.6/ ` 82.8
The Company recognized total expenses of ` 47 Crore (March 31, 2017 ` 7 Crore) related to above equity settled share-based payment
transactions in the year ended March 31, 2018 out of which ` 18 Crore (March 31, 2017 ` 3 Crore) was recovered from group companies.
Vedanta Limited Integrated Report and Annual Accounts 2017-18
239
Notes forming part of the Financial Statements
as at and for the year ended March 31, 2018
38 Share Based Payments continued
Employee stock option plans of erstwhile Cairn India Limited:
The Company has provided various share based payment schemes to its employees. During the year ended March 31, 2018 and March 31,
2017, the following schemes were in operation:
Particulars
Date of Board approval
Date of Shareholder’s approval
Number of options granted till March 31, 2018
Method of Settlement
Vesting Period
Exercise Period
CIPOP
CIESOP
CIPOP Phantom
17-Nov-06
17-Nov-06
1,61,67,131
Equity
3 years from
grant date
3 months from
vesting date
17-Nov-06
17-Nov-06
3,01,12,439
Equity
3 years from
grant date
7 years from
vesting date
Not applicable
Not applicable
48,31,955
Cash
3 years from
grant date
Immediately
upon vesting
CIPOP plan
Options will vest (i.e., become exercisable) at the end of a “performance period” which has been set by the Nomination remuneration
committee at the time of grant (although such period will not be less than three years). However, the percentage of an option which vests
on this date will be determined by the extent to which pre-determined performance conditions have been satisfied. Phantom options are
exercisable proportionate to the period of service rendered by the employee subject to completion of one year.
CIESOP plan
There are no specific vesting conditions under CIESOP plan other than completion of the minimum service period. Phantom options are
exercisable proportionate to the period of service rendered by the employee subject to completion of one year.
Details of employees stock option plans is presented below
CIPOP Plan
Outstanding at the beginning of the year
Granted during the year
Expired during the year
Exercised during the year
Forfeited / cancelled during the year
Modified during the year (refer note below)
Outstanding at the end of the year
Exercisable at the end of the year
Year ended March 31, 2018
Year ended March 31, 2017
Number of options
Weighted average
exercise price in ` Number of options
Weighted average
exercise price in `
Nil
Nil
Nil
Nil
Nil
Nil
Nil
Nil
NA
NA
NA
NA
NA
NA
NA
NA
50,61,646
Nil
Nil
9,39,680
16,33,634
24,88,332
Nil
Nil
10.00
NA
NA
10.00
10.00
NA
NA
NA
Weighted average share price at the date of exercise of stock options is NA (March 31, 2017: ` 195.72)
CIPOP Plan
Outstanding at the beginning of the year
Granted during the year
Expired during the year
Exercised during the year
Forfeited / cancelled during the year
Outstanding at the end of the year
Exercisable at the end of the year
Year ended March 31, 2018
Year ended March 31, 2017
Number of options
Weighted average
exercise price in ` Number of options
Weighted average
exercise price in `
89,62,666
Nil
Nil
15,92,759
2,39,282
71,30,625
71,30,625
264.31
NA
NA
213.75
268.24
275.47
275.47
96,02,201
Nil
Nil
89,402
5,50,133
89,62,666
89,62,666
302.56
NA
NA
165.07
296.45
264.31*
264.31*
Weighted average share price at the date of exercise of stock options is ` 324.64 (March 31, 2017: ` 227.41)
CIPOP Plan
Outstanding at the beginning of the year
Granted during the year
Expired during the year
Exercised during the year
Forfeited / cancelled during the year
Modified during the year (refer note below)
Outstanding at the end of the year
Exercisable at the end of the year
Year ended March 31, 2018
Year ended March 31, 2017
Number of options
Weighted average
exercise price in ` Number of options
Weighted average
exercise price in `
Nil
Nil
Nil
Nil
Nil
Nil
Nil
Nil
NA
NA
NA
NA
NA
NA
NA
NA
8,25,184
Nil
Nil
Nil
4,92,021
3,33,163
Nil
Nil
10.00
NA
NA
NA
10.00
NA
NA
NA
Integrated Report Management Review Statutory Reports Financial Statements
240
Vedanta Limited Integrated Report and Annual Accounts 2017-18
Notes forming part of the Financial Statements
as at and for the year ended March 31, 2018
38 Share Based Payments continued
Weighted average share price at the date of exercise of stock options is NA (March 31, 2017: NA)
Scheme
The details of exercise price for stock options
outstanding as at March 31, 2018 are:
CIPOP Plan
CIESOP Plan
CIPOP Plan – Phantom options
The details of exercise price for stock options
outstanding as at March 31, 2017 are:
CIPOP Plan
CIESOP Plan
CIPOP Plan – Phantom options
Range of exercise
price in `
No. of options
outstanding
Weighted average
remaining contractual
life of options (in years)
Weighted average
exercise price in `
NA
187-291.25
NA
10
126.95-291.25
NA
Nil
71,30,625
Nil
Nil
89,62,666
Nil
NA
NA
NA
NA
NA
NA
NA
275.47
NA
NA
264.31*
NA
* During the previous year, consequent to the merger of Cairn India Limited with Vedanta Limited the exercise price has been reduced by
` 40 per option i.e. from ` 304.31 to ` 264.31.
Effect of the above employee share-based payment plans on the statement of profit and loss and on its financial position:
Particulars
Total Employee Compensation Cost pertaining to share-based payment plans
Compensation Cost pertaining to equity-settled employee share-based payment plan included above
Compensation Cost pertaining to cash-settled employee share-based payment plan included above
As at
March 31,
2018
(` in Crore)
As at
March 31,
2017
-
-
-
21
16
5
Volatility is the measure of the amount by which the price has fluctuated or is expected to fluctuate during the period. The measure of
volatility used in Black-Scholes option-pricing model is the annualized standard deviation of the continuously compounded rates of return
on the stock over a period of time. Time to maturity /expected life of options is the period for which the Company expects the options to
be live. Time to maturity has been calculated as an average of the minimum and maximum life of the options.
Employee share option plan of Vedanta Resources Plc
The value of shares that are awarded to members of the Group is calculated by reference to the individual fixed salary and share-based
remuneration consistent with local market practice. ESOP scheme of VRPLC is both tenure and performance based share schemes. The
options are indexed to and settled by Parent’s shares (Vedanta Resources Plc shares as defined in the scheme). The options have a fixed
exercise price denominated in Parent’s functional currency (10 US cents per share), the performance period of each option is three years
and is exercisable within a period of six months from the date of vesting beyond which the option lapses.
Amount recovered by the Parent and recognized by the Company in the Statement of Profit and Loss for year ended March 31, 2018 is
` 29 Crore (March 31, 2017: ` 33 Crore). The Company considers these amounts as not material and accordingly has not provided further
disclosures.
Out of the total expense of ` 58 Crore pertaining to equity settled options for the year ended March 31, 2018, the Group has capitalised
` 2 Crore expense for the year ended March 31, 2018.
39 Employee Benefit Plans
a) Defined contribution plans
The Company contributed a total of ` 59 crore for the year ended March 31, 2018 and ` 54 Crore for the year ended March 31, 2017 to
the following defined contribution plans.
Central provident fund and family pension fund
In accordance with 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
fiscal year 2018 and 2017) 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 Company has no further obligations under the fund managed by the GOI beyond its monthly contributions which are
charged to the statement of profit and loss in the period they are incurred. Where the contributions are made to independently managed
and approved funds, shortfall in actual return, if any, from the return guaranteed by the State are made by the employer, these are
accounted for as defined benefit plans. The benefits are paid to employees on their retirement or resignation from the Company. There is
no shortfall in the actual return for independently managed funds for the year ended March 31, 2018 and March 31, 2017. Having regard to
the assets of the fund and the return on the investments, the Company does not expect any deficiency in the foreseeable future.
Superannuation
Superannuation, another pension scheme applicable in India, is applicable only to senior executives. The Company holds a policy with Life
Insurance Corporation of India (“LIC”), to which it contributes a fixed amount relating to superannuation and the pension annuity is met by
LIC as required, taking into consideration the contributions made. The Company has no further obligations under the scheme beyond its
monthly contributions which are charged to the statement of profit and loss in the year they are incurred.
Vedanta Limited Integrated Report and Annual Accounts 2017-18
241
Notes forming part of the Financial Statements
as at and for the year ended March 31, 2018
39 Employee Benefit Plans continued
b) Defined benefit plans
Contribution to provident fund trust (the “trust”)
The provident fund of the Iron Ore division is exempted under section 17 of The Employees Provident Fund 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 Ind AS 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 in the funds managed by the trust and hence there is no further liability as on March 31, 2018 and March 31, 2017. Having regard to
the assets of the Fund and the return on the investments, the Company does not expect any deficiency in the foreseeable future.
The Company contributed a total of ` 10 crore for the year ended March 31, 2018 and ` 11 Crore for the year ended March 31, 2017, The
present value of obligation and the fair value of plan assets of the trust are summarised below.
Particulars
Fair value of plan assets
Present value of defined benefit obligations
Net liability arising from defined benefit obligation of trust
Percentage allocation of plan assets of trust
Assets by category
Government Securities
Debentures / bonds
Equity
Fixed deposits
(` in Crore)
As at
March 31, 2018
As at
March 31, 2017
181
(174)
Nil
160
(155)
Nil
As at
March 31, 2018
As at
March 31, 2017
53.00%
42.00%
3.00%
2.00%
53.00%
45.00%
0.00%
2.00%
Gratuity plan
In accordance with the Payment of Gratuity Act, 1972, the Company contributes to a defined benefit plan (the “Gratuity Plan”) for
employees who have completed 5 years of service. 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 Company. The Gratuity plan is a funded plan and the Company makes contribution to recognised funds in India.
Based on actuarial valuations conducted as at year end, a provision is recognised in full for the benefit obligation over and above the funds
held in the Gratuity Plan.
Principal actuarial assumptions
Principal actuarial assumptions used to determine the present value of the defined benefit obligation are as follows:
Particulars
Discount rate
Expected rate of increase in compensation level of covered employees
In service mortality
Post retirement mortality
Amount recognised in the balance sheet consists of:
Particulars
Fair value of plan assets
Present value of defined benefit obligations
Net liability arising from defined benefit obligation
Amount recognised in the statement of profit and loss in respect of defined benefit plan are as follows:
Year ended
March 31, 2018
Year ended
March 31, 2017
7.70%
2%-10%
IALM
(2006-08)
LIC(1996-98)
Ultimate
7.60%
5.5%-10%
IALM
(2006-08)
LIC(1996-98)
Ultimate
(` in Crore)
As at
March 31, 2018
As at
March 31, 2017
123
(161)
(38)
113
(148)
(35)
Integrated Report Management Review Statutory Reports Financial Statements
242
Vedanta Limited Integrated Report and Annual Accounts 2017-18
Notes forming part of the Financial Statements
as at and for the year ended March 31, 2018
39 Employee Benefit Plans continued
Particulars
Current service cost
Net Interest cost
Components of defined benefit costs recognised in profit or loss
Amount recognised in other comprehensive income in respect of defined benefit plan are as follows:
Particulars
Re-measurement of the net defined benefit obligation:-
Actuarial (gains)/losses arising from defined benefit obligations
(Gain)/Loss on plan assets
Components of defined benefit costs recognised in other comprehensive income
Movement in present value of defined benefit obligation:
Particulars
Opening balance
Current service cost
Benefits paid
Interest cost
Actuarial losses/(gains) arising from changes in financial assumptions
Closing balance
Movement in the fair value of plan assets is as follows:
Particulars
Opening balance
Contributions received
Benefits paid
Re-measurement loss arising from return on plan assets
Interest income
Closing balance
As at
March 31,
2018
(` in Crore)
As at
March 31,
2017
16
2
18
15
3
18
(` in Crore)
Year ended
March 31,
2018
Year ended
March 31,
2017
(2)
1
(1)
(2)
1
(1)
(` in Crore)
Year ended
March 31,
2018
Year ended
March 31,
2017
148
16
(12)
11
(2)
161
132
15
(8)
11
(2)
148
(` in Crore)
Year ended
March 31,
2018
Year ended
March 31,
2017
113
15
(13)
(1)
9
123
100
18
(12)
(1)
8
113
The above plan assets have been invested in the qualified insurance policies.
The actual return on plan assets was ` 8 Crore for the year ended March 31, 2018 and ` 8 Crore for the year ended March 31, 2017.
The weighted average duration of the defined benefit obligation is 16.75 years and 16.60 years as at March 31, 2018 and March 31, 2017
respectively.
Vedanta Limited Integrated Report and Annual Accounts 2017-18
243
Notes forming part of the Financial Statements
as at and for the year ended March 31, 2018
39 Employee Benefit Plans continued
The Company expects to contribute ` 20 Crore to the funded defined benefit plans in fiscal year 2019.
Sensitivity analysis
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 the reporting period while holding all other
assumptions constant.
Increase / (Decrease) in defined benefit obligation
Discount rate
Increase by 0.50%
Decrease by 0.50%
Expected rate of increase in compensation level of covered employees
Increase by 0.50%
Decrease by 0.50%
(` in Crore)
Year ended
March 31,
2018
Year ended
March 31,
2017
(6)
6
7
(6)
(6)
6
7
(6)
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 benefit obligation liability
recognized in the balance sheet.
Risk analysis
Company is exposed to a number of risks in the defined benefit plans. Most significant risks pertaining to defined benefit plans and,
management’s estimation of the impact of these risks are as follows:
Investment risk
The Gratuity plan is funded with Life Insurance Corporation of India (LIC) and ICICI Prudential Life (ICICI). Company does not have any
liberty to manage the fund provided to LIC and ICICI.
The present value of the defined benefit plan liability is calculated using a discount rate determined by reference to Government of India
bonds. 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 plan liability.
Longevity risk / Life expectancy
The present value of the defined benefit plan liability 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 liability
Salary growth risk
The present value of the defined benefit plan liability is calculated by reference to the future salaries of plan participants. An increase in the
salary of the plan participants will increase the plan liability.
40 Capital management
The Company’s objectives when managing capital is 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 Company’s overall strategy
remains unchanged from previous year.
The Company 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 requirements are met through a mixture of equity, internal fund generation and other non-current borrowings. The Company’s
policy is to use current and non-current borrowings to meet anticipated funding requirements.
The Company monitors capital on the basis of the gearing ratio which is net debt divided by total capital (equity plus net debt) . The
Company is not subject to any externally imposed capital requirements.
Net debt are non-current and current debts as reduced by cash and cash equivalents, other bank balances and current investments. Equity
comprises all components including other comprehensive income.
Integrated Report Management Review Statutory Reports Financial Statements
244
Vedanta Limited Integrated Report and Annual Accounts 2017-18
Notes forming part of the Financial Statements
as at and for the year ended March 31, 2018
40 Capital management continued
The following table summarizes the capital of the Company:
Particulars
Cash and cash equivalents (Refer note 12)
Other bank balances (Refer note 13)
Non-current bank deposits (Refer note 7)
Current investments (Refer note 10)
Total cash (a)
Non-current borrowings (Refer note 19)
Current borrowings (Refer note 23)
Current maturities of non-current borrowings (Refer note 25)
Total borrowings (b)
Net debt c=(b-a)
Total equity
Total capital (equity + net debt) (d)
Gearing ratio (times) (c/d)
(` in Crore except as stated)
As at
March 31,
2018
1,144
450
318
5,537
As at
March 31,
2017
638
776
283
19,668
7,449
21,365
14,810
18,320
7,583
22,248
14,309
6,676
40,713
43,233
33,264
79,313
21,868
79,768
112,577
101,636
0.30
0.22
41 The Company has incurred an amount of ` 45 Crore (March 31, 2017 : ` 49 Crore) towards Corporate Social Responsibility (CSR) as per
Section 135 of the Companies Act, 2013 and is included in other expenses:
Particulars
(a) Gross amount required to be spend by the Company during the year
(b) Amount spent on: *
i)
ii) On purposes other than (i) above (for CSR projects)
Construction/acquisition of assets
Total
(` in crore)
Year ended
March 31, 2018
Year ended
March 31, 2017
Yet to be
Paid in
Cash
In- Cash
In- Cash
Yet to be
Paid in Cash
-
-
29
29
-
-
16
16
-
-
36
36
-
-
13
13
* includes ` 16 Crore (March 31, 2017 : ` 12 Crore) paid to related party (Refer note 51)
42 Disclosures under Section 22 of the Micro, Small and Medium Enterprises Development Act 2006
Particulars
(i) Principal amount remaining unpaid to any supplier as at the end of the accounting year
(ii) Interest due thereon remaining unpaid to any supplier as at the end of the accounting year
(iii) The amount of interest paid along with the amounts of the payment made to the supplier beyond the appointed
day
(iv) The amount of interest due and payable for the year
(v) The amount of interest accrued and remaining unpaid at the end of the accounting year
(vi) The amount of further interest due and payable even in the succeeding year, until such date when the interest
dues as above are actually paid
(` in crore)
As at
March 31,
2018
As at
March 31,
2017
84
-
26
-
-
-
-
-
-
-
-
-
Vedanta Limited Integrated Report and Annual Accounts 2017-18
245
Notes forming part of the Financial Statements
as at and for the year ended March 31, 2018
43 Oil & gas reserves and resources
The Company’s gross reserve estimates are updated atleast 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 (2007)”. 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
Total
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)
As at
March 31,
2018
As at
March 31,
2017
As at
March 31,
2018
As at
March 31,
2017
As at
March 31,
2018
As at
March 31,
2017
2,288
-
3,460
733
251
335
2,197
-
4,034
696
225
335
371
335
430
45
34
48
410
272
478
41
23
48
130
117
150
10
13
24
7,067
7,487
1,263
1,272
444
143
95
167
9
9
24
447
The Company’s net working interest proved and probable reserves is as follows:
Particulars
Reserves as of March 31, 2016*
Additions / (revision) during the year
Production during the year
Reserves as of March 31, 2017**
Additions / (revision) during the year
Production during the year
Reserves as of March 31, 2018***
Proved and probable
reserves
Proved and probable
reserves (developed)
Oil
(mmstb)
Gas
(bscf)
Oil
(mmstb)
Gas
(bscf)
85
(0)
(23)
62
15
(22)
55
32
1
(4)
29
8
(6)
31
76
(0)
(23)
53
8
(22)
39
18
(2)
(4)
12
13
(6)
19
* Includes probable oil reserves of 22.69 mmstb (of which 15.05 mmstb is developed) and probable gas reserves of 18.31 bscf (of which
5.02 bscf is developed)
** Includes probable oil reserves of 20.36 mmstb (of which 11.73 mmstb is developed) and probable gas reserves of 22.69 bscf (of which
4.75 bscf is developed)
*** Includes probable oil reserves of 15.43 mmstb (of which 2.97 mmstb is developed) and probable gas reserves of 14.51 bscf (of which
3.91 bscf is developed)
mmboe = million barrels of oil equivalent
mmstb = million stock tank barrels
bscf = billion standard cubic feet
1 million metric tonnes = 7.4 mmstb
1 standard cubic meter =35.315 standard cubic feet
MBA = Mangala, Bhagyam & Aishwarya
EOR = Enhanced Oil Recovery
Integrated Report Management Review Statutory Reports Financial Statements 4
5
6
246
Vedanta Limited Integrated Report and Annual Accounts 2017-18
Notes forming part of the Financial Statements
as at and for the year ended March 31, 2018
44 Interest in Other entities
a) Subsidiaries
The Company, has a number of subsidiaries held directly and indirectly by the Company which operate and are incorporated around the
world. Following are the details of shareholdings in the subsidiaries.
S. No Name of the Company
1
2
Copper Mines of Tasmania Pty Limited
("CMT")
Thalanga Copper Mines Pty Limited
("TCM")
Principal activities
Copper mining
Immediate holding company
Country of
Incorporation
Ownership interest
held by the Company
As at
March 31,
2018
As at
March 31,
2017
Monte Cello B.V.
Australia
100.00
100.00
Copper mining
Monte Cello B.V.
Australia
100.00
100.00
3 Monte Cello B.V. (“MCBV”)
Investment company
Vedanta Limited
Netherlands
100.00
100.00
Bharat Aluminium Company Limited
("BALCO")
Aluminium mining and
smelting
Vedanta Limited
India
51.00
51.00
Talwandi Sabo Power Limited ("TSPL")
Power generation
Vedanta Limited
Sterlite (USA) Inc.
Investment company
Vedanta Limited
7 Hindustan Zinc Limited ("HZL")
Zinc mining and smelting
Vedanta Limited
India
USA
India
100.00
100.00
100.00
100.00
64.92
64.92
8
9
Fujairah Gold FZC 1
Gold & Silver processing
Malco Energy Limited UAE
100.00
100.00
THL Zinc Ventures Ltd
Investment company
Vedanta Limited
Mauritius
100.00
100.00
10 THL Zinc Ltd
Investment company
THL Zinc Ventures Ltd Mauritius
100.00
100.00
11
THL Zinc Holding B.V.
Investment company
Vedanta Limited
Netherlands
100.00
100.00
12 THL Zinc Namibia Holdings (Proprietary)
Investment company
THL Zinc Ltd
Namibia
100.00
100.00
Limited (“VNHL”)
13 Skorpion Zinc (Proprietary) Limited
Investment company
14 Skorpion Mining Company (Proprietary)
Limited
Exploration, development,
production and sale of
zinc ore
THL Zinc Namibia
Holdings (Proprietary)
Limited
Skorpion Zinc
(Proprietary) Limited
Namibia
100.00
100.00
Namibia
100.00
100.00
15 Namzinc (Proprietary) Limited
Owns and operates a Zinc
refinery
Skorpion Zinc
(Proprietary) Limited
Namibia
100.00
100.00
16 Amica Guesthouse (Proprietary) Limited Accommodation and catering
17 Rosh Pinah Healthcare (Proprietary)
Limited
18 Black Mountain Mining (Proprietary)
Limited ("BMM")
services
Leasing out of medical
equipment and building and
conducting services related
thereto
Exploration, development,
production and sale of zinc,
lead, copper and associates
mineral concentrates
Skorpion Zinc
(Proprietary) Limited
Skorpion Zinc
(Proprietary) Limited
Namibia
100.00
100.00
Namibia
69.00
69.00
THL Zinc Ltd
South Africa
74.00
74.00
19 Vedanta Lisheen Holdings Limited
Investment company
THL Zinc Holing B.V.
Ireland
100.00
100.00
20 Vedanta Lisheen Mining Limited
Zinc and lead mining
21 Killoran Lisheen Mining Limited
Zinc and lead mining
22 Lisheen Milling Limited
Manufacturing
23 Killoran Lisheen Finance Limited
Investment company
24 Vedanta Exploration Ireland Limited
Exploration company
25 Sterlite Ports Limited
Infrastructure
26 Vizag General Cargo Berth Private
Infrastructure
Limited
Vedanta Lisheen
Holdings Limited
Vedanta Lisheen
Holdings Limited
Vedanta Lisheen
Holdings Limited
Vedanta Lisheen
Holdings Limited
Vedanta Lisheen
Holdings Ltd
Vedanta Limited
Vedanta Limited
Ireland
100.00
100.00
Ireland
100.00
100.00
Ireland
100.00
100.00
Ireland
100.00
100.00
Ireland
100.00
100.00
India
India
100.00
100.00
100.00
100.00
27 Paradip Multi Cargo Berth Private
Infrastructure
Vedanta Limited
India
100.00
100.00
Limited
Vedanta Limited Integrated Report and Annual Accounts 2017-18
247
Notes forming part of the Financial Statements
as at and for the year ended March 31, 2018
44 Interest in Other entities continued
S. No Name of the Company
Principal activities
Immediate holding company
Ownership interest
held by the Company
As at
March 31,
2018
As at
March 31,
2017
Country of
Incorporation
28 Maritime Ventures Private Limited
Infrastructure
Sterlite Ports Limited
India
100.00
100.00
29 Lakomasko B.V.
Investment company
THL Zinc Holding B.V. Netherlands
100.00
100.00
30 Malco Energy Limited ("MEL")
Power generation
31 Sesa Resources Limited ("SRL")
Iron ore mining
32 Sesa Mining Corporation Limited
Iron ore mining
Vedanta Limited
Vedanta Limited
Sesa Resources
Limited
India
India
India
100.00
100.00
100.00
100.00
100.00
100.00
33 Goa Sea Ports Private Limited 2
Infrastructure
Sterlite Ports Limited
India
100.00
100.00
34 Western Cluster Limited
Iron ore mining
35 Twin Star Mauritius Holdings Limited
Investment Company
("TMHL") *
36 Twin Star Energy Holdings Limited
Investment Company
("TEHL") *
37 Bloom Fountain Limited
Bloom Fountain
Limited
Twin Star Energy
Holdings Limited
Bloom Fountain
Limited
Liberia
100.00
100.00
Mauritius
100.00
100.00
Mauritius
100.00
100.00
Operating (Iron ore) and
Investment Company
Vedanta Limited
Mauritius
100.00
100.00
38 Cairn India Holdings Limited 3
Investment company
Vedanta Limited
Jersey
100.00
100.00
39 Cairn Energy Hydrocarbons Limited
40 Cairn Exploration (No. 2) Limited
41 Cairn Energy Gujarat Block 1 Limited
42 Cairn Energy Discovery Limited
43 Cairn Energy India Pty Limited
Oil and gas exploration,
development and production
Cairn India Holdings
Limited
Oil and gas exploration,
development and production
Cairn India Holdings
Limited
Oil and gas exploration,
development and production
Cairn India Holdings
Limited
Oil and gas exploration,
development and production
Cairn India Holdings
Limited
Oil and gas exploration,
development and production
Cairn India Holdings
Limited
44 CIG Mauritius Holdings Private Limited
Investment Company
45 CIG Mauritius Private Limited
Investment Company
Cairn Energy
Hydrocarbons Limited
CIG Mauritius
Holdings Private
Limited
Scotland**
100.00
100.00
Scotland
100.00
100.00
Scotland
100.00
100.00
Scotland
100.00
100.00
Australia
100.00
100.00
Mauritius
100.00
100.00
Mauritius
100.00
100.00
46 Cairn Lanka Private Limited
47 Cairn South Africa Pty Limited
Oil and gas exploration,
development and production
CIG Mauritius Private
Limited
Oil and gas exploration,
development and production
Cairn Energy
Hydrocarbons Limited
Sri Lanka
100.00
100.00
South Africa
100.00
100.00
48 Sesa Sterlite Mauritius Holdings Limited
Investment Company
*
Bloom Fountain
Limited
Mauritius
100.00
100.00
49 Avanstrate (Japan) Inc. (‘ASI’)***
Manufacturer of LCD glass
substrate
Cairn India Holdings
Limited
Japan
51.63
50 Avanstrate Korea***
51 Avanstrate Taiwan***
Manufacturer of LCD glass
substrate
Manufacturer of LCD glass
substrate
AvanStrate Inc.
South Korea
51.63
AvanStrate Inc.
Taiwan
51.63
-
-
-
*Under liquidation **Principal place of business is in India ***Purchased during the current year
1 Pursuant to transfer of holding in Fujairah Gold from TCM and CMT to MEL in July 2016
2 Goa Sea Port Private Limited incorporated on July 5, 2016 as a 100% subsidiary of Sterlite Ports Limited (SPL)
3 Cairn India Limited merged with Vedanta Limited. Post merger Cairn India Holdings Limited became direct subsidiary of Vedanta Limited (Refer note 4).
4 The Company also has interest in certain trust which are neither significant nor material to the Company.
5 Subsequent to the balance sheet date, Vedanta Star Limited, a 100% subsidiary of Vedanta Limited was incorporated on April 23, 2018.
b) Joint operations
The Company participates in several unincorporated joint operations which involve the joint control of assets used in oil and gas exploration
and producing activities which are as follows:
Integrated Report Management Review Statutory Reports Financial Statements 248
Vedanta Limited Integrated Report and Annual Accounts 2017-18
Notes forming part of the Financial Statements
as at and for the year ended March 31, 2018
44 Interest in Other entities continued
Particulars
Operating Blocks
Ravva block
CB-OS/2 – Exploration
CB-OS/2 - Development & production
RJ-ON-90/1 – Exploration(1)
RJ-ON-90/1 – Development & production(1)
KG-OSN-2009/3
Relinquished block
PR-OSN-2004/1(2)
Non-Operating Blocks
KG-ONN-2003/1(3)
Area
Krishna Godavari
Cambay Offshore
Cambay Offshore
Rajasthan Onshore
Rajasthan Onshore
Krishna Godavari Offshore
Palar Basin Offshore
Krishna Godavari Onshore
Participating Interest (%)
As at
March 31,
2018
22.50
60.00
40.00
50.00
35.00
100.00
As at
March 31,
2017
22.50
60.00
40.00
50.00
35.00
100.00
-
35.00
49.00
49.00
(1) Vedanta Limited’s step down subsidiary Cairn Energy Hydrocarbons Limited owns additional 50% and 35% interest in RJ-ON-90/1 - Exploration block and
RJ-ON-90/1 - Development & Production block respectively.
(2) Relinquished on June 30, 2017
(3) Operatorship has been transferred to Oil and Natural Gas Corporation (ONGC) w.e.f. July 7, 2014
c) Interest in associates and joint ventures
Set out below are the associates and joint ventures of the Company as at March 31, 2018 which, in the opinion of the directors, are not
material to the Company. The country of incorporation or registration is also their principal place of business, and the proportion of
ownership interest is the same as the proportion of voting rights held.
S. No Associates and other entities
Associates
Roshkor Township (Proprietary) Limited
1
2 Gaurav Overseas Private Limited
1
Other entities
Lisheen Mine Partnership (50% each held by Killoran Lisheen Mining Limited &
Vedanta Lisheen Mining Limited)
S. No Jointly controlled entities
Rampia Coal Mines and Energy Private Limited
1
2 Madanpur South Coal Company Limited
3 Goa Maritime Private Limited
Country of
incorporation
Namibia
India
Ireland
Country of
incorporation
India
India
India
% Ownership interest
As at
March 31,
2018
As at
March 31,
2017
50.00
50.00
50.00
50.00
100.00
100.00
% Ownership interest
As at
March 31,
2018
As at
March 31,
2017
17.39
18.05
50.00
17.39
18.05
50.00
45 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 the Company (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 H’onable High Court of Bombay and Madras have been challenged by Commissioner of Income Tax,
Goa and Ministry of Corporate Affairs through a Special Leave Petition before the Supreme Court and also by a creditor and a shareholder
of the Company. The said petitions are pending for hearing and admission.
46 Financial guarantees
The Company has issued financial guarantees to banks on behalf of and in respect of loan facilities availed by its group companies. In
accordance with the policy of the Company (Refer note 3(h)) the Company has designated such guarantees as ‘Insurance Contracts’. The
Company has classified financial guarantees as contingent liabilities.
Accordingly, there are no assets and liabilities recognized in the balance sheet under these contracts other than those related to
commission income recognized and/or receivable from such group companies as disclosed in note 51.
Refer below for details of the financial guarantees issued:
Vedanta Limited Integrated Report and Annual Accounts 2017-18
249
Notes forming part of the Financial Statements
as at and for the year ended March 31, 2018
46 Financial guarantees continued
Company Name
Talwandi Sabo Power Limited
Vizag General Cargo Berth Private Limited
Bharat Aluminium Company Limited
Copper Mines of Tasmania Pty Limited
Thalanga Copper Mines Pty Limited
Western Cluster Limited
Cairn India Holdings Limited
(` in crore)
As at
March 31,
2018
As at
March 31,
2017 Purpose
9,000
10,693 Borrowing for long term power agreement.
483
-
31
23
-
3,224
Buyers credit for capital expenditure, custom
bonds and term loan facility.
458
2,500 Short term commercial paper
30
Environmental and closure obligations relating
to Mining leases granted
Environmental and closure obligations relating
23
to Mining leases granted
32 Extending banking facilities
- For the purpose of external borrowings.
47 Leases
Operating lease commitments – as lessee
The Company is having an operating lease in relation to the office premises, with a non-cancellable lease period of 3 years. There are no
restrictions imposed by lease arrangements and there are no subleases. There are no contingent rents. The information required with
respect to non-cancellable leases are as follow:
Particulars
Within one year
Later than one year but not later than five years
Later than five years
Total
(` in crore)
As at
March 31,
2018
As at
March 31,
2017
1
0
-
1
1
1
0
2
Lease payments recognized as expenses on non-cancellable lease during the year is ` 1 Crore (March 31, 2017: ` 28Crore)
48 Financial instruments
This section gives an overview of the significance of financial instruments for the Company and provides additional information on the
balance sheet. Details of significant accounting policies, including the criteria for recognition, the basis of measurement and the basis on
which income and expenses are recognised, in respect of each class of financial asset, financial liability and equity instrument are disclosed
in Note 2 and Note 3.
A. Financial assets and liabilities:
The accounting classification of each category of financial instruments, and their carrying amounts, are set out below:
As at March 31, 2018
Financial Assets
Investments*
Trade receivables
Cash and cash equivalents
Other bank balances
Loans
Derivatives
Other financial assets
Total
Financial Liabilities
Borrowings
Trade payables
Derivatives
Other financial liabilities
Total
Fair value
through
profit or
loss
Fair value
through
other
comprehen-
sive income
5,537
-
-
-
-
20
-
5,557
(` in crore)
Total fair
value
5,697
2,439
1,144
450
14
102
3,446
Amortised
cost
-
2,439
1,144
450
14
-
3,446
Total
carrying
value
5,697
2,439
1,144
450
14
102
3,446
160
-
-
-
-
82
-
242
7,493
13,292
13,292
(` in crore)
Fair value
through
profit or
loss
Fair value
through
other
comprehen-
sive income
-
-
26
-
26
-
-
0
-
0
Amortised
cost
40,713
14,066
-
4,705
Total
carrying
value
40,713
14,066
26
4,705
Total fair
value
40,762
14,066
26
4,705
59,484
59,510
59,559
Integrated Report Management Review Statutory Reports Financial Statements 250
Vedanta Limited Integrated Report and Annual Accounts 2017-18
Notes forming part of the Financial Statements
as at and for the year ended March 31, 2018
48 Financial instruments continued
As at March 31, 2017
Financial Assets
Investments*
Trade receivables
Cash and cash equivalents
Other bank balances
Loans
Derivatives
Other financial assets
Total
Financial Liabilities
Borrowings
Trade payables
Derivatives
Other financial liabilities
Total
Fair value
through
other
comprehen-
sive income
Fair value
through
profit or loss
19,668
-
-
-
-
7
-
19,675
-
-
480
-
480
Fair value
through
other
comprehen-
sive income
Fair value
through
profit or loss
(` in crore)
Total fair
value
19,738
2,080
638
776
286
7
9,655
Amortised
cost
-
2,080
638
776
286
-
9,655
Total
carrying
value
19,738
2,080
638
776
286
7
9,655
70
-
-
-
-
-
-
70
13,435
33,180
33,180
(` in crore)
Amortised
cost
43,233
14,975
-
20,610
Total
carrying
value
43,233
14,975
562
20,610
Total fair
value
43,407
14,975
562
20,610
-
-
82
-
82
78,818
79,380
79,554
* Investment in note 6 also includes investments (in equity and preference shares) in subsidiaries, associates and joint ventures which are carried at cost and hence are
not required to be disclosed as per Ind AS 107 “Financial Instruments Disclosures”. Hence, the same have been excluded from the above table.
B. Fair value hierarchy
The Company uses the following hierarchy for determining and/or disclosing the fair value of financial instruments by valuation techniques:
(i) Level 1: quoted prices (unadjusted) in active markets for identical assets or liabilities.
(ii) 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).
(iii) Level 3: inputs for the asset or liability that are not based on observable market data (unobservable inputs)
The below table summarises the categories of financial assets and liabilities as at March 31, 2018 and March 31, 2017 measured at fair value:
As at March 31, 2018
Financial Assets
At fair value through profit or loss
-Investments
-Derivative financial assets*
At fair value through other comprehensive income
-Investments
-Derivative financial assets*
Total
Financial Liabilities
At fair value through profit or loss
-Derivative financial liabilities*
At fair value through other comprehensive income
-Derivative financial liabilities*
Total
As at March 31, 2017
Financial Assets
At fair value through profit or loss
-Investments
-Derivative financial assets
At fair value through other comprehensive income
-Investments
Total
(` in crore)
Level 1
Level 2
Level 3
1,957
-
3,580
20
149
-
82
2,106
3,682
-
-
11
11
Level 1
Level 2
Level 3
-
-
-
26
0
26
-
-
-
(` in crore)
Level 1
Level 2
Level 3
12,042
-
7,626
7
60
-
12,102
7,633
-
-
10
10
Vedanta Limited Integrated Report and Annual Accounts 2017-18
251
Notes forming part of the Financial Statements
as at and for the year ended March 31, 2018
48 Financial instruments continued
Financial Liabilities
At fair value through profit or loss
-Derivative financial liabilities
At fair value through other comprehensive income
-Derivative financial liabilities
Total
* Refer “D” below.
Level 1
Level 2
Level 3
(` in crore)
-
-
-
480
82
562
-
-
-
The below table summarises the fair value of financial liabilities which are carried at amortised cost as at March 31, 2018 and March 31,
2017:
As at March 31, 2018
Financial Liabilities
Borrowings
Total
As at March 31, 2017
Financial Liabilities
Borrowings
Total
(` in crore)
Level 1
Level 2
Level 3
-
-
40,762
40,762
-
-
(` in crore)
Level 1
Level 2
Level 3
-
-
43,407
43,407
-
-
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 are valued on the basis of market trades, poll and primary issuances for securities issued by the same or similar issuer and for
similar maturities or based on the applicable spread movement for the security derived based on the aforementioned factor(s).
Non-current fixed-rate and variable-rate borrowings: Fair value has been determined by the Company based on parameters such as
interest rates, specific country risk factors, and the risk characteristics of the financed project.
Other non-current financial assets and 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.
Derivative financial assets/liabilities: The Company 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 include forward pricing and swap models, using present
value calculations. The models incorporate various inputs including foreign exchange spot 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 (U.K.).
Trade receivables, cash and cash equivalents, other bank balances, loans, other financial assets, current borrowings, trade payables and
other current financial liabilities: fair values approximate their carrying amounts largely due to the short-term maturities of these
instruments.
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 March 31, 2018 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 transfers between Level 1, Level 2 and Level 3 during the year.
C. Risk management framework
The Company’s businesses are subject to several risks and uncertainties including financial risks.
The Company’s documented risk management policies act as an effective tool in mitigating the various financial risks to which the
businesses are exposed 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 Company has in place risk
management processes which are in line with the Company’s policy. Each significant risk has a designated ‘owner’ within the Company at an
appropriate senior level. The potential financial impact of the risk and its likelihood of a negative outcome are regularly updated.
Integrated Report Management Review Statutory Reports Financial Statements
252
Vedanta Limited Integrated Report and Annual Accounts 2017-18
Notes forming part of the Financial Statements
as at and for the year ended March 31, 2018
48 Financial instruments continued
The risk management process is coordinated by the Management Assurance function and is regularly reviewed by the Company’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 Company’s risk situation
- improve financial returns
Treasury management
Treasury management focuses on liability management, capital protection, liquidity maintenance and yield maximisation. The treasury
policies are approved by the Committee of the Board. Daily treasury operations of the subsidiary companies are managed by the finance
team within the framework of Company’s treasury policies. Long-term fund raising including strategic treasury initiatives are handled by a
Central team. A monthly reporting system exists to inform senior management of the Company’s investments and debt position, exposure
to currency, commodity and interest rate risk and their mitigants including the derivative position. The Company has a strong system of
internal control which enables effective monitoring of adherence to Company’s policies. The internal control measures are effectively
supplemented by regular internal audits.
The investment portfolio at the Company is independently reviewed by CRISIL Limited and Company 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 Company uses derivative instruments to manage the exposure in foreign currency exchange rates, interest rates and commodity
prices. The Company does not acquire or issue derivative financial instruments for trading or speculative purposes. The Company 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 Company’s
policies.
Commodity price risk
The Company 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 Company produces and sells will have an immediate and direct impact on the profitability of the businesses. As a
general policy, the Company aims to sell the products at prevailing market prices. The commodity price risk in import input commodity
such as of Copper Concentrate & Alumina, for our copper and aluminium business 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 Company 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 Company 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
Aluminum
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 Company on selective basis hedges the aluminium content in
outsourced alumina to protect its margins. The Company also enters into hedging arrangements for its aluminium sales to realise average
month of sale LME prices.
Copper
The Company’s custom smelting copper operations at Tuticorin is benefited 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 Company’s policy on custom
smelting is to generate margins from Treatment charges /Refining charges (TC/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 Company
hedges this variability of LME prices through forward contracts and tries to make the LME price a pass-through cost between purchases of
copper concentrate and sales of finished products, both of which are linked to the LME price.
TC/RCs are a major source of income for the Indian copper smelting operations. Fluctuations in TC/RCs are influenced by factors
including demand and supply conditions prevailing in the market for mine output. The Company’s copper business has a strategy of
securing a majority of its concentrate feed requirement under long-term contracts with mines.
Vedanta Limited Integrated Report and Annual Accounts 2017-18
253
Notes forming part of the Financial Statements
as at and for the year ended March 31, 2018
48 Financial instruments continued
Iron ore
The Company 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 crude 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 March 31, 2018, the value of net financial liabilities linked to commodities (excluding derivatives) accounted for on provisional prices
was ` 3,335 Crore (March 31, 2017: liability of ` 2,404 Crore). 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 April 01, 2018.
Set out below is the impact of 10% increase in LME prices on profit/ (loss) for the year and total equity as a result of changes in value of the
Company’s commodity financial instruments:
As at March 31, 2018
Copper
As at March 31, 2017
Copper
Effect on profit/(loss) of a
10% increase in the LME
March 31, 2018
Effect on total equity of a
10% increase in the LME
March 31, 2018
(` in crore)
(342)
-
(` in crore)
Effect on profit/(loss) of a
10% increase in the LME
March 31, 2017
Effect on total equity of a
10% increase in the LME
March 31, 2017
(281)
-
Total
Exposure
(3,416)
Total
Exposure
(2,805)
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 Company’s financial statements.
Included above is also the impact of a 10% increase in closing copper LME for provisionally priced copper concentrate purchased at
Copper division custom smelting operations in India of ` 368 Crore (March 31, 2017: ` 312 Crore), which is pass through in nature and as
such will not have any impact on the profitability.
Financial risk
The Company’s Board approved financial risk policies include monitoring, measuring and mitigating the liquidity, currency, interest rate and
counterparty risk. The Company does not engage in speculative treasury activity but seeks to manage risk and optimize interest and
commodity pricing through proven financial instruments.
(a) Liquidity
The Company requires funds both for short-term operational needs as well as for long-term investment programmes mainly in growth
projects. The Company generates 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. The Company has been rated by
CRISIL Limited (CRISIL) and India Ratings and Research Private Limited (India Rating) for its capital market issuance in the form of CPs and
NCDs and for its banking facilities in line with Basel II norms.
CRISIL changed the outlook for the Company’s long-term bank facilities and its Non-Convertible Debentures (NCD) programme to CRISIL
AA / Positive from CRISIL AA /Stable during the year on account of structural improvement in business profile and deleveraging. India
Ratings has revised the outlook on Vedanta Limited’s ratings to IND AA / Positive from IND AA/ Negative on account of improved financial
metrics, completion of the merger with Cairn and proactive refinancing. Vedanta Limited has the highest short term rating on its working
capital and Commercial Paper Programme at A1+ from CRISIL and India Ratings.
Anticipated future cash flows, together with undrawn fund based committed facilities of ` 985 Crore, and cash, bank and current
investments of ` 7,449 Crore as at March 31, 2018, are expected to be sufficient the meet the liquidity requirement of the Company in the
near future.
The Company remains committed to maintaining a healthy liquidity, a low gearing ratio, deleveraging and strengthening our balance sheet.
The maturity profile of the Company’s financial liabilities based on the remaining period from the date of balance sheet to the contractual
maturity date is given in the table below. The figures reflect the contractual undiscounted cash obligation of the Company.
Integrated Report Management Review Statutory Reports Financial Statements 254
Vedanta Limited Integrated Report and Annual Accounts 2017-18
Notes forming part of the Financial Statements
as at and for the year ended March 31, 2018
48 Financial instruments continued
As at March 31, 2018
Payments due by year
Borrowings *
Derivative financial liabilities
Trade Payables and other financial liabilities **
Total
As at March 31, 2017
Payments due by year
Borrowings *
Derivative financial liabilities
Trade Payables and other financial liabilities **
Total
(` in crore)
<1 year
1-3 years
3-5 years
>5 years
Total
28,336
26
18,048
11,556
-
44
3,373
-
-
2,810
-
-
46,075
26
18,092
46,410
11,600
3,373
2,810
64,193
(` in crore)
<1 year
1-3 years
3-5 years
>5 years
Total
24,700
561
31,878
10,483
-
3,142
13,180
-
-
3,406
-
198
51,769
561
35,218
57,139
13,625
13,180
3,604
87,548
*Includes Non-current borrowings, current borrowings, current maturities of non-current borrowings and committed interest payments on borrowings.
**Includes both Non-current and current financial liabilities and committed interest payment, as applicable. Excludes current maturities of non-current borrowings,
Interest accrued on borrowings and derivatives.
The Company had access to following funding facilities :
As at March 31, 2018
Funding facilities
Fund/non-fund based
As at March 31, 2017
Funding facilities
Fund/non-fund based
(` in crore)
Total
Facility
Drawn
Undrawn
39,551
32,111
7,440
(` in crore)
Total
Facility
Drawn
Undrawn
21,215
15,810
5,405
Collateral
The Company has pledged a part of its trade receivables, short-term investments and cash and cash equivalents in order to fulfil the
collateral requirements for the financial facilities in place. The counterparties have an obligation to return the securities to the Company.
(b) Foreign exchange risk
Fluctuations in foreign currency exchange rates may have an impact on statement of profit and loss, the statement 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 Company.
Exposures on foreign currency loans are managed through the Company wide hedging policy, which is reviewed periodically to ensure that
the results from fluctuating currency exchange rates are appropriately managed. The Company strives to achieve asset liability offset of
foreign currency exposures and only the net position is hedged.
The Company’s presentation currency is the INR. The assets are located in India and the Indian Rupee is the functional currency except for
Oil and Gas business. 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. However all
new non-current borrowing exposures are being hedged. The hedge mechanisms are reviewed periodically to ensure that the risk from
fluctuating currency exchange rates is appropriately managed.
The carrying amount of the Company’s financial assets & liabilities in different currencies are as follows:
(` in crore)
Currency
INR
Euro
USD
Others
Total
As at March 31, 2018
As at March 31, 2017
Financial
Assets
Financial
liabilities
Financial
Assets
Financial
liabilities
11,201
25
1,966
100
44,508
245
14,709
48
32,336
19
736
89
56,709
208
22,448
15
13,292
59,510
33,180
79,380
The Company’s exposure to foreign currency arises where a Company entity holds monetary assets and liabilities denominated in a
currency different to the functional currency of the respective business, with US dollar being the major non-functional currency. The
following analysis is based on the gross exposure as at the reporting date which could affect the consolidated statement of profit and loss.
The exposure is mitigated by some of the derivative contracts entered into by the Company as disclosed under the section on ‘Derivative
financial instruments’.
Vedanta Limited Integrated Report and Annual Accounts 2017-18
255
Notes forming part of the Financial Statements
as at and for the year ended March 31, 2018
48 Financial instruments continued
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 foreign currencies by 10% against the functional currency of the respective entities.
Set out below is the impact of a 10% strengthening in the functional currencies of the respective businesses on pre-tax profit/(loss) and
pre-tax equity arising as a result of the revaluation of the Company’s foreign currency financial assets/liabilities:
As at March 31, 2018
USD
INR
As at March 31, 2017
USD
INR
(` in crore)
Effect of
10% strengthening
of functional currency on
pre-tax profit/ (loss)
Effect of
10% strengthening
of foreign currency on
equity
1,129
10
0
-
(` in crore)
Effect of
10% strengthening
of functional currency on
pre-tax profit/ (loss)
Effect of
10% strengthening
of foreign currency on
equity
2,092
46
(18)
-
A 10% weakening of functional currencies of the respective businesses would have an equal and opposite effect on the Company’s
financial statements.
(c) Interest rate risk
At March 31, 2018, the Company’s net debt of ` 33,264 Crore (March 31, 2017: ` 21,868 Crore) comprises cash, bank and investments of
` 7,449 Crore (March 31, 2017: ` 21,365 Crore) offset by debt of ` 40,713 Crore (March 31, 2017: ` 43,233 Crore).
The Company is exposed to interest rate risk on short-term and long-term floating rate instruments and on the refinancing of fixed rate
debt. The Company’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 Company 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 Company 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 Company invests cash and liquid investments in short-term deposits and debt mutual funds, some of which generate a tax-free return,
to achieve the Company’s goal of maintaining liquidity, carrying manageable risk and achieving satisfactory returns.
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 Company’s financial assets as at March 31, 2018 to interest rate risk is as follows:
As at March 31, 2018
Financial Assets
Floating
rate
Financial
assets
Fixed rate
financial
assets
Total
(` in crore)
Non-
interest
bearing
financial
assets
13,292
3,978
3,043
6,271
The exposure of the Company’s financial liabilities as at March 31, 2018 to interest rate risk is as follows:
As at March 31, 2018
Financial Liabilities
Floating
rate
Financial
liabilities
Fixed rate
financial
liabilities
Total
(` in crore)
Non-
interest
bearing
financial
liabilities
59,510
11,840
37,234
10,436
The exposure of the Company’s financial assets as at March 31, 2017 to interest rate risk is as follows:
As at March 31, 2017
Financial Assets
Floating rate
Financial
assets
Fixed rate
financial
assets
Total
(` in crore)
Non-interest
bearing
financial
assets
33,180
15,825
5,241
12,114
Integrated Report Management Review Statutory Reports Financial Statements 256
Vedanta Limited Integrated Report and Annual Accounts 2017-18
Notes forming part of the Financial Statements
as at and for the year ended March 31, 2018
48 Financial instruments continued
The exposure of the Company’s financial liabilities as at March 31, 2017 to interest rate risk is as follows:
Floating rate
Financial
liabilities
Fixed rate
financial
liabilities
Total
79,380
31,388
31,590
16,402
(` in crore)
Non-interest
bearing
financial
liabilities
As at March 31, 2017
Financial Liabilities
Considering the net debt position as at March 31, 2018 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 table below illustrates the impact of a 0.5% to 2.0% increase in interest rates on interest on floating rate financial assets/ liabilities (net)
on profit/(loss) and equity and represents management’s assessment of the possible change in interest rates. 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.
(` in crore)
Increase in interest rates
0.50%
1.00%
2.00%
Effect on pre-tax profit/
(loss) during the year ended
March 31, 2018
Effect on pre-tax profit/
(loss) during the year ended
March 31, 2017
(39)
(79)
(157)
(78)
(156)
(311)
An equivalent reduction in interest rates would have an equal and opposite effect on the Company’s financial statements.
(d) Counterparty and concentration of credit risk
Credit risk refers to the risk that counterparty will default on its contractual obligations resulting in financial loss to the Company. The
Company 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 Company is exposed to credit risk for trade receivables, investments, loans, other financial assets, and derivative financial instruments.
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 Company’s businesses trade receivables are spread over a number of customers with no
significant concentration of credit risk. No single customer accounted for 10.0% or more 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 Company does
not expect any material risk on account of non-performance by any of the Company’s counterparties.
The Company 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 Company attempts to limit the credit risk by only dealing with reputable
banks and financial institutions.
For current 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 Company
attempts to limit the credit risk by only dealing with reputable banks and financial institutions.
The carrying value of the financial assets represents the maximum credit exposure. The Company’s maximum exposure to credit risk is
` 13,292 Crore and ` 33,180 as at March 31, 2018 and March 31, 2017 respectively.
The maximum credit exposure on financial guarantees given by the Company for various financial facilities is described in Note 49 on
“Commitments, contingencies, and guarantees”.
None of the Company’s cash equivalents, including time deposits with banks, are past due or impaired. Regarding trade receivables, loans
and other financial assets (both current and non-current), there were no indications as at March 31, 2018, that defaults in payment
obligations will occur except as described in Note 7, 11, and 15 on allowance for impairment of trade receivables and other financial assets.
Of the year end trade and other receivable, loans and other financial assets (excluding bank deposits) balance the following, though
overdue, are expected to be realised in the normal course of business and hence, are not considered impaired as at March 31, 2018 and
March 31, 2017:
(` in crore)
Particulars
Neither impaired nor past due
Past due but not impaired
- Less than 1 month
- Between 1–3 months
- Between 3–12 months
- Greater than 12 months
Total
As at
March 31,
2018
4,437
As at
March 31,
2017
8,777
295
60
144
645
5,581
308
126
1,609
918
11,738
Vedanta Limited Integrated Report and Annual Accounts 2017-18
257
Notes forming part of the Financial Statements
as at and for the year ended March 31, 2018
48 Financial instruments continued
Receivables are deemed to be past due or impaired with reference to the Company’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 tables are those that have not been settled within the terms and
conditions that have been agreed with that customer. The Company based on past experience does not expect any material loss on its
receivables and hence no provision is deemed necessary on account of ECL.
The credit quality of the Company’s customers is monitored on an ongoing basis and assessed for impairment where indicators of such
impairment exist. The Company uses simplified approach for impairment of financial assets. If credit risk has not increased significantly,
12-month expected credit loss is used to provide for impairment loss. However, if credit risk has increased significantly, lifetime expected
credit loss is used. The solvency of the debtor and their ability to repay the receivable is considered in assessing receivables for impairment.
Where receivables have been impaired, the Company actively seeks to recover the amounts in question and enforce compliance with
credit terms.
D. Derivative financial instruments
The Company uses derivative instruments as part of its management of exposure to fluctuations in foreign currency exchange rates,
interest rates and commodity prices. The Company does not acquire or issue derivative financial instruments for trading or speculative
purposes. The Company 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 Company guidelines
and policies.
The fair values of all derivatives are separately recorded in the balance sheet within current and non-current assets and liabilities.
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 Company 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.
(i) Embedded derivatives
Derivatives embedded other financial instruments or other contracts are treated as separate derivative contracts and marked-to-market
when their risks and characteristics are not clearly and closely related to those of their host contracts and the host contracts are not fair
valued.
(ii) Cash flow hedges
The Company 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 recognized in equity until the hedged
transaction occurs, at which time, the respective gain or losses are reclassified to profit or loss. These hedges have been effective for the
year ended March 31, 2018.
The Company uses foreign exchange contracts from time to time to optimize currency risk exposure on its foreign currency transactions.
The Company hedged part of its foreign currency exposure on capital commitments during the year ended 2018. Fair value changes on
such forward contracts are recognized in comprehensive income.
The majority of cash flow hedges taken out by the Company 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 ended March 31, 2019 and consequently may impact profit or loss
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 profit or loss over the expected useful life of the property, plant and equipment.
(iii) Fair value hedge
The fair value hedges relate to forward covers taken to hedge currency exposure and commodity price risks.
The Company’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 Company 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 recognized in the statement of profit and loss.
The Company 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 recognized in the statement of profit and loss.
(iv) Non-qualifying/economic hedge
The Company 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 future contracts
on the LME and certain other derivative instruments. Fair value changes on such derivative instruments are recognized in the statement of
profit and loss.
The fair value of the Company’s derivative positions recorded under derivative financial assets and derivative financial liabilities are as
follows:
Integrated Report Management Review Statutory Reports Financial Statements 258
Vedanta Limited Integrated Report and Annual Accounts 2017-18
Notes forming part of the Financial Statements
as at and for the year ended March 31, 2018
48 Financial instruments continued
Derivative Financial Instruments
Current
Cash flow hedge*
- Commodity contracts
- Forward foreign currency contracts
Fair Value hedge**
- Commodity contracts
- Forward foreign currency contracts
Non - qualifying hedges
- Commodity contracts
- Forward foreign currency contracts
- Interest rate swap
- Cross currency swap
Total
As at March 31, 2018
As at March 31, 2017
Assets
Liabilities
Assets
Liabilities
(` in crore)
81
1
-
11
-
9
-
0
102
-
0
1
9
14
1
-
1
26
-
-
-
0
7
-
-
-
7
68
14
0
346
23
110
-
1
562
* Refer statement of profit and loss and statement of change in equity for the changes in the fair value of cash flow hedges.
** The change in fair value hedges is recognised in the statement of profit and loss.
E. Derivative contracts entered into by the Company and outstanding as at Balance Sheet date :
(i) To hedge currency risks and interest related risks, the Company has entered into various derivatives contracts. The category wise break
up of amount outstanding as on Balance Sheet date is given below :
Particulars
Forex forward cover (buy)
Forex forward cover (sell)
(ii) For hedging commodity related risks :- Category wise break up is given below.
Particulars
Forwards / Futures
Copper (MT)
Gold (Oz)
Silver (Oz)
Aluminium (MT)
As at
March 31,
2018
9,983
223
(` in crore)
As at
March 31,
2017
13,164
5
As at March 31, 2018
As at March 31, 2017
Purchases
Sales
Purchases
Sales
53,825
61,850
8,070
1,05,594
30,219 5,65,393
73,675
-
30,350
1,497
9,411
-
17,400
94,242
8,17,565
77,025
49 Contingencies and commitments
I Contingent Liabilities
a) Erstwhile Cairn India Limited: Income tax
In March 2014, Cairn India Limited (referred to as ‘Cairn India’) received a show cause notice from the Indian Tax Authorities (“Tax
Authorities”) for not deducting withholding tax on the payments made to Cairn UK Holdings Limited (“CUHL”), for acquiring shares of Cairn
India Holdings Limited (“CIHL”), as part of their internal reorganisation. Tax Authorities have stated in the notice that a short-term capital
gain has accrued to CUHL on transfer of the shares of CIHL to Cairn India, in the financial year 2006-2007, on which tax should have been
withheld by Cairn India. Pursuant to this various replies were filed with the tax authorities.
Cairn India also filed a writ petition before the Delhi High Court wherein it has raised several points for assailing the aforementioned
Income tax Authority’s order. The matter is next listed for hearing on July 06, 2018 before the Honourable Delhi High Court.
After several hearings, the Income Tax Authority, in March 2015, issued an order holding Cairn India as ‘assessee in default’ and raised a
demand totalling ` 20,495 Crore (including interest of ` 10,247 Crore). Cairn India had filed an appeal before the First Appellate Authority,
Commissioner of Income Tax (Appeals) which vide order dated July 03, 2017 confirmed the tax demand against Cairn India. Cairn India
has challenged the Commissioner of Income Tax (Appeals) order before Income Tax Appellate Tribunal (ITAT).
Separately CUHL, on whom the primary liability of tax lies has received an Order from the ITAT holding that the transaction is taxable in
view of the clarification made in the Act but also acknowledged that being a retrospective transaction, interest would not be levied. Hence
affirming a demand of ` 10,248 Crore excluding the interest portion that had previously been claimed. The Department is appealing this
order.
As a result of the above order from ITAT, the Company now considers the risk in respect of the interest portion of claim to be remote.
Further, as per the recent attachment notice received from the Tax Recovery Officer appointed for CUHL, the tax officer has adjusted the
dividend of ` 667 Crore which was due to CUHL and was recovered by the Tax department. The Company has further remitted additional
dividend of ` 442 Crore further reducing the principal liability to ` 9,139 Crore. Accordingly, the Company has revised the contingent
liability to ` 9,139 Crore.
Vedanta Limited Integrated Report and Annual Accounts 2017-18
259
Notes forming part of the Financial Statements
as at and for the year ended March 31, 2018
49 Contingencies and commitments continued
Additionally, the Tax department has initiated the process of selling the attached CUHL investment in equity and preference shares of
Vedanta Limited valuing ` 5,861 Crore based on the quoted price as at March 31, 2018.
In the event, the case is finally decided against Cairn India, the potential liability including interest would be ` 20,495 Crore.
Separately but in connection with this litigation, Vedanta Resources Plc has filed a Notice of Claim against the Government of India (‘GOI’)
under the UK India Bilateral Investment Treaty (the “BIT”). The International arbitration Tribunal recently passed favourable order on
jurisdiction and now the matter would be heard on merits – hearing scheduled in April-May 2019. The Government of India has challenged
jurisdiction order of Arbitration Tribunal before the High court of Singapore.
b) Vedanta Limited: Contractor claim
Shenzhen Shandong Nuclear Power Construction Co. Limited (‘SSNP’) subsequent to terminating the EPC contract invoked arbitration as
per the contract alleging non-payment of their dues towards construction of a 210 MW co-generation power plant for the 6 MTPA
expansion project, and filed a claim of ` 1,642 Crore. SSNP also filed a petition under Section 9 of the Arbitration and Conciliation Act,
1996 before the Bombay High Court requesting for interim relief. The Bombay High Court initially dismissed their petition, but on a further
appeal by SSNP, the Division Bench of the Bombay High Court directed Vedanta Limited to deposit a bank guarantee for an amount of
` 187 Crore as a security, being a prima facie representation of the claim, until arbitration proceedings are completed. Vedanta Limited has
deposited a bank guarantee of an equivalent amount. Based on the assessment, the Company had booked the liability for ` 200 Crore in
earlier years.
On November 09, 2017, the Arbitral Tribunal has pronounced the award in favor of SSNP for ` 221 Crore along with the interest and cost of
` 118 Crore (@ 9% p.a. from date of filing petition, i.e. April 18, 2012). The amount is payable subject to SSNP handing over all the drawings
to the Company. Given the Company was already carrying a part provision it recognized additional liability of ` 139 Crore including interest
and cost making the total liability towards SSNP as ` 339 Crore. The additional amount recognized in the income statement includes ` 113
Crore which has been presented under exceptional items.
The Company has challenged the award under section 34 of The Arbitration and Conciliation Act, 1996, which was dismissed.
Subsequently, the Company has filed an appeal under section 37 of The Arbitration and Conciliation Act, 1996 with the Delhi High Court.
The Court has granted a stay subject to deposit of the award amount, which has been complied by the Company. The hearing on the
arguments in the matter have been completed and the matter has now been reserved for orders.
c) Ravva joint venture arbitration proceedings: ONGC Carry
Erstwhile Cairn India Limited (referred to as ‘Cairn India’) is involved in a dispute against the Government of India (GOI) relating to the
recovery of contractual costs in terms of calculation of payments that the contractor party were required to make in connection with the
Ravva field.
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 whereas four other issues were decided in favour of 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 which adjudicated the matter on October 11, 2011, upheld the Partial Award. Per the decision of
the Arbitral Tribunal, the contractor parties and GOI were required to arrive at a quantification of the sums relatable to each of the issues
under the Partial Award.
Pursuant to the decision of the Federal Court, the contractor parties approached the Ministry of Petroleum and Natural Gas (“MoPNG”) to
implement the Partial Award while reconciling the statement of accounts as outlined in the Partial Award.
However, MoPNG on July 10, 2014 proceeded to issue a Show Cause Notice alleging that since the partial award has not been enforced,
the profit petroleum share of GOI has been short-paid. MoPNG threatened to recover the amount from the sale proceeds payable by the
oil marketing companies to the contractor parties. The contractor party replied to the show cause notice taking various legal contentions.
As the Partial Award did not quantify the sums, therefore, contractor parties approached the same Arbitral 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 Cairn India’s favour. GOI’s challenge of the Final Award was dismissed by the Malaysian High Court. GOI has challenged
the decision before the Court of Appeal, the procedural hearing for which is scheduled on August 30, 2018. Further, Cairn India has also
filed for the enforcement of the Partial Award and Final Award with Delhi High Court which is scheduled to be heard on September 04,
2018. While Cairn India does not believe the GOI will be successful in its challenge, if the Arbitral Award is reversed and such reversal is
binding, Cairn India could be liable for approximately ` 416 Crore plus interest as at March 31, 2018 ( March 31, 2017: ` 416 Crore plus
interest).
d) Proceedings related to the imposition of entry tax
The Company challenged the constitutional validity of the local statutes and related notifications in the states of Odisha and Rajasthan
pertaining to the levy of entry tax on the entry of goods brought into the respective states from outside.
Post some contradictory orders of High Courts across India adjudicating on similar challenges, the Supreme Court referred the matters to
a nine judge bench. Post 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
Integrated Report Management Review Statutory Reports Financial Statements 260
Vedanta Limited Integrated Report and Annual Accounts 2017-18
Notes forming part of the Financial Statements
as at and for the year ended March 31, 2018
49 Contingencies and commitments continued
respective High Courts for final determination but retained the issue of jurisdiction for levy on imported goods, for determination by regular
bench of Supreme Court. Following the order of the Supreme Court, the Company filed writ petitions in respective High Courts.
On October 09, 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 parri-passu with domestic goods for the purpose of levy of Entry tax. The Company has
amended its appeal (writ petitions) in Odisha 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 Company has challenged the levy of entry tax on any movement of goods into an SEZ based on the definition of
‘local area’ under the Odisha Entry Tax Act which is very clear and does not include an SEZ. In addition, the Government of Odisha further
through its SEZ Policy 2015 and the operational guidelines for administration of this policy dated August 22, 2016, exempted the entry tax
levy on SEZ operations.
The total claims against the Company are ` 1,020 Crore (March 31, 2017: ` 809 Crore) net of provisions made.
e) Miscellaneous disputes- Income tax
The Company is involved in various tax disputes amounting to ` 1,430 Crore (March 31, 2017: ` 1,439 Crore) relating to income tax. 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, disallowance under section 14A of the Income Tax Act and interest thereon which are pending at various appellate levels.
The Company believes that these disallowances are not tenable and accordingly no provision is considered necessary.
f) Miscellaneous disputes- Others
The Company 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. 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 Company totals to ` 2,177 Crore (March 31,
2017: `1,933 Crore)
The Company considers that it can take steps such that the risks can be mitigated and that there are no significant unprovided liabilities arising.
Except as described above from (a) to (f), there are no pending litigations which the Company believes could reasonably be expected to
have a material adverse effect on the results of operations, cash flow or the financial position of the Company.
II Commitments
The Company has a number of continuing operational and financial commitments in the normal course of business including:
• exploratory mining commitments;
• oil & gas commitments;
• mining commitments arising under production sharing agreements; and
• completion of the construction of certain assets.
Estimated amount of contracts remaining to be executed on capital accounts and not provided for:
Particulars
Oil & Gas sector
Cairn India (now merged with the Company)
Aluminium sector
Lanjigarh Refinery (Phase II) 5.0 mtpa
Jharsuguda 1.25mtpa smelter
Power sector
Jharsuguda 600 MW Power Plant
Copper sector
Tuticorin Smelter 400 ktpa
Others
Total
(` in crore)
As at
March 31,
2018
As at
March 31,
2017
2,338
63
1,335
491
1,368
791
98
213
2,758
-
1,411
2
7,020
3,848
Vedanta Limited Integrated Report and Annual Accounts 2017-18
261
Notes forming part of the Financial Statements
as at and for the year ended March 31, 2018
49 Contingencies and commitments continued
III Other Commitments
Particulars
(i) The Company has given corporate guarantees to regulatory authorities on behalf of Volcan Investments Limited
(ii) The Company has given corporate guarantees to other group companies in respect of certain short-term and
long-term borrowings
As at
March 31,
2018
115
12,761
(` in crore)
As at
March 31,
2017
115
13,737
(iii) Customs duty bond taken for Project Import/ Export
(iv) Company's share of oil and gas joint ventures minimum exploration commitments as per the production sharing
580
42
405
19
contracts
(v) Export obligations against the import licenses taken for import of capital goods under the Export Promotion
7,190
6,976
Capital Goods Scheme and advance license. In the event of the Company’s inability to meet Export obligations,
the Company’s liability, reduced in proportion to actual exports. In addition, applicable interest would be
payable.
(vi) Power Division of the Company has signed a long term power purchase agreement (PPA) with Gridco Limited for supply of 25% of
power generated from the power station with additional right to purchase power at (5%/ 7 %) at variable cost as per the conditions
referred to in PPA . The PPA has a tenure of twenty five years.
50 Segment Information
A) Description of segment and principle activities
The Company is a diversified natural resource Company engaged in exploring, extracting and processing minerals and oil and gas. The
Company produces copper, aluminium, iron ore, oil and gas and commercial power. The Company has five reportable segments: copper,
aluminum, iron ore, commercial power and oil and gas. The management of the Company is organized by its main products: copper,
aluminum, iron ore, oil and gas and power. Each of the reportable segments derives its revenues from these main products and hence
these have been identified as reportable segments by the Company’s Chief Operating Decision Maker (“CODM”). Earnings before Interest,
Tax and Depreciation & Amortisation (EBITDA) amounts are evaluated regularly by the Management, which has been identified as the
CODM, in deciding how to allocate resources and in assessing performance.
Copper
The Company’s copper business is principally one of custom smelting and includes a copper smelter, a refinery, a phosphoric acid plant, a
sulphuric acid plant, a copper rod plant and three captive power plants at Tuticorin in Southern India, and a refinery and two copper rod
plants at Silvassa in Western India.
On April 09, 2018 the annual consent to operate (CTO) for Tuticorin plant under the Air and Water Acts for copper smelters in India was
rejected by the State Pollution Control Board for want of further clarification and consequently the operations have presently been
suspended. The matter is presently pending in Tribunal. (Refer note 3 (y) (1) (xi))
Aluminum
The Company’s aluminium operations include a refinery and a captive power plant at Lanjigarh and a smelter, a thermal coal based captive
power facility at Jharsuguda both situated in the State of Odisha in India. The pots are in the stage of commissioning in the 1.25 mtpa
Jharsuguda-II Aluminium smelter with 879 pots having been commissioned by March 31, 2018.
Iron ore
The Company’s iron ore business consists of exploration, mining and processing of iron ore, pig iron and metallurgical coke. The mining
operations are carried out at Codli group, Bicholim mine, Surla mine and the Sonshi group of mines in state of Goa and Narrian mine,
situated at state of Karnataka in India, a Metallurgical Coke and Pig Iron plant in State of Goa in India and also has a power plant in State of
Goa in India for captive use. Pursuant to an order passed by Hon’ble Supreme Court of India on Febuary 07, 2018 all mining was banned in
state of Goa. The Company has recognised an impairement charge on its ironore assets for the year ended March 31, 2018
(Refer note 34 (d)).
Power
The Company’s power business include 600 MW thermal coal-based commercial power facility at Jharsuguda in the State of Odisha in
Eastern India. During the previous year, three units of 600 MW each at Jharsugda have been converted into captive power plant to
commercial power plant to meet the inhouse energy demands. Hence w.e.f. April 01, 2016 the operations of the said units have been
included in the aluminium business segment.
Oil and gas
The Company’s is engaged in business of exploration and development and production of oil and gas, having a diversified asset base of five
blocks, one in state of Rajasthan in India, one on the west coast of India and three on the east coast of India.
Segment Revenue, Results, Assets and Liabilities include the respective amounts identifiable to each of the segments and amount allocated
on a reasonable basis. Unallocated expenditure consist of common expenditure incurred for all the segments and expenses incurred at
corporate level. The assets and liabilities that cannot be allocated between the segments are shown as unallocated assets and unallocated
liabilities respectively.
The accounting policies of the reportable segments are the same as the Company’s accounting policies described in Note 3. The operating
segments reported are the segments of the Company for which separate financial information is available. Earnings before interest,
depreciation and amortisation and tax (EBITDA) are evaluated regularly by the CODM in deciding how to allocate resources and in
assessing performance. The Company’s financing (including finance costs and finance income) and income taxes are reviewed on an
overall basis and are not allocated to operating segments.
Integrated Report Management Review Statutory Reports Financial Statements 262
Vedanta Limited Integrated Report and Annual Accounts 2017-18
Notes forming part of the Financial Statements
as at and for the year ended March 31, 2018
50 Segment Information continued
Transfer prices between operating segments are on an arm’s length basis in a manner similar to transactions with third parties.
For the year ended March 31, 2018, the Company has not recorded any impairment of receivables relating to amounts owed by related
parties. This assessment is undertaken each financial year through examining the financial position of the related party and the market in
which the related party operates.
The following table presents revenue and profit information and certain assets information regarding the Company’s business segments as
at and for the year ended March 31, 2018 and March 31, 2017.
I) For the year ended and as at March 31, 2018
(` in crore)
Business Segments
Iron Ore
Total
45,759
-
45,759
6,881
2,835
69
4,115
112
3,900
-
412
412
Copper
Aluminium
Oil and Gas
(16)
(16)
Power Eliminations
44
122
11
(67)
3,158
16
3,174
461
120
6
347
5,085
-
5,085
21,277
-
21,277
15,827
-
15,827
1,357
201
3
1,159
2,110
1,379
49
780
2,909
1,013
-
1,896
Particulars
Revenue
External revenue a
Inter segment revenue
Segment revenue
Results
EBITDA
Depreciation, depletion and amortisation expense
Other income b
Segment Results
Unallocated expenses c
Less: Finance costs
Add : Other income (excluding exchange difference and
deferred grant)
Less: Exceptional items
Net profit be]fore tax
Other information
Segment Assets
Financial asset investments
Income tax assets (net of provisions)
Cash & cash equivalents (including other bank balances &
bank deposits)
Others
Total assets
Segment Liabilities
Borrowings(including interest accrued)
Current tax liability (net of payments)
Deferred tax liability (net)
Others
Total liabilities
Capital Expenditure d
Impairment reversal/(charge) - net / Provision e
a)
b) Amorisation of duty benefits relating to assets recognised as government grant.
c) Depreciation, depletion and amortisation expense excludes and unallocated expense includes unallocated deprection of ` 7 Crore.
d) Total Capital expenditure includes capital expenditure of ` 11 Crore not allocable to any segment.
e) Total of Impairment reversal/(charge) - net / Provision includes impairment reversal on investment in subsidiaries of ` 2,710 Crore not allocable to any segment.
Includes export incentive of ` 263 Crore.
609
3,513
1,318
(251)
70
(452)
43,426
12,842
11,919
3,094
9,968
3,263
8,667
3,755
1,558
540
-
-
275
1,912
2,225
1,47,169
26,174
41,451
45
26
160
67,856
2,548
5,520
72,593
68,010
2,429
3,489
5,407
9,224
I) For the year ended and as at March 31, 2017
Particulars
Revenue
External revenue a
Inter segment revenue
Segment revenue
Results
EBITDA
Depreciation, depletion and amortisation expense c
Other income b
Segment Results
Unallocated expenses c
Less: Finance costs
Add : Other income (excluding exchange difference and
deferred grant)
Less: Exceptional items
Net profit before tax
Other information
Segment assets
Financial asset investments
Deferred tax assets (net)
Copper
Oil and Gas
Aluminium
Iron Ore
Power
Eliminations
Total
Business Segments
(` in crore)
19,011
-
19,011
1,726
202
3
1,527
4,357
-
4,357
2,092
1,638
-
454
9,898
-
9,898
4,277
13
4,290
1,604
892
45
757
1,227
125
6
1,108
802
-
802
161
122
11
50
7,830
10,052
41,710
3,283
3,230
-
(13)
(13)
38,345
-
38,345
-
-
-
-
-
-
6,810
2,979
65
3,896
(166)
3,896
9,640
1,324
10,798
66,105
86,085
1,958
Vedanta Limited Integrated Report and Annual Accounts 2017-18
263
Notes forming part of the Financial Statements
as at and for the year ended March 31, 2018
50 Segment Information continued
Particulars
Copper
Oil and Gas
Aluminium
Iron Ore
Power
Eliminations
Total
Business Segments
(` in crore)
Income tax assets
Cash & Cash Equivalents (Including other bank balances
& bank deposits)
Others
Total assets
Segment liabilities
Borrowings (including interest accrued)
Current tax liabilities (net of payments)
Others
Total liabilities
10,863
3,233
9,367
1,446
177
Capital Expenditure d
Impairment reversal/(charge) - net / Provision e
166
-
272
252
1,119
(201)
46
-
29
-
2,189
1,697
8,150
1,66,184
25,086
43,956
45
17,329
86,416
1,637
(46)
-
-
-
-
-
a) Includes export incentive of ` 155 Crore.
b) Amorisation of duty benefits relating to assets recognised as government grant.
c) Depreciation, depletion and amortisation expense excludes and unallocated expense includes unallocated deprection of ` 7 Crore.
d) Total Capital expenditure includes capital expenditure of ` 5 Crore not allocable to any segment.
e) Total of Impairment reversal/(charge) - net / Provision includes impairment reversal on investment in subsidiaries of ` 97 Crore not allocable to any segment.
II) Geographical segment analysis
The following table provides an analysis of the Company’s sales by region in which the customer is located, irrespective of the origin of the
goods.
Geographical Segment
Revenue by geographical segment
India
China
UAE
Malaysia
Others
Total
(` in crore)
Year ended
March 31,
2018
Year ended
March 31,
2017
22,196
6,651
2,766
3,897
10,249
20,460
5,199
4,150
1,748
6,788
45,759
38,345
No single customer has accounted for more than 10% of the Company’s revenue for the year ended March 31, 2018 and March 31, 2017.
The following is an analysis of the carrying amount of non-current assets, which do not include deferred tax assets and financial assets
analysed by the geographical area in which the assets are located:
Carrying Amount of Segment Assets
India
Outside India
Total
Reconciliation between segment revenue and enterprise revenue
Particulars
Total Segment Revenue
Enterprise Revenue
Revenue from operations (including excise duty)
Less: Other operating revenues
Add: Export incentive
Total Segment Revenue
As at
March 31,
2018
60,551
-
(` in crore)
As at
March 31,
2017
57,492
-
60,551
57,492
(` in crore)
Year ended
March 31,
2018
Year ended
March 31,
2017
45,759
38,345
45,974
(478)
263
38,540
(350)
155
45,759
38,345
Integrated Report Management Review Statutory Reports Financial Statements
264
Vedanta Limited Integrated Report and Annual Accounts 2017-18
Notes forming part of the Financial Statements
as at and for the year ended March 31, 2018
51 Related Party disclosures
List of related parties and relationships
A) Entities controlling the Company (Holding Companies)
Volcan Investments Limited (Ultimate Holding Company)
Intermediate Holding Companies
Finsider International Company Limited
Richter Holdings Limited
Twin Star Holdings Limited
Vedanta Resources Cyprus Limited
Vedanta Resources Finance Limited
Vedanta Resources Holdings Limited
Vedanta Resources Plc
Welter Trading Limited
Westglobe Limited
B) Fellow Subsidiaries (with whom transactions have taken place)
Konkola Copper Mines Plc
Sterlite Iron and Steel Company Limited
Sterlite Technologies Limited
Sterlite Power Transmission limited
C) Associates (with whom transactions have taken place)
Gaurav Overseas Private Limited
D) Subsidiaries
Amica Guesthouse (Proprietary) Limited
Bharat Aluminium Company Limited
Black Mountain Mining (Proprietary) Limited
Bloom Fountain Limited
Cairn Energy Discovery Limited
Cairn Energy Gujarat Block 1 Limited
Cairn Energy Hydrocarbons Limited
Cairn Energy India (Proprietary) Limited
Cairn Exploration (No. 2) Limited
Cairn India Holdings Limited
Cairn Lanka (Private) Limited
Cairn South Africa (Proprietary) Limited
CIG Mauritius Holdings Private Limited
CIG Mauritius Private Limited
Copper Mines of Tasmania (Proprietary) Limited
Fujairah Gold FZC
Hindustan Zinc Limited
Killoran Lisheen Finance Limited
Killoran Lisheen Mining Limited
Lakomasko B.V.
Lisheen Milling Limited
Malco Energy Limited
Maritime Ventures Private Limited
Monte Cello B.V.
Namzinc (Proprietary) Limited
Paradip Multi Cargo Berth Private Limited
Rosh Pinah Health Care (Proprietary) Limited
Sesa Mining Corporation Limited
Sesa Resources Limited
Sesa Sterlite Mauritius Holdings Limited*
Skorpion Mining Company (Proprietary) Limited
Skorpion Zinc (Proprietary) Limited
Sterlite (USA) Inc.
Sterlite Infraventures Limited**
Sterlite Ports Limited
Talwandi Sabo Power Limited
Thalanga Copper Mines (Proprietary) Limited
THL Zinc Holding B.V.
THL Zinc Limited
THL Zinc Namibia Holdings (Proprietary) Limited
THL Zinc Ventures Limited
Twin Star Energy Holdings Limited*
Twin Star Mauritius Holdings Limited*
Vedanta Exploration Ireland Limited
Vedanta Lisheen Holdings Limited
Vedanta Lisheen Mining Limited
Vizag General Cargo Berth Private Limited
Western Cluster Limited
Goa Sea Port Private Limited
AvanStrate Inc, Japan
AvanStrate Korea Inc, Korea
AvanStrate Taiwan Inc, Taiwan
E) Post retirement benefit plan
Sesa Group Employees Provident Fund Trust
Sesa Group Employees Gratuity Fund and Sesa Group
Executives Gratuity Fund
Sesa Group Executives Superannuation Scheme Fund
F) Others (with whom transactions have taken place)
Vedanta Foundation
Sesa Community Development Foundation
Rampia Coal Mines & Energy Private Limited
Vedanta Limited ESOS Trust
Cairn Foundation
India Grid Trust
* Under liquidation
** Sold during the previous year
Vedanta Limited Integrated Report and Annual Accounts 2017-18
265
Notes forming part of the Financial Statements
as at and for the year ended March 31, 2018
51 Related Party disclosures continued
Disclosure in respect of transactions/balances with related parties
Particulars
Income :
(i)
Revenue from operations
Fujairah Gold FZC
Sterlite Technologies Limited
Sterlite Power Transmission Limited
Bharat Aluminium Company Limited
Malco Energy Limited
Sesa Resources Limited
Sesa Mining Corporation Limited
Talwandi Sabo Power Limited
Hindustan Zinc Limited
Konkola Copper Mines Plc
(ii) Other income
a)
Interest and guarantee commission
Malco Energy Limited
Sterlite Iron and Steel Company Limited
Bharat Aluminium Company Limited
Sterlite Ports Limited
Sterlite Infraventures Limited
Vizag General Cargo Berth Private Limited
Paradip Multi Cargo Berth Private Limited
Sterlite Power Transmission limited
Sterlite Technologies Limited
Cairn India Holdings Limited
Sesa Resources Limited
Copper Mines of Tasmania Pty Limited
Konkola Copper Mines Plc
Fujairah Gold FZC
b)
Dividend income
Hindustan Zinc Limited
Sterlite Technologies Limited
India Grid Trust
c)
Outsourcing service fees
Vedanta Resources Plc
d)
Other non-operating income
Hindustan Zinc Limited
Cairn India Holdings Limited
Sterlite Power Transmission limited.
Expenditure :
(iii) Purchases :
a)
Purchase of goods
Konkola Copper Mines Plc
Hindustan Zinc Limited
Sesa Resources Limited
Bharat Aluminium Company Limited
Maritime Ventures Private Limited
Sterlite Technologies Limited
Sterlite Power Transmission limited
Sesa Mining Corporation Limited
Vizag General Cargo Berth Private Limited
Fujairah Gold FZC
(` in crore)
Year ended
March 31,
2018
Year ended
March 31,
2017
2,308
2
954
935
-
12
2
0
10
2
2,035
742
8
969
4
67
1
-
28
-
4,225
3,854
0
0
1
0
-
1
0
1
-
7
3
-
4
3
-
0
2
0
0
8
0
-
9
-
15
0
3
3
20
40
2,195
0
8
8,065
1
-
2,203
8,066
3
3
1
-
0
1
657
16
48
303
2
-
2
213
6
6
3
3
-
0
-
0
298
1
167
396
3
13
-
141
0
1
1,253
1,020
Integrated Report Management Review Statutory Reports Financial Statements 266
Vedanta Limited Integrated Report and Annual Accounts 2017-18
Notes forming part of the Financial Statements
as at and for the year ended March 31, 2018
51 Related Party disclosures continued
Particulars
b)
Power Charges
Malco Energy Limited
(iv) Receiving of services
a)
Stock options expenses/(recovery)
Vedanta Resources Plc
Hindustan Zinc Limited
Bharat Aluminium Company Limited
Talwandi Sabo Power Limited
Malco Energy Limited
Vizag General Cargo Berth Private Limited
Konkola Copper Mines Plc
Fujairah Gold FZC
b)
Allocation of Corporate Expenses :
Hindustan Zinc Limited
Bharat Aluminium Company Limited
Malco Energy Limited
c)
Management and Brand Fees paid / (recovered):
Vedanta Resources Plc
Hindustan Zinc Limited
Malco Energy Limited
Bharat Aluminium Company Limited
d)
(Recovery of) / Reimbursement to /for other expenses (net)
Bharat Aluminium Company Limited
Hindustan Zinc Limited
Malco Energy Limited
Vedanta Resources Plc
Konkola Copper Mines Plc
Sesa Resources Limited
Sesa Mining Corporation Limited
Copper Mines of Tasmania Pty Limited
Fujairah Gold FZC
Black Mountain Mining (Proprietary) Limited
Talwandi Sabo Power Limited
Vizag General Cargo Berth Private Limited
Paradip Multi Cargo Berth Private Limited
Cairn Energy Hydrocarbons Ltd
Cairn South Africa Proprietary Limited
Goa Sea Port Private Limited
Maritime Ventures Private Limited
Namzinc (Pty) Limited
Sterlite Iron and Steel Company Limited
Vedanta Lisheen Mining Limited
Vedanta Lisheen Holdings Limited
Volcan Investments Limited
Cairn India Holdings Limited
e)
Corporate Social Responsibility expenditure/ Donation
Vedanta Foundation*
Cairn Foundation
*includes donation in kind, having fair market value of ` 11 Crore in previous year
(` in crore)
Year ended
March 31,
2018
Year ended
March 31,
2017
18
18
49
(25)
(11)
(2)
(1)
(0)
(0)
(0)
10
(73)
(40)
(1)
(114)
345
(10)
-
(5)
330
(187)
5
(1)
11
(5)
-
-
(0)
(0)
(2)
(3)
(0)
-
-
-
(2)
2
(0)
-
(0)
-
(2)
0
39
39
63
(20)
(10)
(1)
(1)
0
-
(0)
31
(72)
(39)
(1)
(112)
59
(11)
(0)
(6)
42
(191)
(49)
(0)
15
(10)
(18)
(3)
(0)
(1)
0
(5)
(0)
(4)
1
0
(0)
-
(4)
0
(0)
(0)
(1)
-
(184)
(270)
0
16
16
18
12
30
Vedanta Limited Integrated Report and Annual Accounts 2017-18
267
Notes forming part of the Financial Statements
as at and for the year ended March 31, 2018
51 Related Party disclosures continued
Particulars
f)
Contribution to Post Retirement Employee Benefit Trust
Sesa Group Employees Provident Fund Trust
Sesa Group Employees Gratuity Fund and Sesa Group Executives Gratuity Fund
Sesa Group Executives Superannuation Scheme Fund
(v) Transfer of Assets
Sale of Assets
a)
Konkola Copper Mines Plc
Hindustan Zinc Limited
b)
Purchase of Assets
Hindustan Zinc Limited
(vi) Dividend paid
Twin Star Holdings Limited
Finsider International Company Limited
Twin Star Mauritius Holdings Limited*
Sesa Resources Limited*
Westglobe Limited
Welter Trading Limited
Vedanta Limited ESOS Trust
* Dividend paid by erstwhile Cairn India Limited
(vii) a. Financial guarantees given
Talwandi Sabo Power Limited
Vizag General Cargo Berth Private Limited
Cairn India Holdings Limited
b. Financial guarantees renewed during the year
Copper Mines of Tasmania Proprietary Limited
Thalanga Copper Mines Proprietary Limited
c. Financial guarantees relinquished
Talwandi Sabo Power Limited
Vizag General Cargo Berth Private Limited
Bharat Aluminium Company Limited
Western Cluster Limited
Cairn India Holdings Limited.
(viii) Sale/ (Redemption) of Investments
Sterlite Power Transmission Limited
(Investment in Sterlite Infraventures Limited)
India Grid Trust
(` in crore)
Year ended
March 31,
2018
Year ended
March 31,
2017
5
1
2
8
-
-
-
0
0
6
6
2
14
1
0
1
1
1
2,924
851
-
-
94
81
20
2,683
781
194
10
86
74
7
3,970
3,835
3,600
425
4,870
1,853
275
-
8,895
2,128
31
23
54
5,293
400
2,500
32
1,646
9,871
-
(0)
(0)
30
23
53
750
75
-
-
-
825
0
-
0
Integrated Report Management Review Statutory Reports Financial Statements 268
Vedanta Limited Integrated Report and Annual Accounts 2017-18
Notes forming part of the Financial Statements
as at and for the year ended March 31, 2018
51 Related Party disclosures continued
Particulars
(ix) Balances as at year end
a) Trade Receivables
Fujairah Gold FZC
Cairn Lanka (Private) Ltd
Bharat Aluminium Company Limited
Sterlite Power Transmission Limited
Konkola Copper Mines Plc
Western Cluster Limited
b)
c)
Loans given
Sterlite Ports Limited
Vizag General Cargo Berth Private Limited
Paradip Multi Cargo Berth Private Limited
Sesa Resources Limited
Sterlite Iron and Steel Company Limited
Vedanta Limited ESOS Trust
Other receivables and advances
Talwandi Sabo Power Limited
Sesa Resources Limited
Bharat Aluminium Company Limited
Sterlite Iron and Steel Company Limited
Hindustan Zinc Limited
Malco Energy Limited
Konkola Copper Mines Plc
Sterlite Ports Limited
Sterlite Technologies Limited
Volcan Investments Limited
Paradip Multi Cargo Berth Private Limited
Sesa Mining Corporation Limited
Vizag General Cargo Berth Private Limited
Vedanta Lisheen Mining Limited
Black Mountain Mining (Pty) Limited
Fujairah Gold FZC
Sterlite Power Transmission Limited
Goa Sea Port Pvt Ltd
Vedanta Resources PLC
Vedanta Foundation
d) Dividend receivable
Hindustan Zinc Limited
e)
Trade Payables
Hindustan Zinc Limited
Fujairah Gold FZC
Sesa Resources Limited
Sesa Mining Corporation Limited
Malco Energy Limited
Bharat Aluminium Company Limited
Black Mountain Mining (Pty) Limited
Konkola Copper Mines Plc
Vedanta Resources PLC
Vizag General Cargo Berth Private Limited
Sterlite Technologies Limited
Sterlite Power Transmission limited.
Goa Sea Port Private Limited
Cairn Energy Hydrocarbons Ltd
Cairn Foundation
Maritime Ventures Private Limited
Talwandi Sabo Power Limited
(` in crore)
As at
March 31,
2018
As at
March 31,
2017
606
0
58
0
0
0
664
4
-
0
-
5
236
245
4
69
46
13
22
5
320
1
-
4
5
-
2
0
1
0
0
3
62
5
562
663
-
148
0
-
0
811
5
8
0
133
4
103
253
1
-
74
12
21
33
148
1
0
2
5
-
2
0
0
0
-
-
-
-
299
1,646
1,646
7,544
7,544
10
-
-
8
0
0
0
38
11
0
-
0
-
1
11
0
0
79
0
0
16
44
14
-
0
8
9
0
1
-
1
1
18
-
-
112
Vedanta Limited Integrated Report and Annual Accounts 2017-18
269
Notes forming part of the Financial Statements
as at and for the year ended March 31, 2018
51 Related Party disclosures continued
Particulars
f)
g)
h)
i)
Other payables
Malco Energy Limited
Hindustan Zinc Limited
Vedanta Resources Plc
Bharat Aluminium Company Limited
Talwandi Sabo Power Limited
Konkola Copper Mines Plc
Maritime Ventures Private Limited
Fujairah Gold FZC
Vizag General Cargo Berth Private Limited
Namzinc (Proprietary) Limited
Sesa Group Employees Provident Fund Trust
Sesa Group Executives Superannuation Scheme
Other Current liabilities- Advance from Customers
Sterlite Technologies Limited
Dividend Payable
Twin Star Holdings Limited
Finsider International Company Limited
Westglobe Limited
Welter Trading Limited
Vedanta Limited ESOS Trust
Financial guarantee given
Talwandi Sabo Power Limited
Vizag General Cargo Berth Private Limited
Bharat Aluminium Company Limited
Copper Mines of Tasmania Pty Limited
Thalanga copper mines Pty Limited
Western Cluster Limited
Volcan Investments Limited*
Cairn India Holdings Limited.
(` in crore)
As at
March 31,
2018
As at
March 31,
2017
-
-
2
0
0
-
1
0
0
0
2
0
5
-
-
-
-
-
-
-
-
9,000
483
-
31
23
-
115
3,224
0
0
12
0
-
0
-
0
-
-
2
0
14
14
14
2,441
711
78
68
7
3,305
10,693
458
2,500
30
23
32
115
-
12,876
13,851
* Bank gaurantee given by Vedanta Limited on behalf of Volcan Investments Limited in favour of Income Tax department, India as collateral in respect of certain tax
disputes of Volcan Investments Limited.
Particulars
(x)
a)
Transactions during the year
Loans Given during the year
Paradip Multi Cargo Berth Private Limited
Malco Energy Limited
Sterlite Ports Limited
Sterlite Infraventures Limited
Sesa Resources Limited
Vizag General Cargo Berth Private Limited
Sterlite Iron and Steel Company Limited
Vedanta Limited ESOS Trust
(` in crore)
Year ended
March 31,
2018
Year ended
March 31,
2017
-
18
-
-
5
-
0
202
225
0
-
2
0
7
79
0
108
196
Integrated Report Management Review Statutory Reports Financial Statements 270
Vedanta Limited Integrated Report and Annual Accounts 2017-18
Notes forming part of the Financial Statements
as at and for the year ended March 31, 2018
51 Related Party disclosures continued
Particulars
b)
Loans Repaid during the year
Sesa Resources Limited
Sterlite Ports Limited
Vizag General Cargo Berth Private Limited
Vedanta Limited ESOS Trust*
Cairn South Africa (Pty) Limited
Malco Energy Limited
(` in crore)
Year ended
March 31,
2018
Year ended
March 31,
2017
138
1
8
58
-
18
223
68
1
264
5
0
-
338
* During the year, the Company reduced its loan receivable from Vedanta Limited ESOS Trust by ` 12 crore on exercise of stock options by employees
c)
Investments made during the year
Gaurav Overseas Private Limited
Malco Energy Limited
Bloom Fountain Limited
Vedanta Limited ESOS Trust (` 5000)
Erstwhile Cairn India Limited from subsidiaries*
0
18
-
-
-
18
-
107
14,730
0
715
15,552
* March 31, 2017 purchase of investment from Sesa Sterlite Mauritius Holdings Limited
During the year Compulsorily Convertible Debentures (CCDs) issued by Vizag General Cargo Berth Private Limited (VGCB) to the
Company for an amount ` 150 Crores have been extended for an additional period of 2 years and 10 months.
The remuneration of key management personnel of the Company are set out below in aggregate for each of the categories
specified in Ind AS 24 Related Party disclosures.
Particulars
(xi) Remuneration of key management personnel
Short-term employee benefits
Post employment benefits*
Share based payments
*Does not include the provision made for gratuity and leave benefits, as they are determined on an actuarial basis for all the employees together.
Commission/Sitting fees
Commission to Key Management Personnel
Commission and sitting fees to independent directors
Dividend to key management personnel
Dividend to relatives of key management personnel
Terms and conditions of transactions with related parties
All transactions are from related parties are made in ordinary course of business. For the year ended March 31 2018, the Company has not
recorded any impairment of receivables relating to amounts owed by related parties. This assessment is undertaken each financial year
through examining the financial position of the related party and the market in which the related party operates.
(` in crore)
Year ended
March 31,
2018
Year ended
March 31,
2017
33
2
6
41
0
4
0
0
34
3
8
45
0
3
0
0
Vedanta Limited Integrated Report and Annual Accounts 2017-18
271
Notes forming part of the Financial Statements
as at and for the year ended March 31, 2018
52 Advance(s) in the nature of Loan (Regulation 34 of Listing Obligations & Disclosure Requirements):
a) Loans and advances in the nature of Loans
Name of the Company
Paradip Multi Cargo Berth Private Limited
Sterlite Ports Limited
Sterlite Iron and Steel Company Limited
Sesa Resources Limited
Vizag General Cargo Berth Private Limited
Balance
as at
March 31,
2018
Maximum
Amount
Outstanding
during the
year
Interest rate
0
4
5
-
-
0
9.6%
5
9.6%
5
133
8.5%
8.0%
8
9.0%
(` in crore)
Balance
as at
March 31,
2017
0
5
4
133
8
Relationship
Wholly owned
Subsidiary
Wholly owned
Subsidiary
Fellow Subsidiary
Wholly owned
Subsidiary
Subsidiary
(b) None of the loanee have made, per se, investment in the shares of the Company.
(c) Investments made by Sterlite Ports Limited in Maritime Ventures Private Limited - 10,000 equity shares and Goa Sea Port - 50,000
equity shares
Investments made by Sesa Resources Limited in Sesa Mining Corporation Limited - 11,50,000 equity shares and Goa Maritime Private
Limited - 5,000 Shares
(d) The above loans and advances to subsidiary fall under the category of loans and advances in the nature of loans where there is no
repayment schedule and are repayable on demand.
(e) As per the Company’s policy, loan to employees are not considered in (a) above.
53 Subsequent events
Except as disclosed in note 3 (y) (1) (xi) and below, there are no material adjusting or non adjusting subsequent events:
Vedanta Limited’s resolution plan to acquire Electrosteel Steels Limited (ESL) was approved by National Company Law Tribunal (NCLT) in
India on April 17, 2018. In regard to an appeal filed before it, the National Company Law Appellate Tribunal (NCLAT) has directed that
pending final resolution, status quo on ESL as on May 1, 2018 is to be maintained until the appeal is resolved. The Steering Committee,
already constituted, shall continue to run the operations of ESL until final resolution.
As per our report of even date
For and on behalf of Board of Directors
For S.R. Batliboi & Co. LLP
Chartered Accountants
ICAI Firm Registration No. 301003E/E300005
per Raj Agrawal
Partner
Membership No.: 82028
Place: Gurugram
Date: May 03, 2018
Navin Agarwal
Executive Chairman
DIN 00006303
GR Arun Kumar
Whole-Time Director and
Chief Financial Officer
DIN 01874769
Place: Mumbai
Date: May 03, 2018
Kuldip Kumar Kaura
Interim Chief Executive Officer
PAN AFVPK8712R
Bhumika Sood
Company Secretary
ICSI Membership No. A19326
Integrated Report Management Review Statutory Reports Financial Statements
272
Vedanta Limited Integrated Report and Annual Accounts 2017-18
Consolidated
Financial
Statements
Vedanta Limited Integrated Report and Annual Accounts 2017-18
273
Independent Auditor’s Report
To the Members of Vedanta Limited
Report on the Consolidated Ind AS Financial Statements
We have audited the accompanying consolidated Ind AS financial statements of Vedanta Limited (hereinafter referred to as “the Holding
Company”), its subsidiaries (the Holding Company and its subsidiaries together referred to as “the Group”) its associates and jointly
controlled entities, comprising of the consolidated Balance Sheet as at March 31, 2018, the consolidated Statement of Profit and Loss
including Other Comprehensive Income, the consolidated Cash Flow Statement, the consolidated Statement of Changes in Equity for the
year then ended, and a summary of significant accounting policies and other explanatory information (hereinafter referred to as “the
consolidated Ind AS financial statements”).
Management’s Responsibility for the Consolidated Ind AS Financial Statements
The Holding Company’s Board of Directors is responsible for the preparation of these consolidated Ind AS financial statements in terms of
the requirement of the Companies Act, 2013 (“the Act”) that give a true and fair view of the consolidated financial position, consolidated
financial performance including other comprehensive income, consolidated cash flows and consolidated statement of changes in equity of
the Group including its associates and jointly controlled entities in accordance with accounting principles generally accepted in India,
including the Accounting Standards specified under Section 133 of the Act, read with the Companies (Indian Accounting Standard) Rules,
2015, as amended. The respective Board of Directors of the companies included in the Group and of its associates and jointly controlled
entities are responsible for maintenance of adequate accounting records in accordance with the provisions of the Act for safeguarding of
the assets of the Group and of its associates and jointly controlled entities and for preventing and detecting frauds and other irregularities;
the selection and application of appropriate accounting policies; making judgments and estimates that are reasonable and prudent; and the
design, implementation and maintenance of adequate internal financial controls, that were operating effectively for ensuring the accuracy
and completeness of the accounting records, relevant to the preparation and presentation of the financial statements that give a true and
fair view and are free from material misstatement(s), whether due to fraud or error, which have been used for the purpose of preparation of
the consolidated Ind AS financial statements by the Directors of the Holding Company, as aforesaid.
Auditor’s Responsibility
Our responsibility is to express an opinion on these consolidated Ind AS financial statements based on our audit. While conducting the
audit, we have taken into account the provisions of the Act, the accounting and auditing standards and matters which are required to be
included in the audit report under the provisions of the Act and the Rules made thereunder. We conducted our audit in accordance with
the Standards on Auditing, issued by the Institute of Chartered Accountants of India, as specified under Section 143(10) of the Act. Those
Standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether
the financial statements are free from material misstatement.
An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the consolidated financial
statements. The procedures selected depend on the auditor’s judgment, including the assessment of the risks of material misstatement of
the consolidated financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal
financial control relevant to the Holding Company’s preparation of the consolidated Ind AS financial statements that give a true and fair
view in order to design audit procedures that are appropriate in the circumstances. An audit also includes evaluating the appropriateness of
accounting policies used and the reasonableness of the accounting estimates made by the Holding Company’s Board of Directors, as well
as evaluating the overall presentation of the consolidated financial statements. We believe that the audit evidence obtained by us and the
audit evidence obtained by the other auditors in terms of their reports referred to in sub-paragraph (a) of the Other Matters paragraph
below, is sufficient and appropriate to provide a basis for our audit opinion on the consolidated Ind AS financial statements.
Opinion
In our opinion and to the best of our information and according to the explanations given to us, and based on the consideration of reports
of other auditors on separate financial statements and on the other financial information of the subsidiaries, associates and jointly controlled
entities, the aforesaid consolidated Ind AS financial statements give the information required by the Act in the manner so required and give
a true and fair view in conformity with the accounting principles generally accepted in India of the consolidated state of affairs of the
Group, its associates and jointly controlled entities as at March 31, 2018, their consolidated profits including other comprehensive income,
their consolidated cash flows and consolidated statement of changes in equity for the year ended on that date.
Other Matters
(a) We did not audit the financial statements and other financial information, in respect of 13 subsidiaries, whose Ind AS financial
statements include total assets of ` 7,527 Crore and net assets of ` 4,532 Crore as at March 31, 2018, and total revenues of ` 3,479
Crore and net cash outflows of ` 257 Crore respectively for the year ended on that date. These financial statements and other financial
information have been audited by other auditors, whose financial statements, other financial information and auditors’ reports have been
furnished to us by the management. The consolidated Ind AS financial statements also include the Group’s share of net profit of ` Nil for
the year ended March 31, 2018 as considered in the consolidated financial statements, in respect of 1 associate, whose financial
statements, other financial information have been audited by other auditors and whose reports have been furnished to us by the
Management. Our opinion on the consolidated Ind AS financial statements, in so far as it relates to the amounts and disclosures
included in respect of these subsidiaries and associate, and our report in terms of sub-sections (3) of Section 143 of the Act, in so far as
it relates to the aforesaid subsidiaries and associate, is based solely on the report(s) of such other auditors.
All of these subsidiaries and associates are located outside India whose financial statements and other financial information have been
prepared in accordance with accounting principles generally accepted in their respective countries and which have been audited by
other auditors under generally accepted auditing standards applicable in their respective countries. The Company’s management has
converted the financial statements of such subsidiaries, associates and jointly controlled entities located outside India from accounting
principles generally accepted in their respective countries to accounting principles generally accepted in India. We have audited these
conversion adjustments made by the Company’s management. Our opinion in so far as it relates to the balances and affairs of such
subsidiaries, associates and jointly controlled entities located outside India is based on the report of other auditors and the conversion
adjustments prepared by the management of the Company and audited by us.
Integrated Report Management Review Statutory Reports Financial Statements
274
Vedanta Limited Integrated Report and Annual Accounts 2017-18
(b) The accompanying consolidated Ind AS financial statements include unaudited financial statements and other unaudited financial
information in respect of 3 subsidiaries whose financial statements and other financial information reflect total assets of ` 2,790 Crore
and net assets of ` 97 Crore as at March 31, 2018, and total revenues of ` 150 Crore and net cash inflows of ` 65 Crore for the year
ended on that date. These unaudited financial statements and other unaudited financial information have been furnished to us by the
management. The consolidated Ind AS financial statements also include the Group’s share of net profit of ` Nil Crore for the year ended
March 31, 2018, as considered in the consolidated financial statements, in respect of 1 associate and 3 jointly controlled entities, whose
financial statements, other financial information have not been audited and whose unaudited financial statements and other unaudited
financial information have been furnished to us by the Management. Our opinion, in so far as it relates to amounts and disclosures
included in respect of these subsidiaries, associates and jointly controlled entities, and our report in terms of sub-sections (3) of Section
143 of the Act in so far as it relates to the aforesaid subsidiaries, associates and jointly controlled entities, is based solely on such
unaudited financial statement and other unaudited financial information. In our opinion and according to the information and
explanations given to us by the Management, these financial statements and other financial information are not material to the Group.
Our opinion above on the consolidated Ind AS financial statements, and our report on Other Legal and Regulatory Requirements below, is
not modified in respect of the above matters with respect to our reliance on the work done and the reports of the other auditors and the
financial statements and other financial information certified by the Management.
Report on Other Legal and Regulatory Requirements
As required by section 143 (3) of the Act, based on our audit and on the consideration of report of the other auditors on separate financial
statements and the other financial information of subsidiaries, associates and jointly controlled entities, as noted in the ‘Other Matters’
paragraph, we report, to the extent applicable, that:
(a) We and the other auditors whose reports we have relied upon have sought and obtained all the information and explanations which to
the best of our knowledge and belief were necessary for the purpose of our audit of the aforesaid consolidated Ind AS financial
statements;
(b) In our opinion, proper books of account as required by law relating to preparation of the aforesaid consolidation of the financial
statements have been kept so far as it appears from our examination of those books and reports of the other auditors;
(c) The consolidated Balance Sheet, consolidated Statement of Profit and Loss including the Statement of Other Comprehensive Income,
the consolidated Cash Flow Statement and consolidated Statement of Changes in Equity dealt with by this Report are in agreement
with the books of account maintained for the purpose of preparation of the consolidated Ind AS financial statements;
(d) In our opinion, the aforesaid consolidated Ind AS financial statements comply with the Accounting Standards specified under section
133 of the Act, read with Companies (Indian Accounting Standard) Rules, 2015, as amended;
(e) On the basis of the written representations received from the directors of the Holding Company as on March 31, 2018 and taken on
record by the Board of Directors of the Holding Company and the reports of the statutory auditors who are appointed under Section
139 of the Act, of its subsidiaries, associates and jointly controlled entities incorporated in India, none of the directors of the Group’s
companies incorporated in India is disqualified as on March 31, 2018 from being appointed as a director in terms of Section 164 (2) of
the Act.
(f) With respect to the adequacy and the operating effectiveness of the internal financial controls over financial reporting of the Holding
Company and its subsidiary companies, associate companies and jointly controlled entities incorporated in India, refer to our separate
report in “Annexure 1” to this report;
(g) With respect to the other matters to be included in the Auditor’s Report in accordance with Rule 11 of the Companies (Audit and
Auditors) Rules, 2014, in our opinion and to the best of our information and according to the explanations given to us and based on the
consideration of the report of the other auditors on separate financial statements as also the other financial information of the
subsidiaries, associates and jointly controlled entities, as noted in the ‘Other Matters’ paragraph:
i. The consolidated Ind AS financial statements disclose the impact of pending litigations on the consolidated financial position of the
Group, its associates and jointly controlled entities – Refer Note 49 to the consolidated Ind AS financial statements;
ii. The Group, its associates and jointly controlled entities did not have any material foreseeable losses in long-term contracts including
derivative contracts during the year ended March 31, 2018;
iii. There has been no delay in transferring amounts, required to be transferred, to the Investor Education and Protection Fund by the
Holding Company, its subsidiaries, associates and jointly controlled entities incorporated in India during the year ended March 31,
2018.
Place: Gurugram
Date: May 03, 2018
For S.R. Batliboi & Co. LLP
Chartered Accountants
ICAI Firm Registration Number: 301003E/
E300005
per Raj Agrawal
Partner
Membership Number: 82028
Vedanta Limited Integrated Report and Annual Accounts 2017-18
275
Annexure 1 referred to in para (f) under the heading “Report on Other Legal and Regulatory Requirements” to the independent
auditor’s report of even date on the consolidated Ind AS Financial Statements of Vedanta Limited
Report on the Internal Financial Controls under Clause (i) of Sub-section 3 of Section 143 of the Companies Act, 2013 (“the Act”)
In conjunction with our audit of the consolidated financial statements of Vedanta Limited as of and for the year ended March 31, 2018, we
have audited the internal financial controls over financial reporting of Vedanta Limited (hereinafter referred to as the “Holding Company”)
and its subsidiary companies, its associates and jointly controlled entities, which are companies incorporated in India, as of that date.
Management’s Responsibility for Internal Financial Controls
The respective Board of Directors of the Holding Company, its subsidiaries, associates and jointly controlled entities, which are companies
incorporated in India, are responsible for establishing and maintaining internal financial controls based on the internal control over financial
reporting criteria established under the Committee of Sponsoring Organizations of the Treadway Commission (2013 framework) (“COSO
2013 criteria”), which considers the essential components of internal control stated in the Guidance Note on Audit of Internal Financial
Controls Over Financial Reporting issued by the Institute of Chartered Accountants of India. These responsibilities include the design,
implementation and maintenance of adequate internal financial controls that were operating effectively for ensuring the orderly and
efficient conduct of its business, including adherence to the respective company’s policies, the safeguarding of its assets, the prevention
and detection of frauds and errors, the accuracy and completeness of the accounting records, and the timely preparation of reliable
financial information, as required under the Act.
Auditor’s Responsibility
Our responsibility is to express an opinion on the Holding Company’s, its subsidiaries, associates and jointly controlled entities, which are
companies incorporated in India, internal financial controls over financial reporting based on our audit. We conducted our audit in
accordance with the Guidance Note on Audit of Internal Financial Controls Over Financial Reporting (the “Guidance Note”) and the
Standards on Auditing, both issued by Institute of Chartered Accountants of India, and deemed to be prescribed under section 143(10) of
the Act, to the extent applicable to an audit of internal financial controls. Those Standards and the Guidance Note require that we comply
with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether adequate internal financial
controls over financial reporting was established and maintained and if such controls operated effectively in all material respects.
Our audit involves performing procedures to obtain audit evidence about the adequacy of the internal financial controls system over financial
reporting and their operating effectiveness. Our audit of internal financial controls over financial reporting included obtaining an understanding
of internal financial controls over financial reporting, assessing the risk that a material weakness exists, and testing and evaluating the design
and operating effectiveness of internal control based on the assessed risk. The procedures selected depend on the auditor’s judgement,
including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error.
We believe that the audit evidence we have obtained and the audit evidence obtained by the other auditors in terms of their reports
referred to in the “Other Matters” paragraph below, is sufficient and appropriate to provide a basis for our audit opinion on the internal
financial controls system over financial reporting.
Meaning of Internal Financial Controls Over Financial Reporting
A company’s internal financial control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of
financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting
principles. A company’s internal financial control over financial reporting includes those policies and procedures that (1) pertain to the
maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company;
(2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with
generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with
authorisations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection
of unauthorised acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.
Inherent Limitations of Internal Financial Controls Over Financial Reporting
Because of the inherent limitations of internal financial controls over financial reporting, including the possibility of collusion or improper management
override of controls, material misstatements due to error or fraud may occur and not be detected. Also, projections of any evaluation of the internal
financial controls over financial reporting to future periods are subject to the risk that the internal financial control over financial reporting may
become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.
Opinion
In our opinion, the Holding Company, its subsidiaries, associates and jointly controlled entities, which are companies incorporated in India,
have maintained in all material respects, an adequate internal financial controls system over financial reporting and such internal financial
controls over financial reporting were operating effectively as at March 31, 2018, based on the internal control over financial reporting in
COSO 2013 criteria, established by the Holding Company considering the essential components of internal control stated in the Guidance
Note on Audit of Internal Financial Controls Over Financial Reporting issued by the Institute of Chartered Accountants of India.
Other Matters
Our report under Section 143(3)(i) of the Act on the adequacy and operating effectiveness of the internal financial controls over financial
reporting of the Holding Company, its subsidiaries, associates and jointly controlled entities, which are companies incorporated in India,
insofar as it relates to 1 subsidiary, 1 associate and 1 jointly controlled entity, which are companies incorporated in India, is based on the
corresponding reports of the auditors of such associates and jointly controlled entity incorporated in India.
Place: Gurugram
Date: May 03, 2018
For S.R. Batliboi & Co. LLP
Chartered Accountants
ICAI Firm Registration Number: 301003E/
E300005
per Raj Agrawal
Partner
Membership Number: 82028
Integrated Report Management Review Statutory Reports Financial Statements 276
Vedanta Limited Integrated Report and Annual Accounts 2017-18
Consolidated Balance Sheet
Particulars
ASSETS
Non-current assets
Property, Plant and Equipment
Capital work-in-progress
Intangible assets
Exploration intangible assets under development
Financial assets
Investments
Trade receivables
Loans
Others
Deferred tax assets (net)
Income tax assets (net of provisions)
Other non-current assets
Total non-current assets
Current assets
Inventories
Financial assets
Investments
Trade receivables
Cash and cash equivalents
Other bank balances
Loans
Others
Income tax assets (net of provisions)
Other current assets
Total current assets
Total assets
EQUITY AND LIABILITIES
Equity
Equity Share Capital
Other Equity
Equity attributable to owners of Vedanta Limited
Non-controlling interests
Total Equity
Liabilities
Non-current liabilities
Financial liabilities
Borrowings
Other financial liabilities
Provisions
Deferred tax liabilities (Net)
Other non-current liabilities
Total non-current liabilities
Current liabilities
Financial liabilities
Borrowings
Trade payables
Other financial liabilities
Other current liabilities
Provisions
Income tax liabilities (net of payments)
Total current liabilities
Total equity and liabilities
As at
March 31,
2018
Note
(` in Crore)
As at
March 31,
2017
5
5
5
5
6
7
8
9
37
10
11
12
13
14
15
16
17
18
79,330
16,140
949
15,915
164
1,347
23
3,355
4,934
3,389
4,138
75,835
17,671
921
9,886
73
1,169
26
2,989
7,492
2,817
3,355
129,684
122,234
11,967
9,628
28,536
3,969
4,236
980
82
1,357
15
3,972
46,889
2,240
9,864
4,259
79
1,106
14
2,717
55,114
76,796
184,798
199,030
19
20
48 (b)
372
63,136
63,508
15,957
79,465
372
60,128
60,500
13,928
74,428
21
22
23
37
24
25
26
27
28
29
26,789
555
2,361
4,078
4,303
38,086
21,951
17,843
18,811
7,921
410
311
67,247
30,255
3,376
2,054
2,084
4,158
41,927
32,245
18,459
24,305
7,170
293
203
82,675
184,798
199,030
See accompanying notes to the financial statements
As per our report of even date
For and on behalf of Board of Directors
For S.R. Batliboi & Co. LLP
Chartered Accountants
ICAI Firm Registration No. 301003E/E300005
Navin Agarwal
Executive Chairman
DIN 00006303
per Raj Agrawal
Partner
Membership No.: 82028
Place: Gurugram
Date: May 03, 2018
GR Arun Kumar
Whole-Time Director and
Chief Financial Officer
DIN 01874769
Place: Mumbai
Date: May 03, 2018
Kuldip Kumar Kaura
Interim Chief Executive Officer
PAN AFVPK8712R
Bhumika Sood
Company Secretary
ICSI Membership No. A19326
Vedanta Limited Integrated Report and Annual Accounts 2017-18
277
Consolidated Statement of Profit and Loss
Particulars
Revenue from operations (Net of excise duty)
Add: Excise duty
Revenue from operations (Gross of excise duty)
Other income
Total Income
Expenses
Cost of materials consumed
Purchases of stock-in-trade
Changes in inventories of finished goods and work-in-progress
Power & fuel charges
Employee benefits expense
Excise duty on sales
Finance costs
Depreciation, depletion and amortisation expense
Other expenses
Total expenses
Profit before exceptional items and tax
Net exceptional gain/(loss)
Profit before tax
Tax expense/(benefit):
On other than exceptional items
Net current tax expense
Net deferred tax expense/(benefit)
Distribution tax on dividend from subsidiaries
On exceptional items
Net current tax expense
Net deferred tax expense
Net tax expense:
Profit after tax for the year before share in profit/(loss) of jointly controlled entities and associates
and non-controlling interests
Add: Share in profit/(loss) of jointly controlled entities and associates
Profit for the year after share in profit/(loss) of jointly controlled entities and associates (a)
Other comprehensive income
Items that will not be reclassified to profit or loss
Re-measurement gain/(loss) on defined benefit obligations
Tax credit/(expense)
Gain on FVOCI equity investment
Items that will be reclassified to profit or loss
Net gain/(loss) on cash flow hedges
Tax credit/(expense)
Net gain/(loss) on FVOCI investments
Tax credit/(expense)
Exchange differences on translation
Tax (expense)/credit
Exchange differences reclassified to profit and loss
Total other comprehensive income (b)
Total comprehensive income for the year (a+b)
Profit/(Loss) attributable to:
Owners of Vedanta Limited
Non-controlling interests
Other comprehensive income attributable to:
Owners of Vedanta Limited
Non-controlling interests
Total comprehensive income attributable to:
Owners of Vedanta Limited
Non-controlling interests
Earnings/(loss) per equity share after tax and exceptional items (`):
– Basic
– Diluted
Earnings/(loss) per equity share after tax but before exceptional items (`):
– Basic
– Diluted
* Previous year numbers have been restated (Refer note 41)
See accompanying notes to the financial statements
(` in Crore except otherwise stated)
Note
30
31
Year ended
March 31,
2018
91,866
1,057
92,923
3,574
Year ended
March 31,
2017 *
72,225
3,946
76,171
4,581
96,497
80,752
32
33
34
5
35
36
37
41
48 (b)
48 (b)
48 (b)
38
38
31,582
220
450
14,026
2,496
1,057
5,783
6,283
17,928
79,825
16,672
2,897
19,569
2,867
2,472
(1,536)
51
2,023
5,877
13,692
0
13,692
7
3
90
100
(45)
35
(23)
2
636
(3)
1485
2,087
2,187
15,879
10,342
3,350
2,119
68
12,461
3,418
28.30
28.24
26.17
26.11
22,460
649
(1,229)
10,233
2,339
3,946
5,855
6,292
16,441
66,986
13,766
(114)
13,652
2,302
(199)
196
–
34
2,333
11,319
(3)
11,316
(5)
3
27
25
8
(10)
58
–
(352)
6
-
(290)
(265)
11,051
6,958
4,358
(18)
(247)
6,940
4,111
23.47
23.46
24.04
24.03
As per our report of even date
For and on behalf of Board of Directors
For S. R. Batliboi & Co. LLP
Chartered Accountants
ICAI Firm Registration No. 301003E/E300005
per Raj Agrawal
Partner
Membership No.: 82028
Place: Gurugram
Date: May 03, 2018
Navin Agarwal
Executive Chairman
DIN 00006303
GR Arun Kumar
Whole-Time Director and
Chief Financial Officer
DIN 01874769
Place: Mumbai
Date: May 03, 2018
Kuldip Kumar Kaura
Interim Chief Executive Officer
PAN AFVPK8712R
Bhumika Sood
Company Secretary
ICSI Membership No. A19326
Integrated Report Management Review Statutory Reports Financial Statements
278
Vedanta Limited Integrated Report and Annual Accounts 2017-18
Consolidated Statement of Cash Flow
Cash flows from operating activities
Profit before tax
Adjustments for:
Depreciation, depletion and amortization
Impairment (reversal)/charge
Other exceptional items
Provision for doubtful debts/advances
Exploration costs written off
Fair value gain on financial assets held for trading
Loss on sale of property, plant and equipment, net
Foreign exchange Loss/(gains), net
Unwinding of discount
Other non-operating income/(expenses)
Share based payment expense
Interest and dividend income
Interest expenses
Deferred government grant
Changes in assets and liabilities:
Increase in trade and other receivables
Increase in inventories
Increase in other financial and non-financial assets
Increase in trade and other payable
Increase/(Decrease) in other current and non-current liabilities
Cash generated from operations
Income taxes paid
Net cash from operating activities
Cash flows from investing activities
Acquisition of Subsidiary (net of cash&bank balance)(Note 4)
Purchases of property, plant and equipment (including intangibles)
Proceeds from sale of property, plant and equipment
Loans repaid by related parties /(Loans to related parties)
Proceeds from redemption of short-term deposits
Short-term deposits made
Proceeds from sale of short term investments
Short-term investments made
Interest received
Dividends received
Payments made to site restoration fund
Net cash from investing activities
Cash flows from financing activities
Proceeds from exercise of Stock Options
Proceeds from/(repayment of) short term loan, net
Proceeds from current borrowings
Repayment of current borrowings
Proceeds from long-term borrowings
Repayment of long-term borrowings
Interest paid
Loans from related parties
Loans repaid to related parties
Payment of dividends to equity holders of the parent, including dividend distribution tax
Payment of dividends to non-controlling interests, including dividend distribution tax
Purchase of Treasury Shares for stock options
Exercise of Stock Options
Net cash used in financing activities
Effect of exchange rate changes on cash and cash equivalents
Net (decrease)/increase in cash and cash equivalents
Cash and cash equivalents at the beginning of the year (Refer Note 14(e))
Cash and cash equivalents at the end of the year (Refer Note 14(e))
Year ended
March 31,
2018
(` in Crore)
Year ended
March 31,
2017 *
19,569
13,652
6,310
(4,327)
1,598
68
-
(1,676)
15
(18)
84
22
47
(1,304)
5,667
(145)
(1,685)
(2,215)
(1,633)
101
757
21,235
(3,198)
18,037
6,317
114
-
19
41
(3,185)
44
134
85
(51)
7
(1,193)
5,636
(130)
(917)
(1,623)
(531)
5,706
(841)
23,284
(5,201)
18,083
(859)
(7,334)
38
-
6,230
(3,774)
1,02,592
(82,841)
1,405
10
(71)
15,396
(4)
(5,516)
81
(1)
1,090
(3,635)
1,03,201
(93,585)
1,144
1
(65)
2,711
-
(3,945)
4,238
(18,360)
8,271
(7,473)
(5,677)
-
-
(14,881)
(1,931)
(202)
34
(39,926)
84
(6,409)
10,876
4,467
2
11,769
17,440
(14,736)
8,847
(7,191)
(6,150)
191
(12,715)
(625)
(9,154)
(103)
-
(12,425)
(30)
8,339
2,537
10,876
Notes:
1. The figures in brackets indicate outflows
2. The above cash flow has been prepared under the “Indirect Method” as set out in Indian Accounting Standard (Ind AS) 7 – Statement of Cash Flows
* Previous year numbers have been restated (Refer note 41)
See accompanying notes to the financial statements
As per our report of even date
For and on behalf of Board of Directors
For S.R. Batliboi & Co. LLP
Chartered Accountants
ICAI Firm Registration No. 301003E/E300005
per Raj Agrawal
Partner
Membership No.: 82028
Place: Gurugram
Date: May 03, 2018
Navin Agarwal
Executive Chairman
DIN 00006303
GR Arun Kumar
Whole-Time Director and
Chief Financial Officer
DIN 01874769
Place: Mumbai
Date: May 03, 2018
Kuldip Kumar Kaura
Interim Chief Executive Officer
PAN AFVPK8712R
Bhumika Sood
Company Secretary
ICSI Membership No. A19326
Vedanta Limited Integrated Report and Annual Accounts 2017-18
279
Statement of Changes in Equity
A. Equity Share Capital
Equity shares of ` 1 each issued, subscribed and fully paid except shares to be issued
As at March 31, 2016
Shares to be issued pursuant to merger (Refer Note 4 (I))
As at March 31, 2017 and March 31, 2018
B. Other Equity
Number
of shares
(in Crore)
Amount
(` in Crore)
297
75
372
297
75
372
Reserves and surplus
Items of OCI
(` in Crore)
Capital
reserve
Securities
premium
reserve
Retained
earnings
Other
reserves
(Refer note
below)
Foreign
currency
translation
reserve
Equity
instruments
through
OCI
Debt
instruments
through
OCI
Effective
portion of
cash flow
hedges
Total other
equity
Non-
controlling
interests
Total
Particulars
Balance as at April 01, 2016
Profit for the year *
Other comprehensive income for
the year (net of tax impact)
Total comprehensive income
for the year
Transferred pursuant to merger
(Refer note 4 (I))
Purchase of treasury shares
Recognition of share based
payment
Creation of debenture
redemption reserve
Purchase of non-controlling
interests – Cairn India Limited
Changes in non-controlling
interests (Refer note 4 (I))
Dividend, including tax on
dividend (Refer note 39) *
131
–
19,965
–
3,856
6,958
20,427
–
–
–
–
–
(0)
6,958
–
–
–
(103)
7
–
–
–
(560)
560
–
–
(8,538)
–
148
–
956
–
(956)
–
–
–
(2)
17,934
–
–
–
–
–
–
(728)
–
(90)
(90)
–
–
–
–
–
–
–
Balance as at March 31, 2017
19,019
19,009
1,716
21,039
(818)
Profit for the year
Other comprehensive income for
the year (net of tax impact)
Total comprehensive income
for the year
Purchase of treasury shares
Creation of legal reserve
Recognition of share based
payment
Stock options cancelled during
the year
Exercise of stock option
Transfer from debenture
redemption reserve (net)
Acquisition of ASI (Refer note 4 (II))
Recognition of put option
liability/derecognition of non
controlling interest
Dividend, including tax on
dividend (Refer note 39)
–
–
–
–
–
–
–
–
–
167
(37)
–
–
–
–
–
–
–
–
–
–
–
–
–
10,342
8
10,350
–
(22)
–
3
10
292
–
–
(9,462)
–
–
–
(202)
22
47
(3)
24
(292)
–
–
–
–
2,049
2,049
–
–
–
–
–
–
–
–
–
32
–
27
27
–
–
–
–
–
–
–
59
–
90
90
–
–
–
–
–
–
–
–
–
62
–
37
37
–
–
–
–
–
–
–
99
–
(13)
(13)
–
–
–
–
–
–
–
–
–
(3)
–
43,742
6,958
36,561
4,358
80,303
11,316
8
8
–
–
–
–
–
–
–
5
–
(18)
(247)
(265)
6,940
4,111
11,051
–
(103)
7
–
–
–
–
–
–
(103)
7
–
(2)
(18)
(20)
18,082
(21,211)
(3,129)
(8,538)
(5,515)
(14,053)
60,128
13,928
74,056
10,342
3,350
13,692
(15)
2,119
68
2,187
(15)
–
–
12,461
(202)
–
3,418
–
–
15,879
(202)
–
–
–
–
–
–
–
–
47
–
34
–
167
–
–
–
–
2
47
–
34
–
169
(37)
37
–
(9,462)
(1,428)
(10,890)
Balance as at March 31, 2018
19,149
19,009
2,887
20,635
1,231
149
86
(10)
63,136
15,957
79,093
Integrated Report Management Review Statutory Reports Financial Statements 280
Vedanta Limited Integrated Report and Annual Accounts 2017-18
Notes forming part of the Consolidated Financial Statements
as at and for the year ended March 31, 2018
Note:
Other reserves comprise of:
Particulars
Balance as at April 01, 2016
Purchase of treasury shares
Recognition of share based
payment
Changes in non-controlling
interests (Refer note 4 (I)) **
Transfer from retained earning
Balance as at March 31, 2017
Purchase of treasury shares
Creation of legal reserve
Recognition of share based
payment
Stock options cancelled during
the year
Exercise of stock option
Transfer to Retained earnings
Capital
redemption
reserve
Debenture
redemption
reserve
Preference
share
redemption
reserve
Capital
reserve on
consolidation
Share based
payment
reserve
Legal
reserve
23
–
–
–
–
23
–
–
–
–
–
–
1,209
–
–
–
560
1,769
–
–
–
–
–
(292)
77
–
–
–
–
77
–
–
–
–
–
–
10
–
–
–
–
10
–
–
–
–
–
–
Treasury
shares
(Refer note
20)
–
(103)
–
–
–
(103)
(202)
–
–
–
46
–
General
reserve
19,105
–
Total
20,427
(103)
–
–
–
7
148
560
19,105
21,039
–
–
–
–
–
–
(202)
22
47
(3)
24
(292)
3
–
–
–
–
3
–
22
–
–
–
–
25
(259)
19,105
20,635
–
–
7
148
–
155
–
–
47
(3)
(22)
–
177
Balance as at March 31, 2018
23
1,477
77
10
Previous year numbers have been restated (Refer note 41)
*
** Net of tax ` 4.28 Crore
See accompanying notes to the financial statements
As per our report of even date
For and on behalf of Board of Directors
For S.R. Batliboi & Co. LLP
Chartered Accountants
ICAI Firm Registration No. 301003E/E300005
Navin Agarwal
Executive Chairman
DIN 00006303
per Raj Agrawal
Partner
Membership No.: 82028
Place: Gurugram
Date: May 03, 2018
GR Arun Kumar
Whole-Time Director and
Chief Financial Officer
DIN 01874769
Place: Mumbai
Date: May 03, 2018
Kuldip Kumar Kaura
Interim Chief Executive Officer
PAN AFVPK8712R
Bhumika Sood
Company Secretary
ICSI Membership No. A19326
Vedanta Limited Integrated Report and Annual Accounts 2017-18
281
1 Group overview
Vedanta Limited (“Vedanta” or “the Company”) is a public limited company domiciled in India and has its registered office at 1st Floor,
‘C’ wing, Unit 103, Corporate Avenue, Atul Projects, Chakala, Andheri (East), Mumbai-400093, Maharashtra. Vedanta’s equity shares are
listed on National Stock Exchange and Bombay Stock Exchange in India and its American Depository Shares (“ADS”) are listed on New
York Stock Exchange in United States of America. Each ADS represents four equity shares. Vedanta is majority-owned and controlled
subsidiary of Vedanta Resources Plc (holding company), the London listed diversified natural resource company.
The Company and its consolidated subsidiaries (collectively referred as “Group”) are principally engaged in the business of iron ore mining,
non-ferrous metals (copper, aluminium and zinc), commercial power generation, oil and gas and manufacturing of glass substrate.
The Group’s oil and gas business was held by Cairn India Limited and its subsidiaries. Pursuant to the merger of Cairn India Limited with the
Company in year ended March 31, 2017 (refer note 4 (I)), interests have been transferred to Vedanta and its subsidiaries.
The Group’s zinc India business is owned and operated by Hindustan Zinc Limited (“HZL”) in which it has a 64.92% interest as at March 31, 2018.
The Group’s zinc international business comprises 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”) and Black
Mountain Mining (Proprietary) Limited (“BMM”), whose assets include the Black Mountain mine and the Gamsberg mine project which is in
exploration stage, located in South Africa.
The Group’s iron ore business is wholly owned by Vedanta, 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. The Group’s iron ore business also
comprises Western Cluster Limited (“WCL”) in Liberia which has iron 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.
The Group’s copper business is owned and operated by Vedanta, Copper Mines of Tasmania Pty Ltd (“CMT”), Tasmania Copper mines
(“TCM”) and Fujairah Gold FZC and principally consists of customised smelting.
The Group’s Aluminium business is owned and operated by Vedanta and Bharat Aluminium Company Limited (“BALCO”) in which it has
51% interest as on March 31, 2018. Aluminium business consists of mining of bauxite, manufacture of alumina and various Aluminium
products and generation of power.
The Group’s power business is owned and operated by Vedanta, Talwandi Sabo Power Limited (“TSPL”), 274 MW of wind power plants
commissioned by HZL and 600 MW power plant at BALCO.
The Group’s other activities include 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 and is handled by Vizag General Cargo Berth Private Limited (“VGCB”) and
Maritime Ventures Private Limited (“MVPL”), in which the Group owns 100% interest. It also includes manufacturing of glass substrate
owned and operated by AvanStrate Inc., in which it has 51.63% interest as on March 31, 2018.
2 Basis of preparation and basis of measurement of financial statements
a) Basis of preparation
These consolidated financial statements have been prepared in accordance with Indian Accounting Standards (Ind AS) notified under the
Companies (Indian Accounting Standards) Rules, 2015 and other relevant provisions of the Companies Act, 2013 (the Act) (as amended
from time to time).
These consolidated 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.
Accounting policies are consistently applied except as stated in note 41 or where a newly issued accounting standard is initially adopted on
a revision to an existing accounting standard requiring a change in the accounting policy hitherto in use as disclosed below.
These financial statements are approved for issue by the Board of Directors on May 03, 2018.
Certain comparative figures appearing in these consolidated financial statements have been regrouped and/or reclassified to better reflect
the nature of those items.
Amounts less than ` 0.50 Crore have been presented as “0”.
b) Basis of measurement
The consolidated financial statements have been prepared on a going concern basis 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.
c) Application of new and revised standards
The Group has adopted with effect from April 1, 2017, the following new amendments and pronouncements.
• Ind AS 7 Statement of Cash Flows: Narrow-scope amendments: The amendments introduce an additional disclosure that will enable
users of financial statements to evaluate changes in liabilities arising from financing activities. The required disclosure is given in note 21 (f).
• Ind AS 102 Share-based Payment: Few amendments to clarify the classification and measurement of share-based payment transactions
have been issued. This does not have any significant impact on the amounts reported in the consolidated financial statements.
• Guidance Note on Oil and Gas Accounting: The Institute of Chartered Accountants of India (“ICAI”), on December 6, 2016 issued the
revised Guidance Note on accounting for Oil and Gas producing activities (“Guidance Note”), applicable from April 01, 2017.
Notes forming part of the Consolidated Financial Statementsas at and for the year ended March 31, 2018 continuedIntegrated Report Management Review Statutory Reports Financial Statements 282
Vedanta Limited Integrated Report and Annual Accounts 2017-18
2 Basis of preparation and basis of measurement of financial statements continued
Till March 31, 2017, proved and probable reserves (or 2P reserves) on entitlement interest basis were being considered for providing
depletion on oil and gas assets. As per the Guidance Note, proved and developed reserves (or 1P reserves) on working interest basis are to
be considered for computing depletion. The change has been applied prospectively and as a result, depreciation, depletion and
amortization expense for the year is lower by ` 1,487 Crore and profit after tax is higher by ` 899 Crore.
3 Significant accounting policies
The Group has applied the following accounting policies to all periods presented in these consolidated financial statements.
a) Basis of Consolidation
i) Subsidiaries:
The consolidated financial statements incorporate the results of Vedanta Limited and all its subsidiaries, being the entities that it controls.
Control is evidenced where the Group has power over the investee or 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 returns.
The financial statements of subsidiaries are prepared for the same reporting year as the parent 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 statement of profit and loss and consolidated balance sheet.
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. In addition, 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 statement of profit and loss from the effective date of acquisition or up to the
effective date of disposal, as appropriate.
Intra-Group balances and transactions, and any unrealized profit arising from intra-Group transactions, are eliminated. Unrealized losses
are eliminated unless costs cannot be recovered.
ii) 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 and 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 48.
Joint venture
The Group accounts for its interest in joint venture using the equity method (see (iv) below), after initially being recognised at cost in the
consolidated balance sheet. Goodwill arising on the acquisition of joint venture is included in the carrying value of investments in joint venture.
iii) Investments in associates
Investments in associates are accounted for using the equity method (see (iv) below). An associate is an entity over which the Group is in a
position to exercise significant influence over operating and financial policies. Goodwill arising on the acquisition of associates is included
in the carrying value of investments in associate.
iv) 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 in profit and loss, and the Group’s share of other comprehensive income of the investee, other changes to the
investee’s net assets and is further adjusted for impairment losses , if any. Dividend received or receivable from associates and joint-
ventures are recognised as a reduction in carrying amount of the investment.
Notes forming part of the Consolidated Financial Statementsas at and for the year ended March 31, 2018 continued Vedanta Limited Integrated Report and Annual Accounts 2017-18
283
3 Significant accounting policies continued
The consolidated statement of profit and loss 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 recognized. 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 a joint venture equals or exceeds its interests in the associate or joint venture, the Group
discontinues 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 on transactions between the Group and its associates and joint ventures are eliminated against the investments to the
extent of the Group’s interest in these entities. Unrealised losses are also eliminated unless the transaction provides evidence of an
impairment of the assets transferred. Accounting policies of equity accounted investees have been 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 below 3 (j).
b) Business combination
Business acquisitions are accounted for under the purchase method. The acquiree’s identifiable assets, liabilities and contingent liabilities
that meet the conditions for recognition, 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 cost of acquisition, 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 recognized 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 gain is recognized in other comprehensive income and accumulated in equity as capital reserve.
However, if there is no clear evidence of bargain purchase, the entity recognizes the gain directly in equity as capital reserve, without
routing the same through other comprehensive income.
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.
The Group makes adjustments to the provisional fair value amounts recognised at the date of acquisition to reflect new information
obtained about facts and circumstances that existed as of the acquisition date that, if known, would have affected the measurement of the
amounts recognised as of that date. The Group applies the measurement period adjustments retrospectively to the consolidated financial
statements to reflect the measurement period adjustments as retrospectively recorded on the date of the acquisition as if measurement
period adjustments had been recorded initially at the date of acquisition.
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 consolidated statement of profit and loss.
If the Group acquires a group of assets in a company that does not constitute a business combination in accordance with Ind AS 103
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 specifically covered by Ind AS 103. Such transactions are
accounted for using the pooling-of-interest method. The assets and liabilities of the acquired entity are recognised at their carrying
amounts recorded in the parent entity’s consolidated financial statements with the exception of certain income tax and deferred tax assets.
No adjustments are made to reflect fair values, or recognise any new assets or liabilities. The only adjustments that are made are to
harmonise accounting policies. The components of equity of the acquired companies are added to the same components within Group
equity. The difference, if any, between the amounts recorded as share capital issued plus any additional consideration in the form of cash or
other assets and the amount of share capital of the transferor is transferred to capital reserve and is presented separately from other capital
reserves. The company’s shares issued in consideration for the acquired companies are recognized 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 year
comparative information is only adjusted for periods during which entities were under common control.
c) Revenue recognition
Revenues are measured at the fair value of the consideration received or receivable, net of discounts, volume rebates, outgoing sales
taxes/goods and services tax and other indirect taxes excluding excise duty.
Excise duty is a liability of the manufacturer which forms part of the cost of production, irrespective of whether the goods are sold or not.
Since the recovery of excise duty flows to the Group on its own account, revenue includes excise duty.
Notes forming part of the Consolidated Financial Statementsas at and for the year ended March 31, 2018 continuedIntegrated Report Management Review Statutory Reports Financial Statements 284
Vedanta Limited Integrated Report and Annual Accounts 2017-18
3 Significant accounting policies continued
• Sale of goods/rendering of services
Revenues from sales of goods are recognised when all significant risks and rewards of ownership of the commodity sold are transferred
to the customer which usually is on delivery of the goods to the shipping agent. 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”), as
specified in the contract, when shipped. 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 of oil, gas and condensate production, recognised on a direct
entitlement basis, when significant risks and rewards of ownership are transferred to the buyers. Direct entitlement basis represents
entitlement to variable physical volumes of hydrocarbons, representing recovery of the costs incurred and a stipulated share of the
production remaining after such cost recovery. The stipulated share of production is arrived after reducing government’s share of profit
petroleum which is accounted for when the obligation (legal or constructive), 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 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 and costs relating to each construction contract of service concession
arrangements are recognised over the period of each arrangement only to the extent of costs incurred that are probable of recovery.
Revenues and costs relating to operating phase of the port contract are measured at the fair value of the consideration received or
receivable for the services provided.
Revenue from rendering of services is recognised on the basis of work performed.
• 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 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 statement of profit and loss 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.
d) Property, Plant and Equipment
i) Mining properties and leases
The costs of mining properties and leases, which include the costs of acquiring and developing mining properties and mineral rights, are
capitalised as property, plant and equipment under the heading “mining property and leases” in the year in which they are incurred.
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 land, buildings, plant and equipment is capitalised as part of the
cost of the mining property until the mining property is capable of commercial production.
The stripping cost incurred during the production phase of a surface mine is deferred 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 company 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 cost 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.
Notes forming part of the Consolidated Financial Statementsas at and for the year ended March 31, 2018 continued
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ii) Oil and gas assets – (developing/producing assets)
For oil and gas assets a successful efforts based accounting policy is followed.
All costs incurred after the technical feasibility and commercial viability of producing 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 statement of profit and loss to the extent that the net
proceeds exceed or are less than the appropriate portion of the net capitalised costs of the asset.
iii) 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.
Land acquired free of cost or at below market rate from the government is recognized at fair value with corresponding credit to deferred income.
If significant parts of an item of property, plant and equipment have different useful lives, then they are accounted 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 statement of profit and loss 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 statement of profit and loss when the asset is derecognised.
iv) Assets under construction
Assets under construction are capitalized 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 (net of income) associated with the commissioning of an asset and any obligations for decommissioning costs are capitalised until
the period of commissioning has been completed and the asset is ready for its intended use.
v) Depreciation, depletion and amortisation expense
Mining properties and other assets in the course of development or construction and freehold land are not depreciated.
• 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.
Leasehold land and buildings are depreciated on a straight-line basis over the period of the lease or, if shorter, their useful economic life.
• Oil and gas assets: [Refer note 2 (b)]
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 depletable 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.
Depletable reserves are proved reserves for acquisition costs and proved and developed reserves for successful exploratory wells,
development wells, processing facilities, distribution assets, estimated future abandonment cost and all other related costs. These
assets are depleted within each cost centre. Reserves for this purpose are considered on working interest basis which are reassessed
atleast annually. Impact of changes to reserves are accounted for prospectively.
Till March 31, 2017 depletable reserves were proven and probable oil and gas reserves. 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 these reserves.
• 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 based on technical estimates) as given below.
Management’s assessment of independent technical evaluation/advice 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.
Notes forming part of the Consolidated Financial Statementsas at and for the year ended March 31, 2018 continuedIntegrated Report Management Review Statutory Reports Financial Statements
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Estimated useful life of assets are as follows:
Asset
Buildings (Residential; factory etc.)
Plant and equipment
Railway siding
Roads(including buildings)
Office equipment
Furniture and fixture
Vehicles
Ships
Aircraft
River fleet
Useful life
(in years)
3-60
15-40
15
3-10
3-6
8-10
8-10
25
20
28
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 statements of profit and loss 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
estimates, the change is accounted for as a change in accounting estimate.
e) Intangible assets
Intangible assets acquired separately are measured on initial recognition at cost. Following initial recognition, intangible assets are carried
at cost less accumulated amortisation and accumulated impairment losses, if any.
Intangible assets are amortised over their estimated useful life on a straight line basis. Software is amortised over the estimated useful life
of software license of five 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 ten years.
The amortization period and the amortization method are reviewed at least at each financial year end. If the expected useful life of the
asset is different from previous estimates, the change is accounted for prospectively as a change in accounting estimate.
f) Port concession rights
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 also include certain property, plant and equipment in
accordance with Appendix A of Ind AS 11 ‘Service Concession Arrangements’.
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.
Gains or losses arising from de-recognition of port concession rights are measured as the difference between the net disposal proceeds and the
carrying amount of the asset and are recognised in the consolidated statement of profit and loss when the asset is de-recognised.
g) Exploration and evaluation intangible 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 (intangible assets) and stated at cost less impairment, if any. Exploration and evaluation intangible assets are
transferred to property, plant and equipment when the technical feasibility and commercial viability has been determined. Exploration
intangible assets under development 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 licenses 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 exploration drilling and equipping exploration and appraisal wells.
Exploration expenditure incurred in the process of determining oil and gas exploration targets is capitalised within “Exploration and
evaluation assets” (intangible 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.
Notes forming part of the Consolidated Financial Statementsas at and for the year ended March 31, 2018 continued
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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 and equipment
– development/producing assets 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 statement of profit and loss.
Expenditure incurred on the acquisition of a license interest is initially capitalised on a license-by-license basis. Costs are held, undepleted,
within exploration and evaluation assets until such time as the exploration phase on the license 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 statement of profit and loss.
h) 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.
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 balance sheet.
i) Impairment of 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. External factors, such as 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
and 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 be specific to the entity 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.
If the recoverable amount of an asset or CGU is estimated to be less than its carrying amount, the carrying amount of the asset or CGU is
reduced to its recoverable amount. An impairment loss is recognised in the consolidated statement of profit and loss.
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.
Exploration and evaluation intangible 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 indications:
• the period for which the entity 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 entity 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 underway or planned. To the extent that capitalised
expenditure is no longer expected to be recovered, it is charged to the consolidated statement of profit and loss.
Notes forming part of the Consolidated Financial Statementsas at and for the year ended March 31, 2018 continuedIntegrated Report Management Review Statutory Reports Financial Statements 288
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j) 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.
(i) 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 and 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.
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) 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. 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 statement of profit and loss. The losses
arising from impairment are recognised in consolidated statement of profit and loss.
• Debt instruments at fair value through other comprehensive income (FVOCI)
A ‘debt instrument’ is classified as at the 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 recognized in other comprehensive income (OCI). However, the Group recognizes interest income, impairment losses
and reversals and foreign exchange gain or loss in the profit and loss. On derecognition of the asset, cumulative gain or loss previously
recognised in other comprehensive income is reclassified from the equity to consolidated statement of profit and loss. 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
amortized cost or as FVOCI, is classified as at FVTPL.
In addition, the Group may elect to designate a debt instrument, which otherwise meets amortized 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 recognized in consolidated
statement of Profit and loss.
• Equity instruments
All equity investments in scope of Ind AS 109 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 Ind AS 103 applies are classified as at FVTPL. For all other equity
instruments, the Company 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
recognized 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 statement of profit and loss.
(ii) 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.
(iii) Impairment of financial assets
In accordance with Ind AS 109, the Group applies expected credit loss (“ECL”) model for measurement and recognition of impairment loss
on the following financial assets:
a) Financial assets that are debt instruments, and are measured at amortised cost e.g., loans, debt securities and deposits
b) Financial assets that are debt instruments and are measured as at FVOCI
c) Trade receivables or any contractual right to receive cash or another financial asset that result from transactions that are within the
scope of Ind AS 18.
Notes forming part of the Consolidated Financial Statementsas at and for the year ended March 31, 2018 continued
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The Group follows ‘simplified approach’ for recognition of impairment loss allowance on trade 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 recognized as income/expense in profit or loss. The balance sheet
presentation for various financial instruments is described below:
a) Financial assets measured at amortised cost: ECL is presented as an allowance, i.e., as an integral part of the measurement of those
assets in the balance sheet. The Company does not reduce impairment allowance from the gross carrying amount.
b) 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.
(iv) Financial liabilities – Recognition & 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 loans, borrowings and payables, 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 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 Ind AS 109. 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 statement of profit and loss.
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 Ind AS 109 are satisfied. For liabilities designated as FVTPL, fair value gains/losses attributable to
changes in own credit risk are recognized in OCI. These gains/loss are not subsequently transferred to profit or loss. 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 statement of profit and loss. The Group has not designated any financial liability as at fair value through consolidated
statement of profit and loss.
• Financial liabilities at amortised cost (Loans and Borrowings)
After initial recognition, interest-bearing loans and borrowings are subsequently measured at amortised cost using the EIR method.
Gains and losses are recognised in profit or loss 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 statement of profit and loss.
• 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 statement of profit and loss.
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(v) 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 consolidated statement of profit and loss.
If the hybrid contract contains a host that is a financial asset within the scope of Ind AS 109, the Group does not separate embedded
derivatives. Rather, it applies the classification requirements contained in Ind AS 109 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 profit or loss, unless designated as
effective hedging instruments.
(vi) 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.
(vii) Offsetting of financial instruments
Financial assets and financial liabilities are offset and the net amount is reported in the consolidated balance sheet 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.
(viii) 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 profit or loss, except for the effective portion of
cash flow hedges, which is recognised in OCI and later reclassified to profit or loss 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 entity 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 profit or loss 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 profit or
loss. Hedge accounting is discontinued when company 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 statement of profit and loss.
Amounts recognised as OCI are transferred to profit or loss 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 as OCI are transferred to the initial carrying amount of the non-financial asset or liability.
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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 as OCI while any gains or losses relating to the ineffective portion are recognised in the consolidated statement of
profit and loss. On disposal of the foreign operation, the cumulative value of any such gains or losses recorded in equity is reclassified to
the consolidated statement of profit and loss (as a reclassification adjustment).
k) 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 statement of profit and loss.
l) Leases
Determining whether an arrangement contains lease
At inception of an arrangement, the Group determines whether the arrangement is or contains a lease. The arrangement is, or contains, a
lease if fulfilment of the arrangement is dependent on the use of a specific asset or assets and the arrangement conveys a right to use the
asset or assets, even if that right is not explicitly specified in an arrangement.
At inception or on reassessment of an arrangement that contains lease, the Group separates payments and other consideration required by
the arrangement into those for the lease and those for other elements on the basis of their relative fair values. If the Group concludes for a
finance lease that it is impracticable to separate the payments reliably, then an asset and a liability are recognised at an amount equal to the
fair value of the underlying asset; subsequently the liability is reduced as payments are made and an imputed finance cost on the liability is
recognised using the Group’s incremental borrowing rate.
Group as a lessee
A lease is classified at the inception date as a finance lease or an operating lease. A lease that transfers substantially all the risks and
rewards incidental to ownership to the Group is classified as a finance lease.
Finance leases are capitalised at the commencement of the lease at the inception date fair value of the leased property or, if lower, at the
present value of the minimum lease payments. Lease payments are apportioned between finance charges and reduction of the lease liability
so as to achieve a constant rate of interest on the remaining balance of the liability. Finance charges are recognised in finance costs in the
statement of profit and loss, unless they are directly attributable to qualifying assets, in which case they are capitalized in accordance with the
Group’s general policy on the borrowing costs. Contingent rentals are recognised as expenses in the periods in which they are incurred.
A leased asset is depreciated over the useful life of the asset. However, if there is no reasonable certainty that the Group will obtain
ownership by the end of the lease term, the asset is depreciated over the shorter of the estimated useful life of the asset and the lease term.
Operating lease payments are recognised as an expense in the statement of profit and loss on a straight-line basis over the lease term unless
the payments are structured to increase in line with general inflation to compensate for the lessor’s expected inflationary cost increase.
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 unless the payments are
structured to increase in line with general inflation to compensate for the lessor’s expected inflating cost increase. 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 Company’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.
m) Inventories
Inventories including 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 FIFO basis, however, cost of finished
goods of oil and condensate is determined on a quarterly weighted average basis; 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 to completion and disposal.
n) Government Grant
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.
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When the grant or subsidy relates to revenue, it is recognised as income on a systematic basis in the consolidated statement of profit and
loss over the periods necessary to match them with the related costs, which they are intended to compensate.
Where the grant relates to an asset, it is recognised as deferred income and released to income in equal amounts over the expected useful
life of the related asset and presented within other income.
When the Group receives grants of non-monetary assets, the asset and the grant are recorded at fair value amounts and released to profit
or loss over the expected useful life in a pattern of consumption of the benefit of the underlying asset.
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 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.
o) 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 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, which effects neither the accounting profit nor taxable profit or 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 realized 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 recognized outside profit or loss is recognised outside profit or loss (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 income statement/other comprehensive income as the underlying temporary difference is reversed.
p) Retirement benefits 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 statement of profit and loss.
Past service costs are recognised in profit or loss 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 cost is recognised within cost of sales, administrative expenses and
distribution expenses. Net interest expense or income is recognized within finance costs.
For defined contribution schemes, the amount charged to the consolidated statement of profit and loss 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.
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q) 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 balance sheet 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.
Additionally, VRPLC offers certain share based incentives under the Long-Term Incentive Plan (“LTIP”) to employees and directors of the
Company and its subsidiaries. VRPLC recovers the proportionate cost (calculated based on the grant date fair value of the options granted)
from the respective group companies, which is charged to the consolidated statement of profit and loss.
r) Provisions, contingent liabilities and contingent assets
Provisions represent liabilities for which the amount or timing is uncertain. Provisions are recognized 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 recognized in consolidated statements of profit and loss 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 the 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 recognize 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 benefits is probable.
s) 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 statement of profit and loss 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 finance cost in the consolidated statement of profit and loss.
Costs for the 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 statements of profit and loss as extraction progresses. Where the costs of site restoration
are not anticipated to be material, they are expensed as incurred.
t) 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 which has a US dollar functional currency as that is the currency of the primary economic
environment in which it operates. The financial statements are presented in Indian rupee (`). All financial information presented in Indian
Rupees has been rounded to the nearest Crore.
In the financial statements of individual group companies, Transactions in currencies other than the functional currency are translated into
the functional currency at the exchange rates ruling at the date of the transaction. Monetary assets and liabilities denominated in other
currencies are translated into the functional currency 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.
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All exchange differences are included in the consolidated statements of profit and loss 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 recognized in
the other comprehensive income.
These include the exchange differences on foreign currency borrowings relating to asset under construction, and for future productive use
which are included in the cost of those assets when they are regarded as an adjustment to interest costs on those foreign currency
borrowings.
For the purposes of the consolidated financial statements, items in the consolidated statements of profit and loss of those businesses for
which the Indian Rupees is not the functional currency are translated into Indian Rupees at the average rates of exchange during the year/
exchange rates as on the date of transaction. The related consolidated balance sheet are translated into Indian rupees at the rates as at the
reporting date. Exchange differences arising on translation are recognised in the other 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 statement of profit and loss.
The Group had applied paragraph 46A of AS 11 under Previous GAAP. Ind AS 101 gives an option, which has been exercised by the Group,
whereby a first time adopter can continue its Indian GAAP policy for accounting for exchange differences arising from translation of
long-term foreign currency monetary items recognised in the Indian GAAP financial statements for the period ending immediately before
the beginning of the first Ind AS financial reporting period. Hence, foreign exchange gain/loss on long-term foreign currency monetary
items recognized upto March 31, 2016 has been deferred/capitalized. Such exchange differences arising on translation/settlement of
long-term foreign currency monetary items and pertaining to the acquisition of a depreciable asset are amortised over the remaining useful
lives of the assets.
Exchange differences arising on translation/settlement of long-term foreign currency monetary items, acquired post April 01, 2016,
pertaining to the acquisition of a depreciable asset are charged to the consolidated statement of profit and loss.
u) Earnings per share
The Group presents basic and diluted earnings per share (“EPS”) data for its equity shares. Basic EPS is calculated by dividing the profit or
loss attributable to equity shareholders of the Company by the weighted average number of equity shares outstanding during the period.
Diluted EPS is determined by adjusting the profit or loss attributable to equity shareholders and the weighted average number of equity
shares outstanding for the effects of all dilutive potential equity shares.
v) Buyers Credit
The Group enters into arrangements whereby financial institutions make direct payments to suppliers for raw materials and project
materials. The financial institutions are subsequently repaid by the company 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 materials). Where these arrangements are for
raw materials 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 (under Trade and other payables). Where these arrangements are for project
materials with a maturity up to thirty six months, the economic substance of the transaction is determined to be financing in nature, and
these are classified as projects buyers’ credit within borrowings in the consolidated balance sheet.
w) Current and non-current classification
The Group presents assets and liabilities in the consolidated balance sheet 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 .
x) 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.
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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
projects, 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
capitalized borrowing cost. 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 company during the year.
All other borrowing costs are recognised in the consolidated statement of profit and loss 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 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).
y) Treasury shares
The Group has created an Employee Benefit Trust (EBT) for providing share-based payment to its employees. The Group uses EBT as a
vehicle for distributing shares to employees under the employee remuneration schemes. The EBT buys shares of the company from the
market, for giving shares to employees. The shares held by EBT are treated as treasury shares.
Own equity instruments that are reacquired (treasury shares) are recognised at cost and deducted from equity. No gain or loss is
recognised in profit or loss on the purchase, sale, issue or cancellation of the Group’s own equity instruments. Any difference between the
carrying amount and the consideration, if reissued, is recognised in capital reserve. Share options whenever exercised, would be satisfied
with treasury shares.
z) Cash and cash equivalents
Cash and cash equivalents comprise cash at bank and on hand and short-term money market deposits which have a maturity of three
months or less 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
aa) Significant accounting estimates and judgements
The preparation of consolidated financial statements in conformity with Ind AS 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 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 judgments in applying accounting policies that have the most
significant effect on the amounts recognized in the financial statements are as given below:
1) Significant estimates
i) Oil and gas reserves.
Significant technical and commercial judgements are required to determine the Group’s estimated oil and natural gas reserves. Reserves
considered for computing depletion are proved reserves for acquisition costs and proved and developed reserves for successful
exploratory wells, development wells, processing facilities, distribution assets, estimated future abandonment cost and all other related
costs. Reserves for this purpose are considered on working interest basis which are reassessed atleast annually. Details of such reserves
are given in note 52.
Changes in reserves as a result of change in management assumptions could impact the depreciation rates and the carrying value of
assets.
ii) Carrying value of exploration and evaluation assets:
The recoverability of a project is assessed under Ind AS 106. 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 exists. 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 statement of profit and loss 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.
Notes forming part of the Consolidated Financial Statementsas at and for the year ended March 31, 2018 continuedIntegrated Report Management Review Statutory Reports Financial Statements
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Details of impairment charge/reversal impact and the assumptions used are disclosed in note 36 and carrying values of exploration and
evaluation assets are disclosed in note 5.
iii) Carrying value of developing / producing oil and gas assets:
Management perform impairment tests on the Group’s developing/producing oil and gas assets where indicators of impairment or
impairment reversal of previous recorded impairment are identified in accordance with Ind AS 36.
The impairment assessments are based on a range of estimates and assumptions, including:
Estimates/Assumptions
Future production
Commodity prices
Discount to price
Extension of PSC
Basis
Proved and probable reserves, resource estimates 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 forcast
Management’s best estimate based on historical prevailing discount
Assumed that PSC for Rajasthan block would be extended till 2030 on the expected
commercial terms as per the announced government policy
Discount rates
Cost of capital risk-adjusted for the risk specific to the asset/CGU
Any subsequent changes to cash flows due to changes in the above mentioned factors could impact the carrying value of the assets.
Details of carrying values and impairment charge/reversal and the assumptions and sensitivities used are disclosed in note 5 and 36
respectively .
iv) 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.
In the current year the Group has reassessed the parameters for mine development depletion including cost to complete at HZL, which has
resulted in additional depletion charge of ` 369 Crore for the current year.
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
Exchange Rates
Discount Rates
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 forcast
Management best estimate benchmarked with external sources of information
Cost of capital risk-adjusted for the risk specific to the assest/CGU
Details of carrying values and impairment charge/reversal and the assumptions used are disclosed in note 5 and 36 respectively.
v) Assessment of impairment at Lanjigarh refinery:
During financial year 2015-16, the Group has received the necessary approvals for expansion of the Lanjigarh refinery to 4 million tonnes
per annum (MTPA). Accordingly, second stream operations were commenced in Alumina refinery from April 2016 and the refinery was
debottlenecked to nameplate capacity of 2 MTPA in this year. We continue to explore the feasibility of expanding our alumina refinery
capacity, from 2 to 4 million and then up to 6 million tonnes per annum, subject to bauxite availability and regulatory approvals.
The State of Odisha has abundant bauxite resources and given the initiatives by the Government of Odisha, management is confident that
bauxite will be made available in the short to medium term. The Group has entered into agreements with various suppliers internationally
and domestically to ensure the availability of bauxite to run its refinery.
Recoverability value assessment during the previous year ended March 31, 2017 including sensitivity analysis on the key assumptions
indicated recoverable value exceeds the carrying value. No negative developments have occurred since the previous year and accordingly,
it is not expected that the carrying amount would exceed the recoverable amount and hence the recoverable value for the year ended
March 31, 2018 was not re-determined.
The carrying amounts of property plant and equipment related to alumina refinery operations at Lanjigarh and related mining assets as at
March 31, 2018 is ` 8,326 Crore and March 31, 2017 is ` 8,803 Crore.
Notes forming part of the Consolidated Financial Statementsas at and for the year ended March 31, 2018 continued
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vi) Assessment of Impairment of Goa iron ore mines:
Pursuant to an order passed by the Hon’ble Supreme Court of India on February 07, 2018, the second renewal of the mining leases granted
by the State of Goa in 2014-15 to all miners including Vedanta were cancelled. Consequentially all mining operations stopped with effect
from March 16, 2018 until fresh mining leases (not fresh renewals or other renewals) and fresh environmental clearances are granted in
accordance with the provisions of The Mines and Minerals (Development and Regulation) (MMDR) Act. Significant uncertainty exists over
the resumption of mining at Goa under the current leases. The Group has assessed the recoverable value of all its assets and liabilities
associated with existing mining leases which led to a non-cash impairment charge in March 2018.
Details of impairment charge and method of estimating recoverable value are disclosed in note 36.
(vii) Restoration, rehabilitation and environmental costs:
Provision is made for costs associated with restoration and rehabilitation of mining sites as soon as the obligation to incur such costs arises.
Such restoration and closure costs are typical of extractive industries and they are normally incurred at the end of the life of the mine or oil
fields. The costs are estimated on the basis of mine closure plans and the estimated discounted costs of dismantling and removing these
facilities and the costs of restoration are capitalised as soon as the obligation to incur such costs arises.
The provision for decommissioning oil and gas assets is based on the current estimates of the costs for removing and decommissioning
production facilities, the forecast timing and currency of settlement of decommissioning liabilities and the appropriate discount rate.
A corresponding provision is created on the liability side. The capitalised asset is charged to the consolidated statement profit and loss over
the life of the asset through depreciation over the life of the operation and the provision is increased each period via unwinding the
discount on the provision. Management estimates are based on local legislation and/or other agreements.
The actual costs and cash outflows may differ from estimates because of changes in laws and regulations, changes in prices, analysis of
site conditions and changes in restoration technology. Details of such provisions are set out in Note 23 and 29.
(viii) Provisions and liabilities
Provisions and liabilities are recognised in the period when it becomes probable that there will be a future outflow of funds resulting from
past operations or events that can be reasonably estimated. The timing of recognition requires the application of judgement to existing
facts and circumstances which may be subject to change especially when taken in the context of the legal environment in India. The actual
cash outflows may take place over many years in the future and hence the carrying amounts of provisions and liabilities are regularly
reviewed and adjusted to take into account the changing circumstances and other factors that influence the provisions and liabilities. This is
set out in note 23 and 29.
(ix) The HZL and BALCO call options
The Group had exercised its call option to acquire the remaining 49% interest in BALCO and 29.5% interest in HZL. The Government of
India has however, contested the validity of the options and disputed their valuation performed in terms of the relevant agreements the
details of which are set out in note 43. 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 Group considers the strike price of the options to be at fair value. Accordingly, the value of the option would be nil, and hence,
the call options have not been recognized in the financial statements.
(x) 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 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 statement of profit and loss.
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 involve 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.
The details of MAT assets (recognized and unrecognized) are set out in note 37.
(xi) Copper operations India
The renewal of consent to operate (CTO) under the Air and Water Acts for copper smelter in India was rejected by the State Pollution
Control Board on April 09, 2018 for want of further clarifications and consequently, the operations have presently been suspended. The
company has filed an appeal in the Tribunal. Even though there can be no assurance regarding the final outcome of the process, as per the
company’s assessment, it is in compliance with the applicable regulations and expects the renewal of CTO in next few months.
The carrying value of assets as at March 31, 2018 is ` 2,131 Crore.
2) Significant judgements
i) 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 IAS 18 and to assess the
recoverability of withheld revenue currently accounted for as receivables.
Notes forming part of the Consolidated Financial Statementsas at and for the year ended March 31, 2018 continuedIntegrated Report Management Review Statutory Reports Financial Statements 298
Vedanta Limited Integrated Report and Annual Accounts 2017-18
3 Significant accounting policies continued
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 13 (d))
ii) Contingencies
In the normal course of business, contingent liabilities may arise from litigation, taxation and other claims against the Group. A tax provision
is recognised when the Group has a present obligation as a result of a past event, 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 49.
iii) Determining whether an arrangement contains a lease :
The Group has ascertained that the Power Purchase Agreement (PPA) entered into between one of the subsidiaries and a State grid
qualifies to be an operating lease under Ind AS 17 “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 40.
iv) Exceptional Items
Exceptional 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. Also tax charges
related to Special items and certain one-time tax effects are considered exceptional. Such items are material by nature or amount to the
year’s result and require separate disclosure in accordance with Ind AS.
The determination as to which items should be disclosed separately requires a degree of judgement. The details of exceptional items are
set out in note 36.
ab) Standards issued but not yet effective
The following standards/amendments to standards have been issued but are not yet effective up to the date of issuance of the Group’s
Financial Statements. Except specifically disclosed below, the Group is evaluating the requirements of these standards, improvements and
amendments and has not yet determined the impact on the financial statements.
• Ind AS 115 – Revenue from Contracts with Customers
This standard outlines a single comprehensive model for entities to use in accounting for revenue arising from contracts with customers.
The standard replaces most of the current revenue recognition guidance. The core principle of the new standard is for companies to
recognize revenue when the control of the goods and services is transferred to the customer as against the transfer of risk and rewards.
The amount of revenue recognised should reflect the consideration to which the company expects to be entitled in exchange for those
goods or services. The new standard also will result in enhanced disclosures about revenue, provide guidance for transactions that were
not previously addressed comprehensively including service revenues and contract modifications and improved guidance for multiple
element arrangements. The new Standard comes into effect for the annual reporting periods beginning on or after April 1, 2018.
In order to identify the potential impact of the standard on the Group’s consolidated financial statements, the Group has analyzed
contracts of the relevant revenue streams of the Group. The work done is focused on evaluating the contractual arrangements across
the Group’s principal revenue streams, particularly key terms and conditions which may impact the timing of revenue recognition and
measurement of revenue.
Based on the work carried out, the areas of impact in implementing Ind AS 115, on the Group results is detailed below.
On the basis of the analysis conducted, the new standard would result in identification of freight and insurance services as a separate
performance obligation implying segregation of revenue on account of sale of goods and sale of services. The revenue on account of
these services is required to be deferred along with the associated costs and recognised over time as this obligation is fulfilled.
Notes forming part of the Consolidated Financial Statementsas at and for the year ended March 31, 2018 continued
Vedanta Limited Integrated Report and Annual Accounts 2017-18
299
3 Significant accounting policies continued
The Group has products which are provisionally priced at the date revenue is recognised. Revenue in respect of such contracts will
be recognised when control passes to the customer and will be 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 will be accounted in accordance with Ind AS 109 “Financial Instruments” rather than Ind AS 115 and therefore the
Ind AS 115 rules on variable consideration do not apply. These ‘provisional pricing’ adjustments i.e. the consideration received post
transfer of control will continue to be included in consolidated revenue on the face of the consolidated statement of profit and loss
and these would be disclosed by way of note to the financial statements.
The implementation of changes required as per Ind AS 115 as mentioned above is identified to be not materially effecting the current
recognition and measurement of revenues, though there would be significant additional disclosure requirements for the Group to
comply with.
The Group will adopt the modified transitional approach to implementation where any transitional adjustment is recognised in retained
earnings at April 01, 2018 without adjustment of comparatives and the new standard will only be applied to contracts that remain in
force at that date.
• Other recently issued accounting pronouncements and not effective for the year ended 31 March 2018:
Standards not yet effective for the financial statements for the year ended 31 March 2018
Amendments to Ind AS 12: Recognition of Deferred Tax Assets for Unrealised Losses
Amendment to Ind AS 21: Foreign Currency Transactions and Advance Consideration
Amendment to Ind AS 40: Investment Property
Amendment to Ind AS 28: Investments in Associates and Joint Ventures
Amendment to Ind AS 112: Disclosure of Interests in Other Entities
Effective for annual periods
beginning on or after
April 01, 2018
April 01, 2018
April 01, 2018
April 01, 2018
April 01, 2018
4 Business acquisitions and mergers
I Merger of Cairn India Limited with Vedanta Limited
Vedanta Limited and Cairn India Limited, had initially announced a scheme of merger between the two companies on June 14, 2015, terms
whereof were amended on July 22, 2016 (“Scheme”). As per the terms of the Scheme, Cairn India Limited was to merge into Vedanta
Limited and upon the merger becoming effective:
a) Non-controlling shareholders of Cairn India Limited were to receive one equity share in Vedanta Limited of face value ` 1 each and four
7.5% Redeemable Preference Shares (redeemable after 18 months from issuance) in Vedanta Limited with a face value of ` 10 each for
each equity share held in Cairn India Limited.
b) No shares were to be issued to Vedanta Limited or any of its subsidiaries for their shareholding in Cairn India Limited. This included
shares held by Sesa Resources Limited in Cairn India Limited with a carrying value of ` 956 Crore, the effects of cancellation of which
was to be recorded in securities premium account.
c) The employees of Cairn India Limited who were holding stock options in Cairn India Limited were to be compensated either in cash or
through issuance of stock options of Vedanta Limited.
d) The authorised share capital of Cairn India Limited aggregating to ` 2,250 Crore was to be assumed by the Company, resulting in an
increase in its authorised share capital from ` 5,162 Crore ( divided into 5,127 Crore equity shares of ` 1 each and 3.50 Crore preference
shares of ` 10 each) to ` 7,412 Crore (divided into 4,402 Crore equity shares of ` 1 each and 301 Crore preference shares of ` 10 each).
All substantive approvals for effecting the merger of Cairn India Limited with Vedanta Limited were received by March 27, 2017 and
therefore the same has been accounted for in the previous financial year ending March 31, 2017. The Board of Directors of both the
companies made the merger operative on April 11, 2017, whereafter Cairn India Limited ceased to exist
Since non-controlling shareholders of Cairn India Limited become the shareholders of the Company, non-controlling interest of ` 21,211
Crore attributable to Cairn India Limited stands extinguished. Correspondingly, there is (a) an increase in equity share capital of ` 75 Crore
(representing par value of 75 Crore equity shares), financial liabilities of ` 3,010 Crore (representing fair value of redeemable preference
shares) and ` 43 Crore (representing cash compensation payable to stock option holders of Cairn India Limited), share based payment
reserve of ` 148 Crore (representing employee stock options issued to stock option holders of Cairn India Limited) and capital reserve of
` 18,890 Crore and (b) a decrease in securities premium account by ` 956 Crore.
II Business Combination
On December 28, 2017, the Group acquired 51.63% equity stake in AvanStrate Inc. (ASI) for a cash consideration of JPY 1 million (` 0.06
Crore) and acquired debts for JPY 17,058 million (` 964 Crore). Additionally, a loan of JPY 814.8 million (` 46 Crore) was extended to ASI.
ASI is involved in manufaturing of glass substrate. The financial results of ASI from the date of acquisition to March 31, 2018 have been
included in the consolidated financial statements of the Group.
As per the shareholding agreement (SHA) entered with the other majority shareholder holding 46.6% in ASI, the Group has call option,
conversion option to convert part of its debt given to ASI into equity of ASI as well as it has issued put option to the other majority
shareholder. These are exercisable as per the terms mentioned in the SHA.
The fair values and business combination has been accounted for on a provisional basis under Ind AS 103, as it relates to property, plant
and equipment and other intangible assets, and the resultant bargain gain of ` 353 Crore as computed below has been recognised directly
in capital reserve.
Notes forming part of the Consolidated Financial Statementsas at and for the year ended March 31, 2018 continuedIntegrated Report Management Review Statutory Reports Financial Statements 300
Vedanta Limited Integrated Report and Annual Accounts 2017-18
4 Business acquisitions and mergers continued
II Business Combination continued
The fair value of the identifiable assets and liabilities of ASI as at the date of the acquisition were provisionally estimated as below:
Particulars
Non-Current Assets
Property, Plant and Equipment
Capital work-in-progress
Other Intangible assets
Deffered tax assets
Other non-current assets
Total non-current assets
Current Assets
Inventories
Trade Receivables
Cash and cash equivalents
Other Current Assets
Total current assets
Total Assets (A)
Non-current liabilities
Borrowings (excluding borrowings from immediate parent)
Deferred tax liabilities
Other non-current liabilities
Total non-current liabilities
Other current liabilities
Total Liabilities (B)
Net Assets (A-B)
Satisfied by:
Fair Value of Total Purchase Consideration
Non-Controlling interest on acquisition (48.37% of net assets after adjustment of fair value of
borrowings from immediate parent of ` 1,253 Crore)
Less: Fair value of identifiable assets and liabilities
Net Bargain Gain
(` in Crore)
Provisional
Fair Value
1,385
163
205
126
41
1,920
138
166
151
64
519
2,439
631
400
23
1,054
128
1,182
1,257
902
2
(1,257)
353
The net amount of ` 167 Crore recognized in Capital Reserve in the Statement of Changes of Equity, is the difference between the above
bargain gain of ` 353 Crore and ` 186 Crore being the excess of gross fair value of the put option liability, held by the non controlling
shareholder of ASI, over the mark to market loss on such liability on the date of acquisition.
The gross carrying amount of trade receivables equals the fair value of trade receivables. None of the trade receivables was impaired and
the full contractual amounts were expected to be realised. Property, plant and equipment have been valued using cost approach – cost of
reproduction new (CRN) method. For estimating CRN, appropriate indices were used to develop trend factors that have been applied on
the acquisition/historical costs of the different assets over the period during which the asset has been commissioned or in other words life
spent. The estimated CRN was further adjusted for applicable physical deterioration to arrive at fair value. The physical deterioration was
based on the estimated age and remaining useful life. Fair value of assumed debt was determined using yield-method, wherein, the
expected cash flows including interest component and principal repayments have been discounted at an appropriate market interest rate.
Since the date of acquisition, ASI has contributed ` 150 Crore to the Group revenue and has reduced the profit before taxation by ` 70
Crore (including impact of borrowings from immediate parent) for the year ended March 31, 2018.
If ASI had been acquired at the beginning of the year, the revenue of the Group would have been ` 93,613 Crore and the profit before tax
of the Group would have been ` 19,542 Crore.
Non-controlling interest has been measured at the non-controlling interest’s proportionate share of ASI’s identifiable net assets.
Acquisition costs of ` 45 Crore related to ASI have been charged to consolidated statement of profit and loss under exceptional items.
Notes forming part of the Consolidated Financial Statementsas at and for the year ended March 31, 2018 continued
Vedanta Limited Integrated Report and Annual Accounts 2017-18
301
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Notes forming part of the Consolidated Financial Statementsas at and for the year ended March 31, 2018 continuedIntegrated Report Management Review Statutory Reports Financial Statements
302
Vedanta Limited Integrated Report and Annual Accounts 2017-18
5 Property, plant and equipment, Intangible assets, Capital work-in-progress and Exploration intangible assets under development
continued
iii) Capital work-in progress
Particulars
Gross Block
Opening balance
Additions during the year*
Amount capitalised during the year
Acquisition through Business Combination (Refer note 4(II))
Foreign exchange translation difference
Closing balance
Accumulated Impairment/Provision
Opening balance
Provision for loss on unusable items (Refer note 36)
Impairment charge during the year (Refer note 36)
Closing balance
Net closing balance
* Additions include expenses capitalised during the year.
iv) Exploration intangible assets under development
Particulars
Gross Block
Opening balance
Additions for the year
Deductions/Adjustments
Transferred to capital work in progress
Exploration costs written off (Refer note 35)
Foreign exchange translation difference
Closing balance
Accumulated Impairment
Opening balance
Impairment reversal (Refer note 36)
Foreign exchange translation difference
Closing balance
Net Closing balance
As at
March 31,
2018
(` in Crore)
As at
March 31,
2017
18,893
5,456
(6,903)
163
30
28,947
3,080
(12,915)
-
(219)
17,639
18,893
1,222
251
26
1,499
1,021
-
201
1,222
16,140
17,671
As at
March 31,
2018
62,057
94
(64)
(200)
–
196
(` in Crore)
As at
March 31,
2017
64,411
119
-
(1,001)
(41)
(1,431)
62,083
62,057
52,171
(6,111)
108
53,876
(508)
(1,197)
46,168
52,171
15,915
9,886
a) Additions to mining property and leases includes deferred stripping cost of ` 44 Crore (March 31, 2017 ` 26 Crore).
b) Freehold land includes gross block of ` 240 Crore (March 31, 2017 ` 222 Crore), accumulated amortisation ` 191 Crore (March 31, 2017
` 164 Crore), which is available for use during the lifetime of the Production Sharing Contract of the respective Oil and Gas blocks.
c) Certain property, plant and equipment are pledged as collateral against borrowings, the details related to which have been described in
Note 21 on “Borrowings”.
d) Freehold land includes 40 quarters at Bidhan Bagh Unit and 300.88 acres of land at Korba and Bidhan Bagh which have been occupied
without authorisation for which Group is evaluating evacuation options.
e) The land transferred to BALCO by National Thermal Power Corporation Ltd. (NTPC) vide agreement dated June 20, 2002 comprising
171.44 acres land for BALCO’s 270 MW captive power plant and its allied facilities and 34.74 acres land for staff quarters of the said
captive power plant is yet to registered in favour of BALCO due to non availability of title deeds from NTPC.
f) The Division Bench of the Hon’ble High Court of Chhattisgarh has vide its order dated February 25, 2010, upheld that the BALCO is in
legal possession of 1804.67 acres of Government land. Subsequent to the said order, the State Government has decided to issue the
lease deed in favour of the BALCO after the issue of forest land is decided by the Hon’ble Supreme Court. In the proceedings before
the Hon’ble Supreme Court, pursuant to public interest litigations filed, it has been alleged that land in possession of the BALCO is
being used in contravention of the Forest Conservation Act, 1980 even though the said land has been in its possession prior to the
promulgation of the Forest Conservation Act, 1980 on which its Aluminium complex, allied facilities and township were constructed
between 1971-76. The Central Empowered Committee of the Supreme Court has already recommended ex-post facto diversion of the
forest land in possession of the BALCO. The matter is presently sub-judice before the Hon’ble Supreme Court.
Notes forming part of the Consolidated Financial Statementsas at and for the year ended March 31, 2018 continued
Vedanta Limited Integrated Report and Annual Accounts 2017-18
303
5 Property, plant and equipment, Intangible assets, Capital work-in-progress and Exploration intangible assets under development
continued
g) The above gross block includes share of jointly owned assets with the joint venture partners ` 61,076 Crore (March 31, 2017 ` 59,844
Crore). Accumulated depreciation, depletion, amortization and impairment and impairment on these assets is ` 57,683 Crore (March 31,
2017 ` 56,590 Crore) and net book value is ` 3,393 Crore (March 31, 2017 ` 3,254 Crore).
Capital work-in-progress includes ` 1,960 Crore (March 31, 2017 ` 1,990 Crore) jointly owned with the joint venture partners
Exploration intangible assets under development includes ` 15,882 Crore (March 31, 2017 ` 9,886 Crore) jointly owned with the joint
venture partners.
h) In accordance with the exemption given under Ind AS 101, which has been exercised by the Group, a first time adopter can continue its
previous GAAP policy for accounting for exchange differences arising from translation of long-term foreign currency monetary items
recognised in the previous GAAP financial statements for the period ending immediately before the beginning of the first Ind AS
financial reporting period i.e. April 01, 2016.
Accordingly, foreign currency exchange loss arising on translation/settlement of long-term foreign currency monetary items acquired
before April 01, 2016 pertaining to the acquisition of a depreciable asset amounting to ` 81 Crore (March 31, 2017 ` 4 Crore loss) are
adjusted to the cost of respective item of property, plant and equipment.
Capital work-in-progress includes foreign currency exchange loss of ` 17 Crore incurred during the year (March 31,2017 ` 104 Crore
loss) on such long term foreign currency monetary liabilities.
i) Reconciliation of depreciation, depletion and amortisation expense
Particulars
Depreciation/Depletion/Amortisation expense on:
Property, Plant and equipment
Intangible assets
As per Property, plant and equipment schedule
Less: Depreciation capitalised
Less: Cost allocated to joint ventures
As per Consolidated statement of Profit and Loss
For the
year ended
March 31,
2018
(` in Crore)
For the
year ended
March 31,
2017
6,252
79
6,331
(21)
(27)
6,252
66
6,318
(1)
(25)
6,283
6,292
j) 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 as on March 31, 2018 and March 31, 2017. The project is to
be carried out on a design, build, finance, operate, transfer basis and the concession agreement between Visakhapatnam Port and
VGCB was signed in June 2010. In October 2010, VGCB was awarded with the concession after fulfilling conditions stipulated as a
precedent to the concession agreement. Visakhapatnam Port 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 for 30 years from the date of the award of the concession. The capacity of upgraded berth would be 10.18
mmtpa and that the Vishakhapatnam Port 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 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 Visakhapatnam Port at the end of the concession period.
Notes forming part of the Consolidated Financial Statementsas at and for the year ended March 31, 2018 continuedIntegrated Report Management Review Statutory Reports Financial Statements
304
Vedanta Limited Integrated Report and Annual Accounts 2017-18
6 Non-current financial assets – Investments
Particulars
(I)
Investments at fair value through other comprehensive income
Investment in Equity Shares – Quoted
Sterlite Technologies Limited- 47,64,295 shares of ` 2 each (including 60 shares held jointly with nominees)
Investment in Equity Shares – unquoted
Sterlite Power Transmission Limited – 9,52,859 equity shares of ` 2 each (including 12 shares held jointly with
nominees) (Refer ‘b’)
Other Investments
(II) Investment in Equity Shares (fully paid)
Associate Companies – Unquoted
Gaurav Overseas Private Limited – 3,23,000 (March 31, 2017 – 2,10,000) equity shares of ` 10 each
RoshSkor Township (Proprietary) Limited- 50 equity shares of NAD 1 each
Joint ventures – Unquoted
Rampia Coal Mines and Energy Private Limited – 2,43,48,016 equity shares of ` 1 each
Madanpur South Coal Company Limited – 1,52,266 equity shares of ` 10 each
Goa Maritime Private Limited : 5,000 equity shares of ` 10 each
Less: Impairment in the value of investment in joint ventures
Total
a)
Particulars
Aggregate amount of quoted investments and market value thereof
Aggregate amount of unquoted investments
Aggregate amount of impairment in the value of investments
Total
As at
March 31,
2018
(` in Crore)
As at
March 31,
2017
149
60
11
0
0
4
3
2
0
(5)
10
0
0
3
3
2
0
(5)
164
73
As at
March 31,
2018
As at
March 31,
2017
149
20
(5)
164
60
18
(5)
73
b) During the previous year, pursuant to demerger of “Sterlite Technologies Limited” into “Sterlite Technologies Limited” and “Sterlite
Power Transmission Limited”, 9,52,859 shares of “Sterlite Power Transmission Limited” have been allotted to the Company.
7 Non-current financial assets – Trade receivables
Particulars
Unsecured
Considered good (Refer note 13)
Considered doubtful
Less: Provision for doubtful trade receivables
Total
8 Non-current financial assets – Loans
Particulars
Unsecured, considered good
Loans to related parties (Refer Note 51)
Loan to employees
Security Deposit
Total
As at
March 31,
2018
(` in Crore)
As at
March 31,
2017
1,347
225
(225)
1,347
1,169
–
–
1,169
As at
March 31,
2018
(` in Crore)
As at
March 31,
2017
7
2
14
23
7
2
17
26
Notes forming part of the Consolidated Financial Statementsas at and for the year ended March 31, 2018 continued Vedanta Limited Integrated Report and Annual Accounts 2017-18
305
9 Non-current financial assets – Others
Particulars
Bank Deposits
Derivative financial instruments
Others – Unsecured, considered good
Security Deposits
Claims and Other receivables
Fair value of conversion option (Refer note 4 (II))
Unsecured, considered doubtful
Security Deposits
Less :Provision for doubtful security deposits
Total
i) Bank deposits includes:
As at
March 31,
2018
2,837
–
(` in Crore)
As at
March 31,
2017
2,779
4
167
138
213
15
(15)
144
62
–
15
(15)
3,355
2,989
a) Fixed deposit with maturity more than twelve months of ` 20 Crore (March 31, 2017: ` 8 Crore) under lien with bank and ` 103 Crore
(March 31, 2017: NIL) under interest reserve created against interest payment on loans from banks.
b) Site restoration fund amounting to `399 Crore (March 31, 2017: ` 328 Crore)
ii) Bank deposits earns interest at fixed rate based on respective deposit rate.
10 Other non-current assets
Particulars
Unsecured, considered good
Capital Advances
Advances other than capital advances
Security Deposits
Others
Prepaid Expenses
Claims and other receivables
Balance with government authoritiesab
Leasehold land prepaymentsc
Unsecured, considered doubtful
Security Deposit
Claims and other receivables
Capital Advances
Less: Provision for doubtful advances
Total
As at
March 31,
2018
(` in Crore)
As at
March 31,
2017
2,381
1,369
0
0
6
784
596
371
28
389
37
(454)
8
1,188
455
335
28
34
2
(64)
4,138
3,355
a) Includes ` 58 Crore (March 31, 2017: ` 58 Crore), being Group share of gross amount of ` 86 Crore (March 31, 2017: ` 86 Crore) paid
under protest on account of Education Cess and Secondary Higher Education Cess for the 2013-14.
b) Includes ` 97 Crore (March 31, 2017: ` 92 Crore), being Group share of gross amount of ` 139 Crore (March 31, 2017: ` 131 Crore), of
excess oil cess paid under Oil Industry (Development) Act.
c) Represents prepayments in respect of land taken under operating leases, being amortised equally over the period of the lease.
Notes forming part of the Consolidated Financial Statementsas at and for the year ended March 31, 2018 continuedIntegrated Report Management Review Statutory Reports Financial Statements 306
Vedanta Limited Integrated Report and Annual Accounts 2017-18
11 Inventories
Particulars
Raw materials
Goods-in transit
Work-in-progress
Goods-in transit
Finished good
Goods-in transit
Fuel stock
Goods-in transit
Stores and spares
Goods-in transit
Total
As at
March 31,
2018
(` in Crore)
As at
March 31,
2017
3,189
2,561
2,986
26
535
91
478
591
1,465
45
1,357
2,021
3,273
25
756
–
541
145
1,181
329
11,967
9,628
a) Inventories with a carrying amount of ` 8,139 Crore (March 31, 2017: ` 5,125 Crore) have been pledged as security against certain bank
borrowings of the Group as at March 31, 2018 (refer note 21)
b) Inventory held at net realisable value ` 103 Crore (March 31, 2017: ` 45 Crore) as at March 31, 2018.
c) The write down of inventories amounts to ` 44 Crore (March 31, 2017: ` 12 Crore) has been charged to statement of profit and loss.
d) For method of valuation for each class of inventories, refer note number 3(m).
12 Current Financial Assets – Investments
Particulars
Investments carried at fair value through other comprehensive income (fully paid)
Investment in Bonds – quoted
Investments carried at fair value through profit and loss (fully paid)
Investment in mutual funds – quoted
Investment in mutual funds – unquoted
Investment in Bonds – quoted
Commercial Paper – quoted
Investment in India Grid Trust – quoted
Total
a) Includes ` 412 Crore (March 2017 : NIL) offered as security by a subsidiary against overdraft facility from a bank.
(b) Particulars
Aggregate amount of quoted investments and market value thereof
Aggregate amount of unquoted investments
Total
13 Current Financial Assets – Trade receivables
Particulars
Considered good
Considered doubtful
Less: Provision for doubtful trade receivables
Total
As at
March 31,
2018
(` in Crore)
As at
March 31,
2017
2,803
4,446
11,536
7,444
6,631
–
122
15,917
19,409
6,868
249
–
28,536
46,889
As at
March 31,
2018
21,092
7,444
As at
March 31,
2017
27,480
19,409
28,536
46,889
As at
March 31,
2018
3,969
340
(340)
(` in Crore)
As at
March 31,
2017
2,240
546
(546)
3,969
2,240
a) The interest free credit period given to customer is up to 90 days. Also refer note 45.C(d)
b) Trade receivable with a carrying value of ` 3,364 Crore (March 31, 2017: ` 1,917 Crore) have been given as collateral towards
borrowings. (Refer note 21)
c) For amount due and terms and conditions of related party receivables please refer note 51.
Notes forming part of the Consolidated Financial Statementsas at and for the year ended March 31, 2018 continued Vedanta Limited Integrated Report and Annual Accounts 2017-18
307
13 Current Financial Assets – Trade receivables continued
d) Non current and current trade receivables include receivables (net of provisions) of the power division aggregating to (a) ` 767 Crore as
at March 31, 2018 (March 31, 2017: ` 893 Crore) held back by a customer, owing to certain disputes relating to computation of tariffs
and differential revenue recognised with respect to tariffs pending finalisation by the state electricity regulatory commission; (b) ` 802
Crore as at March 31, 2018 (March 31, 2017: ` 583 Crore) held back by another customer on account of disputes mainly relating to the
determination of the calorific value of coal which has been adjudicate in favour of the Group by the Hon’ble Supreme Court of India and
(c) ` 831 Crore as at March 31, 2018 (March 31, 2017: ` 262 Crore) relating to tax benefits available at the time of plant set up and certain
other matters, which the Group has litigated. In all these matters, the Group has obtained separate independent legal advice(s) or
considered favourable judgements in support of their claim and believes that it is highly probable that the matters would be settled in
their favour and does not expect any material loss on ultimate settlement.
e) There are no outstanding debts due from directors or other officers of the Company.
14 Current Financial Assets – Cash and cash equivalents
Particulars
Balances with banks a
Bank deposits with original maturity of less than 3 months bc (including interest accrued thereon)
Cash on Hand
Total
As at
March 31,
2018
3,468
767
1
(` in Crore)
As at
March 31,
2017
8,563
1,301
0
4,236
9,864
a) Includes ` 1,646 Crore (March 31, 2017 : ` 7,544 Crore) in unpaid dividend account of the subsidiary, attributable to the Company’s
shareholding which has been remitted subsequent to the year end.
b) Includes NIL Crore (March 31, 2017: ` 115 Crore) on lien with banks.
c) Restricted funds of ` 17 Crore (March 31, 2017: ` 52 Crore) held as collateral in respect of closure costs.
d) Bank deposits earns interest at fixed rate based on respective deposit rate.
e) Cash and Cash equivalents for the purpose of Consolidated statement of Cash flows comprise the following
Particulars
Cash and cash equivalents as above
Earmarked unpaid Dividend Accounts (Refer note 15)
Total
15 Current Financial Assets – Other Bank Balances
Particulars
Bank deposits with original maturity of more than 3 months but less than 12 months a
Bank deposits with original maturity of more than 12 months bc
Earmarked unpaid dividend accounts d
Total
As at
March 31,
2018
(` in Crore)
As at
March 31,
2017
4,236
231
9,864
1,012
4,467
10,876
As at
March 31,
2018
402
347
231
980
(` in Crore)
As at
March 31,
2017
629
2,618
1,012
4,259
a) Includes ` 193 Crore (March 31, 2017: ` 195 Crore) on lien with banks and margin money of ` 39 Crore (March 31, 2017: `40 Crore).
b) Includes ` 8 Crore (March 31, 2017: ` 1 Crore) on lien with banks.
c) Restricted funds of ` 60 Crore (March 31, 2017: ` 74 Crore) held as collateral in respect of closure costs and NIL (March 31, 2017: ` 17
Crore) held in of an escrow account for future redundancy payments payable to employees in Lisheen.
d) Earmarked unpaid dividend accounts are restricted in use as it relates to unclaimed dividends or unpaid dividend.
e) Bank deposits earns interest at fixed rate based on respective deposit rate.
Notes forming part of the Consolidated Financial Statementsas at and for the year ended March 31, 2018 continuedIntegrated Report Management Review Statutory Reports Financial Statements
308
Vedanta Limited Integrated Report and Annual Accounts 2017-18
16 Financial Assets – Current: Loans
Particulars
Unsecured, considered good
Loans to related parties (Refer Note 51)
Loans to employees
Others
Total
17 Financial Assets – Current: Others
Particulars
Unsecured, considered good
Advance to Related Parties (Refer note 51)
Security Deposits
Derivative Instruments (Refer note 45)
Others
Advance recoverable (oil and gas)
Unbilled revenue
Claims and other receivables
Unsecured, considered doubtful
Security Deposit
Balance with government authorities
Advance recoverable (Oil and gas)
Claims and other receivables
Less: Provision for doubtful advances
Total
18 Other Current Assets
Particulars
Unsecured, considered good
Advance to suppliers
Advance to related party suppliers (Refer note 51)
Security deposits
Prepaid expenses
Claims and other receivables
Balance with government authorities
Leasehold land prepayments
Export incentive receivable
Advance recoverable (oil and gas)
Unsecured, considered doubtful
Claims and other receivables
Advance to suppliers
Less: Provision for doubtful advances
Total
As at
March 31,
2018
(` in Crore)
As at
March 31,
2017
70
9
3
82
69
10
–
79
As at
March 31,
2018
(` in Crore)
As at
March 31,
2017
26
19
152
643
311
206
7
18
304
45
(374)
31
14
9
847
188
17
6
11
299
46
(362)
1,357
1,106
As at
March 31,
2018
(` in Crore)
As at
March 31,
2017
1,879
386
0
176
253
755
12
482
29
2
49
(51)
1,163
141
0
139
178
680
22
357
37
2
18
(20)
3,972
2,717
Notes forming part of the Consolidated Financial Statementsas at and for the year ended March 31, 2018 continued Vedanta Limited Integrated Report and Annual Accounts 2017-18
309
19 Share capital
Particulars
a) Authorised equity share capital
Opening balance (equity shares of ` 1 each with voting rights)
Less: Pursuant to the scheme of merger (Refer note 4 (I))
Closing balance (equity shares of ` 1 each with voting rights)
Authorised preference share capitala
Opening balance (preference shares of ` 10 each)
Add: Pursuant to the scheme of merger (Refer note 4 (I))
Closing balance (preference shares of ` 10 each)
Issued , subscribed and paid up a
Equity shares of ` 1 each with voting rights bc
To be issued pursuant to merger
Equity shares of ` 1/- each with voting rights (Refer note 4 (I)) d
b)
As at
March 31, 2018
As at
March 31, 2017
Number
(in Crore)
Amount
(` in Crore)
Number
(in Crore)
Amount
(` in Crore)
4,402
–
4,402
301
–
301
4,402
–
4,402
3,010
–
3,010
5,127
(725)
4,402
4
297
301
5,127
(725)
4,402
35
2,975
3,010
372
372
297
297
–
372
–
372
75
372
75
372
a) During the year, 7.5% preference share capital of ` 3,010 Crore comprising of 301 Crore shares of ` 10/- each have been issued and the
same are disclosed under borrowing (Refer note 21)
b) includes 3,08,232 (March 31, 2017: 3,10,632) equity shares kept in abeyance. These shares are not part of listed equity capital.
c) includes 92,33,871 (March 31, 2017: 39,84,256) equity shares held by Vedanta Limited ESOS Trust (Refer Note 20).
d) Voting rights excisable upon issuance
c) Shares held by ultimate holding company and its subsidiaries/associates*
Particulars
Twin Star Holdings Limited
Twin Star Holdings Limited(2)
Finsider International Company Limited
Westglobe Limited
Welter Trading Limited
Total
As at
March 31, 2018
As at
March 31, 2017
No. of
Shares held
(in Crore)
128.01
9.93
40.15
4.43
3.82
% of
holding
34.44
2.67
10.80
1.19
1.03
No. of
Shares held
(in Crore) % of holding
128.01
9.93
40.15
4.43
3.82
43.18
3.35
13.54
1.50
1.29
186.34
50.13
186.34
62.86
(1) All the above entities are subsidiaries of Volcan Investments Limited, the ultimate holding company.
(2) Represented by 2,48,23,177 American Depository Shares (“ADS”).
* The % of holding has been calculated on the issued and subscribed share capital as at respective balance sheet date.
Shareholding % reduced as at March 31, 2018 consequent to merger (Refer note 4 (I))
d) Aggregate number of bonus shares issued, shares issued for consideration other than cash and shares bought back during the
period of five years immediately preceding the reporting date
Particulars
Equity shares issued pursuant to Scheme of Amalgamation (in FY 2017-18)
Preference shares issued pursuant to Scheme of Amalgamation (in FY 2017-18)
Equity shares issued pursuant to Scheme of Amalgamation (in FY 2013-14)
As at
March 31,
2018
75
301
210
(in Crore)
As at
March 31,
2017
–
–
210
Notes forming part of the Consolidated Financial Statementsas at and for the year ended March 31, 2018 continuedIntegrated Report Management Review Statutory Reports Financial Statements
310
Vedanta Limited Integrated Report and Annual Accounts 2017-18
19 Share capital continued
e) Details of shareholders holding more than 5% shares in the Company*
Twin Star Holdings Limited
Twin Star Holdings Limited#
Finsider International Company Limited
As at
March 31, 2018
As at
March 31, 2017
No. of
Shares held
(in Crore)
128.01
9.93
40.15
% of
holding
34.44
2.67
10.80
No. of
Shares held
(in Crore) % of holding
128.01
9.93
40.15
43.18
3.35
13.54
# 2,48,23,177 ADS, held by CITI Bank N.A. New York as a depository.
* The % of holding has been calculated on the issued and subscribed share capital as at respective balance sheet date.
Shareholding % reduced as at March 31, 2018 consequent to merger (Refer note 4 (I))
f) Other disclosures
i) The Company has one class of equity shares having a par value of ` 1 per share. Each shareholder is eligible for one vote per share held
and dividend as and when declared by the Company. The dividend proposed by the Board of Directors is subject to the approval of the
shareholders in the ensuing Annual General Meeting, except in case of interim dividend which is paid as and when declared by the
Board of Directors. In the event of liquidation of the Company, the holders of equity shares will be entitled to receive any of the
remaining assets of the Company, after distribution of all preferential amounts, in proportion to their shareholding.
ii) The Company has one class of 7.5% non-cumulative redeemable preference shares having a par value of ` 10 per share. Each
preference shareholder is eligible for one vote per share as per terms of Section 47(2) of the Companies Act 2013 and dividend as and
when declared by the Company. As per the terms of preference shares, these shares are redeemable at par on expiry of 18 months from
the date of their allotment. In the event of winding up of Vedanta Limited, the holders of Preference Shares shall have a right to receive
repayment of capital paid up and arrears of dividend, whether declared or not, up to the commencement of winding up, in prioirty to
any payment of capital on the equity shares out of the surplus of Vedanta Limited.
iii) ADS holders do not have right to attend General meetings in person and also do not have right to vote. They are represented by
depository, CITI Bank N.A. New York. As at March 31, 2018 – 24,84,24,696 equity shares were held in the form of 6,21,06,174 ADS
(March 31, 2017- 21,70,19,900 equity shares in form of 5,42,54,975 ADS).
iv) In terms of Scheme of Arrangement as approved by the Hon’ble High Court of Judicature at Mumbai, vide its order dated April 19,
2002, the erstwhile Sterlite Industries (India) Limited (merged with the Company during 2013-14) during 2002-2003 reduced its paid
up share capital by ` 10 Crore. There are 204,525 equity shares (March 31, 2017: 199,026 equity shares) of ` 1 each pending clearance
from NSDL/CDSL. The Company has filed an application in Hon’ble High Court of Mumbai to cancel these shares, the final decision on
which is pending. Hon’ble High Court of Judicature at Mumbai, vide its interim order dated September 06, 2002 restrained any
transaction with respect to subject shares.
20 Other equity (Refer consolidated statement of changes in equity)
a) General reserve: Under the erstwhile Companies Act 1956, a general reserve was created through an annual transfer of net income at
a specified percentage in accordance with applicable regulations. The purpose of these transfers was to ensure that if a dividend
distribution in a given year is more than 10.0% of the paid-up capital of the Company for that year, then the total dividend distribution is
less than the total distributable reserves for that year. Consequent to introduction of Companies Act 2013, the requirement to
mandatory transfer a specified percentage of the net profit to general reserve has been withdrawn.
b) Debenture redemption reserve: The Companies Act, 2013 requires companies that issue debentures to create a debenture
redemption reserve from annual profits until such debentures are redeemed. Companies are required to maintain 25% as a reserve of
outstanding redeemable debentures. The amounts credited to the debenture redemption reserve may not be utilised except to redeem
debentures.
c) Preference share redemption reserve: The Companies Act, 2013 provides that companies that issue preference shares may redeem
those shares from profits of the Company which otherwise would be available for dividends, or from proceeds of a new issue of shares
made for the purpose of redemption of the preference shares. If there is a premium payable on redemption, the premium must be
provided for, either by reducing the additional paid in capital (securities premium account) or net income, before the shares are
redeemed. If profits are used to redeem preference shares, the value of the nominal amount of shares redeemed should be transferred
from profits (retained earnings) to the preference share redemption reserve account. This amount should then be utilised for the
purpose of redemption of redeemable preference shares. This reserve can be used to issue fully paid-up bonus shares to the
shareholders of the Company.
d) Capital reserve: The balance in capital reserve has mainly arisen pursuant to extinguishment of non-controlling interests of erstwhile
Cairn India Limited in the previous year pursuant to merger as described in note 4 (I). In the current year, the balance has further
increased due to acquisition of ASI as detailed in note 4 (II).
e) Legal reserve is created at Fujairah Gold FZC in accordance with free zone regulations.
f) Treasury share represents 92,33,871 (March 31, 2017 : 39,84,256) equity shares (face value of ` 1 each) of the Company purchased by
Vedanta Limited ESOP Trust pursuant to the Company’s stock option scheme as detailed in note 46.
Notes forming part of the Consolidated Financial Statementsas at and for the year ended March 31, 2018 continued Vedanta Limited Integrated Report and Annual Accounts 2017-18
311
21 Non-current financial liabilities – Borrowings
Particulars
Secured
Redeemable non convertible debentures
Term loans from banks
Rupee term loans
Foreign currency term loans
External commercial borrowings
Project buyers’ credit from banks
Others
Unsecured
Deferred Sales Tax Loan
Non convertible bonds
Project buyers’ credit from banks
Term loans from banks (Foreign currency)
7.5% Redeemable preference shares
Non-current financial liabilities – Borrowings (A)
Less: Current maturities of long term borrowings (Refer note 27)
Total non-current financial liabilities – Borrowings (Net)
Current financial liabilities – Borrowings (B) (Refer note 25)
Total Borrowings (A+B)
a) The Group has not defaulted in the repayment of loans and interest as at the Balance Sheet date.
b) Summary of Redeemable non-convertible debentures (Carrying value)
Particulars
7.60% due May 2019
9.10% due April 2018 **
9.17% due July 2018 **
9.45% due August 2020
7.80% due December 2020
9.24% due December 2022 *
9.24% due December 2022 *
9.40% due November 2022 *
9.40% due October 2022 *
9.36% due October 2017
9.36% due December 2017
7.90% due March 2020 **
8.00% due July 2020
10.25% due August 2017
7.85% due August 2020
9.70% due September 2017
9.27% due November 2017
8.91% due April 2018
8.20% due November 2019
7.75% due September 2019
8.65% due September 2019
8.70% due April 2020
8.75% due April 2021
8.75% due September 2021
8.25% due September 2020
8.25% due October 2019
7.95% due April 2020 **
7.50% due November 2019 **
Total
As at
March 31,
2018
(` in Crore)
As at
March 31,
2017
11,575
13,675
16,969
3,070
811
–
513
91
114
–
55
3,010
36,208
(9,419)
22,386
–
2,315
137
–
94
–
717
–
–
39,324
(9,069)
26,789
30,255
21,951
58,159
32,245
71,569
As at
March 31,
2018
(` in Crore)
As at
March 31,
2017
351
2,500
1,200
1,999
500
–
–
–
–
–
–
200
300
–
500
–
–
1,000
300
250
150
600
250
250
425
300
300
200
–
2,499
1,200
1,999
–
499
500
500
500
975
525
–
–
500
–
180
200
998
300
250
150
600
250
250
–
300
300
200
11,575
13,675
* The NCDs have been pre-paid during the year
** The debenture holders of these NCDs and the Company have put and call option at the end of 5 years from the respective date of the
allotment of the NCDs
Notes forming part of the Consolidated Financial Statementsas at and for the year ended March 31, 2018 continuedIntegrated Report Management Review Statutory Reports Financial Statements 312
Vedanta Limited Integrated Report and Annual Accounts 2017-18
21 Non-current financial liabilities – Borrowings continued
c) The Group has taken borrowings in various countries towards funding of its acquisitions, capital expenditure and working capital
requirements. The borrowings comprise of funding arrangements from various banks taken by the parent and subsidiaries. The Group’s
total secured borrowings and a summary of security provided by the Group are as follows -
Particulars
Secured long term borrowings
Secured short term borrowings
Total
Facility Category
Security details
Project buyers’
credit from banks
Working capital
loans*
First pari passu charge on the entire current assets of Vedanta Limited, both present and
future. First pari passu charge on all rights, title, claim and benefit in all the whole of the
current assets of the borrower, both present and future, including stock & raw material,
stock in process, semi finished, finished good and stores & spares not relating to plant and
machinery (consumable stores & spares)
Secured by first charge on entire stock of raw material, semi-finished goods, finished
goods, consumable stores and spares and such other movables including book debts and
bills of Vedanta Limited’s Iron ore division at Goa and charge on Iron ore Goa’s all other
current assets including outstanding monies and receivables on pari passu basis
Other secured project buyers’ credit from banks
Secured by first pari passu charge on current assets, present and future of Vedanta Limited
Secured by hypothecation of stock of raw materials, work-in-progress, semi-finished,
finished products, consumable stores and spares, bills receivables, book debts and all
other movables, both present and future in BALCO. The charges rank pari passu among
banks under the multiple banking arrangements, for fund and non-fund based facilities
First pari passu charge on the entire current assets of Vedanta Limited, both present and
future. First pari passu charge on all rights, title, claim and benefit in all the whole of the
current assets of the borrower, both present and future, including stock & raw material,
stock in process, semi finished, finished goods and stores & spares not relating to plant and
machinery (consumable stores & spares)
Secured by first charge on entire stock of raw material, semi-finished goods, finished
goods, consumable stores and spares and all book debts of Vedanta Limited’s Iron ore
division at Goa on pari passu basis
Secured by a first pari passu charge on all present and future inventories, book debts and
all other current assets of TSPL
Secured by hypothecation of stock of raw materials, work-in-progress, semi-finished,
finished products, consumable stores and spares, bills receivables, book debts and all other
movables, both present and future in BALCO. The charges rank pari passu among banks
under the multiple banking arrangements, both for fund based and non-fund based facilities
External
Commercial
Borrowings
The facility is secured by first pari passu charge on all movable property, plant and
equipments related to power plants and aluminium smelters 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
Other secured external commercial borrowings
Redeemable non
convertible
debentures
Secured by way of movable fixed assets in relation to the Lanjigarh Refinery Expansion
Project including 210 MW Power Project for the Lanjigarh Refinery Expansion Project at
Lanjigarh, Orissa
As at
March 31,
2018
32,938
1,999
(` in Crore)
As at
March 31,
2017
38,513
7,648
34,937
46,161
(` in Crore)
As at
March 31,
2018
As at
March 31,
2017
125
–
2
–
–
308
149
661
1
–
639
–
166
166
588
170
–
–
486
479
325
323
–
1,513
1,200
1,200
Notes forming part of the Consolidated Financial Statementsas at and for the year ended March 31, 2018 continued Vedanta Limited Integrated Report and Annual Accounts 2017-18
313
21 Non-current financial liabilities – Borrowings continued
Facility Category
Security details
a) Secured by way of “movable fixed assets” in relation to the 1.6 MTPA Aluminium Smelter
alongwith 1215 MW (135MW * 9) captive power plant located in Jharsuguda and 1 MTPA
Alumina Refinery alongwith 90 MW Co-generation power plant located at Lanjigarh in
Odisha State and shall include all present movable plant and machinery, machinery spares,
tools and accessories, fixtures, mechanical and electrical equipments, machinery and all
other movable fixed assets and all estate, right, title, interest, property, claims and demands
whatsoever in relation to assets.
b) The whole of the movable fixed assets of the 1.6 MTPA Aluminium Smelter along with 1215
MW captive power plant in Jharsuguda and 1 MTPA alumina refinery alongwith 75 MW
co-generation plant in Lanjigarh, including its movable plant and machinery, capital works-in-
progress, machinery spares, tools and accessories, and other movable fixed assets
As at
March 31,
2018
(` in Crore)
As at
March 31,
2017
2,500
2,500
Term loans from
banks (Include rupee
term loans and
foreign currency
term loans)
First Pari Passu charge on the movable fixed assets both present and future of 2400 MW
(600 MW*4)Jharsuguda Power Plant
2,500
2,500
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 the Company along with 90 MW power plant in
Lanjigarh’ and all its related capacity expansions.
1,550
1,550
Secured by way of movable fixed assets of the Lanjigarh Refinery Expansion Project
including 210 MW Power Project for the Lanjigarh Refinery Expansion Project with a
minimum security cover of 1 time of the outstanding amount of the debenture
Secured by First pari passu charge over Plant, Property, Equipment (excluding coal block)
of BALCO.
850
500
–
–
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.
1,050
550
Secured by first pari passu charge on movable and/or immovable fixed assets of TSPL with
a minimum asset cover of 1.1 times during the tenure of NCD .
1,000
998
Secured by way of first pari-passu charge on the specific movable and/or immovable
property, plant and equipment of VGCB, 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 bonds outstanding at any point of time.
425
–
Other secured redeemable non convertible debentures
–
4,377
Secured by first pari passu charge on fixed assets of TSPL both present and future.
4,075
3,640
Secured by first pari passu charge by way of hypothecation on the entire movable property,
plant and equipments (including CWIP) of the Aluminium and Power Project, both present
and future except for assets acquired under buyer’s credit where there is a second charge;
and mortgage by deposit of documents of title of the land pertaining to the property, plant
and equipments. Aluminium and Power project shall mean the manufacturing facilities
comprising of (i) alumina refinery having output of 1 MTPA along with co-generation captive
power plant with an aggregate capacity of 75 MW at Lanjigarh, Orissa. (ii) aluminium smelter
having an output of 1.6 MTPA along with a 1215 (9x135) MW CPP at Jharsuguda, Orissa.
Secured by creating first pari-passu charge by way of hypothecation of the movable
property, plant and equipments except for assets acquired under buyer’s credit where there
is a second charge, and mortgage on all the immovable property, plant and equipments of
the Aluminium Division of Vedanta Limited, both present and future, including leasehold land.
Secured by a first pari passu charge by way of hypothecation on the entire movable
property, plant and equipments (including CWIP) of the project at Vedanta Limited’s
Jharsuguda Aluminium division except for assets acquired under buyer’s credit where
there is a second charge, both present and future; and mortgage by deposit of documents
of title of the land pertaining to the property, plant and equipments.
Secured by aggregate of the property, plant and equipments of Aluminium Division and the
Lanjigarh Expansion Project reduced by the outstanding amount of other borrowings
having first pari passu charge on the property, plant and equipments of Aluminium division
and the Lanjigarh Expansion Project except for assets acquired under buyer’s credit where
there is a second charge.
2,048
2,659
5,521
9,292
1,891
1,942
1,232
1,245
Secured by first pari passu charge on moveable property, plant and equipments (except for
coal block) of BALCO.
1,511
–
Notes forming part of the Consolidated Financial Statementsas at and for the year ended March 31, 2018 continuedIntegrated Report Management Review Statutory Reports Financial Statements 314
Vedanta Limited Integrated Report and Annual Accounts 2017-18
21 Non-current financial liabilities – Borrowings continued
Facility Category
Security details
Secured by first pari passu charge on all present and future moveable fixed assets of
BALCO including but not limited to plant & machinery, spares, tools and accessories of
borrower (excluding of coal block assets ) by way of a deed of hypothecation.
Charge on Cairn Energy Hydrocarbons Limited’s (CEH) all Bank Accounts, Cash &
Investments, all receivables and current assets (but excluding any shares issued to CEH by
its subsidaries, all of its right, title and interest in and to Production Sharing Contract and all
of its fixed assets of any nature).
Other secured term loans from banks
Others
Secured by way of first charge over AvanStrate’s asset
As at
March 31,
2018
988
2,773
(` in Crore)
As at
March 31,
2017
–
–
–
10,417
513
–
34,937
46,161
* Includes loans repayable on demand from banks, packing credit in foreign currencies from banks and amounts due on factoring.
d) Bank loans availed by the Group are subject to certain covenants relating to interest service coverage, current ratio, debt service coverage
ratio, total outside liabilities to total net worth, fixed assets coverage ratio, ratio of total term liabilities to net worth, debt to EBITDA ratio
and return on fixed assets. The Group has complied with the covenants as per the terms of the loan agreement.
e) Term of repayment of total borrowings outstanding as at March 31, 2018 are provided below:
(` in Crore)
Borrowings
Weighted
average of
interest as at
March 31,
2018
Foreign Currency term Loan
3.79%
Total
carrying
value
3,125
<1 year
1-3 years
3-5 years
>5 years Remarks
354
1,445
1,083
337 Repayable in 48 quarterly installments
and 10 annual installments
Rupee Term Loan
7.33%
16,969
1,348
6,999
3,845
4,830 Repayable in 522 quarterly
installments, 6 installments payable in
the gap of 5 months and 7 months,
10 half yearly installments and 2 bullet
payments
2.72%
811
–
338
475
– Repayable in 3 annual installments
8.40%
11,575
4,700
6,375
500
– Repayable in 21 bullet payments
External Commercial
Borrowings
Redeemable Non
Convertible Debentures
Commercial paper
Working capital loan*
7.37%
7.94%
17,687
3,354
17,885
3,354
–
–
–
–
37
–
–
–
–
–
–
–
41
–
–
– Repayable in 99 bullet payments
– Export packing credit is repayable
within 1-6 months from the date of
drawal and cash credit can be repaid
anytime as per the availability of
business surplus during the validity of
the facility.
– Repayable in 15 bullet payments
– Repayable in 12 bullet payments
29 Repayable monthly in 14 years from
the date of deferment. The loan was
initially measured at fair value using a
discount rate of 7.50%
– Repayable in 1 bullet payment upon
18 months from date of issuance
412 Repayable in 10 annual installments
328
164 Repayable in 6 half yearly installments
starting from 4th Year till 6th Year
Project Buyers' credit
from banks
Amounts due on factoring
Deferred sales tax liability
1.77%
7.16%
NA
127
783
91
127
783
10
Redeemable Preference
shares
7.50%
3,010
3,010
Non-convertible bonds
0.00%**
Other
Total
2.67%
114
513
–
–
The above maturity is based on the total principal outstanding gross of issue expenses.
*Includes loans repayable on demand from banks for ` 477 Crore and packing credit in foreign currency from banks
** Increasing interest rate from 0.00% to 0.50% till maturity
58,159
31,571
15,194
6,272
5,772
Notes forming part of the Consolidated Financial Statementsas at and for the year ended March 31, 2018 continued Vedanta Limited Integrated Report and Annual Accounts 2017-18
315
21 Non-current financial liabilities – Borrowings continued
Term of repayment of total borrowings outstanding as at March 31, 2017 are provided below -
Borrowings
Weighted
average of
interest as at
March 31,
2018
Total
carrying
value
<1 year
1-3 years
3-5 years
>5 years Remarks
Foreign Currency term Loan
4.04%
6,809
6,809
-
-
- Repayable in 2 bullet payments
Rupee Term Loan
9.64% 22,386
2,747
4,622
10,095
4,949 Repayable in 474 quarterly
installments, 43 half yearly
installments.
External Commercial
Borrowings
Redeemable Non
Convertible Debentures
4.76%
2,315
1,080
517
564
162 Repayable in 8 annual installments
and 1 bullet payment
9.15%
13,675
4,379
5,699
3,599
- Repayable in 23 bullet payments
(` in Crore)
Commercial paper
6.55%
23,418
23,448
Working capital loan*
8.13%
1,203
1,203
Project Buyers' credit
from banks
2.54%
866
866
Amounts due on factoring
3.23%
Deferred sales tax liability
NA
803
94
803
9
-
-
-
-
-
-
-
-
28
32
- Repayable in 33 bullet payments
- Export packing credit is repayable
within 1-6 months from the date of
drawal and cash credit can be repaid
anytime as per the availability of
business surplus during the validity of
the facility
- Repayable in 5 bullet payments
- Repayable in 3 bullet payments
58 Repayable monthly in 14 years from
the date of deferment. The loan was
initially measured at fair value using a
discount rate of 7.50%
Total
71,569
41,344
10,866
14,290
5,169
The above maturity is based on the total principal outstanding gross of issue expenses
* Includes loans repayable on demand from banks for ` 24 Crore and packing credit in foreign currencies from banks.
f) Movement in borrowings during the year is provided below:
Particulars
As at April 01, 2016
Cash flow
Other non cash changes
Foreign exchange currency translation differences
As at March 31, 2017
Cash flow
Borrowings on acquisition through business combination
Other non cash changes
Foreign exchange currency translation differences
As at March 31, 2018
Borrowings
due within
one year
Borrowings
due after
one year
(` in Crore)
Total
18,399
49,378
67,777
14,473
8,678
(236)
(10,868)
(8,499)
244
3,605
179
8
41,314
30,255
71,569
(18,067)
-
8,164
(41)
798
631
(5,000)
105
(17,269)
631
3,164
64
31,370
26,789
58,159
Other non-cash changes comprises of amortisation of borrowing costs, foreign exchange difference on borrowings and reclassification
between borrowings due within one year and borrowings due after one year. Additionally non cash changes for the year ended
March 31, 2018 includes preference shares issued on merger(Refer Note 4 (I))
Notes forming part of the Consolidated Financial Statementsas at and for the year ended March 31, 2018 continuedIntegrated Report Management Review Statutory Reports Financial Statements
316
Vedanta Limited Integrated Report and Annual Accounts 2017-18
22 Non-current financial liabilities – Other financial liabilities
Particulars
Payable for purchase of property, plant and equipment
Security deposits from vendors and others
Derivatives instruments (Refer note 45)
Put option liability with non-controling interest a
Obligation for issuance of redeemable preference shares (Refer note 4 (I) and 19)
Total
As at
March 31,
2018
(` in Crore)
As at
March 31,
2017
128
10
118
299
–
555
309
1
56
–
3,010
3,376
a) One of the significant non-controlling shareholder of ASI has an option to offload their shareholding to the Group. The option is
exercisable after 5 years from the date of acquisition at a price higher of ` 49 (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 fair value put option liability are treated as equity
transaction and hence accounted for in equity. (Refer Note 4 (II))
23 Non-current provisions
Particulars
Provision for employee benefits a (Refer Note 47)
Provision for restoration, rehabilitation and environmental costs b
Total
a) Includes gratuity, compensated absences, deferred cash bonus etc.
b) Particulars
At April 01, 2016
Additions
Amounts utilised
Unwinding of discount
Revision in estimates
Exchange differences
At March 31, 2017
Additions
Amounts utilised
Unused amount reversed (Refer note 36)
Unwinding of discount
Revision in estimates
Additions upon acquisition though business combinations
Exchange differences
At March 31, 2018
Classification as at March 31, 2017
Current
Non-Current
Classification as at March 31, 2018
Current
Non-Current
As at
March 31,
2018
210
2,151
(` in Crore)
As at
March 31,
2017
183
1,871
2,361
2,054
Restoration,
rehabilitation and
environmental
costs
Others
(Refer c)
2,030
49
116
(85)
85
(184)
(28)
1,934
174
(46)
(41)
84
8
24
64
2,201
63
1,871
50
2,151
1
–
–
–
–
50
1
–
–
–
–
51
50
–
51
–
c) Others
Other provisions comprise the Group’s best estimate of the costs based on the possibility of occurrence in the future to settle certain legal, tax
and other claims outstanding against the Group. The timing of cash flows in respect of such provisions cannot be reasonably determined.
Notes forming part of the Consolidated Financial Statementsas at and for the year ended March 31, 2018 continued Vedanta Limited Integrated Report and Annual Accounts 2017-18
317
24 Other non-current liabilities
Particulars
Deferred government grantsa
Total
As at
March 31,
2018
4,303
4,303
(` in Crore)
As at
March 31,
2017
4,158
4,158
a) Represents government assistance in the form of the duty benefit availed under Export Promotion Capital Goods (EPCG) Scheme and
SEZ scheme on purchase of property, plant and equipment accounted for as government grant and being amortised over the useful life
of such assets.
25 Current financial liabilities – Borrowings
Particulars
Secured
Term loans from banks (Foreign currency)
Others
Project buyers credit from banks
Loans repayable on demand from Banks
Working capital loan
Packing credit in foreign currencies from banks
Amounts due on factoring
Unsecured
Commercial paper
Packing credit in foreign currencies from banks
Working capital loan
Amounts due on factoring
Total
As at
March 31,
2018
(` in Crore)
As at
March 31,
2017
–
6,809
127
477
41
636
718
12
24
–
–
803
17,687
2,105
95
65
23,418
1,179
–
–
21,951
32,245
a) For details on terms of short term borrowing refer note 21.
b) The Company has discounted trade receivables on recourse basis of ` 783 Crore (March 31, 2017: ` 166 Crore). Accordingly, the
monies received on this account are shown as borrowings as the trade receivables do not meet de-recognition criteria.
26 Current financial liabilities – Trade payables
Particulars
Trade payables ab
Operational buyers credit c
Total
As at
March 31,
2018
8,426
9,417
(` in Crore)
As at
March 31,
2017
7,129
11,330
17,843
18,459
a Trade Payables are majorly non-interest bearing and are normally settled upto 180 days terms.
b For amount due and terms and conditions of related party payables refer note 51.
c Operational Buyer’s Credit is availed from offshore banks at an interest rate ranging from 1.5% to 3.5% per annum and are repayable
within one year from the date of draw down, based on the letter of comfort issued under working capital facilities sanctioned by
domestics banks. Some of these working capital facilities are secured by first pari-passu charge over the present and future current
assets of the Group.
Notes forming part of the Consolidated Financial Statementsas at and for the year ended March 31, 2018 continuedIntegrated Report Management Review Statutory Reports Financial Statements 318
Vedanta Limited Integrated Report and Annual Accounts 2017-18
27 Current financial liabilities – Other financial liabilities
Particulars
Current maturities of long term borrowings a (Refer note 21)
Interest accrued but not due on borrowings
Derivatives instruments (Refer note 45)
Unpaid/Unclaimed dividend b
Unpaid matured deposits and interest accrued thereon c
Payable for purchase of property, plant and equipment
Due to related parties (Refer note 51)
Deposits from Vendors and others
Profit petroleum payable
Interim dividend payable
Other liabilities d
Total
a) Current maturities of long-term borrowings consist of:
Particulars
Deferred sales tax liability
Project buyer’s credit from banks
Term loans from banks
Rupee term loans
Foreign currency term loans
External commercial borrowings
Redeemable non convertible debentures
7.5% Redeemable preference shares
Total
As at
March 31,
2018
(` in Crore)
As at
March 31,
2017
9,419
886
143
90
0
3,313
4
901
827
142
3,086
9,069
839
822
368
0
2,965
13
987
988
7,217
1,037
18,811
24,305
As at
March 31,
2018
(` in Crore)
As at
March 31,
2017
10
–
9
854
1,345
354
–
4,700
3,010
2,747
–
1,080
4,379
–
9,419
9,069
b) Does not include any amounts, due and outstanding, to be credited to Investor Education and Protection Fund except ` 0.38 Crore
(March 31, 2017: ` 0.38 Crore) which is held in abeyance due to a pending legal case.
c) Matured deposits of ` 0.08 Crore (March 31, 2017: ` 0.08 Crore) due for transfer to Investor Education and Protection Fund have not
been transferred in view of pending legal litigation between the beneficiaries.
d) Includes revenue received in excess of entitlement interest of ` 1,297 Crore (March 31, 2017 : ` 10 Crore) and reimbursement of
expenses, interest accrued on other than borrowings, liabilities related to claim etc.
Notes forming part of the Consolidated Financial Statementsas at and for the year ended March 31, 2018 continued
Vedanta Limited Integrated Report and Annual Accounts 2017-18
319
28 Other current liabilities
Particulars
Statutory Liabilities and other Liabilities a
Amount payable to owned post-employment benefit trust (Refer note 51)
Deferred government grant b
Advance from customers c
Advance from related party (Refer note 51)
Total
As at
March 31,
2018
2,793
16
168
4,944
–
7,921
(` in Crore)
As at
March 31,
2017
2,217
10
208
4,721
14
7,170
a) Statutory and other liabilities mainly includes contribution to Provided fund, ESIC, withholding taxes, goods & service tax, excise duty,
VAT, service tax etc.
b) Represents government assistance in the form of the duty benefit availed under Export Promotion Capital Goods (EPCG) Scheme and
SEZ scheme on purchase of property, plant and equipment accounted for as government grant and being amortised over the useful life
of such assets.
c) Advances from customers include amounts received under long term supply agreements. The advance would be settled by supplying
goods as per the terms of the agreement. The portion of advance that is expected to be settled within the next 12 months has been
classified as a current liability.
29 Current provisions
Particulars
Provision for employee benefits a (Refer note 47)
Provision for restoration, rehabilitation and environmental costs b
Other Provisions b
Total
a) Includes gratuity, compensated absences, deferred cash bonus etc.
b) For details refer note 23.
30 Revenue from operations
Particulars
Sale of products (Net of excise duty) a
Less: Government share of profit petroleum
Total Sale of products (Net of excise duty)
Add: Excise duty
Total Sale of products (Gross of excise duty) a
Sale of services
Other operating revenues
Export incentives
Scrap sales
Miscellaneous income
Total
As at
March 31,
2018
(` in Crore)
As at
March 31,
2017
309
50
51
410
180
63
50
293
(` in Crore)
Year ended
March 31,
2018
Year ended
March 31,
2017
93,464
(2,818)
90,646
1,057
91,703
308
73,953
(2,968)
70,985
3,946
74,931
479
418
277
217
257
158
346
92,923
76,171
a) With effect from July 01, 2017, Goods and Service Tax (‘GST’) has been implemented which has replaced several indirect taxes
including excise duty. While Ind-AS required excise duty to be included while computing revenues, GST is required to be excluded from
revenue computation. Accordingly “Revenue from operations (Net of excise duty)” has been additionally disclosed to enhance
comparability of financial information.
Notes forming part of the Consolidated Financial Statementsas at and for the year ended March 31, 2018 continuedIntegrated Report Management Review Statutory Reports Financial Statements 320
Vedanta Limited Integrated Report and Annual Accounts 2017-18
31 Other Income
Particulars
Net gain on investment measured at FVTPL
Interest income from investments measured at FVTPL
Interest income from investments measured at FVOCI
Interest income from financial assets at amortised cost
- Bank deposits
- Loans
- Interest others
Interest on income tax refund
Dividend Income from
- financial assets at FVTPL
- financial assets at FVOCI
Net gain on foreign currency transactions and translation
Deferred government grant income (Refer note 24 and 28)
Miscellaneous income
Total
32 Changes in inventories of finished goods and work-in-progress*
Particulars
Opening Stock:
Finished Goods
Work in Progess
Less: Impairment of Inventory (Refer note 36(b))
Add: Foreign exchange translation
Add: Finished Goods acquired as part of business combination
Closing Stock
Finished Goods
Work in Progess
Total
* Inventories include goods-in-transit
33 Employee Benefits expense
Particulars
Salaries and wages
Share based payments (Refer note 46)
Contributions to provident and other funds (Refer note 47)
Staff welfare expenses
Less: Cost allocated/directly booked in joint ventures
Total
Year ended
March 31,
2018
1,676
469
258
(` in Crore)
Year ended
March 31,
2017
3,185
485
321
133
6
211
217
10
0
369
145
80
171
4
152
58
1
1
–
130
73
3,574
4,581
Year ended
March 31,
2018
(` in Crore)
Year ended
March 31,
2017
756
3,298
566
2,260
4,054
2,826
(35)
28
41
–
(1)
–
626
3,012
756
3,298
3,638
4,054
450
(1,229)
Year ended
March 31,
2018
2,500
118
239
227
(588)
(` in Crore)
Year ended
March 31,
2017
2,535
90
176
205
(667)
2,496
2,339
Notes forming part of the Consolidated Financial Statementsas at and for the year ended March 31, 2018 continued Vedanta Limited Integrated Report and Annual Accounts 2017-18
321
34 Finance Cost
Particulars
Interest expense on financial liabilities at amortised cost a
Other finance costs
Net interest on defined benefit arrangement
Unwinding of discount on provisions
Exchange difference regarded as an adjustment to borrowing cost
Less: Cost allocated/directly booked in joint ventures
Total
Year ended
March 31,
2018
4,803
848
16
84
32
(0)
(` in Crore)
Year ended
March 31,
2017
4,844
777
15
85
134
(0)
5,783
5,855
a) Includes ` 252 Crore (March 31, 2017 : NIL) on redeemable preference shares.
b) Net of interest cost of ` 349 Crore (March 31, 2017: ` 669 Crore) capitalised, relating to funds borrowed specifically to acquire/
construct the qualifying asset. The capitalisation rate of these borrowings is approximately 8.1% per annum (March 31, 2017: 9%).
35 Other Expenses
Particulars
Consumption of stores and spare parts
Share of expenses in producing oil and gas blocks
Exploration costs written off (Refer note 5)
Cess on crude oil
Water charges
Repairs to Plant and equipment
Repairs to building
Repairs others
Mine Expenses
Excise duty on changes in inventories
Royalty
Rates and taxes
Rent
Insurance
Conveyance & travelling expenses
Loss on sale of fixed asset
Directors sitting fees and commission
Bad trade receivables and advances written off
Provision for doubtful trade receivables/advances
Carriage
Amortisation of prepaid lease charges
Net loss on foreign currency transactions and translation
Miscellaneous expenses
Less: Cost allocated/directly booked in joint ventures
Total
Year ended
March 31,
2018
(` in Crore)
Year ended
March 31,
2017
2,393
1,875
–
2,155
197
1,845
128
173
1,499
(19)
3,051
50
81
150
143
15
5
4
64
1,560
12
–
2,824
(277)
2,309
1,882
41
1,949
169
1,882
98
111
1,528
–
2,597
69
66
117
111
44
6
–
19
1,432
11
88
2,117
(205)
17,928
16,441
Notes forming part of the Consolidated Financial Statementsas at and for the year ended March 31, 2018 continuedIntegrated Report Management Review Statutory Reports Financial Statements
322
Vedanta Limited Integrated Report and Annual Accounts 2017-18
36 Exceptional Items
Particulars
Reversal of impairment charge relating to property, plant and equipment and exploration intangible assets under
development – Oil and Gas a
Impairment charge relating to iron ore assets b
Foreign currency translation reserve reclassified from equity to profit and loss relating to subsidiaries under
liquidation c
Loss on unusable capital work in progress d
Impairment of capital work-in-progress e
Reversal of provision for District mineral fund f
Gratuity – change in limits g
Charge pursuant to adverse arbitration order h
Acquisition expenses (Refer note 4 (II)) i
Total
Year ended
March 31,
2018
(` in Crore)
Year ended
March 31,
2017
6,907
(2,329)
(1,485)
(251)
–
295
(82)
(113)
(45)
2,897
87
–
–
–
(201)
–
–
–
–
(114)
a) During the year ended March 31, 2018, the Company has recogniged net impairment reversal of ` 6,907 Crore on its assets in the oil
and gas segment comprising of:
i
reversal of previously recorded impairment charge of ` 7,016 Crore relating to Rajasthan oil and gas block (“CGU”) mainly following
the progress on key growth projects expected to result in the enhanced recovery of resources in a commercially viable manner
leading to a higher forecast of oil production and adoption of integrated development strategy for various projects leading to savings
in cost. Of this reversal, ` 796 Crore reversal has been recorded against oil and gas assets and ` 6,220 Crore reversal has been
recorded against exploration intangible assets under development.
The recoverable amount of Rajasthan oil and gas cash generating units (CGU), ` 16,352 Crore (US$ 2514 million) and ` 13,013 Crore
(US$ 2007 million) as at March 31, 2018 and March 31, 2017 respectively, was determined based on the fair value less costs of
disposal approach, a level-3 valuation technique in the fair value hierarchy, as it more accurately reflects the recoverable amount
based on our view of the assumptions that would be used by 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$ 62 per barrel for the next one year
(March 31, 2017: US$ 58 per barrel) and scales upto long-term nominal price of US$ 65 per barrel three years thereafter (March 31,
2017: US$ 70 per barrel) derived from a consensus of various analyst recommendations.
Thereafter, these have been escalated at a rate of 2.5% per annum. The cash flows are discounted using the post-tax nominal
discount rate of 10.1% (March 31, 2017: 10.2%) derived from the post-tax weighted average cost of capital after factoring in the risks
ascribed to PSC extension including successful implementation of key growth projects. Based on the sensitivities carried out by the
Group, change in crude price assumptions by US$ 1/bbl and changes to discount rate by 0.5% would lead to a change in recoverable
value by ` 416 Crore (US$ 64 million) and ` 345 Crore (US$ 53 million) respectively.
ii
impairment charge of ` 109 Crore representing the carrying value of assets relating to exploratory wells in Block PR-OSN-2004/1
which has been relinquished during the year
During the year ended March 31, 2017, the Company has recognized net impairment reversal of ` 87 Crore relating to Rajasthan oil and gas
block. Of this net reversal, ` 421 Crore charge has been recorded against cost of producing facilities and ` 508 Crore reversal has been
recorded against exploration intangible assets under development.
b) During the year ended March 31, 2018, the Group has recognized an impairment charge of ` 2,329 Crore as against the net carrying
value of ` 3,034 Crore on its iron ore assets in Goa in the iron ore segment of this impairment of ` 1702 Crore has been recorded
against property, plant and equipment, ` 150 Crore has been recorded against intangible assets and ` 26 Crore has been recorded
against capital work in progress.
Pursuant to an order passed by the Hon’ble Supreme Court of India on February 7, 2018, the second renewal of the mining leases
granted by the State of Goa to all miners including Vedanta were cancelled. Consequentially all mining operations stopped with effect
from March 16, 2018 until fresh mining leases (not fresh renewals or other renewals) and fresh environmental clearances are granted in
accordance with the provisions of the The Mines and Minerals (Development and Regulation) (MMDR) Act.
.
Significant uncertainty exists over the resumption of mining at Goa under the current leases. The Group has assessed the recoverable
value of all its assets and liabilities associated with existing mining leases which led to a non-cash impairment charge. The recoverable
value of the mining reserve (grouped under ‘mining property’) has been assessed as Nil, as there is no reasonable certainty towards
re-award of these mining leases. Similarly, upon consideration of past precedence, the provision for restoration and rehabilitation with
respect to these mines has been assessed as Nil, as the Group believes that the same would be carried out by the future successful
bidder at the time of mine closure. The net recoverable value of other assets and liabilities has been assessed at ` 705 Crore, for each
category individually, based on the fair value less cost of sales methodology using a level 3 valuation technique. The fair value was
determined based on the estimated selling price of the individual assets using the depreciated replacement cost method.
Notes forming part of the Consolidated Financial Statementsas at and for the year ended March 31, 2018 continued
Vedanta Limited Integrated Report and Annual Accounts 2017-18
323
36 Exceptional Items continued
c) Three wholly owned subsidiaries of the Group, Twin Star Mauritius Holdings Limited, Twin Star Energy Holdings Limited and Sesa
Sterlite Mauritius Holdings Limited are in the process of liquidation. All these entities had US dollar as their functional currency and their
financial statements are translated into Indian Rupees for the purpose of consolidated financial statements. The cumulative exchange
difference relating to these entities recognized in equity has now been recognised in the consolidated statement of profit and loss.
d) During the year ended March 31, 2018, the Group has recognised a loss of ` 251 Crore relating to certain items of capital work-in-
progress at the aluminium operations, which are no longer expected to be used.
e) During the year ended March 31, 2017, the Group has recognised ` 201 Crore impairment charge relating to certain old items of capital
work-in-progress at the Alumina refinery operations.
f) During the year ended March 31, 2018, the Group has recognised the reversal of provision of ` 295 Crore relating to contribution to the
District Mineral Foundation. Effective January 12, 2015, the Mines and Minerals Development and Regulation Act, 1957 prescribed the
establishment of the District Mineral Foundation (DMF) in any district affected by mining related operations. The provisions required
contribution of an amount equivalent to a percentage of royalty not exceeding one-third thereof, as may be prescribed by the Central
Government of India. The rates were prescribed on September 17, 2015 for minerals other than coal, lignite and sand and on October
20, 2015 for coal, lignite and sand as amended on August 31, 2016. The Supreme Court order dated October 13, 2017 has determined
the prospective applicability of the contributions from the date of the notification fixing such rate of contribution and hence DMF would
be effective:
i
for minerals other than coal, lignite and sand, from the date when the rates were prescribed by the Central Government; and;
ii for coal, lignite and sand, DMF would be effective from the date when the rates were prescribed by the Central Government of India
or from the date on which the DMF was established by the State Government by a notification, whichever is later.
Pursuant to the aforesaid order, the Group has recognised a reversal of DMF provision for the period for which DMF levy is no longer
leviable.
g) Certain subsidiaries of the Group participate in a defined benefit plan (the “Gratuity Plan”) covering certain categories of employees. In
few of these companies, the maximum liability was capped at the statutory prescribed limit of ` 10 lakhs. Consequent to the increase in
the statutory limit to ` 20 lakhs, the increase in provision representing past service cost has been recognized as an exceptional item.
h) Charge pursuant to unfavourable arbitration order of ` 113 Crore (Refer note 49- Vedanta Limited: Contractor claim)
i) On December 28, 2017, the Group through its wholly owned subsidiary, acquired 51.6% equity stake in AvanStrate Inc. (ASI) (refer note
4 (II)). Acquisition expenses of ` 45 Crore incurred for the transaction has been classified under exceptional items.
37 Tax expense
(a) Tax charge/(credit) recognised in profit or loss (including on exceptional items)
Particulars
Current tax:
Current tax on profit for the year
Charge/(credit) in respect of current tax for earlier years
Charge in respect of exceptional items
Total Current Tax (a)
Deferred tax:
Origination and reversal of temporary differences
Charge in respect of deferred tax for earlier years
Net charge in respect of exceptional items
Total Deferred Tax (b)
Distribution tax on dividend from subsidiaries (Refer Note 41) (c)
Total tax charge (a+b+c)
Accounting profit after tax
Effective income tax rate (%)
(` in Crore)
Year ended
March 31,
2018
Year ended
March 31,
2017
2,828
39
51
2,918
2,380
92
2,023
4,495
(1,536)
2,310
(8)
–
2,302
(127)
(72)
34
(165)
196
5,877
2,333
19,569
13,652
30%
17%
Notes forming part of the Consolidated Financial Statementsas at and for the year ended March 31, 2018 continuedIntegrated Report Management Review Statutory Reports Financial Statements 324
Vedanta Limited Integrated Report and Annual Accounts 2017-18
37 Tax expense continued
(b) A reconciliation of income tax expense applicable to accounting profit before tax at the Indian statutory income tax rate to recognised
income tax expense/(credit) at the Group’s effective tax rate for the year indicated are as follows:
Particulars
Accounting profit before tax
Indian statutory income tax rate
Tax at statutory income tax rate
Disallowable expenses
Non-taxable income
FCTR Recycled to P&L (Refer note 36)
Tax holidays and similar exemptions
Effect of tax rate differences of subsidiaries operating in other jurisdictions
Dividend distribution tax
Unrecognised tax assets (net)
Change in deferred tax balances due to change in income tax rate from 34.608% to 34.944%
Capital Gains subject to lower tax rate
Investment allowances
Charge/(credit) in respect of earlier years
Other permanent differences
Year ended
March 31,
2018
(` in Crore)
Year ended
March 31,
2017
19,569
13,652
34.608% 34.608%
4,725
97
(694)
–
(1,270)
(332)
196
661
–
(456)
(482)
(80)
(32)
6,772
153
(241)
514
(996)
370
(1,536)
271
89
(76)
–
131
426
5,877
2,333
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 a tax holiday. Such a 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 March 31, 2012. However, such undertaking would continue to be subject to the Minimum
Alternative tax (‘MAT’).
The Group has such types of undertakings at Haridwar and Pantnagar, which are part of Hindustan Zinc Limited (Zinc India). In the current
year, Haridwar and Pantnagar units are eligible for deduction at 30% of taxable profits.
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 a tax holiday. Such a 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. 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.
The Group has power plants which benefit from such deductions, at various locations of Hindustan Zinc Limited (where such benefits has
been drawn), Talwandi Sabo Power Limited, Vedanta Limited and Bharat Aluminium Company Limited (where no benefit has been drawn)
and port facilities at Vizag General Cargo Berth 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 `996 Crore for the year ended March 31, 2018 (March 31, 2017: `1,270 Crore).
Investment Allowance u/s 32 AC of the Income Tax Act
Incentive for acquisition and installation of new high value plant or machinery to manufacturing companies by providing an additional
deduction of 15% of the actual cost of plant or Machinery acquired and installed during the year. The actual cost of the new Plant or
Machinery should exceed `25 Crore to be eligible for this deduction. Deduction u/s 32AC was available up to financial year March 31, 2017.
Notes forming part of the Consolidated Financial Statementsas at and for the year ended March 31, 2018 continued Vedanta Limited Integrated Report and Annual Accounts 2017-18
325
37 Tax expense continued
(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 and the fair value uplifts created on acquisitions, net of losses carried forward by
Vedanta Limited (post the re-organisation) and unused tax credits in the form of MAT credits carried forward in Vedanta Limited, Cairn
Energy Hydrocarbons Limited and Hindustan Zinc Limited. Significant components of Deferred tax (assets) and liabilities recognized in the
consolidated balance sheet are as follows :
For the year ended March 31, 2018
Significant components of Deferred tax (assets)
and liabilities
Property, Plant and Equipment
Voluntary retirement scheme
Employee benefits
Fair valuation of derivative asset/liability
Fair valuation of other asset/liability
MAT credit entitlement
Unabsorbed depreciation and tax losses
Other temporary differences
Total
For the year ended March 31, 2017
Significant components of Deferred tax (assets) and liabilities
Property, Plant and Equipment
Voluntary retirement scheme
Employee benefits
Fair valuation of derivative asset/liability
Fair valuation of other asset/liability
MAT credit entitlement
Unabsorbed depreciation and tax losses
Other temporary differences
Total
Charged/
(credited) to
statement of
profit or loss
Charged/
(credited) to
other
comprehensive
income
Charged/
(credited) to
equity
Opening
balance as at
April 01, 2017
Deferred tax
on
Acquisition
through
business
combination
(Refer Note
4 (II))
Exchange
difference
transferred to
translation of
foreign
operation
11,056
(48)
(81)
(34)
1,120
(12,381)
(4,420)
(620)
(5,408)
3,386
6
(9)
(9)
(622)
1,295
437
11
4,495
–
–
(3)
(35)
(2)
(4)
–
8
(36)
–
–
–
–
–
–
–
(338)
(338)
(21)
–
–
–
295
–
–
–
274
132
–
(4)
–
24
6
–
(1)
157
(` in Crore)
Closing
balance as at
March 31,
2018
14,553
(42)
(97)
(78)
815
(11,084)
(3,983)
(940)
(856)
Opening
balance as at
April 01, 2016
11,028
(59)
(73)
(18)
1,184
(13,046)
(3,922)
(362)
(5,268)
Charged/
(credited) to
statement
profit or loss
Charged/
(credited) to
other
comprehensive
income
Charged/
(credited) to
Equity
44
11
(5)
(26)
(84)
693
(498)
(300)
(165)
–
–
(3)
10
–
(28)
–
22
1
–
–
–
–
–
–
–
4
4
Exchange
difference
transferred to
translation of
foreign
operation
(` in Crore)
Closing
balance as at
March 31,
2017
(16)
–
–
–
20
–
–
16
20
11,056
(48)
(81)
(34)
1,120
(12,381)
(4,420)
(620)
(5,408)
Deferred tax assets and liabilities have been offset where they arise in the same legal entity and taxing jurisdiction but not otherwise.
Accordingly the net deferred tax (assets)/liability has been disclosed in the Balance Sheet as follows :
Deferred tax assets
Deferred tax liabilities
Net Deferred tax (assets)/Liabilities
(` in Crore)
As at March
31, 2018
As at March
31, 2017
(4,934)
4,078
(7,492)
2,084
(856)
(5,408)
Recognition of deferred tax assets on MAT credit 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.
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.
Notes forming part of the Consolidated Financial Statementsas at and for the year ended March 31, 2018 continuedIntegrated Report Management Review Statutory Reports Financial Statements 326
Vedanta Limited Integrated Report and Annual Accounts 2017-18
37 Tax expense continued
Unused tax losses/unused tax credit for which no deferred tax asset has been recognized amount to `3,818 Crore and `10,179 Crore as at
March 31, 2018 and March 31, 2017 respectively. The unused tax losses expire as detailed below:
As at March 31, 2018
Unrecognised deferred tax assets
Unutilised business losses
Unabsorbed depreciation
Unutilised Capital losses
Unutilised MAT Credit
Unused R&D tax credit
Total
As at March 31, 2017
Unrecognised deferred tax assets
Unutilised business losses
Unabsorbed depreciation
Unutilised MAT Credit
Unused R&D tax credit
Total
Within one
year
–
–
128
Greater
than one
year, less
than five
years
4
–
142
–
Greater
than five
years
14
–
–
300
(` in Crore)
No expiry
date
1,201
2,020
–
9
Total
1,219
2,020
270
300
9
128
146
314
3,230
3,818
Greater than
one year,
less than five
years
4,935
–
–
–
Within one
year
1,745
–
–
–
1,745
4,935
Greater than
five years
No expiry
date
1,183
1,997
–
9
14
–
296
–
310
3,189
10,179
(` in Crore)
Total
7,877
1,997
296
9
No Deferred tax assets has been recognised on these unused tax losses as there is no evidence that sufficient taxable profit will be
available in future against which the can be utilised by the respective entities.
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 it is probable that the liability will not be
incurred in the foreseeable future. The amount of unremitted earnings are ` 31,488 Crore and ` 32,880 Crore as at March 31, 2018 and
March 31, 2017 respectively.
38 Earnings per equity share (EPS)
Particulars
(` in Crore except otherwise stated)
Year ended
March 31,
2018
Year ended
March 31,
2017
Profit after tax and exceptional items attributable to equity share holders for Basic and Diluted EPS
Profit after tax but before exceptional items attributable to equity share holders for Basic and Diluted EPS
A
B
10,342
9,561
6,958
7,127
Computation of weighted average number of shares (in Crore)
Weighted average number of ordinary shares outstanding during the year excluding shares acquired for
ESOP for basic earnings per share *
Effect of dilution:
Potential ordinary shares relating to share option awards
Adjusted weighted average number of shares of the Company in issue
Basic earnings per equity share after exceptional items (`)
Diluted earnings per equity share after exceptional items (`)
Basic earnings per equity share before exceptional items (`)
Diluted earnings per equity share before exceptional items (`)
Nominal Value per Share (`)
* After excluding the impact of treasury shares
C
365.41
296.43
D
A/C
A/D
B/C
B/D
0.77
366.18
28.30
28.24
26.17
26.11
1/-
0.12
296.56
23.47
23.46
24.04
24.03
1/-
Notes forming part of the Consolidated Financial Statementsas at and for the year ended March 31, 2018 continued Vedanta Limited Integrated Report and Annual Accounts 2017-18
327
39 Distributions made and proposed
Particulars
Amounts recognised as distributions to equity share holders:
Equity dividend on ordinary shares:
Interim dividend for the year : ` 21.20 per share (March 31, 2017 : ` 19.45 per share) ab
Dividend distribution tax on interim dividend
Preference dividend on redeemable preference shares:
Preference dividend for the year : 7.5% p.a. (March 31, 2017 : NIL) c
Dividend distribution tax on preference dividend
(` in Crore)
Year ended
March 31,
2018
Year ended
March 31,
2017
7,881
1,605
7,099
1,447
9,486
8,546
209
43
252
–
–
–
a An interim dividend of ` 21.20 per share was declared during the current year. This includes dividend of ` 20 Crore payable (excludes
dividend distribution tax of ` 4 Crore) on 92,33,871 equity shares held by Vedanta Limited through ESOP trust for its stock options.
(Refer note 20)
b Two interim dividends of ` 1.75 and ` 17.70 per share were declared during the previous year ended March 31, 2017. This includes
interim dividend of ` 7 Crore (excludes dividend distribution tax of ` 1 Crore) payable on 39,84,256 equity shares held by Vedanta
Limited through ESOP trust for its stock options. (Refer note 20)
c Dividend @ 7.5% p.a. on the redeemable preference shares of face value of ` 10/- per preference share as per their terms of issuance
was declared during the year ended March 31, 2018. The same has been accounted for as interest cost and has been recorded in the
consolidated statement of profit and loss. (Refer note 34)
40 Operating lease:
As lessee
Operating leases are in relation to the office premises, office equipment and other assets, some of which are cancellable and some are
non-cancellable. There is an escalation clause in the lease agreements during the primary lease period and the same is in line with expected
general inflation to compensate for the lessor’s expected inflationary cost increase. There are no contingent rents and restrictions imposed
by lease arrangements. The total of the future minimum lease payments under non-cancellable lease are as follow:
Particulars
Within one year of the balance sheet date
Due in a period between one year and five years
Later than five years
Total
(` in Crore)
Year ended
March 31,
2018
Year ended
March 31,
2017
4
5
1
10
1
5
2
8
Lease payments recognized as expenses on non-cancellable lease during the year is ` 1 Crore (March 31, 2017: ` 28 Crore)
As lessor
TSPL has ascertained that the Power Purchase Agreement (PPA) entered with Punjab State Power Corporation Limited (PSPCL) qualifies
to be an operating lease under Ind AS 17 ‘Leases’. Based on the assessment that the lease payments are subject to variations on account of
various factors like availability of coal, water, etc., the management has determined the entire consideration receivable under the PPA
relating to recovery of capacity charges towards capital cost as contingent rent under Ind AS 17. The contingent rent recognised in the
Consolidated statement of profit and loss during the year ended March 31, 2018 and March 31, 2017 is ` 1,236 Crore and ` 1,229 Crore
respectively.
41 In view of clarification issued by Ind AS Transition Facilitation Group, the Group has revised the accounting for dividend distribution tax
(DDT) on profits of subsidiaries. DDT paid by subsidiaries on dividends received from them which is to be utilized against the equity
dividend declared by the Company, is recognised in statement of changes in equity as against the hitherto followed policy of
recognizing the same in the statement of profit and loss.
Accordingly, the tax charge for the year ended March 31, 2018 is lower by ` 1,940 Crore (including a credit of ` 1,536 Crore
representing DDT on dividend received from a subsidiary in the current year which has been utilised against the interim dividend
referred in note 39). The consolidated financial statement for the year ended March 31, 2017 have been restated to reflect a lower tax
charge of ` 1,445 Crore, as compared to the previously reported amounts. Consequentially the cash flow statement for the year ended
March 31, 2017 has also been restated to reflect a higher cash generation in operating activities and a higher cash utilisation in financing
activities by ` 106 Crore.
Notes forming part of the Consolidated Financial Statementsas at and for the year ended March 31, 2018 continuedIntegrated Report Management Review Statutory Reports Financial Statements
328
Vedanta Limited Integrated Report and Annual Accounts 2017-18
42 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 the Company (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 Commissioner of
Income Tax, Goa and Ministry of Corporate Affairs through a Special Leave Petition before the honourable Supreme Court and also by
a creditor and a shareholder of the Company. The said petitions are pending for hearing and admission.
43 a) Pursuant to the Government of India’s policy of disinvestment, the Company in April 2002 acquired 26% equity interest in Hindustan
Zinc Limited (HZL) from the Government of India. Under the terms of the Shareholder’s Agreement (‘SHA’),the Company had two
call options to purchase all of the Government of India’s shares in HZL at fair market value. The Company exercised the first call
option on August 29, 2003 and acquired an additional 18.9% of HZL’s issued share capital. The Company also acquired an additional
20% of the equity capital in HZL through an open offer, increasing its shareholding to 64.9%. The second call option provided the
Company the right to acquire the Government of India’s remaining 29.5% share in HZL. This call option was subject to the right of
the Government of India to sell 3.5% of HZL shares to HZL employees. The Company exercised the second call option on July 21,
2009. The Government of India disputed the validity of the call option and refused to act upon the second call option. Consequently
the Company invoked arbitration which is in the early stages. The next date of hearing is scheduled for November 24, 2018.
b) Pursuant to the Government of India’s policy of divestment, the Company in March 2001 acquired 51% equity interest in BALCO
from the Government of India. Under the terms of the SHA, the Company had a call option to purchase the Government of India’s
remaining ownership interest in BALCO at any point from March 2, 2004. The Company exercised this option on March 19, 2004.
However, the Government of India contested the valuation and validity of the option and contended that the clauses of the SHA
violate the erstwhile 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 Company, the arbitral tribunal by a majority award
rejected the claims of the Company on the ground that the clauses relating to the call option, the right of first refusal, the “tagalong”
rights and the restriction on the transfer of shares violate the erstwhile Companies Act, 1956 and are not enforceable.
The Company has challenged the validity of the majority award before the Hon’ble High Court at 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 to partially set aside the arbitral award in respect of certain matters involving valuation. The matter
is currently scheduled for hearing by the Delhi High Court on July 03, 2018.
On January 9, 2012, the Company offered to acquire the Government of India’s interests in HZL and BALCO for ` 15,492 Crore and
` 1,782 Crore respectively. This offer was separate from the contested exercise of the call options, and Company 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.
44 Capital management
The Group’s objectives when managing capital is 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’s overall strategy remains
unchanged from previous year.
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 requirements are met through a mixture of equity, internal fund generation, convertible debt securities, and other long term
borrowings. The Group’s policy is to use short term and long-term borrowings to meet anticipated funding requirements.
The Group monitors capital on the basis of the net gearing ratio which is Net debt/Total Capital (equity + net debt) . The Group is not
subject to any externally imposed capital requirements.
Net debt are non-current and current debt as reduced by cash and cash equivalents, other bank balances and current investments. Equity
comprises all components including other comprehensive income.
Notes forming part of the Consolidated Financial Statementsas at and for the year ended March 31, 2018 continued
Vedanta Limited Integrated Report and Annual Accounts 2017-18
329
44 Capital management continued
The following table summarizes the capital of the Group:
Cash and cash equivalents (Note 14)
Other bank balances (Note 15)
Non-current bank deposits (Note 9)
Current investments (Note 12)
Total (a)
Non-current borrowings (Note 21)
Current borrowings (Note 25)
Current maturities of non-current borrowings (Note 27)
Total (b)
Net debt (c=(b-a))
Total equity (d)
Total capital (e = equity + net debt)
Gearing ratio (times) (c/e)
(` in Crore except otherwise stated)
Year ended
March 31,
2018
Year ended
March 31,
2017
4,236
980
2,837
28,536
9,864
4,259
2,779
46,889
36,589
63,791
26,789
21,951
9,419
30,255
32,245
9,069
58,159
71,569
21,570
7,778
79,465
74,428
101,035
82,206
0.21
0.09
45 Financial instruments
This section gives an overview of the significance of financial instruments for the Group and provides additional information on the
consolidated balance sheet. Details of significant accounting policies, including the criteria for recognition, the basis of measurement and
the basis on which income and expenses are recognised, in respect of each class of financial asset, financial liability and equity instrument
are disclosed in note 2 and note 3.
A. Financial assets and liabilities:
The accounting classification of each category of financial instruments, their carrying amounts and their fair values are set out below:
As at March 31, 2018
Financial Assets
Investments*
Trade receivables
Loans
Other financial assets
Derivatives
Cash and cash equivalents
Other bank balances
Total
Financial liabilities
Borrowings
Trade payables
Other financial liabilities
Derivatives
Total
Fair value
through profit
or loss
Fair value
through other
comprehensive
income
25,733
–
–
–
33
–
–
25,766
2,963
–
–
–
119
–
–
3,082
Fair value
through profit
or loss
Fair value
through other
comprehensive
income
(` in Crore)
Amortised
cost
–
5,316
105
4,347
–
4,236
980
14,984
Total carrying
Others**
value Total fair value
–
–
–
213
–
–
–
213
28,696
5,316
105
4,560
152
4,236
980
28,696
5,316
105
4,560
152
4,236
980
44,045
44,045
Amortised
cost
Others**
Total carrying
value
–
–
–
166
166
–
–
–
95
95
58,159
17,843
9,387
–
85,389
–
–
299
–
299
58,159
17,843
9,686
261
85,949
86,026
(` in Crore)
Total
fair value
58,236
17,843
9,686
261
Notes forming part of the Consolidated Financial Statementsas at and for the year ended March 31, 2018 continuedIntegrated Report Management Review Statutory Reports Financial Statements 330
Vedanta Limited Integrated Report and Annual Accounts 2017-18
45 Financial instruments continued
As at March 31, 2017
Financial Assets
Investments*
Trade receivables
Loans
Other financial assets
Derivatives
Cash and cash equivalents
Other bank balances
Total
Financial liabilities
Borrowings
Trade payables
Other financial liabilities
Derivatives
Total
(` in Crore)
Total
fair value
46,959
3,409
105
4,082
13
9,864
4,259
Fair value
through profit
or loss
Fair value
through other
comprehensive
income
Amortised
cost
Total carrying
value
42,443
–
–
–
13
–
–
42,456
4,516
–
–
–
0
–
–
4,516
–
3,409
105
4,082
–
9,864
4,259
21,719
46,959
3,409
105
4,082
13
9,864
4,259
68,691
68,691
Fair value
through profit
or loss
Fair value
through other
comprehensive
income
–
–
–
779
779
–
–
–
99
99
Amortised
cost
Total carrying
value
71,569
18,459
17,734
–
71,569
18,459
17,734
878
(` in Crore)
Total
fair value
71,759
18,459
17,734
878
107,762
108,640
108,830
* Investments exclude equity investment in associates and joint ventures which are accounted as per the equity method of accounting and
hence not considered.
** Represents conversion option asset and put option liability accounted for at fair value. (Refer note 4 (II), note 9 and note 22).
B. Fair value hierarchy
The Group uses the following hierarchy for determining and disclosing the fair value of financial instruments by valuation technique:
(i) Level 1: quoted prices (unadjusted) in active markets for identical assets or liabilities.
(ii) 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).
(iii) Level 3: inputs for the asset or liability that are not based on observable market data (unobservable inputs)
The below table summarises the categories of financial assets and liabilities as at March 31, 2018 and March 31, 2017 measured at fair value:
As at March 31, 2018
Financial Assets
At fair value through profit or loss
Investments
Derivative financial assets*
At fair value through other comprehensive income
Investments
Derivative financial assets*
Other financial assets - Fair value of conversion option (Refer note 4 (II) and 9)
Total
Financial Liabilities
At fair value through profit or loss
Derivative financial liabilities*
At fair value through other comprehensive income
Derivative financial liabilities*
Other financial liabilities - Put option liability with non-controling interest (Refer note 4 (II) and 22)
Total
(` in Crore)
Level 1
Level 2
Level 3
7,566
–
18,167
33
149
–
–
2,803
119
–
7,715
21,122
–
–
11
–
213
224
(` in Crore)
Level 1
Level 2
Level 3
–
–
–
–
166
95
–
261
–
–
299
299
Notes forming part of the Consolidated Financial Statementsas at and for the year ended March 31, 2018 continued
Vedanta Limited Integrated Report and Annual Accounts 2017-18
331
45 Financial instruments continued
As at March 31, 2017
Financial Assets
At fair value through profit or loss
Investments
Derivative financial assets*
At fair value through other comprehensive income
Investments
Derivative financial assets*
Total
Financial Liabilities
At fair value through profit or loss
Derivative financial liabilities*
At fair value through other comprehensive income
Derivative financial liabilities*
Total
* Refer D below
(` in Crore)
Level 1
Level 2
Level 3
19,409
–
23,034
13
60
–
4,446
0
19,469
27,493
–
–
10
–
10
(` in Crore)
Level 1
Level 2
Level 3
–
–
–
779
99
878
–
–
–
The below table summarises the fair value of financial liabilities which are carried at amortised cost as at March 31, 2018 and March 31, 2017
As at March 31, 2018
Financial Liabilities
Borrowings
Total
As at March 31, 2017
Financial Liabilities
Borrowings
Total
(` in Crore)
Level 1
Level 2
Level 3
–
–
58,236
58,236
–
–
(` in Crore)
Level 1
Level 2
Level 3
–
–
71,759
71,759
–
–
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 are valued on the basis of market trades, poll and primary issuances for securities issued by the same or similar issuer and for
similar maturities or based on the applicable spread movement for the security derived based on the aforementioned factor(s).
Non-current fixed-rate and variable-rate borrowings: Fair value has been determined by the Group based on parameters such as interest
rates, specific country risk factors, and the risk characteristics of the financed project.
Other non-current financial assets and 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.
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 include forward pricing and swap models, using present value
calculations. The models incorporate various inputs including foreign exchange spot 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 (U.K.).
Trade receivables, cash and cash equivalents, other bank balances, loans, other financial assets, current borrowings, trade payables and
other current financial liabilities: Fair values approximate their carrying amounts largely due to the short-term maturities of these
instruments.
For all other financial instruments, the carrying amount is either the fair value, or approximates the fair value.
Notes forming part of the Consolidated Financial Statementsas at and for the year ended March 31, 2018 continuedIntegrated Report Management Review Statutory Reports Financial Statements 332
Vedanta Limited Integrated Report and Annual Accounts 2017-18
45 Financial instruments continued
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 March 31, 2018 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 transfers between Level 1, Level 2 and Level 3 during the year.
C. Risk management framework
The Group’s businesses are subject to several risks and uncertainties including financial risks.
The Group’s documented risk management policies act as an effective tool in mitigating the various financial risks to which the businesses
are exposed 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 maximisation. 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 input commodity such as of
Copper Concentrate & Alumina, for our copper and aluminium business 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
Notes forming part of the Consolidated Financial Statementsas at and for the year ended March 31, 2018 continued
Vedanta Limited Integrated Report and Annual Accounts 2017-18
333
45 Financial instruments continued
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 benefited 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 Treatment charges/Refining charges (TC/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 copper concentrate
and sales of finished products, both of which are linked to the LME price.
TC/RCs are a major source of income for the Indian copper smelting operations. Fluctuations in TC/RCs are 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 concentrate feed 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 Namibia and 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 crude 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 March 31, 2018, the value of net financial liabilities linked to commodities (excluding derivatives) accounted for on provisional prices
was ` 2,988 Crore (March 31, 2017: liability of ` 2,565 Crore). 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 April 01, 2018.
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:
(` in Crore)
For the year ended March 31, 2018
Copper
For the year ended March 31, 2017
Copper
Effect on
pre-tax
profit/(loss)
of a 10%
increase in
the LME
Effect on
equity of a
10%
increase in
the LME
Total
Exposure
3,558
(356)
–
Effect on
pre-tax
profit/(loss)
of a 10%
increase in
the LME
(` in Crore)
Effect on
equity of a
10%
increase in
the LME
Total
Exposure
2,954
(295)
–
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.
Notes forming part of the Consolidated Financial Statementsas at and for the year ended March 31, 2018 continuedIntegrated Report Management Review Statutory Reports Financial Statements 334
Vedanta Limited Integrated Report and Annual Accounts 2017-18
45 Financial instruments continued
Included above is also the impact of a 10% increase in closing copper LME for provisionally priced copper concentrate purchased at
Copper division custom smelting operations in India of ` 368 Crore (March 31, 2017: ` 312 Crore), 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 optimize interest and
commodity pricing through proven financial instruments.
(a) Liquidity
The Group requires funds both for short-term operational needs as well as for long-term investment programmes mainly in growth
projects. The Group generates 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. The Group has been rated by
CRISIL Limited (CRISIL) and India Ratings and Research Private Limited (India Rating) for its capital market issuance in the form of CPs and
NCDs and for its banking facilities in line with Basel II norms.
CRISIL changed the outlook for the Group’s long-term bank facilities and its Non-Convertible Debentures (NCD) programme to CRISIL
AA/Positive from CRISIL AA/Stable during the year on account of structural improvement in business profile and deleveraging. India
Ratings has revised the outlook on Vedanta Limited’s ratings to IND AA/Positive from IND AA/Negative on account of improved financial
metrics, completion of the merger with Cairn and proactive refinancing. Vedanta Limited has the highest short term rating on its working
capital and Commercial Paper Programme at A1+ from CRISIL and India Ratings.
Anticipated future cash flows, together with undrawn fund based committed facilities of ` 3,337 Crore, and cash, bank and current
investments of ` 36,589 Crore as at March 31, 2018, are expected to be sufficient to the meet the liquidity requirement of the Group in the
near future.
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 date of balance sheet to the contractual
maturity date is given in the table below. The figures reflect the contractual undiscounted cash obligation of the Group.
As at March 31, 2018
Payments due by year
Borrowings*
Derivative financial liabilities
Trade Payables and Other financial liabilities**
As at March 31, 2017
Payments due by year
Borrowings*
Derivative financial liabilities
Trade Payables and Other financial liabilities**
(` in Crore)
<1 year
1-3 years
3-5 years
>5 years
Total
34,624
143
26,276
18,090
118
138
7,417
–
299
7,440
–
–
67,571
261
26,713
61,043
18,346
7,716
7,440
94,545
(` in Crore)
<1 year
1-3 years
3-5 years
>5 years
Total
46,029
822
32,207
14,796
56
3,255
16,021
-
0
6,826
-
197
83,672
878
35,659
79,058
18,107
16,021
7,023
120,209
*Includes Non-current borrowings, current borrowings, current maturities of non-current borrowings and committed interest payments on
borrowings.
**Includes both Non-current and current financial liabilities and accured and committed interest payment as applicableJ. Excludes current
maturities of non-current borrowings, Interest accrued on borrowings and derivatives.
The Group had access to following funding facilities :
As at March 31, 2018
Funding facility
Fund/non-fund based
As at March 31, 2017
Funding facility
Fund/non-fund based
(` in Crore)
Total
Facility
Drawn
Undrawn
57,190
46,486
10,704
(` in Crore)
Total Facility
Drawn
Undrawn
49,059
38,526
10,533
Notes forming part of the Consolidated Financial Statementsas at and for the year ended March 31, 2018 continued
Vedanta Limited Integrated Report and Annual Accounts 2017-18
335
45 Financial instruments continued
Collateral
The Group has pledged a part of its trade receivables, short-term investments and cash and cash equivalents in order to fulfil the collateral
requirements for the financial facilities in place. The counterparties have an obligation to return the securities to the Group.
The details related to the fair value of collateral have been stated in note 7, note 12, note 13, note 14 and note 15.
(b) Foreign exchange risk
Fluctuations in foreign currency exchange rates may have an impact on the consolidated statement of profit and loss, the consolidated
statement 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, JPY, INR and Euro against the functional
currencies of Vedanta Limited and 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 INR. 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. 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. However all new non-current borrowing exposures are being hedged. The hedge mechanisms are reviewed
periodically to ensure that the risk from fluctuating currency exchange rates is appropriately managed.
The carrying amount of the Group’s financial assets and liabilities in different currencies are as follows :
(` in Crore)
Currency
INR
USD
EURO
Others
Total
As at March 31, 2018
As at March 31, 2017
Financial
Asset
Financial
liabilities
Financial
Asset
35,709
7,189
41
1,106
61,588
22,289
444
1,628
58,486
9,650
181
374
Financial
liabilities
80,173
27,874
268
325
44,045
85,949
68,691
108,640
The Group’s exposure to foreign currency arises where a Group entity holds monetary assets and liabilities denominated in a currency
different to the functional currency of the respective business, with US dollar being the major non-functional currency. The following analysis is
based on the gross exposure as at the reporting date which could affect the consolidated statement of profit and loss. The exposure is
mitigated by some of the derivative contracts entered into by the Group as disclosed under the section on “Derivative financial instruments”.
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 foreign currencies by 10% against the functional currency of the respective entities.
Set out below is the impact of a 10% strengthening in the functional currencies of the respective businesses on pre-tax profit/(loss) and
pre-tax equity arising as a result of the revaluation of the Group’s foreign currency financial assets/liabilities:
March 31, 2018
USD
INR
March 31, 2017
USD
INR
Effect of
10%
strengthening
of functional
currency on
pre-tax profit/
(loss)
1,504
(64)
Effect of
10%
strengthening
of functional
currency on
pre-tax profit/
(loss)
1,894
104
(` in Crore)
Effect of
10%
strengthening
of functional
currency on
equity
0
–
(` in Crore)
Effect of
10%
strengthening
of functional
currency on
equity
(18)
–
Notes forming part of the Consolidated Financial Statementsas at and for the year ended March 31, 2018 continuedIntegrated Report Management Review Statutory Reports Financial Statements 336
Vedanta Limited Integrated Report and Annual Accounts 2017-18
45 Financial instruments continued
A 10% weakening of functional currencies of the respective businesses would have an equal and opposite effect on the Group’s
financial statements.
(c) Interest rate risk
At March 31, 2018, the Group’s net debt of ` 21,570 Crore (March 31, 2017: ` 7,778 Crore) comprises cash, bank and investments of
` 36,589 Crore (March 31, 2017: ` 63,791 Crore) offset by debt of ` 58,159 Crore (March 31, 2017: ` 71,569 Crore).
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 liquid 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.
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 as at March 31, 2018 to interest rate risk is as follows:
Financial Assets
44,045
19,653
14,682
9,710
The exposure of the Group’s financial liabilities as at March 31, 2018 to interest rate risk is as follows:
Floating
rate
financial
assets
Fixed rate
financial
assets
Total
(` in Crore)
Non-
interest
bearing
financial
assets
Floating
rate
financial
liabilities
Fixed rate
financial
liabilities
Total
(` in Crore)
Non-
interest
bearing
financial
liabilities
Financial Liabilities
85,949
23,242
44,303
18,404
The exposure of the Group’s financial assets as at March 31, 2017 to interest rate risk is as follows:
Financial Assets
Floating rate
financial
assets
Fixed rate
financial
assets
Total
(` in Crore)
Non-interest
bearing
financial
assets
68,691
35,507
19,535
13,649
The exposure of the Group’s financial liabilities as at March 31, 2017 to interest rate risk is as follows:
Financial Liabilities
108,640
39,956
45,901
22,783
Considering the net debt position as at March 31, 2018 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.
Floating rate
financial
liabilities
Fixed rate
financial
liabilities
Total
(` in Crore)
Non-interest
bearing
financial
liabilities
Notes forming part of the Consolidated Financial Statementsas at and for the year ended March 31, 2018 continued Vedanta Limited Integrated Report and Annual Accounts 2017-18
337
45 Financial instruments continued
The table below illustrates the impact of a 0.5% to 2.0% increase in interest rates on interest on floating rate financial assets/liabilities (net)
on profit/(loss) and equity and represents management’s assessment of the possible change in interest rates. 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.
(` in Crore)
Increase in interest rates
0.50%
1.00%
2.00%
Effect on
pre-tax
profit/(loss)
during the
year ended
March 31,
2018
Effect on
pre-tax
profit/(loss)
during the
year ended
March 31,
2017
(18)
(36)
(72)
(22)
(44)
(89)
An equivalent reduction in interest rates would have an equal and opposite effect on the Group’s financial statements.
(d) Counterparty and concentration of 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 for trade receivables, investments, loans, other financial assets, and derivative financial instruments.
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 10.0% or more 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 the Group’s counterparties.
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.
For current 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.
The carrying value of the financial assets represents the maximum credit exposure. The Group’s maximum exposure to credit risk at March
31, 2018 and March 31, 2017 is ` 44,045 Crore and ` 68,691 Crore respectively.
The maximum credit exposure on financial guarantees given by the Group for various financial facilities is described in Note 49 on
“Contingent liability and capital commitments”.
None of the Group’s cash equivalents, including time deposits with banks, are past due or impaired. Regarding trade receivables, loans and
other financial assets (both current and non-current), there were no indications as at March 31, 2018, that defaults in payment obligations
will occur except as described in Note 7, 9, 13 and 17 on allowance for impairment of trade receivables and other financial assets.
Of the year end trade receivables, loans and other financial assets (excluding bank deposits and derivatives) balance the following, though
overdue, are expected to be realised in the normal course of business and hence, are not considered impaired as at March 31, 2018 and
March 31, 2017:
Particulars
Neither impaired nor past due
Past due but not impaired
- Less than 1 month
- Between 1-3 months
- Between 3-12 months
- Greater than 12 months
Total
As at
March 31,
2018
(` in Crore)
As at
March 31,
2017
3,493
1,106
773
390
728
1,547
6,931
844
221
1,306
1,340
4,817
Notes forming part of the Consolidated Financial Statementsas at and for the year ended March 31, 2018 continuedIntegrated Report Management Review Statutory Reports Financial Statements 338
Vedanta Limited Integrated Report and Annual Accounts 2017-18
45 Financial instruments continued
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 tables are those that have not been settled within the terms and conditions that
have been agreed with that customer. The Company based on past experiences does not expect any material loss on its receivables and
hence no provision is deemed necessary on account of ECL.
The credit quality of the Group’s customers is monitored on an ongoing basis and assessed for impairment where indicators of such
impairment exist. The Group uses simplified approach for impairment of financial assets. If credit risk has not increased significantly, 12-month
expected credit loss is used to provide for impairment loss. However, if credit risk has increased significantly, lifetime expected credit loss is
used. The solvency of the debtor and their ability to repay the receivable is considered in assessing receivables for impairment. Where
receivables have been impaired, the Group actively seeks to recover the amounts in question and enforce compliance with credit terms.
D. 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 in the consolidated balance sheet within current and non-current assets and
liabilities. 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.
(i) Embedded derivatives
Derivatives embedded other financial instruments or other contracts are treated as separate derivative contracts and marked-to-market
when their risks and characteristics are not clearly and closely related to those of their host contracts and the host contracts are not fair
valued.
(ii) 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 recognized in equity until the hedged
transaction occurs, at which time, the respective gain or losses are reclassified to profit or loss. These hedges have been effective for the
year ended March 31, 2018.
The Group uses foreign exchange contracts from time to time to optimize currency risk exposure on its foreign currency transactions. The
Company hedged part of its foreign currency exposure on capital commitments during the year ended 2018. Fair value changes on such
forward contracts are recognized in 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 ended March 31, 2019 and consequently may impact profit or loss
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 profit or loss over the expected useful life of the property, plant and equipment.
(iii) Fair value hedge
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 recognized in the consolidated statement of profit and loss.
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 recognized in consolidated statement of profit and loss.
(iv) Non-qualifying/economic hedge
The Company 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 future contracts
on the LME and certain other derivative instruments. Fair value changes on such derivative instruments are recognized in consolidated
statement of profit and loss.
Notes forming part of the Consolidated Financial Statementsas at and for the year ended March 31, 2018 continued Vedanta Limited Integrated Report and Annual Accounts 2017-18
339
45 Financial instruments continued
The fair value of the Company’s derivative positions recorded under derivative financial assets and derivative financial liabilities are
as follows:
(` in Crore)
Derivative Financial Instruments
Current
Cash flow hedge*
- Commodity contracts
- Forward foreign currency contracts
Fair Value hedge**
- Commodity contracts
- Forward foreign currency contracts
Non – qualifying hedges
- Commodity contracts
- Forward foreign currency contracts
- Cross currency swap
Total
Non-current
Fair value hedge
- Forward foreign currency contracts
Non – qualifying hedges
- Commodity contracts
- Forward foreign currency contracts
Total
As at March 31, 2018
As at March 31, 2017
Assets
Liabilities
Assets
Liabilities
118
1
2
14
4
13
0
95
0
1
9
15
22
1
152
143
–
–
–
–
106
1
11
118
0
0
0
0
9
–
–
9
4
–
–
4
85
14
2
533
24
163
1
822
56
–
–
56
* Refer consolidated statements of profit and loss and consolidated statements of change in equity for the change in the fair value of cash
flow hedges.
** The change in fair value hedges is recognised in the consolidated statement of profit and loss.
46 Share based payments
The Company offers equity based option plans to its employees, officers and directors through the Company’s stock option plan
introduced in the previous year, Cairn India’s stock option plan now administered by the Company pursuant to merger with the Company
and Vedanta Resources Plc plans [Vedanta Resources Long-Term Incentive Plan (“LTIP”), Employee Share Ownership Plan (“ESOP”),
Performance Share Plan (“PSP”) and Deferred Share Bonus Plan (“DSBP”)] collectively referred as ‘VR PLC ESOP’ scheme.
The Vedanta Limited Employee Stock Option Scheme (ESOS) 2016
The Company introduced an Employee Stock Option Scheme 2016 (“ESOS”), which was approved by the Vedanta Limited shareholders to
provide equity settled incentive to all employees of the Company including subsidiary companies. The ESOS scheme includes both tenure
based and performance based stock options. The maximum value of options that can be awarded to members of the wider management
group is calculated by reference to the grade average cost-to-company (“”CTC””) and individual grade of the employee. The performance
conditions attached to the option is measured by comparing company’s performance in terms of Total Shareholder Return (“TSR”) over the
performance period with the performance of two group of comparator companies (i.e. Indian and global comparator companies) defined
in the scheme. The extent to which an option vests will depend on the Company’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 options will be subject to a continued service condition only with the remainder measured in terms of TSR.
The performance condition is measured by taking Vedanta Limited’s TSR at the start and end of the performance period (without
averaging), and comparing its performance with that of the comparator group or groups. The information to enable this calculation to be
carried out on behalf of the Nomination and Remuneration Committee (the Committee) is provided by the Company’s advisers. The
Committee considers that this performance condition, which requires that the Company’s total return has outperformed a group of
industry peers, provides a reasonable alignment of the interests of participants with those of the shareholders.
Initial options under the ESOS were granted on 15 December 2016. Further during the year, new options were granted in September 2017,
October 2017 and November 2017. In the scheme launched during the year, business performance (“EBIDTA”) set against business plan for
the financial year is included as an additional performance condition. The exercise price of the options is ` 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 March 31, 2018 is presented below:
Year of Grant Excerise Date
2017
2018
2018
2018
15 December 2016-14 December 2019
1 September 2017-31 August 2020
16 October 2017-15 October 2020
1 November 2017-31 October 2020
Options
Options lapsed
during the year
owing to
outstanding
Options granted during
Options lapsed
performance
Options exercised
April 1, 2017
the year
during the year
conditions
during the year
As at
March 31, 2018
78,03,400
-
-
-
- 6,70,998
1,00,41,040 3,93,310 5,81,568
573
1,422
78,03,400 1,00,81,350 10,64,308 5,83,563
11,570
28,740
-
-
-
-
71,32,402
-
90,66,162
-
10,997
-
27,318
- 1,62,36,879
Notes forming part of the Consolidated Financial Statementsas at and for the year ended March 31, 2018 continuedIntegrated Report Management Review Statutory Reports Financial Statements 340
Vedanta Limited Integrated Report and Annual Accounts 2017-18
46 Share based payments continued
The details of share options for the year ended March 31, 2017 is presented below:
Year of Grant Excerise Date
outstanding April
Options granted during
Options lapsed
performance
Options exercised
1, 2016
the year
during the year
conditions
during the year
Options
Options lapsed
during the year
owing to
Options
outstanding
March 31, 2017
2016
15 December 2016-14 December 2019
- 80,00,000 1,96,600
-
-
78,03,400
The fair value of all options has been determined at the date of grant of the option allowing for the effect of any market-based performance
conditions. This fair value, adjusted by the Group’s estimate of the number of options that will eventually vest as a result of non-market
conditions, is expensed over the vesting period.
The fair values were calculated using the Black-Scholes Model for tenure based and EBIDTA based options and Monte Carlo simulation
model for TSR based options. The inputs to the model include the share price at date of grant, exercise price, expected volatility, expected
dividends, expected term and the risk free rate of interest. Expected volatility has been calculated using historical return indices over the
period to date of grant that is commensurate with the performance period of the option. The volatilities of the industry peers have been
modelled based on historical movements in the indices over the period to date of grant which is also commensurate with the performance
period for the option. The history of return indices is used to determine the volatility and correlation of share prices for the comparator
companies and is needed for the Monte Carlo model to estimate their future TSR performance relative to the Vedanta Limited’s TSR
performance. All options are assumed to be exercised immediately after vesting, as the excercise period is 6 months.
The assumptions used in the calculations of the charge in respect of the ESOS options granted during the year ended March 31, 2018 and
March 31, 2017 are set out below:
Particulars
Number of Options
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 (EBIDTA & Service based/Performance based)
Year ended
March 31, 2018 Year ended March 31, 2017
ESOS September,
October &
November 2017
1,00,81,350
` 1
` 308.90
3 years
48%
3 years
3.70%
6.50%
10%p.a.
` 275.3/` 161.1
ESOS December 2016
80,00,000
` 1
` 235.90
3 years
48%
3 years
3.20%
6.50%
10%p.a.
` 213.6/` 82.8
The Company recognized total expenses of ` 47 Crore related to above equity settled share-based payment transactions in the year ended
March 31, 2018 (March 31, 2017 ` 7 Crore).
Employee stock option plans of erstwhile Cairn India Limited:
The Company has provided various share based payment schemes to its employees. During the year ended March 31, 2018 and March 31,
2017, the following schemes were in operation:
Particulars
Date of Board Approval
Date of Shareholder’s approval
Number of options granted till March 31, 2018
Method of Settlement
Vesting Period
Exercise Period
CIPOP
CIESOP
CIPOP Phantom
17-Nov-06
17-Nov-06
1,61,67,131
Equity
3 years from
grant date
3 months from
vesting date
17-Nov-06
17-Nov-06
3,01,12,439
Equity
3 years from
grant date
7 years from vesting
date
Not applicable
Not applicable
48,31,955
Cash
3 years from
grant date
Immediately upon
vesting
CIPOP plan (including phantom options)
Options will vest (i.e., become exercisable) at the end of a “performance period” which has been set by the Nomination remuneration
committee at the time of grant (although such period will not be less than three years). However, the percentage of an option which vests
on this date will be determined by the extent to which pre-determined performance conditions have been satisfied. Phantom options are
exercisable proportionate to the period of service rendered by the employee subject to completion of one year.
CIESOP plan
There are no specific vesting conditions under CIESOP plan other than completion of the minimum service period. Phantom options are
exercisable proportionate to the period of service rendered by the employee subject to completion of one year.
Notes forming part of the Consolidated Financial Statementsas at and for the year ended March 31, 2018 continued Vedanta Limited Integrated Report and Annual Accounts 2017-18
341
46 Share based payments continued
Details of employees stock option plans is presented below
CIPOP Plan
Outstanding at the beginning of the year
Granted during the year
Expired during the year
Exercised during the year
Forfeited / cancelled during the year
Modified during the year (refer note below)
Outstanding at the end of the year
Exercisable at the end of the year
Year ended March 31, 2018 Year ended March 31, 2017
Weighted
average
exercise
price in `
Number of
options
Number of
options
Nil
Nil
Nil
Nil
Nil
Nil
Nil
Nil
NA 50,61,646
Nil
NA
Nil
NA
NA 9,39,680
NA 16,33,634
NA 24,88,332
Nil
NA
Nil
NA
Weighted
average
exercise
price in `
10.00
NA
NA
10.00
10.00
NA
NA
NA
Weighted average share price at the date of exercise of stock options is NA (March 31, 2017: ` 195.72)
CIESOP Plan
Outstanding at the beginning of the year
Granted during the year
Expired during the year
Exercised during the year
Forfeited / cancelled during the year
Outstanding at the end of the year
Exercisable at the end of the year
Year ended March 31, 2018 Year ended March 31, 2017
Weighted
average
exercise
price in `
Number of
options
264.31 96,02,201
Nil
NA
Nil
NA
89,402
213.75
268.24 5,50,133
275.47 89,62,666
275.47 89,62,666
Weighted
average
exercise
price in `
302.56
NA
NA
165.07
296.45
264.31*
264.31*
Number of
options
89,62,666
Nil
Nil
15,92,759
2,39,282
71,30,625
71,30,625
Weighted average share price at the date of exercise of stock options is ` 324.64 (March 31, 2017: ` 227.41)
CIPOP Plan – Phantom options
Outstanding at the beginning of the year
Granted during the year
Expired during the year
Exercised during the year
Forfeited / cancelled during the year
Modified during the year (refer note below)
Outstanding at the end of the year
Exercisable at the end of the year
Year ended March 31, 2018 Year ended March 31, 2017
Weighted
average
exercise
price in `
Number of
options
Number of
options
Nil
Nil
Nil
Nil
Nil
Nil
Nil
Nil
NA 8,25,184
Nil
NA
Nil
NA
Nil
NA
NA 4,92,021
NA 3,33,163
Nil
NA
Nil
NA
Weighted
average
exercise
price in `
10.00
NA
NA
NA
10.00
NA
NA
NA
Weighted average share price at the date of exercise of stock options is NA (March 31, 2017: NA)
Scheme
The details of exercise price for stock options
outstanding as at March 31, 2018 are:
CIPOP Plan
CIESOP Plan
CIPOP Plan – Phantom options
The details of exercise price for stock options
outstanding as at March 31, 2017 are:
CIPOP Plan
CIESOP Plan
CIPOP Plan – Phantom options
Year ended March 31, 2018
Year ended March 31, 2017
Range of exercise
price in `
No. of options
outstanding
Weighted average
remaining contractual life
of options (in years)
Weighted
average exercise
price in `
NA
187-291.25
NA
10
126.95-291.25
NA
Nil
71,30,625
Nil
Nil
89,62,666
Nil
NA
NA
NA
NA
NA
NA
NA
275.47
NA
NA
264.31*
NA
* During the previous year, consequent to the merger of Cairn India Limited with Vedanta Limited the exercise price has been reduced by
` 40 per option i.e. from ` 304.31 to ` 264.31 per option. (Refer note 4 (I))
Notes forming part of the Consolidated Financial Statementsas at and for the year ended March 31, 2018 continuedIntegrated Report Management Review Statutory Reports Financial Statements 342
Vedanta Limited Integrated Report and Annual Accounts 2017-18
46 Share based payments continued
Effect of the above employee share-based payment plans on the statement of profit and loss and on its financial position:
Particulars
Total Employee Compensation Cost pertaining to share-based payment plans
Compensation Cost pertaining to equity-settled employee share-based payment plan included above
Compensation Cost pertaining to cash-settled employee share-based payment plan included above
(` in Crore)
March 31,
2018
March 31,
2017
-
-
-
21
16
5
Volatility is the measure of the amount by which the price has fluctuated or is expected to fluctuate during the period. The measure of
volatility used in Black-Scholes option-pricing model is the annualized standard deviation of the continuously compounded rates of return
on the stock over a period of time. Time to maturity /expected life of options is the period for which the Company expects the options to
be live. Time to maturity has been calculated as an average of the minimum and maximum life of the options.
Employee share option plan of Vedanta Resources Plc
The value of shares that are awarded to members of the Group is calculated by reference to the individual fixed salary and share-based
remuneration consistent with local market practice. ESOP scheme of VRPLC is both tenure and performance based share schemes. The
options are indexed to and settled by Parent’s shares (Vedanta Resources Plc shares as defined in the scheme). The options have a fixed
exercise price denominated in Parent’s functional currency (10 US cents per share), the performance period of each option is three years
and is exercisable within a period of six months from the date of vesting beyond which the option lapses.
Amount recovered by the Parent and recognized by the Company in the Consolidated Statement of Profit and Loss for the year ended
March 31, 2018 is ` 53 Crore (March 31, 2017: ` 63 Crore). The Company considers these amounts as not material and accordingly has not
provided further disclosures.
The Group has awarded certain cash settled share based options indexed to Parents’ shares(Vedanta Resources Plc shares) and shares of
any of its subsidiaries. The total expense recognised on account of cash settled share based plan during the year ended March 31, 2018 is
` 22 Crore and the carrying value of cash settled share based compensation liability as at March 31, 2018 is ` 22 Crore.
Out of the total expense of ` 100 Crore pertaining to equity settled options for the year ended March 31, 2018, the Group has capitalised
` 4 Crore expense for the year ended March 31, 2018.
47 Employee Benefit Plans
a) Defined contribution plans
The Group contributed a total of ` 60 Crore and ` 84 Crore for the year ended March 31, 2018 and March 31, 2017 respectively to the
following defined contribution plans.
Particulars
Employer’s contribution to Provident fund and family pension fund
Employer’s contribution to superannuation
(` in Crore)
Year ended
March 31,
2018
Year ended
March 31,
2017
46
14
60
63
21
84
Central provident fund and family pension fund
In accordance with the Indian ‘The Employees Provident 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 2018
and 2017) 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
statement of profit and loss in the period they are incurred. Where the contributions are made to independently managed and approved funds,
shortfall in actual return, if any, from the return guaranteed by the State are made by the employer, these are accounted for as defined benefit
plans.There is no such shortfall in the actual return for independently managed funds for the year ended March 31, 2018 and March 31, 2017.
Having regard to the assets of the fund and the return on the investments, the Group does not expect any deficiency in the foreseeable future.
The benefits are paid to employees on their retirement or resignation from the Group.
Superannuation
Superannuation, another pension scheme applicable in India, is applicable only to senior executives. Vedanta Limited and each relevant
Indian subsidiary holds a policy with 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 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 statement of profit
and loss in the period they are incurred.
Australian pension scheme
The Group also participates in defined contribution superannuation schemes in Australia. The contribution of a proportion of an employee’s
salary in a superannuation fund is a legal requirement in Australia. The employer contributes, into the employee’s fund of choice, 9.50% of
an employee’s gross remuneration where the employee is covered by an industrial agreement and 12.50% of the basic remuneration for all
Notes forming part of the Consolidated Financial Statementsas at and for the year ended March 31, 2018 continued Vedanta Limited Integrated Report and Annual Accounts 2017-18
343
47 Employee Benefit Plans continued
other employees. All employees have the 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 statement of profit and loss in the period 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
Group 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%.
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.
Black Mountain (Pty) Limited, South Africa Pension and Provident Funds
BMM has two retirement funds, both administered by Alexander Forbes, a registered financial service provider. Both funds form part of the
Alexander Forbes umbrella fund and are defined contribution funds. The purpose of the funds is to provide retirement and death benefits
to all eligible employees. Both the fund plans are defined contribution schemes for its employees and amount of contribution paid or
payable during the year is charged to profit or loss. Group contributes at a fixed percentage of 10.5% for up to supervisor grade and 15%
for others.
Lisheen Mine, Ireland Pension Funds
Lisheen participates in a defined contribution pension scheme for all employees. The plan requires Lisheen to contribute 5% of annual
basic salary of the employee and the employee is required to also contribute 5% of their annual basic salary. Under the terms of the
executive scheme a contribution of 15% each is made by Lisheen and by the individual. Employees may also make additional voluntary
contributions subject to certain limits. The Lisheen’s contribution will continue until an employee terminates employment or reaches the
retirement age of 65, whichever happens first.
b) Defined benefit plans
Contribution to provident fund trust (the “trusts”) of Iron ore division, BALCO, HZL, SRL and SMCL
The provident funds of Iron ore division, BALCO, HZL, SRL and SMCL are exempted under section 17 of The Employees Provident Fund
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 Ind AS 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 of March 31, 2018 and March
31, 2017. Having regard to the assets of the fund and the return in the investments, the Group does not expect any deficiency in the
foreseeable future.
The Group contributed a total of ` 63 Crore for the year ended March 31, 2018 and ` 63 Crore for the year ended March 31, 2017 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
summarised below.
Particulars
Fair value of plan assets of trusts
Present value of defined benefit obligations of trusts
Net liability arising from defined benefit obligation
Percentage allocation of plan assets of the trust
Assets by Category
Government Securities
Debentures / bonds
Equity
Fixed deposits
As at
March 31,
2018
1,514
(1,469)
(` in Crore)
As at
March 31,
2017
1,334
(1,311)
Nil
Nil
(` in Crore)
As at
March 31,
2018
As at
March 31,
2017
77.17%
71.10%
28.04% 22.59%
0.62%
0.24%
-
0.24%
Post-Retirement Medical Benefits:
The scheme is framed with a view to provide medical benefits to the regular employees of Balco and BMM and their spouses subsequent
to their retirement on completion of tenure including retirement on medical grounds and voluntary retirement on contributory basis:
Notes forming part of the Consolidated Financial Statementsas at and for the year ended March 31, 2018 continuedIntegrated Report Management Review Statutory Reports Financial Statements 344
Vedanta Limited Integrated Report and Annual Accounts 2017-18
47 Employee Benefit Plans continued
Principal actuarial assumptions
Principal actuarial assumptions used to determine the present value of the defined benefit obligation are as follows:
Particulars
Discount rate
Expected rate of increase in compensation level of covered employees
In service mortality
Post retirement mortality
Year ended
March 31, 2018
Year ended
March 31, 2017
7.6% to 10%
5% to 10%
IALM (2006-08)
LIC (1996-98)
Ultimate
7.6% to 10%
5% to 10%
IALM (2006-08)
LIC (1996-98)
Ultimate
Amounts recognised in Statement of Profit or Loss in respect of defined benefit plan are as follows:
Particulars
Current service cost
Net Interest cost
Components of defined benefit costs recognised in profit or loss
Amounts recognised in other comprehensive income in respect of defined benefit Plan are as follows:
Particulars
Remeasurement of the net defined benefit obligation:-
Actuarial losses / (gains) arising from changes in assumptions
Components of defined benefit costs recognised in Other comprehensive income
The movement in the present value of the defined benefit obligation is as follows:
Particulars
Opening balance
Current service cost
Interest cost
Actuarial losses/(gains) arising from changes in financial assumptions
Benefits paid
Foreign currency translation
Closing balance
(` in Crore)
Year ended
March 31,
2018
Year ended
March 31,
2017
1
6
7
1
5
6
(` in Crore)
Year ended
March 31,
2018
Year ended
March 31,
2017
(4)
(4)
1
1
(` in Crore)
Year ended
March 31,
2018
Year ended
March 31,
2017
61
1
6
(4)
(2)
4
66
54
1
5
1
(2)
2
61
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.
Based on actuarial valuations conducted as at year end, a provision is recognised in full for the benefit obligation over and above the funds
held in the Gratuity Plan. In case where there is no Gratuity Plan, full provision is recognised in the consolidated balance sheet.
The iron ore division of the Company, HZL and Cairn have constituted a trust recognized by Income Tax Authorities for gratuity to
employees and contributions to the trust are funded with Life Insurance Corporation of India (LIC), ICICI Prudential Life Insurance
Company Limited and HDFC Standard Life Insurance.
Notes forming part of the Consolidated Financial Statementsas at and for the year ended March 31, 2018 continued Vedanta Limited Integrated Report and Annual Accounts 2017-18
345
47 Employee Benefit Plans continued
Principal actuarial assumptions
Principal actuarial assumptions used to determine the present value of the defined benefit obligation are as follows:
Particulars
Discount rate
Expected rate of increase in compensation level of covered employees
Mortality table
Amount recognised in the balance sheet consists of:
Particulars
Fair value of plan assets
Present value of defined benefit obligations
Net liability arising from defined benefit obligation
Amounts recognised in profit or loss in respect of defined benefit pension schemes are as follows:
Particulars
Current service cost
Past service cost (Refer note 36)
Interest cost
Components of defined benefit costs recognised in profit or loss
Amounts recognised in other comprehensive income in respect of defined benefit pension scheme are as follows:
Particulars
Re-measurement of the net defined benefit obligation:-
Actuarial losses / (gains) arising from changes in financial assumptions
Actuarial losses / (gains) arising from experience adjustments
(Gain)/Loss on plan assets (excluding amounts included in net interest cost)
Components of defined benefit costs recognised in Other comprehensive income
The movement of the present value of the defined benefit obligation is as follows:
Particulars
Opening balance
Current service cost
Past service cost
Benefits paid
Interest cost
Actuarial losses/(gains) arising from changes in financial assumptions
Actuarial losses/(gains) arising from experience adjustment
Closing balance
Year ended
March 31,
2018
Year ended
March 31,
2017
7.70%
7.72%
2%-15% 3%-15%
IALM
(2006-08)
IALM
(2006-08)
(` in Crore)
As at
March 31,
2018
As at
March 31,
2017
339
(546)
(207)
322
(450)
(128)
(` in Crore)
Year ended
March 31,
2018
Year ended
March 31,
2017
33
82
10
125
28
-
10
38
(` in Crore)
Year ended
March 31,
2018
Year ended
March 31,
2017
2
(6)
1
(3)
(1)
4
-
3
(` in Crore)
Year ended
March 31,
2018
Year ended
March 31,
2017
450
33
82
(49)
34
2
(6)
546
427
28
-
(42)
34
(1)
4
450
Notes forming part of the Consolidated Financial Statementsas at and for the year ended March 31, 2018 continuedIntegrated Report Management Review Statutory Reports Financial Statements 346
Vedanta Limited Integrated Report and Annual Accounts 2017-18
47 Employee Benefit Plans continued
The movement in the fair value of plan assets is as follows:
Particulars
Opening balance
Contributions received
Benefits paid
Re-measurement gain/(loss) arising from return on plan assets
Interest income
Closing balance
(` in Crore)
Year ended
March 31,
2018
Year ended
March 31,
2017
322
32
(38)
(1)
24
339
290
45
(38)
-
25
322
The above plan assets have been invested in the qualified insurance policies.
The actual return on plan assets was ` 23 Crore for the year ended March 31, 2018 and ` 25 Crore for the year ended March 31, 2017.
The weighted average duration of the defined benefit obligation is 14.6 years and 12.7 years as at March 31, 2018 and March 31, 2017
respectively.
The Company expects to contribute ` 53 Crore to the funded defined benefit plans in fiscal year 2019.
Sensitivity analysis
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 the reporting period while holding all other
assumptions constant.
Particulars
Discount rate
Increase by 0.50%
Decrease by 0.50%
Expected rate of increase in compensation level of covered employees
Increase by 0.50%
Decrease by 0.50%
(` in Crore)
Year ended
March 31,
2018
Year ended
March 31,
2017
(17)
17
15
(14)
(15)
16
14
(14)
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 balance sheet.
Risk analysis
Group is exposed to a number of risks in the defined benefit plans. Most significant risks pertaining to defined benefit 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 Life Insurance Corporation of India (LIC), ICICI Prudential Life (ICICI) and HDFC
Standard Life. Group does not have any liberty to manage the fund provided to LIC, ICICI prudential and HDFC Standard Life.
The present value of the defined benefit plan liability is calculated using a discount rate determined by reference to Government of India
bonds for 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 plan liability.
Longevity risk / Life expectancy
The present value of the defined benefit plan liability 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 liability.
Salary growth risk
The present value of the defined benefit plan liability is calculated by reference to the future salaries of plan participants. An increase in the
salary of the plan participants will increase the plan liability.
Notes forming part of the Consolidated Financial Statementsas at and for the year ended March 31, 2018 continued
Vedanta Limited Integrated Report and Annual Accounts 2017-18
347
48 Interest in other entities
a) Subsidiaries
The Group consists of a parent company, Vedanta Limited, incorporated in India and a number of subsidiaries held directly and indirectly
by the Group which operate and are incorporated around the world. Following are the details of shareholdings in the subsidiaries.
S. No Name of the Company
1
2
Copper Mines of Tasmania Pty Limited
("CMT")
Thalanga Copper Mines Pty Limited
("TCM")
Principal activities
Copper mining
Immediate holding company
Country of
Incorporation
Ownership interest
held by the Group (%)
As at
March 31,
2018
As at
March 31,
2017
Monte Cello B.V.
Australia
100.00
100.00
Copper mining
Monte Cello B.V.
Australia
100.00
100.00
3 Monte Cello B.V. (“MCBV”)
Investment company
Vedanta Limited
Netherland
100.00
100.00
4
5
6
Bharat Aluminium Company Limited
("BALCO")
Aluminium mining and
smelting
Vedanta Limited
India
51.00
51.00
Talwandi Sabo Power Limited ("TSPL")
Power generation
Vedanta Limited
Sterlite (USA) Inc.
Investment company
Vedanta Limited
7 Hindustan Zinc Limited ("HZL")
Zinc mining and smelting
Vedanta Limited
India
USA
India
100.00
100.00
100.00
100.00
64.92
64.92
8
9
Fujairah Gold FZC 1
Gold & Silver processing
Malco Energy Limited UAE
100.00
100.00
THL Zinc Ventures Ltd
Investment company
Vedanta Limited
Mauritius
100.00
100.00
10 THL Zinc Ltd
Investment company
THL Zinc Ventures Ltd Mauritius
100.00
100.00
11
THL Zinc Holding B.V.
Investment company
Vedanta Limited
Netherland
100.00
100.00
12 THL Zinc Namibia Holdings
(Proprietary) Limited (“VNHL”)
Investment company
THL Zinc Ltd
Namibia
100.00
100.00
13 Skorpion Zinc (Proprietary) Limited
Investment company
THL Zinc Namibia
Holdings (Proprietary)
Limited
Namibia
100.00
100.00
14 Skorpion Mining Company (Proprietary)
Limited
Exploration, development,
production and sale of zinc ore
Skorpion Zinc
(Proprietary) Limited
Namibia
100.00
100.00
15 Namzinc (Proprietary) Limited
Owns and operates a
Zinc refinery
16 Amica Guesthouse (Proprietary) Limited Accommodation and catering
17 Rosh Pinah Healthcare (Proprietary)
Limited
18 Black Mountain Mining (Proprietary)
Limited ("BMM")
services
Leasing out of medical
equipment and building and
conducting services related
thereto
Exploration, development,
production and sale of zinc,
lead, copper and associated
mineral concentrates
Skorpion Zinc
(Proprietary) Limited
Skorpion Zinc
(Proprietary) Limited
Skorpion Zinc
(Proprietary) Limited
Namibia
100.00
100.00
Namibia
100.00
100.00
Namibia
69.00
69.00
THL Zinc Ltd
South Africa
74.00
74.00
19 Vedanta Lisheen Holdings Limited
Investment company
THL Zinc Holing B.V.
Ireland
100.00
100.00
20 Vedanta Lisheen Mining Limited
Zinc and lead mining
21 Killoran Lisheen Mining Limited
Zinc and lead mining
Vedanta Lisheen
Holdings Limited
Vedanta Lisheen
Holdings Limited
Ireland
100.00
100.00
Ireland
100.00
100.00
22 Lisheen Milling Limited
Production of zinc and lead
concentrates
Vedanta Lisheen
Holdings Limited
Ireland
100.00
100.00
23 Killoran Lisheen Finance Limited
Investment company
24 Vedanta Exploration Ireland Limited
Exploration company
25 Sterlite Ports Limited
Infrastructure
26 Vizag General Cargo Berth Private
Infrastructure
Limited
Vedanta Lisheen
Holdings Limited
Vedanta Lisheen
Holdings Limited
Vedanta Limited
Vedanta Limited
Ireland
100.00
100.00
Ireland
100.00
100.00
India
India
100.00
100.00
100.00
100.00
27 Paradip Multi Cargo Berth Private
Infrastructure
Vedanta Limited
India
100.00
100.00
Limited
Notes forming part of the Consolidated Financial Statementsas at and for the year ended March 31, 2018 continuedIntegrated Report Management Review Statutory Reports Financial Statements 348
Vedanta Limited Integrated Report and Annual Accounts 2017-18
48 Interest in other entities continued
S. No Name of the Company
Principal activities
Immediate holding company
Ownership interest
held by the Group (%)
As at
March 31,
2018
As at
March 31,
2017
Country of
Incorporation
28 Maritime Ventures Private Limited
Infrastructure
Sterlite Ports Limited
India
100.00
100.00
29 Lakomasko B.V.
Investment company
THL Zinc Holding B.V. Netherland
100.00
100.00
30 Malco Energy Limited ("MEL")
Power generation
31 Sesa Resources Limited ("SRL")
Iron ore mining
32 Sesa Mining Corporation Limited
Iron ore mining
Vedanta Limited
Vedanta Limited
Sesa Resources
Limited
India
India
India
100.00
100.00
100.00
100.00
100.00
100.00
33 Goa Sea Ports Private Limited 2
Infrastructure
Sterlite Ports Limited
India
100.00
100.00
34 Western Cluster Limited
Iron ore mining
35 Twin Star Mauritius Holdings Limited
Investment Company
("TMHL") *
36 Twin Star Energy Holdings Limited
Investment Company
("TEHL") *
37 Bloom Fountain Limited
Bloom Fountain
Limited
Twin Star Energy
Holdings Limited
Bloom Fountain
Limited
Liberia
100.00
100.00
Mauritius
100.00
100.00
Mauritius
100.00
100.00
Operating (Iron ore) and
Investment Company
Vedanta Limited
Mauritius
100.00
100.00
38 Cairn India Holdings Limited 3
Investment company
Vedanta Limited
Jersey
100.00
100.00
39 Cairn Energy Hydrocarbons Limited
40 Cairn Exploration (No. 2) Limited
41 Cairn Energy Gujarat Block 1 Limited
42 Cairn Energy Discovery Limited
43 Cairn Energy India Pty Limited
Oil and gas exploration,
development and production
Cairn India Holdings
Limited
Oil and gas exploration,
development and production
Cairn India Holdings
Limited
Oil and gas exploration,
development and production
Cairn India Holdings
Limited
Oil and gas exploration,
development and production
Cairn India Holdings
Limited
Oil and gas exploration,
development and production
Cairn India Holdings
Limited
44 CIG Mauritius Holdings Private Limited
Investment Company
45 CIG Mauritius Private Limited
Investment Company
Cairn Energy
Hydrocarbons Limited
CIG Mauritius
Holdings Private
Limited
Scotland**
100.00
100.00
Scotland
100.00
100.00
Scotland
100.00
100.00
Scotland
100.00
100.00
Australia
100.00
100.00
Mauritius
100.00
100.00
Mauritius
100.00
100.00
46 Cairn Lanka Private Limited
47 Cairn South Africa Pty Limited
Oil and gas exploration,
development and production
CIG Mauritius Private
Limited
Oil and gas exploration,
development and production
Cairn Energy
Hydrocarbons Limited
Sri Lanka
100.00
100.00
South Africa
100.00
100.00
48 Sesa Sterlite Mauritius
Holdings Limited *
Investment Company
Bloom Fountain
Limited
Mauritius
100.00
100.00
49 Avanstrate (Japan) Inc. (‘ASI’)***
Manufacturer of LCD glass
substrate
Cairn India Holdings
Limited
Japan
51.63
50 Avanstrate Korea***
51 Avanstrate Taiwan***
Manufacturer of LCD glass
substrate
AvanStrate
(Japan) Inc.
Manufacturer of LCD glass
substrate
AvanStrate
(Japan) Inc.
South Korea
51.63
Taiwan
51.63
-
-
-
*Under liquidation **Principal place of business is in India ***Purchased during the current year (Refer note 4 (II))
1 Pursuant to transfer of holding in Fujairah Gold from TCM and CMT to MEL in July 2016
2 Goa Sea Port Private Limited incorporated on 5th July, 2016 as a 100% subsidiary of Sterlite Ports Limited (SPL)
3 Cairn India Limited merged with Vedanta Limited. Post merger Cairn India Holdings Limited became direct subsidiary of Vedanta
Limited (Refer note 4 (I)).
4 The Group also has interest in certain trust which are neither significant nor material to the Group.
5 Subsequent to the balance sheet date, Vedanta Star Limited, a 100% subsidiary of Vedanta Limited was incorporated on April 23, 2018.
Notes forming part of the Consolidated Financial Statementsas at and for the year ended March 31, 2018 continued Vedanta Limited Integrated Report and Annual Accounts 2017-18
349
48 Interest in other entities continued
b) Non-controlling interests (NCI)
The Non-controlling interests that are material to the Group relate to Hindustan Zinc Limited (HZL) and Bharat Aluminium Company
Limited (“BALCO”).
As at March 31, 2018 NCIs hold an economic interest by virtue of their shareholding of 35.08%, 49.00%, 26.00% and 48.37% in HZL,
BALCO, BMM and ASI , respectively and as at March 31, 2017 NCIs hold an economic interest by virtue of their shareholding of 35.08%,
49.00% and 26.00% in HZL, BALCO and BMM respectively.
The principal place of business of HZL and BALCO is in India, that of BMM is in South Africa and that of Avanstrate (Japan) Inc. is in Japan,
South Korea and Taiwan
The table below shows summarized financial information of subsidiaries of the Group that have non-controlling interests.
Particulars
Non-current assets
Current assets
Non-current liabilities
Current liabilities
Equity attributable to owners of the Group
Non-controlling interests*
(` in Crore)
As at March 31, 2018
HZL
BALCO
Others
Total
19,401
24,145
1,062
6,004
23,683
12,797
13,110
2,023
4,941
4,982
2,657
2,553
5,830
938
4,037
475
1,688
607
38,341
27,106
10,040
11,461
28,028
15,957
*` 37 Crore loss attributable to NCI of ASI transferred to put option liability. Refer note 4 (II) & 22.
Particulars
Non-current assets
Current assets
Non-current liabilities
Current liabilities
Equity attributable to owners of the Group
Non-controlling interests
Particulars
Revenue
Profit after tax for the year
Profit attributable to the equity shareholders of the Company
Profit attributable to the non-controlling interests
Other comprehensive income during the year
Other comprehensive income attributable to the equity shareholders of the
Company
Other comprehensive income attributable to non-controlling interests
Total comprehensive income during the year
Total comprehensive income attributable to the equity shareholders of the
Company
Total comprehensive income attributable to non-controlling interests
Dividends paid/payable to non-controlling interests, including dividend tax
Net cash inflow from operating activities
Net cash inflow/(outflow) from investing activities
Net cash inflow/(outflow) from financing activities
Net cash (outflow)
*Refer note 4 (II) for acquisition of ASI
As at March 31, 2017
HZL
BALCO
Others
Total
(` in Crore)
17,798
34,606
828
20,230
20,349
10,997
13,523
1,152
3,898
5,659
2,610
2,508
2,148
619
645
495
1,204
423
33,469
36,377
5,371
26,384
24,163
13,928
For the year ended March 31, 2018
Cairn**
HZL
BALCO
Others*
Total
(` in Crore)
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
24,272
9,282
6,026
3,256
(80)
(52)
(28)
9,202
5,974
3,228
1,428
9,837
2,396
(18,649)
(6,416)
9,028
38
19
19
54
28
26
92
47
45
-
744
(200)
(549)
(5)
1,842
363
288
75
272
202
70
635
490
145
-
632
(1,230)
381
(217)
35,142
9,683
6,333
3,350
246
178
68
9,929
6,511
3,418
1,428
11,213
966
(18,817)
(6,638)
Notes forming part of the Consolidated Financial Statementsas at and for the year ended March 31, 2018 continuedIntegrated Report Management Review Statutory Reports Financial Statements 350
Vedanta Limited Integrated Report and Annual Accounts 2017-18
48 Interest in other entities continued
Particulars
Revenue
Profit after tax for the year
Profit attributable to the equity shareholders of the Company
Profit attributable to the non-controlling interests
Other comprehensive income during the year
Other comprehensive income attributable to the equity shareholders of the
Company
Other comprehensive income attributable to non-controlling interests
Total comprehensive income during the year
Total comprehensive income attributable to the equity shareholders of the
Company
Total comprehensive income attributable to non-controlling interests
Dividends paid/payable to non-controlling interests, including dividend tax
Net cash inflow from operating activities
Net cash inflow/(outflow) from investing activities
Net cash outflow from financing activities
Net cash inflow / (outflow)
** Refer note 4 (I) for merger of Cairn India
For the year ended March 31, 2017
Cairn**
HZL
BALCO
Others*
Total
(` in Crore)
10,578
2,977
1,782
1,195
(705)
(422)
(283)
2,272
1,360
912
271
5,597
(5,622)
(637)
(662)
21,204
8,726
5,665
3,061
55
36
19
8,781
5,701
3,080
5,244
7,577
3,816
(11,255)
138
6,330
122
62
60
(23)
(12)
(11)
99
50
49
-
1,225
(508)
(718)
(1)
868
161
119
42
111
83
28
273
203
70
-
579
(391)
(44)
144
38,980
11,986
7,628
4,358
(562)
(315)
(247)
11,425
7,314
4,111
5,515
14,978
(2,705)
(12,654)
(381)
(` in Crore)
The effect of changes in ownership interests in subsidiaries that did not result in a loss of control is as follows:
Particulars
Changes in NCI(1)
(1) Refer note 4 (II) for acquisition of ASI
Particulars
Changes in NCI(2)
For the year ended March 31, 2018
HZL
BALCO
Others
Total
-
-
2
2
For the year ended March 31, 2017
Cairn
HZL
BALCO
Others
Total
(21,229)
-
-
-
(21,229)
(` in Crore)
(2) Change in non-controlling interests due to merger of Cairn India Limited with Vedanta Limited (Refer note 4 (I))
c) Joint operations
The Group participates in several unincorporated joint operations which involve the joint control of assets used in oil and gas exploration
and producing activities which are as follows:
Particulars
Area
Operating Blocks
Ravva block
CB-OS/2 – Exploration
CB-OS/2 - Development & production
RJ-ON-90/1 – Exploration
RJ-ON-90/1 – Development & production
KG-OSN-2009/3
South Africa Block1
Relinquished block
PR-OSN-2004/1 (1)
Non-Operating Blocks
KG-ONN-2003/1 (2)
Krishna Godavari
Cambay Offshore
Cambay Offshore
Rajasthan Onshore
Rajasthan Onshore
Krishna Godavari Offshore
Orange Basin South Africa Offshore
Palar Basin Offshore
-
35.00
Krishna Godavari Onshore
49.00
49.00
(%) Participating Interest
As at March
31, 2018
As at March
31, 2017
22.50
60.00
40.00
100.00
70.00
100.00
60.00
22.50
60.00
40.00
100.00
70.00
100.00
60.00
(1) Relinquished in June 30, 2017
(2) Operatorship has been transferred to Oil and Natural Gas Corporation (ONGC) w.e.f. July 7, 2014
d) Interest in associates and joint ventures
Set out below are the associates and joint ventures of the group as at March 31, 2018 which, in the opinion of the management, are not
material to the group. The country of incorporation or registration is also their principal place of business, and the proportion of ownership
interest is the same as the proportion of voting rights held.
Notes forming part of the Consolidated Financial Statementsas at and for the year ended March 31, 2018 continued
Vedanta Limited Integrated Report and Annual Accounts 2017-18
351
48 Interest in other entities continued
S. No. Associates and other entities
Country of incorporation
Associates
RoshSkor Township (Proprietary) Limited
1
2 Gaurav Overseas Private Limited
1
Other entities
Lisheen Mine Partnership [50% each held by Killoran
Lisheen Mining Limited & Vedanta Lisheen Mining
Limited]
Namibia
India
Ireland
S.
No. Jointly controlled entities
Country of incorporation
Rampia Coal Mines and Energy Private Limited
1
2 Madanpur South Coal Company Limited
3 Goa Maritime Private Limited
India
India
India
% Ownership interest
As at
March 31,
2018
As at
March 31,
2017
50.00
50.00
50.00
50.00
100.00
100.00
% Ownership interest
As at
March 31,
2018
As at
March 31,
2017
17.39
18.05
50.00
17.39
18.05
50.00
49 Commitments, contingencies and guarantees
A) Contingent Liabilities
a) 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 in August, September and October
2006 to HZL, totalling ` 334 Crore as at March 31, 2018 and March 31, 2017. These notices alleged 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. 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. HZL had filed appeals (writ petitions) in the High Court of Rajasthan in Jodhpur. The High Court
restrained the Department of Mines and Geology from undertaking any coercive measures to recover the penalty. Central Government
has also been made a party to the case and matter is likely to be listed now for hearing after completion of pleadings by the Central
Government.
b) Erstwhile Cairn India Limited : Income tax
In March 2014, erstwhile Cairn India Limited (referred to as ‘Cairn India’) received a show cause notice from the Indian Tax Authorities (“Tax
Authorities”) for not deducting withholding tax on the payments made to Cairn UK Holdings Limited (“CUHL”), for acquiring shares of Cairn
India Holdings Limited (“CIHL”), as part of their internal reorganisation. Tax Authorities have stated in the notice that a short-term capital
gain has accrued to CUHL on transfer of the shares of CIHL to Cairn India, in the financial year 2006-2007, on which tax should have been
withheld by Cairn India. Pursuant to this various replies were filed with the tax authorities.
Cairn India also filed a writ petition before the Delhi High Court wherein it has raised several points for assailing the aforementioned
Income tax Authority’s order. The matter is next listed for hearing on July 06, 2018 before the Honourable Delhi High Court.
After several hearings, the Income Tax Authority, in March 2015, issued an order holding Cairn India as ‘assessee in default’ and raised a
demand totalling ` 20,495 Crore (including interest of ` 10,247 Crore). Cairn India had filed an appeal before the First Appellate Authority,
Commissioner of Income Tax (Appeals) which vide order dated July 03, 2017 confirmed the tax demand against Cairn India. Cairn India
has challenged the Commissioner of Income Tax (Appeals) order before Income Tax Appellate Tribunal (ITAT).
Separately CUHL, on whom the primary liability of tax lies has received an Order from the ITAT holding that the transaction is taxable in view
of the clarification made in the Act but also acknowledged that being a retrospective transaction, interest would not be levied. Hence affirming
a demand of ` 10,248 Crore excluding the interest portion that had previously been claimed. The Department is appealing this order.
As a result of the above order from ITAT, the Group now considers the risk in respect of the interest portion of claim to be remote. Further,
as per the recent attachment notice received from the Tax Recovery Officer appointed for CUHL, the tax officer has adjusted the dividend
of ` 667 Crore which was due to CUHL and was recovered by the Tax department. Vedanta Limited has further remitted additional
dividend of ` 442 Crore further reducing the principal liability to ` 9,139 Crore. Accordingly, the Group has revised the contingent liability
to ` 9,139 Crore.
Additionally, the Tax department has initiated the process of selling the attached CUHL investment in equity and preference shares of
Vedanta Limited valuing ` 5,861 Crore based on the quoted price as at March 31, 2018.
In the event, the case is finally decided against Cairn India, the potential liability including interest would be ` 20,495 Crore.
Separately but in connection with this litigation, Vedanta Resources Plc has filed a Notice of Claim against the Government of India (‘GOI’)
under the UK India Bilateral Investment Treaty (the “BIT”). The International arbitration Tribunal recently passed favourable order on
jurisdiction and now the matter would be heard on merits – hearing scheduled in April-May 2019. The Government of India has challenged
jurisdiction order of Arbitration Tribunal before the High court of Singapore.
Notes forming part of the Consolidated Financial Statementsas at and for the year ended March 31, 2018 continuedIntegrated Report Management Review Statutory Reports Financial Statements
352
Vedanta Limited Integrated Report and Annual Accounts 2017-18
49 Commitments, contingencies and guarantees continued
c) Vedanta Limited: contractor claim
Shenzhen Shandong Nuclear Power Construction Co. Limited (‘SSNP’) subsequent to terminating the EPC contract invoked arbitration as
per the contract alleging non-payment of their dues towards construction of a 210 MW co-generation power plant for the 6 MTPA
expansion project, and filed a claim of ` 1,642 Crore. SSNP also filed a petition under Section 9 of the Arbitration and Conciliation Act,
1996 before the Bombay High Court requesting for interim relief. The Bombay High Court initially dismissed their petition, but on a further
appeal by SSNP, the Division Bench of the Bombay High Court directed Vedanta Limited to deposit a bank guarantee for an amount of
` 187 Crore as a security, being a prima facie representation of the claim, until arbitration proceedings are completed. Vedanta Limited has
deposited a bank guarantee of an equivalent amount. Based on the assessment, the Company had booked the liability for ` 200 Crore in
earlier years.
On November 09, 2017, the Arbitral Tribunal has pronounced the award in favor of SSNP for ` 221 Crore along with the interest and cost of
` 118 Crore (@ 9% p.a. from date of filing petition, i.e. April 18, 2012). The amount is payable subject to SSNP handing over all the drawings
to the Company. Given the Company was already carrying a part provision it recognized additional liability of ` 139 Crore including interest
and cost making the total liability towards SSNP as ` 339 Crore. The additional amount recognized in the income statement includes ` 113
Crore which has been presented under exceptional items.
The Company has challenged the award under section 34 of The Arbitration and Conciliation Act, 1996, which was dismissed.
Subsequently, the Company has filed an appeal under section 37 of The Arbitration and Conciliation Act, 1996 with the Delhi High Court.
The Court has granted a stay subject to deposit of the award amount, which has been complied by the Company. The hearing on the
arguments in the matter have been completed and the matter has now been reserved for orders.
d) Ravva joint venture arbitration proceedings: ONGC Carry
Erstwhile Cairn India Limited (referred to as ‘Cairn India’) is involved in a dispute against the Government of India (GOI) relating to the
recovery of contractual costs in terms of calculation of payments that the contractor party were required to make in connection with the
Ravva field.
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 whereas four other issues were decided in favour of 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 which adjudicated the matter on October 11, 2011, upheld the Partial Award. Per the decision of
the Arbitral Tribunal, the contractor parties and GOI were required to arrive at a quantification of the sums relatable to each of the issues
under the Partial Award.
Pursuant to the decision of the Federal Court, the contractor parties approached the Ministry of Petroleum and Natural Gas (“MoPNG”) to
implement the Partial Award while reconciling the statement of accounts as outlined in the Partial Award.
However, MoPNG on July 10, 2014 proceeded to issue a Show Cause Notice alleging that since the partial award has not been enforced,
the profit petroleum share of GOI has been short-paid. MoPNG threatened to recover the amount from the sale proceeds payable by the
oil marketing companies to the contractor parties. The contractor party replied to the show cause notice taking various legal contentions.
As the Partial Award did not quantify the sums, therefore, contractor parties approached the same Arbitral 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 Cairn India’s favour. GOI’s challenge of the Final Award was dismissed by the Malaysian High Court. GOI has challenged
the decision before the Court of Appeal, the procedural hearing for which is scheduled on August 30, 2018. Further, Cairn India has also
filed for the enforcement of the Partial Award and Final Award with Delhi High Court which is scheduled to be heard on September 04,
2018. While Cairn India does not believe the GOI will be successful in its challenge, if the Arbitral Award is reversed and such reversal is
binding, Cairn India could be liable for approximately ` 416 Crore plus interest as at March 31, 2018 (March 31, 2017: ` 416 Crore plus
interest).
e) Proceedings related to the imposition of entry tax
The Company along with its 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.
Post some contradictory orders of High Courts across India adjudicating on similar challenges, the Supreme Court referred the matters to
a nine judge bench. Post 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 regular
bench of Supreme Court. Following the order of the Supreme Court, the Group filed writ petitions in respective High Courts.
On October 09, 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 parri-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.
Notes forming part of the Consolidated Financial Statementsas at and for the year ended March 31, 2018 continued Vedanta Limited Integrated Report and Annual Accounts 2017-18
353
49 Commitments, contingencies and guarantees continued
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 an SEZ based on the definition of ‘local
area’ under the Odisha Entry Tax Act which is very clear and does not include an SEZ. In addition, the Government of Odisha further
through its SEZ Policy 2015 and the operational guidelines for administration of this policy dated August 22, 2016, exempted the entry tax
levy on SEZ operations.
The total claims against Vedanta Limited and its subsidiaries are ` 1,255 Crore (March 31, 2017: ` 1,127 Crore) net of provisions made.
f) Talwandi Sabo Power Limited (TSPL) : Proceedings related to claim for liquidated damages
TSPL entered into a long term PPA with PSPCL for the supply of power. Due to delays in the fulfilment of certain obligations by PSPCL as
per the PPA and force majeure events, there was a delay in completion of the project as per the PPA timelines. TSPL has received notices
of claims from PSPCL seeking payment of Liquidated damages (LD) for delay in commissioning of Unit I, II and III totalling to ` 952 Crore as
at March 31, 2018 and March 31, 2017.
During the financial year 2014-15, PSPCL had invoked the Performance Bank Guarantee (PBG) of ` 150 Crore to recover the LD on account
of delay in Commercial Operation Date (COD). Against the PBG invocation, stay was granted by PSERC and this was later upheld by
APTEL as well. The matter was referred to Arbitration by a panel of three Arbitrators. The arbitration proceedings have concluded and the
order has been passed on September 18, 2017 in TSPL’s favour. The said claim of ` 952 Crore was part of contingent liability as at March
31, 2017. However pursuant to the order passed, the claim has been considered to be resolved with no exposure remaining for the
company. PSPCL has filed a Sec 34 Application challenging the award, which is to be listed on July 27, 2018.
g) 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
December 15, 2006 declared the provisions imposing ED Cess on CPPs as discriminatory and therefore ultra vires the Constitution. The
Group has sought refund of ED Cess paid till March 2006 amounting to ` 35 Crore.
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 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 Supreme Court. In case the Supreme Court overturns the decision of the High
Court, Balco would be liable to pay an additional amount of ` 655 Crore (March 31, 2017: ` 576 Crore) and the Group may have to bear a
charge of ` 690 Crore (March 31, 2017: ` 611 Crore).
h) South Africa Carry cost
As part of the farm-in agreement for Block 1, the Group was required to carry its joint venture partner, Petro SA, up to a gross expenditure
of US $ 100 million (approximately ` 650 Crore) as at March 31, 2018 and March 31, 2017 for a work program including 3D and 2D seismic
studies and at least one exploration well. The Group has spent US $ 38 million (approximately ` 246 Crore) towards exploration
expenditure and a minimum carry of US $ 63 million (approximately ` 404 Crore) (including drilling one well) was outstanding at the end of
the initial exploration period. The Group had sought an extension for execution of deed for entry into the second renewal phase of the
exploration period with a request to maintain status quo of the prior approvals due to uncertainty in the proposed changes in fiscal terms
impacting the Group financial interest in the block. The same was granted by the South African authority subject to risk of exploration right
getting expired on account of recent High Court judgements. After assessing past judicial precedents followed by independent legal
advice, the Group has provided for the requisite damages as applicable under the South African Regulations and obligation for the
aforesaid carry cost of US $ 63 million (approximately ` 404 Crore) as at March 31, 2018 and March 31, 2017 has been assessed as
possible and thus not provided for.
i) Miscellaneous disputes- Income tax
The Group is involved in various tax disputes amounting to ` 6,561 Crore (March 31, 2017: ` 6,335 Crore) relating to income tax. 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, tax holiday for undertakings
located in certain notified areas under section 80IC of the Income Tax Act, 1961, disallowance of tax holiday benefit for power plants
under section 80IA of the Income Tax Act, 1961, on account of depreciation disallowances, disallowance under section 14A of the Income
Tax Act and interest thereon which are pending at various appellate levels.
The Group believes that these disallowances are not tenable and accordingly no provision is considered necessary.
j) 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. 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 totals to ` 3,685 Crore
(March 31, 2017: ` 3,091 Crore)
The Group considers that it can take steps such that the risks can be mitigated and that there are no significant unprovided liabilities arising.
Except as described above from (a) to (j), there are no pending litigations which the Group believes could reasonably be expected to have a
material adverse effect on the results of operations, cash flow or the financial position of the Group.
Notes forming part of the Consolidated Financial Statementsas at and for the year ended March 31, 2018 continuedIntegrated Report Management Review Statutory Reports Financial Statements 354
Vedanta Limited Integrated Report and Annual Accounts 2017-18
49 Commitments, contingencies and guarantees continued
B Commitments
The Group has a number of continuing operational and financial commitments in the normal course of business including:
• exploratory mining commitments;
• oil & gas commitments;
• mining commitments arising under production sharing agreements; and
• completion of the construction of certain assets.
Estimated amount of contracts remaining to be executed on capital accounts and not provided for:
Particulars
Oil & Gas sector
Cairn India (now merged with the Company) and its subsidiaries
Aluminium sector
BALCO- Korba -II 325 KTPA Smelter and Korba 1200 MW power plant (4x300 MW)
Lanjigarh Refinery (Phase II) 5.0 MTPA
Jharsuguda 1.25MTPA smelter
Power sector
Jharsuguda 2400 mw Power Plant
Talwandi 1,980MW IPP
Zinc sector
Zinc India (mines expansion)
Gamsberg mining & milling project
Copper sector
Tuticorin Smelter 400 ktpa
Others
Total
Other Commitments
Particulars
(i) The Group has given corporate guarantees to regulatory authorities on behalf of Volcan Investments Limited
(ii) Customs duty bond taken for Project Import/ Export
(iii) The Group’s share of Joint Ventures' minimum exploration commitments as per the production sharing contracts
(iv) Export obligations against the import licenses taken for import of capital goods under the Export Promotion
Capital Goods Scheme and advance license. In the event of the Group’s inability to meet Export obligations, the
Group’s liability, reduced in proportion to actual exports. In addition, applicable interest would be payable.
As at
March 31,
2018
As at
March 31,
2017
4,304
124
221
1,335
491
326
1,368
791
98
-
213
3
1,984
1,057
1,554
1,335
2,758
25
12,273
1,411
6
7,131
As at
March 31,
2018
115
698
42
12,385
(` in Crore)
As at
March 31,
2017
115
439
19
14,336
(v) Power Division of the Group has signed a long term power purchase agreement (PPA) with Gridco Limited for supply of 25% of power
generated from the power station with additional right to purchase power at (5%/7%) at variable cost as per the conditions referred to in
PPA . The PPA has a tenure of twenty five years.
(vi) TSPL has signed a long term power purchase agreement (PPA) with Punjab State Power Corporation Limited (PSPCL) [formerly known
as Punjab State Electricity Board (PSEB)] for supply of power generated from the power plant. The PPA has tenure of twenty five years.
50 Segment Information
A) Description of segment and principal activities
The Group is a diversified natural resource 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 has a presence across India, South Africa,
Namibia, U.A.E, Ireland, Australia, Japan, South Korea, Taiwan and Liberia. The Group has seven reportable segments: copper, aluminium,
iron ore, power, Zinc India (comprises of zinc and lead India), Zinc international, oil and gas and others. The management of the Group is
organized by its main products: copper, Zinc (comprises of zinc and lead India, silver India and zinc international), aluminium, iron ore, oil
and gas, power and others. 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”).
Copper
The Group’s copper business is owned and operated by Vedanta Limited, Copper Mines of Tasmania Pty Ltd (“CMT”) and Fujairah Gold
FZC and is principally one of custom smelting. It includes a copper smelter, a refinery, a phosphoric acid plant, a sulphuric acid plant, a
copper rod plant and three captive power plants at Tuticorin in Southern India, and a refinery and two copper rod plants at Silvassa in
Western India. In addition, the Group owns and operates the Mt. Lyell copper mine in Tasmania, Australia through its subsidiary, CMT,
which provides a small percentage of the copper concentrate requirements (presently under care and maintenance), and a precious metal
refinery and copper rod plant in Fujairah through its subsidiary Fujairah Gold FZC in the UAE.
On April 09, 2018 the annual consent to operate (CTO) for Tuticorin plant under the Air and Water Acts for copper smelters in India was
rejected by the State Pollution Control Board for want of further clarification and consequently the operations have presently been
suspended. The matter is presently pending in Tribunal. (Refer note 3 (aa)(1)(xi))
Notes forming part of the Consolidated Financial Statementsas at and for the year ended March 31, 2018 continued
Vedanta Limited Integrated Report and Annual Accounts 2017-18
355
50 Segment Information continued
Aluminium
The Group’s aluminium business is owned and operated by Vedanta Limited and Bharat Aluminium Company Limited (“BALCO”) in which it
has a 51% interest as at March 31, 2018 and March 31, 2017. Vedanta Limited’s Aluminium operations include a refinery and a captive power
plant at Lanjigarh and a smelter, a thermal coal based captive power facility at Jharsuguda both situated in the State of Odisha in India. The
pots are in the stage of commissioning in the 1.25 mtpa Jharsuguda-II Aluminium smelter with 879 pots having been commissioned by
March 31, 2018. BALCO’s partially integrated aluminium operations are comprised of two bauxite mines, captive power plants, smelting
and fabrication facilities in central India.
Iron ore
The Group’s iron ore business is owned by Vedanta Limited and by two wholly owned subsidiaries, Sesa Resources Limited and Sesa Mining
Corporation Limited and consists of exploration, mining and processing of iron ore, pig iron and metallurgical coke. The mining operations are
carried out at Codli group, Bicholim mine, Surla mine and the Sonshi group of mines in state of Goa and Narrian mine, situated at state of
Karnataka in India, a Metallurgical Coke and Pig Iron plant in state of Goa in India and also has a power plant in state of Goa in India for captive use.
Group’s iron ore business also comprises Western Cluster Limited (“WCL”) in Liberia which has iron ore assets and is wholly owned subsidiary of
the Group. WCL’s assets include development rights to western cluster and a network of iron ore deposits in West Africa. WCL’s assets were fully
impaired in the year ended March 31, 2016. Pursuant to an order passed by Hon’ble Supreme Court of India on February 07, 2018 all mining was
banned in state of Goa. The Group has recognised an impairment charge on its iron ore assets in year ended March 31, 2018. (Refer note 36 (b))
Power
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’s 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 600
MW (2 units of 300MW each) thermal coal based power plant at Korba. Talwandi Sabo Power Limited (“TSPL”) had signed a power purchase
agreement with the Punjab State Power Corporation Limited (“PSPCL”) for the establishment of 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 the State of Tamil Nadu in southern India.
Zinc - India
The Group’s zinc India business is owned and operated by Hindustan Zinc Limited (“HZL”) in which it has a 64.92% interest as at March 31,
2018 and March 31, 2017. HZL’s operations include five lead-zinc mines, one rock phosphate mine, four hydrometallurgical zinc smelters,
two lead smelters, one pyro metallurgical lead-zinc smelter, six sulphuric acid plants, a silver refinery and six captive power plants in State
of Rajasthan in Northwest India and one zinc ingot processing and refining plant at Haridwar and one silver refinery, one zinc ingot
processing and refining plant and one lead ingot processing and refining plant at Pantnagar in the State of Uttarakhand in North India.
Zinc - International
The Group’s zinc international business comprises 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”) and Black
Mountain Mining (Proprietary) Limited (“BMM”), whose assets include the Black Mountain mine and the Gamsberg mine project which is in
development stage, located in South Africa. The Group has 100% interest in Skorpion, 74.00% interest in BMM and 100% interest in
Lisheen (which owns the Lisheen mine in Ireland which has ceased operations in December 2015).
Oil and gas
The Group’s oil and gas business is owned and operated by the Company and its stepdown subsidiary Cairn Energy Hydrocarbons Limited
and engaged in business of exploration and development and production of oil and gas. The Group has a diversified asset base with six
blocks, one in state of Rajasthan in India, one on the west coast of India, three on the east coast of India and one in South Africa.
Other
The Group’s other activities include Vizag General Cargo Berth Private Limited (“VGCB”) and Maritime Ventures Private Limited (“”MVPL) in which
the Group owns a 100% interest. Vizag port project includes mechanisation of coal handling facility at the outer harbour of Vishakhapatnam port on
the east coast of India. 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. In December 2017, the Company through its wholly owned subsidiary, acquired 51.6% equity stake in
AvanStrate (‘ASI’) which is also included in other segments. ASI is involved in manufacturing of glass substrate. (Refer note 4 (II))
Segment Revenue, Results, Assets and Liabilities include the respective amounts identifiable to each of the segments and amount allocated
on a reasonable basis. Unallocated expenditure consist of common expenditure incurred for all the segments and expenses incurred at
corporate level. The assets and liabilities that cannot be allocated between the segments are shown as unallocated assets and unallocated
liabilities respectively.
The accounting policies of the reportable segments are the same as the Group’s accounting policies described in Note 3. The operating segments
reported are the segments of the Group for which separate financial information is available. Earnings before interest, depreciation and amortisation
and tax (EBITDA) are evaluated regularly by the CODM in deciding how to allocate resources and in assessing performance. The Group’s financing
(including finance costs and finance income) and income taxes are reviewed on an overall basis and are not allocated to operating segments.
Transfer prices between operating segments are on an arm’s length basis in a manner similar to transactions with third parties except from power
segment sales amounting to ` 133 Crore and ` 41 Crore which is at cost for the year ended March 31, 2018 and March 31, 2107 respectively.
The following table presents revenue and profit information and certain assets information regarding the Group’s business segments as at
and for the year ended March 31, 2018 and March 31, 2107.
Notes forming part of the Consolidated Financial Statementsas at and for the year ended March 31, 2018 continuedIntegrated Report Management Review Statutory Reports Financial Statements 356
Vedanta Limited Integrated Report and Annual Accounts 2017-18
9
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(
5
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Notes forming part of the Consolidated Financial Statementsas at and for the year ended March 31, 2018 continuedIntegrated Report Management Review Statutory Reports Financial Statements
358
Vedanta Limited Integrated Report and Annual Accounts 2017-18
50 Segment Information continued
II) Geographical segment Analysis
The Group’s operations are located in India, Namibia, South Africa, Ireland, Australia, Japan, Taiwan, South Korea and UAE. The following
table provides an analysis of the Group’s sales by region in which the customer is located, irrespective of the origin of the goods.
Geographical Segment
Revenue by geographical segment (Gross of excise duty)
India
China
UAE
Malaysia
Others
Total
(` in Crore)
Year ended
March 31,
2018
Year ended
March 31,
2017
53,933
8,414
3,503
5,335
21,244
48,019
6,241
4,807
2,893
13,707
92,429
75,667
No single customer has accounted for more than 10% of the Group’s revenue for the year ended March 31, 2018 and March 31, 2017.
The following is an analysis of the carrying amount of non-current assets, excluding deferred tax assets and financial assets, analysed by
the geographical area in which the assets are located:
Geographical Segment
Carrying amount of non-current assets
India
South Africa
Namibia
Taiwan
Other
Total
Reconciliation between segment revenue and enterprise revenue
Particulars
Enterprise revenue
Revenue from operations
Less: Other operating revenues
Add: Export incentives
Total Segment Revenue
As at
March 31,
2018
(` in Crore)
As at
March 31,
2017
1,12,953
3,708
1,110
1,225
865
1,07,471
2,090
731
-
193
1,19,861
1,10,485
Year ended
March 31,
2018
(` in Crore)
Year ended
March 31,
2017
92,923
(912)
418
76,171
(761)
257
92,429
75,667
Notes forming part of the Consolidated Financial Statementsas at and for the year ended March 31, 2018 continued
Vedanta Limited Integrated Report and Annual Accounts 2017-18
359
51 Related Party disclosures
Related party transactions
List of related parties and relationships
A) Entities controlling the Company (Holding Companies)
Volcan Investments Limited (Ultimate Holding Company)
Intermediate Holding Companies
Finsider International Company Limited
Richter Holdings Limited
Twin Star Holdings Limited
Vedanta Resources Cyprus Limited
Vedanta Resources Finance Limited
Vedanta Resources Holdings Limited
Vedanta Resources Plc
Welter Trading Limited
Westglobe Limited
B) Fellow subsidiaries (with whom transactions have taken
C) Post retirement benefit plan
BALCO Employees Provident Fund Trust
Hindustan Zinc Ltd Employees Contributory Provident Fund Trust
Sesa Group Employees Provident Fund Trust
Sesa Resources Limited Employees Provident Fund Trust
Sesa Mining Corporation Limited Employees Provident Fund Trust
HZL Employee Group Gratuity Trust
Sesa Group Employees Gratuity Fund and Sesa Group
Executives Gratuity Fund
Sesa Resources Limited Employees Gratuity Fund
Sesa Mining Corporation Limited Employees Gratuity Fund
HZL Superannuation Trust
Sesa Group Executives Superannuation Scheme Fund
Sesa Resources Limited and Sesa Mining Corporation Limited
Employees Superannuation Fund
place)
Konkola Copper Mines Plc
Vedanta Resources Jersey II Limited
Sterlite Technologies Limited
Sterlite Power Transmission limited
Sterlite Iron and Steel Company Limited
Vedanta Resources Jersey Limited
Sterlite Power Grid Ventures Limited
D) Associates and Joint Ventures (Refer note : 48)
E) Others (with whom transactions have taken place)
Vedanta Foundation
Vedanta Medical Research Foundation
Sesa Community Development Foundation
Cairn Foundation
India Grid trust
F) Disclosure in respect of transactions / balances with related parties
Particulars
Income :
(i) Revenue from operations
Konkola Copper Mines Plc
Sterlite Technologies Limited
Sterlite Power Transmission limited
(ii) Other income
a)
Interest and guarantee commission
Vedanta Resources Plc
Konkola Copper Mines Plc
Twin Star Holdings Limited
Sterlite Iron and Steel Company Limited
Sterlite Power Transmission limited
Sterlite Technologies Limited
b) Outsourcing service fees
Vedanta Resources Plc
c) Dividend income
Sterlite Technologies Limited
India Grid Trust
d) Other non operating income
Sterlite Power Transmission limited
(` in Crore)
Year ended
March 31,
2018
Year ended
March 31,
2017
2
69
1,129
1,200
-
858
18
876
28
4
1
1
1
-
35
3
3
0
8
8
0
0
39
3
1
0
-
9
52
3
3
1
-
1
-
-
Notes forming part of the Consolidated Financial Statementsas at and for the year ended March 31, 2018 continuedIntegrated Report Management Review Statutory Reports Financial Statements
360
Vedanta Limited Integrated Report and Annual Accounts 2017-18
51 Related Party disclosures continued
Disclosure in respect of transactions / balances with related parties
Particulars
(iii) Purchases :
a)
Purchase of goods
Konkola Copper Mines Plc
Sterlite Technologies Limited
Sterlite Power Transmission Limited
(iv) Expenditure :
a) Stock option expenses / (recovery)
Vedanta Resources Plc
Konkola Copper Mines Plc
b) Management fees and Brand Fees paid
Vedanta Resources Plc
c)
(Recovery of)/Reimbursement to / for other expenses
Vedanta Resources Plc
Konkola Copper Mines Plc
Sterlite Iron and Steel Company Limited
Volcan Investments Limited
d) Interest expense
Vedanta Resources Jersey Limited
Vedanta Resources Jersey II Limited
e) Other expenses
Sterlite Power Grid Ventures Limited
f) Corporate social responsibility expenditure/donation
Vedanta Foundation*
Vedanta Medical Research Foundation
Sesa Community Development Foundation
Cairn Foundation
* Previous year figures includes donation in kind, having fair market value of ` 11 Crore
(v) Dividend paid
Twin Star Holdings Limited
Finsider International Company Limited
Westglobe Limited
Welter Trading Limited
(` in Crore)
Year ended
March 31,
2018
Year ended
March 31,
2017
657
1
13
671
53
(0)
53
345
345
17
(5)
-
(2)
10
-
-
-
0
0
0
84
5
16
105
298
17
3
318
63
-
63
59
59
15
(13)
0
(1)
1
4
218
222
-
68
35
2
12
117
2,924
851
94
81
2,683
781
86
74
3,950
3,624
Notes forming part of the Consolidated Financial Statementsas at and for the year ended March 31, 2018 continued Vedanta Limited Integrated Report and Annual Accounts 2017-18
361
51 Related Party disclosures continued
Disclosure in respect of transactions / balances with related parties
Particulars
(vi) Balances as at year end
a) Trade receivables
Sterlite Technologies Limited
Sterlite Power Transmission Limited
Konkola Copper Mines Plc
Vedanta Resources Plc
b) Loans
Roshskor Township (Proprietary) Limited
Sterlite Iron And Steel Company Limited
Twin Star Holdings Limited
c) Other receivables and advances
Konkola Copper Mines Plc
Sterlite Iron And Steel Company Limited
Vedanta Resources Plc
Sterlite Power Grid Ventures Limited
Sterlite Power Transmission limited
Sterlite Technologies Limited
Goa Maritime Private Limited
Twin Star Holdings Limited
Volcan Investments Limited
Vedanta Foundation
d) Trade payables
Vedanta Resources Plc
Konkola Copper Mines Plc
Sterlite Power Transmission Limited
Sterlite Technologies Limited
Cairn Foundation
e) Other payables
Vedanta Resources Plc
Sterlite Technologies Limited
Hindustan Zinc Ltd Employees Contributory Provident Fund Trust
Sesa Group Employees Provident Fund Trust
Balco Employees Provident Fund Trust
Sesa Resources Limited Employees Provident Fund Trust
Sesa Mining Corporation Limited Employees Provident Fund Trust
HZL Superannuation Trust
Sesa Group Executives Superannuation Scheme
Sesa Resources Limited and Sesa Mining Corporation Limited Employees Superannuation Fund
f) Current investments
Vedanta Resources Plc (Investment in bonds)
India Grid Trust (Investment in units)
g) Financial guarantees given
Volcan Investments Limited*
Vedanta Medical Research Foundation
* Bank guarantee given by Vedanta Limited on behalf of Volcan Investments Limited in favour of Income Tax department, India as collateral in respect of certain
tax disputes of Volcan Investments Limited
(` in Crore)
As at
March 31,
2018
As at
March 31,
2017
4
5
1
7
17
7
5
65
77
323
13
63
0
0
-
1
3
4
5
412
18
38
3
-
11
70
4
-
9
2
5
0
0
0
0
0
26
0
-
-
26
7
4
65
76
148
12
7
-
-
0
1
2
2
-
172
10
8
-
1
18
37
13
14
3
2
5
0
0
0
0
0
20
37
412
122
534
115
34
149
525
-
525
115
-
115
Notes forming part of the Consolidated Financial Statementsas at and for the year ended March 31, 2018 continuedIntegrated Report Management Review Statutory Reports Financial Statements
362
Vedanta Limited Integrated Report and Annual Accounts 2017-18
51 Related Party disclosures continued
Particulars
h) Financial guarantees taken
Vedanta Resources Plc
i) Dividend payable
Twin Star Holdings Limited
Finsider International Company Limited
Westglobe Limited
Welter Trading Limited
Particulars
(vii) Transactions during the year
a)
Loans given / (received) during the year
Roshskor Township (Proprietary) Limited
Sterlite Iron And Steel Company Limited
b) Long-term borrowings (taken)/ repaid during the year
Vedanta Resources Jersey II Limited
Vedanta Resources Jersey Limited*
(` in Crore)
As at
March 31,
2018
As at
March 31,
2017
-
35,014
-
-
-
-
-
2,441
711
78
68
3,298
(` in Crore)
Year ended
March 31,
2018
Year ended
March 31,
2017
-
0
0
-
-
-
1
0
1
12,525
-
12,525
* During the previous year Vedanta Resources Jersey Limited has taken and repaid loan from Twin Star Mauritius Holding Limited for ` 190.73 Crore (US $ 28.43 million)
c)
Financial Guarantees given during the year
Vedanta Medical Research Foundation
d) Financial Guarantees (taken)/ relinquished during the year
Vedanta Resources Plc
e)
Investment made/(redeemed) during the year
Gaurav Overseas Private Limited
Madanpur South Coal Company Limited
Vedanta Resources Plc (Investment in bonds)*
India Grid trust (Investment in units)
* includes premium on redemption of bonds of ` 5 Crore and ` 4 Crore for March 31, 2018 and March 31, 2017 respectively.
f)
Sale of Assets
Konkola Copper Mines Plc
(viii)Remuneration of Key management personnel (KMP)
Short Term employee benefits
Post employment benefits*
Share based payments
*Does not include the provision made for gratuity and leave benefits, as they are determined on an actuarial basis for all the employees together
34
34
-
-
35,015
(14,265)
35,015
(14,265)
0
(0)
(112)
(0)
(112)
-
-
33
2
6
41
-
-
(96)
-
(96)
1
1
34
3
8
45
Notes forming part of the Consolidated Financial Statementsas at and for the year ended March 31, 2018 continued Vedanta Limited Integrated Report and Annual Accounts 2017-18
363
51 Related Party disclosures continued
Particulars
(ix) Dividend to Key management personnel
(x) Commission/Sitting Fees
To independent directors
To other KMP
(xi) Details of transactions with relatives of Key management personnel
Commission to relatives of KMP
Salary to relatives of KMP
Dividend to relatives of KMP
(xii) Details of transactions with post retirement employee benefit plan
Balco Employees Provident Fund Trust
Hindustan Zinc Ltd Employees Contributory Provident Fund Trust
Sesa Resources Limited Employees Provident Fund
Sesa Mining Corporation Limited Employees Provident Fund
Sesa Group Employees Provident Fund
HZL Employee group Gratuity Trust
Sesa Group Employees Gratuity Fund and Sesa Group Executives Gratuity Fund
Sesa Resources Limited Employees Gratuity Fund
Sesa Mining Corporation Limited Employees Gratuity Fund
HZL Superannuation Trust
Sesa Group Executives Superannuation scheme
Sesa Resources Limited and Sesa Mining Corporation Limited Employees Superannuation Fund
(` in Crore)
Year ended
March 31,
2018
Year ended
March 31,
2017
0
4
0
4
0
7
0
13
30
1
1
5
16
1
0
0
2
2
0
71
0
3
1
4
0
8
0
16
31
0
1
6
25
6
1
1
2
2
0
91
Cairn PSC guarantee to Government
Vedanta Resources Plc has provided parent company financial and performance guarantee to Government of India for erstwhile Cairn
India Group’s obligation under the Production Sharing Contract (‘PSC’). The guarantee provides for making available financial resources
equivalent to Cairn India’s share for its obligation under PSC, personnel and technical services in accordance with industry practices and
any other resources in case Cairn India is unable to fulfill its obligations under PSC
Cairn Investment in Vedanta Resources PLC Bonds
Cairn India Holdings Limited had invested ` 384 Crore (US $ 59 million) and ` 485 Crore (US $ 75 million) as at March 31, 2018 and March
31, 2017 in bonds issued by Vedanta Resources Plc, which have maturities ranging from January 2019 to May 2023 at coupon ranging from
6% to 8.25% p.a. The carrying value of these bonds including interest accrued are ` 412 Crore and ` 525 Crore as at March 31, 2018 and
March 31, 2017 respectively.
Loans to holding companies
During the year ended March 31, 2016, Lisheen Milling Limited entered into a loan agreement with Twin Star Holding Limited for ` 67
Crore (US $ 10 milion) at an interest rate of 2.1%. The loan is unsecured and the outstanding balance under the facility at March 31, 2018
and March 31, 2017 is ` 65 Crore (US $ 10 million). The loan was due in March 2018. The loan has been renewed for a further period of 12
months and is now due in March 2019.
Loans to fellow subsidiaries
During the year ended March 31, 2018 Group had renewed loan provided to Sterlite Iron and Steel Company Limited to finance project in
earlier years. The loan balance as at March 31, 2018 was ` 5 Crore. The loan is unsecured in nature and carries an interest rate of 8.50% per
annum. The loan was due in March 2018. The loan has been renewed for a further period of 12 months in March 2018 and is due in
March 2019.
Purchase of Subsidiary
During the year ended March 31, 2017, the Group purchased 100% shareholding in Sesa Sterlite Mauritus Holdings Limited from its holding
company Vedanta Resources Holding Limited ` 64.84 (US $ 1).
Sale of Subsidiary
During the year ended March 31, 2017, the Group sold one its subsidiary - Sterlite Infrastructure Limited (SIVL) to a fellow subsidiary -
Sterlite Power Transmission Limited for a net consideration of ` 0.20 Crore
Financial guarantees
Financial guaratees given includes ` 8,105 Crore as at March 31, 2017 for a loan facility entered by THL Zinc Limited with Cairn India
Holdings Limited (Intercompany Loan) , ` 5,836 Crore as at March 31, 2017 for a loan facility entered by Twin Star Mauritius Holdings
Limited with Fujairah Gold FZC (Intercompany Loan) and ` 14,265 Crore as at March 31, 2017 for a loan facility entered by Bloom Fountain
Limited with Twin Star Mauritius Holdings Limited (Intercompany Loan). During the year ended March 31, 2018, all these gauarantees
Notes forming part of the Consolidated Financial Statementsas at and for the year ended March 31, 2018 continuedIntegrated Report Management Review Statutory Reports Financial Statements
364
Vedanta Limited Integrated Report and Annual Accounts 2017-18
51 Related Party disclosures continued
totalling ` 28,206 Crore have been withdrawn by Vedanta Resources Plc and the guarantees worth ` 6,809 Crore is extinguised as the
underlying external loan has been repaid.
Terms and conditions of transactions with related parties
All transactions with related parties are made in ordinary course of business. For the year ended March 31 2018, the Group has not
recorded any impairment of receivables relating to amounts owed by related parties. This assessment is undertaken each financial year
through examining the financial position of the related party and the market in which the related party operates.
52 Oil & gas reserves and resources
The Group’s gross reserve estimates are updated atleast 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 (2007)”. 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
Total
Gross proved and
probable hydrocarbons
initially in place
(mmboe)
Gross proved and
probable reserves
and resources
(mmboe)
Net working interest proved
and probable reserves
and resources
(mmboe)
As at
March 31,
2018
As at
March 31,
2017
As at
March 31,
2018
As at
March 31,
2017
As at
March 31,
2018
As at
March 31,
2017
2,288
-
3,460
733
251
335
2,197
-
4,034
696
225
335
371
335
430
45
34
48
410
272
478
41
23
48
7,067
7,487
1,263
1,272
260
235
301
10
13
24
843
287
191
334
9
9
24
854
The Group’s net working interest proved and probable reserves is as follows:
Particulars
Reserves as of April 01, 2016*
Additions / (revision) during the year
Production during the year
Reserves as of March 31, 2017**
Additions during the year
Production during the year
Reserves as of March 31, 2018***
Proved and probable
reserves
Proved and probable
reserves (developed)
Oil
(mmstb)
Gas
(bscf)
Oil
(mmstb)
160
(5)
(43)
112
28
(42)
98
55
(2)
(5)
48
12
(8)
52
145
(2)
(43)
100
13
(42)
71
Gas
(bscf)
28
(8)
(5)
15
21
(8)
28
* Includes probable oil reserves of 40.05 mmstb (of which 27.31 mmstb is developed) and probable gas reserves of 29.80 bscf
(of which 5.81 bscf is developed)
** Includes probable oil reserves of 32.37 mmstb (of which 20.62 mmstb is developed) and probable gas reserves of 37.84 bscf
(of which 4.92 bscf is developed)
*** Includes probable oil reserves of 26.77 mmstb (of which 5.00 mmstb is developed) and probable gas reserves of 25.12 bscf
(of which 4.17 bscf is developed) mmboe = million barrels of oil equivalent
mmstb = million stock tank barrels
bscf = billion standard cubic feet
1 million metric tonnes = 7.4 mmstb
1 standard cubic meter =35.315 standard cubic feet
MBA = Mangala, Bhagyam & Aishwarya
EOR = Enhanced Oil Recovery
53 Subsequent events
Except as disclosed in note 3 (aa)(1)(xi) and below, there are no material adjusting or non adjusting subsequent events :
Vedanta Limited’s resolution plan to acquire Electrosteel Steels Limited (ESL) was approved by National Company Law Tribunal (NCLT) in
India on April 17, 2018. In regard to an appeal filed before it, the National Company Law Appellate Tribunal (NCLAT) has directed that
pending final order, status quo on ESL as on May 01, 2018 is to be maintained and the Steering Committee already constituted shall
continue to run the operations of ESL.
Notes forming part of the Consolidated Financial Statementsas at and for the year ended March 31, 2018 continued
Vedanta Limited Integrated Report and Annual Accounts 2017-18
365
6
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Notes forming part of the Consolidated Financial Statementsas at and for the year ended March 31, 2018 continuedIntegrated Report Management Review Statutory Reports Financial Statements
366
Vedanta Limited Integrated Report and Annual Accounts 2017-18
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Vedanta Limited Integrated Report and Annual Accounts 2017-18
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Notes forming part of the Consolidated Financial Statementsas at and for the year ended March 31, 2018 continuedIntegrated Report Management Review Statutory Reports Financial Statements
368
Vedanta Limited Integrated Report and Annual Accounts 2017-18
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Vedanta Limited Integrated Report and Annual Accounts 2017-18
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Notes forming part of the Consolidated Financial Statementsas at and for the year ended March 31, 2018 continuedIntegrated Report Management Review Statutory Reports Financial Statements
372
Vedanta Limited Integrated Report and Annual Accounts 2017-18
Form AOC-I
Salient features of subsidiaries pursuant to first proviso to sub section (3) of section 129 read with rule 5 of Companies (Accounts)
Rules, 2014 Continued
S. No Name of Associates/Joint Ventures
RoshSkor
Township (Pty)
Ltd
Gaurav Overseas
Private Limited
Madanpur South
Coal Company
Limited
Goa Maritime
Private Limited
Rampia Coal
Mines & Energy
Private Limited
1 Latest audited Balance sheet date
June 30, 2017 March 31, 2018
March 31, 2018
March 31, 2018
March 31, 2018
2
Shares of Associate/Joint Ventures held by the Company
at the year end
- Number
- Amount of investment (` Crore)
- % of holding
3 Description of how there is significant influence
Networth attributable to shareholding as per latest audited
Balance sheet (` Crore)
4
5 Profit/(Loss) for the year
*considered till March 31, 2018
For and on behalf of the Board of Directors
50
3
50.00%
By way of
ownership
3,23,000
0
50.00%
By way of
ownership
1,52,266
2
18.05%
5,000
0
50.00%
2,72,29,539
2
17.39%
N.A.
N.A.
N.A.
4
(0)*
0
(0)
2
(0)
-
0
-
(0)
Navin Agarwal
Executive Chairman
DIN 00006303
Kuldip Kumar Kaura
Interim Chief Executive Officer
PAN AFVPK8712R
GR Arun Kumar
Whole-Time Director &
Chief Financial Officer
DIN 01874769
Bhumika Sood
Company Secretary
ICSI Membership
No. A19326
Place: Mumbai
Date: May 03, 2018
Notes forming part of the Consolidated Financial Statementsas at and for the year ended March 31, 2018 continued
NOTES
NOTES
NOTES
NOTES
Portfolio Credit Quality Analysis
2017-2018
Tier 1
Portfolio
Credit Quality
Vedanta Ltd
CRISIL Research certifies that the overall credit quality of Vedanta Ltd’s treasury portfolio of fixed income
investments has been consistently evaluated as
‘Tier 1’ (highest safety from credit default on CRISIL’s 4 point scale^) for the
financial year April 2017 to March 2018
u Vidyadharan
Jiju Vidyadharan
Senior Director, CRISIL Research
^ The credit quality of fixed income investments is classified into a 4 point scale of ‘Tier 1’, ‘Tier 2’, ‘Tier 3’ and ‘Tier 4’
Disclaimer:This portfolio credit quality analysis (“Analysis”) is done by CRISIL Limited (“CRISIL”) through its Research Division (also called “CRISIL Research”). This Analysis is based on the report (“Report”) prepared by CRISIL for Vedanta Ltd. CRISIL has taken
reasonable care in preparing the Report and conducting this Analysis. This Analysis is based on the Report which is prepared based on information and material provided to CRISIL by the Client and/or obtained by CRISIL from sources considered reliable. CRISIL does not
independently verify such information. Accordingly, CRISIL does not warrant that the information or material on which the Report or the Analysis is based (or the report itself) is error-free, complete, adequate or that no other aspect other than those set out in the report
need be considered. CRISIL disclaims all liability in respect of the Report and the Analysis including, without limitation, those arising from: (a) any errors or omissions in the information or material on which the Report or Analysis is based or the Report itself; (b) any use of
the Report or the Analysis; (c) any decisions made or results obtained from the use of the Report / Analysis or reliance placed on the Report / Analysis. This Analysis is not a recommendation to invest / disinvest in any of the Client or any other entity covered in the Analysis /
Report and no part of this Analysis / Report should be construed as an investment advice. CRISIL especially states that it has no financial liability whatsoever to the subscribers/ users/ transmitters/ distributors of this Analysis. CRISIL Research operates independently of,
and does not have access to information obtained by CRISIL’s Ratings Division / CRISIL Risk and Infrastructure Solutions Limited (CRIS), which may, in their regular operations, obtain information of a confidential nature. The views expressed in this Report are that of
CRISIL Research and not of CRISIL’s Ratings Division / CRIS. No part of this Report may be published / reproduced in any form without CRISIL’s prior written approval.
Design and production of the Integrated Report at
(www.emperor.works)
and
(hello@aicl.in)
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VEDANTA LIMITED
ZINC-LEAD -SILVER | OIL & GAS | ALUMINIUM & POWER | COPPER | IRON ORE
1st Floor, ‘C’ wing, Unit 103, Corporate Avenue, Atul Projects, Chakala, Andheri (East), Mumbai–400093, Maharashtra
CIN: L13209MH1965PLC291394 | www.vedantalimited.com
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